Main Ways To Use A Financial Advisor For Experienced Investors

Larry Ellison's Mega Yacht Musashi In Oahu

If you're an experienced investor or a DIY investor, you may want to use a financial advisor. There are plenty of benefits. But, the way you utilize one is going to be different from someone who is unexperienced with the markets. I'll explain the main ways you should use a financial advisor below.

First of all, I'm an experienced investor myself and have a financial advisor I use at Citibank. Here's a look at an experience I had with him that inspired me to write this post.

It all started when I was on a two-week vacation in Hawaii. Everything was going perfect except for one thing. My financial advisor from Citibank failed to call me the day a particular deal was closing. It was a structured note investment. He'd agreed to call me before the purchase deadline before I left for vacation.

This investment offered between a 15% to 20% guaranteed return on the Dow Jones over four years if the Dow closes above the initial strike price plus any upside beyond the guarantee and a 10% downside buffer.

Use A Financial Advisor That You Can Depend On

I wanted to know whether the guaranteed return was 15%, 16%, 17%, 18%, 19%, or 20%. This would help me determine how much to invest. I'd already made up my mind that I would lob anywhere between $20,000 – $30,000 into this note.

But, I didn't receive a call on the day of closing. Instead, I got an e-mail from my financial advisor two days after the close. He got his calendars totally mixed up. Sigh. At least give a believable excuse! You know like, “I went binge drinking the night before and called in sick on Monday.”

Tim's lack of follow up cost me around $1,000 in paper gains in just a couple of weeks due to the Dow's move upwards. As an early retiree, I'm investing all the disposable income I've got. I'm looking for capital appreciation and income to help replace my lack of W2 income. Leaving cash in a money market account yielding 0.1% is a financial crime I refuse to commit.

Lesson learned. I should have put a reminder in my own calendar to chase him for the final deal terms. If you are interested in an upcoming IPO and plan on going away for vacation, put in your IOI (indication of interest) before you leave. Then, stagger your order size depending on the final price.

My financial advisor might still forget to input an order. But, at least there will be an e-mail trail indicating my IOI. And the firm can likely still fill the order in arrears.

3 Main Reasons To Use A Financial Advisor

1) Investment ideas.

There are always interesting investment opportunities somewhere, it just takes effort to look. Utilize another set of eyes specifically looking for investment ideas meeting criteria you've discussed beforehand. This increases your chances of finding hidden gems.

You can ask your financial advisor to send you a weekly recap e-mail. Ask for highlights on what went on in the markets, buy/sell ideas, or big news and analysis. Somebody is always making money on something, somewhere.

2) A sounding board for financial decisions.

Hopefully your financial advisor is financially astute. Don't use a salesman looking to get you into the latest product with high embedded fees. If you have an experienced financial advisor, definitely use him or her to test out your ideas.

For example, I made a three minute pitch to buy Chinese internet stocks. I wanted to see if he had any feedback that I might be missing. He echoed most people's concerns about corporate governance and voodoo accounting.

But, he really had no idea what he was talking about, which is fine. Before you buy anything, it's always good to understand a reason why someone would be selling.

3) Learning seminars.

I have a financial advisor at Fidelity where I have my rollover IRA. She always e-mails me the latest upcoming seminars that are hosted in her office. The latest two are: Lessons From The Downturn and Intermediate Options Strategies.

These sessions are a great way to learn something, get some free food, and meet new folks. Leverage your financial advisor to expand your knowledge.

More Reasons Experienced Investors Should Hire A Financial Advisor

4) Tax and estate planning.

Many of us are financially astute in making and saving money. But, when it comes to taxes and estate planning we need as much help as possible. It's important to avoid getting robbed by the tax man given tax laws are always changing.

It's also recommended to consult estate planning lawyers due to all the law changes. I plan on discussing Rule 72(t) strategies with my advisor later in the month. In addition, I'll ask about potentially opening up a Fidelity Personal Retirement Annuity.

It's technically not an annuity. But, a fund where I can contribute after tax dollars, regardless of my income level. And allow the growth to compound tax free. The FPRA is much like an IRA. Financial advisors generally have colleagues in different branches who can help you out on a multitude of financial issues.

5) Portfolio Rebalancing.

Over time, your investment portfolio can get out of whack due to the growth of your winners. A financial adviser can rebalance your portfolio and save you the hassle. They can do so on a monthly, quarterly, or yearly basis per your instructions. Having a balanced portfolio based on your risk tolerance is important, especially during downturns.

6) To relax and enjoy life.

Most of you with financial means have better things to do with your lives than just watch over your money. You've got countries to see, family to be with, inventions to create, and work to do.

