I’m 28 and have banked $340k, should I leave my Financial Advisor?

A 28-year-old Redditor has $340,000 saved, with part of the money coming from an inheritance and part of the money coming from retirement investments. He invests regularly, but his managed account with his investment advisor has not met his expectations since it has significantly underperformed the S&P 500. He has also paid $13,000 in management fees and a significant amount of taxes. 

The poster is thinking about leaving the advisor, but he’s hesitant because the firm managed his parents’ and grandparents’ money, his family has done well, and he’s feeling sentimental about leaving the advisor who helped them achieve success. So, should he move on, or stick with the advisor despite the fact that his investment advice has not been great? 

Finding the right advisor is key

Many Redditors commenting on the original poster’s thread said that they think he should move on because the fees he is paying are not providing the value he deserves. Those posters are probably right. Paying thousands of dollars in fees and taxes to underperform the market is not a good thing, and there is very little justification for it. 

This Reddit poster made a simple mistake, which many people make. He opted to keep his money with an advisor without doing the proper research. He simply stuck with the person his family had always used, without making sure that the firm had a track record of success and a fee structure that made sense. Sadly, many people end up choosing advisors this way — because of habits or referrals — and then they miss out on the benefits that having the right advisor can bring.

The Redditor should not give up on getting professional financial advice, as he has a lot of money invested already and a skilled advisor could help him to grow that wealth as efficiently as possible while minimizing the tax bills he pays. The right advisor can also help him set clear goals for the future, which he has a definite shot at achieving given his inheritance and the amount he has already saved. 

How to find the right financial advisor

The Redditor can achieve more financial success with his money and make sure he’s making the most of the hard start he has, if he does his research to get the help he needs. Specifically, he should look for an advisor who is a fiduciary, which means that the advisor has a legal obligation to put his needs first and act in his best interests. 

He should also find out exactly what services the advisor offers and how he charges. For example, developing tax-efficient investng stratgies is a key service that some financial professionals offer. It’s clear his current advisor was not doing a very good job of that, given that he said he has paid a fortune in taxes over the past few years. 

The Redditor may also want to look for an advisor who operates on a fee-only basis rather than charging a percentage of assets under management — or, if he is sticking with someone who charges on a percentage basis, he should make sure to ask about their track record to determine if the investment advice the advisor is giving has consistently helped past clients beat the market. In other words, he wants to make sure the advisor is justifying the fees that are being charged. 

 By taking these steps, the poster can set himself up for success, making the most of the money his grandfather left him to build a secure future.

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