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My fiance and I want to start preparing for our economic future; specifically buying a home, planning for children, and our eventual retirement. We both have work 401(k)'s but would like more help with financial planning. While we're not ignorant regarding mutual funds and other investments, we don't have the time or interest to personally manage them, and want to find someone who can provide guidance regarding what to invest in, and how much to invest, to reach our goals. We've tried our bank but they just wanted to upsell us on some services, and we didn't leave the meeting feeling confident in their staff.

Are there particular, established businesses that provide these services? One caveat is that while we're not opposed to opening new investments, we don't want to move our 401(k) accounts as we're quite happy with our current rate of returns.

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  • Don't your 401k plan managers or local credit unions provide this service?
    – littleadv
    Commented Jan 7, 2014 at 5:11
  • We haven't yet reached out to Fidelity (my 401k provider) re: this. As we're new to shopping around for this service, we're just trying to figure out where to start.
    – Craig
    Commented Jan 7, 2014 at 5:15
  • "... we don't want to move our 401k accounts..." Money in 401k accounts can be moved only into the investment vehicles provided by the 401k plan. If your plan is with Fidelity, you are quite likely restricted to Fidelity funds only, or you may be allowed to invest elsewhere through Fidelity's Brokerage Service also: it all depends on the specifics of the plan your employer adopted. I remember a time when my plan did not allow investment in Fidelity's Spartan series of funds, but only in load-bearing funds (though the loads were waived for retirement plan expenses) with high expense ratios.
    – Dilip Sarwate
    Commented Jan 7, 2014 at 15:13

3 Answers 3

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You will want to focus on how much is needed for retirement, and what types of investments within the current 401K offerings will get you there. Also will need to discuss non-401K investments such as an IRA, college savings, savings for a house, and an emergency fund.

The 401K should be a part of your overall financial picture, how much you invest in the 401K depends on the options you have (Roth 401K available), how much matching (some a little or a lot), and your family plans.

You have a few choices:

  • Your company through the 401K provider may provide this service. They may have limited knowledge in what non-401K funds you should invest in, but should be able to discuss types of investment.

  • Fee only planner. They will be able to discus types of investments, and give you some suggestions. Because they don't work on a commission they will not make the investment for you. You need to be able to make the actual selection of investments, so make sure you get criteria to focus on as part of the package.

  • Commission based planner. Will make money off your investment choices. May steer you towards investments that their company offers or ones that offer them the best commissions in that investment type. If the 401K doesn't use funds that the planner can research you will need to provide a copy of the prospectus provided by the 401K.

My suggestion is the fee only planner. They balance the limited focus of the 401K company without limiting themselves to the funds their company sells. Before sitting down with the planner get in writing how they fee structure works. A flat fee or hourly fee planner will be expecting you to do all the investment work. This is what you want.

Let the fee only planner help you define your plan. But also reanalyze the plan every few years as your needs change.

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Are there particular, established businesses that provide these services?

Yes! There are many fee-based financial advisors that provide such services.

These might help:

http://www.ricedelman.com/galleries/default-file/how-to-choose-financial-advisor.pdf

http://www.ricedelman.com/cs/education/article?articleId=990#.Us7cyPRDt1Y

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My former accountant, used to provide this service as part of him doing my taxes. During the off season, he would provide a planning session and he would review strategies that I might look into. Since he did not make any money off of providing investments, he was about as unbiased as one could be. However, something like that might not be enough for you guys.

You could go with someone online, Scottrade is going into the business of providing advice, as well as Charles Schwab or Fidelity, but you might need someone more personal.

In that case, I would use my network. Talk to people, ask who they use, like, and respect. I would say it is very easy to find mediocre investment advisers, the good ones are hard.

I would look for one that teaches. It is very easy to tell someone what to do, much harder to teach them what is the right thing.

One thing that is easy about your situation: Planning to buy a home. Put money for a down payment in a high interest savings account. What I mean by high interest, is they still pay almost nothing. You can't really make a mistake. If you find one with .5% instead of .85%, what is the real difference after 5 years? About $180?

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