Use A Financial Advisor Who Has Your Back

While in Hawaii I was hiking, playing golf, surfing, scuba diving, and eating like a hungry hippo. In addition, I was horseback riding, and watching sunsets over a different cocktail every single day. The last thing I wanted to do was think about whether Apple would beat estimates or sink further below $400.

Knowing that a financial advisor has my back lets me relax on the more important things in life. Money is only a means to an end.

If something big is happening or a position is blowing up in your portfolio, trust that s/he will let you know. You want to use a financial advisor who will make prudent decisions for you. They should have your back because you're busy with work, family, and life. Perhaps they won't execute trades on your behalf, but they can at least give you a heads up.

Manage Your Financial Advisor For A Better Relationship

It's important to set expectations in the beginning when you use a financial advisor. For my financial advisor at Citibank, my #1 request is for him e-mail me the prospectuses of all new index or single stock structured products.

He does this once a month and lets me know which one he likes best. Given I plan on investing new money every month, it's important to be aware of a steady pipeline of new securities.

For my financial advisor at Fidelity, all I ask her to do is put me on the mailing list for all upcoming local investment seminars. I enjoy learning new things and meeting new people.

I'm particularly interested in shielding as much of my investments as possible from the tax man. So, I've asked her to let me know whenever there are any new tax efficient product offerings.

Utilize Technology Alongside A Financial Advisor

To make sure I know where all my money is going, I simply aggregate all my financial accounts online with Personal Capital. I check in once a week or so to make sure everything is on track. Sometimes I catch ridiculous bank fees I had no idea I was paying. Other times I just like to make sure I have a comfortable net worth mix.

Finally, once a quarter I run my portfolios through the Investment Checkup tab. It helps me if I am under or over allocated based on my risk tolerance. It's nice being in the command center online.

If you want further motivation to save, you can use a financial advisor to keep you accountable. There is something very comforting knowing that someone is watching over your investments, especially when you're away on vacation. I know many older retirees who dial up their financial advisors just to shoot the breeze because they are bored and want someone to talk to.

If you are not there yet, don't worry as it just takes time. Financial institutions really do start favoring their larger customers with diversified product offerings. They also can give you access to lower borrowing rates, and better service for the most part.

You may even get invited to social boondoggles just because they want to keep you entertained. Once you amass a large enough financial nut, make sure your financial advisor is on the ball with what you're looking for. Now if I can only get that $1,000 in paper profits back.

Further Reading

Here are some additional articles for further reading

For more resources check out my:

Financial Samurai has been online since 2009 and is one of the most trusted and largest independently-run personal finances today.

Recommendations To Build Wealth

Manage Your Finances In One Place: The best way to become financially independent and protect yourself is to get a handle on your finances by signing up with Empower. They are a free online platform which aggregates all your financial accounts in one place so you can see where you can optimize.

Before Empower, I had to log into eight different systems to track 25+ difference accounts (brokerage, multiple banks, 401K, etc) to manage my finances. Now, I can just log into Empower to see how my stock accounts are doing and how my net worth is progressing. I can also see how much I’m spending every month.

The best tool is their Portfolio Fee Analyzer which runs your investment portfolio through its software to see what you are paying. I found out I was paying $1,700 a year in portfolio fees I had no idea I was paying! 

They also recently launched the best Retirement Planning Calculator around, using your real data to run thousands of algorithms to see what your probability is for retirement success. 

There's no better free tool online to help you track your net worth, minimize investment expenses, and manage your wealth. Why gamble with your future?

Retirement Planner Personal Capital
Personal Capital's award-winning retirement planning calculator. Are you on track?

For more nuanced personal finance content, join 16,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. Everything is written based off firsthand experience. 

Photo: Larry Ellison's mega yacht named Musashi. You know his financial advisor is keeping him up to date on his billions or else!

About The Author

20 thoughts on “Main Ways To Use A Financial Advisor For Experienced Investors”

  1. Anton Ivanov | Dreams Cash True

    Interesting suggestion, although I don’t see a need for a paid financial adviser for the majority of investors, who should be investing mostly in index funds anyway. I suppose if you had an adviser assigned to you for free, it’s a good idea to take advantage of his knowledge and expertise, so long as he doesn’t sway you into doing something with your money you will later regret.

    1. I agree, I also invest in index funds all over the world and pick ones with really low charges, I don’t see the need to pay my financial adviser 3% initial and then 1% trail every year after he picks funds which have an AMC of 5% or more. Granted financial advisers have cutting edge research tools to find the best funds however it has been proven that index funds are hard to beat over a period of time. Nice article.

  2. Sam Pittsburgh

    This read opened my eyes a bit to using an advisor…

    With T Rowe, they give you preferred status over $250k and also a CFP to prepare a written report optimizing your assets….most new money goes to Vanguard index funds now…

    But my opinion is simple – advisors are a wedge between you and your assets – wanting about 1% of your net worth each year and not giving the investor any better return than noload funds and chosen stocks. in sum, I am 16.9% YTD on my own (since ’85) without needing more than a fund representative.

