I moved here from India in 2000, about four years after finishing graduate school. In the beginning, I was uncertain as to whether I would stay in the U.S. So I felt I had to be cautious about putting anything into long-term investments where the money was locked in. With a 401(k), for example, if I withdrew the money early, I would have to pay a penalty.
The situation changed for me about 10 or 12 years ago. By then, I decided I would stay in this country for the long-term. So I started contributing to my 401(k). I still didn’t have a financial advisor, probably because of my lack of knowledge about the field. But we were brought up, from a cultural standpoint, not to spend too much. That helped us to make the right choices. We had a reasonable balance in terms of income vs. expenses and saving for our children’s education, our mortgage and our retirement. I never thought about needing a financial plan.
Around 2015, I realized I had several 401(ks) from previous jobs, and they were all over the place. So, I consolidated them and some IRAs at a big brokerage firm. But I wasn’t able to make smart decisions on allocation. For four or five years, it was there in a very safe, conservative portfolio. Keeping the principle was the most important thing to me, but I realized my options were limited to certain products.
Finally, in 2020 I decided to work with an independent financial advisor. A lot of my friends kept telling me that it was worth the fee. I got a recommendation from a good friend, who worked with an advisor at an independent firm. He’d recommended the same person to some other friends, as well. I ended up reaching out to the advisor in 2021.
I also met with another advisor, so I could compare. He was someone at a big firm who I found through my employer. Employees from time to time can attend workshops with advisors, and one of them had reached out to me. But I found, again, I was restricted to certain products.
After a series of interviews with the advisor recommended by my friend, he suggested that he create a financial plan for us. It was a robust process, with almost 40 hours of work. I could see the level of detail involved. That’s the point where I thought, this is someone who is actually working to take care of us. Also, I noticed the number of clients he worked with was much smaller than the institutional advisor’s client base. I switched my accounts over to him.
There are funds he has direct control over through a platform he uses, and there are funds, like my 401(k), he manages but doesn’t control. His most important value add is his allocation recommendations. There are many options, and he recommends the right ones for me. We review them on a quarterly basis.
At our first quarterly meeting, we had a session for a good two hours when he walked us through his reports. Now, at the end of every quarter, we get a report, and if I have questions I email or text him. I get a response in a couple of hours. I could call, but I’ve never needed to do that. And we have a comprehensive, annual review of the financial plan, the current situation of the portfolio and where we need to make changes.
He sends us so much personalized information. I definitely see a difference between working with an independent advisor vs. a more-institutional one. If I were advising my children, I would tell them to start planning earlier than I did.