Bright Road Wealth Management, LLC
How I got into this mess:
I'll admit it took me longer to find my true calling than most. Resistance to wearing a suit, lack of a win-at-all costs attitude (commitment to my own integrity), and an industry rife with conflicts of interest all conspired to keep me from becoming a financial planner sooner.
But by the time I found my home as a fee-only financial planner, I had unwittingly built a strong skill set that became the perfect foundation on which to build a career. Creativity honed in architecture and the arts combined with 15 years of small business operational management and strategic planning, provide much more practical experience than many advisors with more direct experience can bring to bear. Years of coaching individuals in productivity and efficiency combined with study of behavioral economics gave me an intuitive understanding of motivation. Finally, years of outdoor adventure guiding and real estate investment management brought me enough risk assessment and risk management experience to fill several lifetimes.
What I provide for my clients:
I am committed to full-service, comprehensive financial planning and investment management. I work with clients, both in person and virtually, to optimize their unique financial situation. I like to help my clients save money and increase the return/ risk ratio of their investments. My goal is to maximize the probability of you achieving your own personal and financial goals. This is a long-game approach. As humans, we are prone to growth and as we grow our goals can change, so I use what I know about you to preserve your future choices.
When I am not working on improving your financial life:
I hang out with my wife and two young kids in the outdoors - biking, camping, skiing, or rafting. I teach Wilderness First Aid courses for NOLS. I volunteer as Treasurer of the Tacoma Waldorf School Board of Trustees.
Bachelor of Environmental Design, Texas A&M University
Fee-Only Based on Assets Under Management
Bright Road Wealth Management, LLC is a registered investment adviser in the States of Alaska, Texas, and Washington. The adviser may not transact business in states where it is not appropriately registered, excluded, or exempted from registration. Individualized responses to persons that involve either the effecting of transaction in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption.
You should not hire a financial advisor who is willing to select individual stocks for you, nor should you do that yourself. The historical evidence shows that the vast majority of people who engage in stock-picking underperform the market dramatically, even advisors. There are plenty of advisors still doing this thinking they are somehow able to predict the future. They can't, no one can.
Instead you should be investing in the entire market, which you can only really do with mutual funds.
To the question of allocation, I'd ask how you decided that 50/50 is the right allocation for you. This is where an advisor can really help. Asset allocation is complex and it's easy to mess up - naive diversification is a huge problem that I see when investors pick investments without guidance. The goal of asset allocation is to dampen the volatility of your portfolio while still achieving a reasonable return, but if you end up without proper diversification, your allocation can't do it's job.
To that end, if you want a do it yourself approach, an easy way to assure that you are actually diversified is to pick a low expense ratio target date fund. A target date fund for 2020 typically has a 55/45 allocation right now. This allocation will change over time in a risk appropriate way.
I'd recommend talking to a few fee-only (not fee-based) advisors to get a better understanding of your situation and what the best asset allocation would be for you specifically.
Here's a few things I wish I'd known when I was 20:
1) 80% of the free information out there is designed to either sell magazines or increase the number of trades an investor completes. Neither of these are good for investors.
2) If it sounds too good to be true, it IS too good to be true (except compound interest - haha - that's true and sounds magical). Don't try to beat the market, it can't be done consistently over time. If someone tells you that you can beat the market without dramatically increasing the risk of loss, they don't understand the numbers.
3) An investment of $1000 - $3000 now to meet with a good fee-only advisor will repay you exponentially over your lifetime. Think of this as inexpensive education.
4) There are lots of sales people that call themselves advisors. Ask how they get paid. An advisor who is paid by you only has her interests aligned with yours.
5) These days stock picking is a losing game. No one knows what the future holds. Plenty of blue chip companies have had their stock go to zero, but through diversifying across the entire market (aka mutual funds) you can almost eliminate the chances that your portfolio will go to zero.
6) Nothing in investing is urgent. If someone is rushing you to decide "now before this opportunity is gone," the answer should be "no thank you."
7) Sorry, I can't stop. Yes, invest now, early in life. This will greatly improve your chances of reaching your goals and dramatically increase the number of options you will have late in life.
Without question, you will benefit from saving and investing right away. This will build great habits for you in the future when your expenses start to creep up. The benefits of investing early are hard to overstate. The more time your money has to grow, the more secure your future will be. That said, you will need to balance saving with paying off your student loans.
At minimum, saving what is needed in the 401(k) to take full advantage of the match is essentially giving yourself a raise! After that, balance paying off the higher rate student loans with saving. If you need a boost to your credit score, as many do after college, pay off the newest loans first. Then your oldest loans are still helping to improve your credit score.
When choosing whether to invest more in your work retirement plan, it depends on the details of your employer's 401(k). If the fees are low and the funds available are high quality, then it would pay to put more money into the 401(k). The primary goal of 401(k) plan designers is reducing risk, not catering to each individual's needs. It means you are unlikely to get a terrible fund in your 401(k), but it also means you may get funds that underperform, have higher fees, or don't fit your financial plan. I frequently find that clients are better served by investing additional money in a Roth IRA.
The Roth question, whether 401(k) or IRA, comes down to taxes. Do you want to pay them now or in the future? Many professionals think this is a no-brainer, best to pay the taxes now and withdraw tax free, but I think it really depends on the client. Everyone is different and I think it comes down to a question of when you need the money. Do you need to lower your taxes this year? Then you'd want a traditional IRA.
Well, in short, you are right to be concerned, but there's probably nothing nefarious going on.
It depends on your definition of "fees". In my view, they are telling the partial truth. Your employer probably thinks that is the whole truth, so I wouldn't hold it against them. In fact, I have heard several employer plan adminstrators say "we don't pay any fees for our 401(k)," which is obviously incorrect. Nothing is free. Sometimes even the advisor thinks this is true, because many advisors have only had sales training, not investment education. The bottom line is all mutual funds have an expense ratio that describes fees paid inside the fund. They may also include 12(b)-1 fees (aka commissions paid to a sales person). While you don't pay these fees directly, they are taken out of your return, thus have an impact on your retirement success.
In my experience, when employers pay the advisory fee, the back-end fees are usually less. Look for expense ratios of the funds and 12(b)-1 fees, then add a prorated portion of what your employer pays for the plan and you will have the found most of the fees.
Even with higher fees, it's hard to beat taking full advantage of the match - that basically amounts to a raise! If you need to save above the matching amount, then the question of fees comes into play. If you can get lower fees and equivalent performance outside the plan, that might be better.
If you are asking because you want to be an advisor, it depends on what kind of "advisor" you want to be. If you want to focus on comprehensive financial planning, I recommend "Behavioral Investment Counseling" by Nick Murray.
If you are asking because you want a book version of hiring a financial advisor, that's much more difficult. For that, I'd recommend taking a CFP course. That probably sounds like overkill, but that's why I initially took those courses and that education has been worth multiples of it's cost in my personal financial life, not to mention bringing me into a career that I love. Short of that, it would take many books on individual topics to cover the wide scope of knowledge required. Here's one to get you started, "The Investment Answer" by Daniel Goldie and Gordon Murray.