    I do believe that estate planning trumps financial planning but have not got to that yet…back to work…

    great article..

    1. That’s a great compounded return. It really depends on how good the financial advisor is. If they are on the ball and have an acumen for picking stocks, funds, and asset allocation, then 1% is worth it. If not, then forget it.

  3. My experience with financial experts has been pretty negative over the years. I’ve come to the conclusion that I know my objectives and risk tolerance well enough to go it alone. It may sound arrogant but I’ve had better results with my own strategies than with guided advice. I’ve been investing for almost 30 years so have a pretty large pool of experiences to draw from.

    1. I think youve got to do whatever suits you. With 30 years of experience and an interest in managing your own money then all is good.

  4. Twin Cities Power (a electricity trading company) offers new-issue unsecured subordinated notes paying annual rates from 7% for a $1000 investment up to 16% for a $100,000 investment.

    Why would I not want to invest some money in this?

      1. Enron executives made a lot of money for themselves by fraudulently manipulating Enron financial statements. I seem to remember several of them went to federal prison. In fact, the insider fraud was so egregious that the company went out of business and thousands of honest workers lost their jobs.

  5. Sam
    What is the minimum for a no fee advisor with fidelity. If you are looking to minimize your fund fees isn’t vanguard admiral shares the way to go. You can’t get that from fidelity.

    1. Charles,

      Perhaps you are confusing the two. One is fund fees, and one is an advisory fee for advice. I can buy all Vanguard funds if I want in my Fidelity IRA account. But I’m actually buying all stocks, which have no fees. The Fidelity advisor advises on tax and estate planning among other things.

      I’m not sure what Fidelity’s minimum is. Perhaps $250,000. I’ll ask. This level of financial advisor is assigned for free to anybody with X amount automatically. Which makes me now wonder what a fee only advisor you pay extra for can do. The answer is likely the sophistication of financial advice in building custom portfolios among other things for you.


    1. It may seem that way since Citi is so big, but it’s all about doing business with the local branch. Local branches have their own targets and are run like little franchises within Citibank. It’s why they have Branch Managers, “branch of the month” etc. First Republic is a bank that’s noted for personal service that I use as well.

  6. I’ve been full-on with Fidelity since 1986, rolling over several 401Ks into a Fidelity IRA, direct depositing my paycheck, paying bills and writing checks out of my cash account. For a few years now, my total assets w/ Fidelity have well-exceeded the threshold for Fidelity’s no-cost financial advice. I’ve always self-managed my investments, nothing fancy, a few blended Fidelity and Vanguard mutual funds, CDs, and long-term AA corporate bonds. I just had a $50K CD come due and another one coming due next month. For the first time, I’m feeling quite stuck on where to invest the money, so I finally decided to take advantage of Fidelity’s offer.

    Frankly, the advisor has been a big disappointment. I’ve never been able to reach him on the phone and after I leave a voicemail with my daytime office no., he calls back two days later after 5:30pm so as to (intentionally) miss me. He left one voicemail recommendation – a Fidelity GNMA mutual fund yielding 2%. No thanks. This is my only disappointment with Fidelity, ever, over nearly 30 years.

    1. If in 30 years those are your only complaints, then that’s not bad! That said, I find it annoying if an advisor can’t even acknowledge and e-mail or call back in a timely manner. It’s a service business at the end of the day. Maybe ask for a change?

  7. There definitely is a range of experience and knowledge amongst financial advisors. I met with one woman who knew her stuff but the service offerings weren’t great for my income level so I decided to pass. I found someone else who is less experienced but offers a lot more options, minimal fees, and still a solid foundation of knowledge that I don’t have instead. I still do a lot of my planning and investing independently but as you said it’s nice to have access to a financial advisor for tax and estate planning help and other areas.

  8. Maybe a person question…but what is your net of fees/taxes target return percentage you are looking to hit when blending across all your investments? My target is a conservative 6.5%, that gives me limited downside risk with participation in the upside. I’ve been doing much better, like everybody lately, but not as good as I could have. At this point I’m o.k. just hitting singles instead of needing to sprinkle in a few doubles and the occasional HR.

    1. I use several benchmarks which I’ll write about in a future post. Generally I like to go for 3X the 10-year treasury yield, so that’s 5.5% currently.

      It’s all about hitting singles for as long as possible, with the occasional grand slam!

      1. o.k. we are pretty much on the same page…I agree to keep it is best to keep your pile protected and swing for the fences on a few when it doesn’t impact if your lifestyle if it falls through.

Leave a Comment

Your email address will not be published. Required fields are marked *