This week, I met my prospective advisor face to face – virtually of course – as his image was beamed onto my computer screen. (I say prospective because I’ve not hired him yet.)
The best thing about my advisor was that he looked more or less like the kind of person I would encounter in the office, if I worked in an office.
He was sitting at a desk in his cubicle and he was dressed in a coat and shirt (no tie). He was articulate and very polite.
More to the point was that there were no trappings that often come with earning the title of advisor or financial consigliere: three-piece suits, picture frames of trips to Aspen or Tahiti, a handshake with the president or secretary of state, corporate logos and university bona fides, the kind that for some reason keep appearing in doctors’ and dentists’ offices.
This was Vanguard Group, after all, a trillion-dollar fund that takes its promise of low cost very seriously. Nary a penny spent to promote itself so that as much as possible can be reinvested on behalf of clients like me.
For about $1,150 worth of advice every year, that’s what you get: a seemingly no-frills Mr. Nice Guy in a cubicle in an office park in North Carolina and that’s just fine with me, a small investor.
His image was beamed onto my computer on the recorded line, but he couldn’t see me as I don’t have a camera attached to my monitor.
Before long we were involved in looking at the plan he’d recently drafted upon my request last month.
The 27-page document included six or seven pages of methodology and disclosures. It included the “key actions” line items, and charts, graphs and tables to rebalance my holdings into something more diversified.
Out with the more expensive sector fund and the income fund. In with the stock index funds and the bond index, the planner advised.
Index funds, not target date funds, lifestyle funds and actively managed funds give you the best tax efficiency, he said.
And who was I to question him, a recently minted Certified Financial Planner?
My goal was to generate enough income to cover $30,000 in basic annual living expenses starting in 2036, when I turn 70 and when the cost of living will be higher than it is now.
But between Social Security and my individual retirement account assets, the plan tells me that I should be able to get there without any trouble.
Yes, I know that a plan is only as good as what you put into it, but aren’t basic expenses going to be a lot higher?
I read over and over that health costs alone will eat up that much in annual expenses, so what if I tell him I need $60,000 or $90,000 in basic annual living expenses?
If that’s the case, I’d better have him cook up some new numbers.
I suspect the plan is nowhere near complete, but that’s not the job of the advisor.
It’s my job to sit down and flesh out possible future spending tracks, and then come back and ask my advisor to prepare plans to meet difference scenarios.
For now, I’ve got the basic framework of a financial plan under my belt.
Whether I decide to act on the plan is another story, but at least the ball is rolling with just two easy phone calls.
I'll give him an answer before Christmas.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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