By Quentin Fottrell
'We do not take out-of-country or five-star vacations. Instead, we enjoy time with family and friends and hobbies'
&#34;My wife and I met with two financial advisers and ultimately elected to go without either one.&#34; (Photo subjects are models.)
Dear Quentin,
Before I retired, my wife and I met with two financial advisers and ultimately elected to go without either one. One adviser was recommended by a friend, and the other by my employer.
We met with the first adviser in what appeared to be a high-end, tastefully decorated law office. He was knowledgeable, spoke well and sent us home with a thick packet outlining his policies and prices, neatly organized in a nice folder. I read every word of that packet, and two things stopped me in my tracks. About halfway through, it explained that he charged 5% per year of our total assets under advisement and also received commissions from the various funds he invested in. That was a clear &#34;no&#34; for me.
The second adviser was also knowledgeable, spoke extensively about how skilled he was at investing, and he even bragged about his Mercedes-Benz. He, too, gave me a packet to review. When he followed up, I offered him one-third of my lump-sum retirement payment to manage. He told me he needed 100% of my money so he could manage a balanced investment plan and keep my taxes low. I suggested he could manage a larger amount after I had seen his track record. He declined, and we went our separate ways.
I have a modest lifestyle with my wife. We do not take out-of-country or five-star vacations. Instead, we enjoy time with family and friends and hobbies, and two to three road trips each year. We have an emergency fund, Social Security income, my lump-sum retirement fund and some paid-off life insurance. After 25 years of retirement - and despite several investment errors - the lump sum has grown to three times its initial amount. That fund fulfills our needs beyond Social Security and is invested mostly in stocks, along with several conservative funds.
My questions are as follows:
-- Do you think we should have gone with a financial adviser?
-- Would investing 100% of our funds have been wiser and safer?
-- Would you recommend any changes to our approach going forward?
Respectfully submitted,
A Loyal Reader
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot respond to questions individually.
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We don't know what or who would have been behind Door No. 3.
Dear Loyal,
You built upon your original investment - celebrate that.
Neither of those financial advisers sounded suitable: one had exorbitant fees, which gives me pause about this ethical considerations, and the other insisted you invest 100% of your savings, which also strikes me as aggressive and inappropriate, and also makes me wonder what would have happened if you had handed over your life savings to this man.
We don't know what or who would have been behind Door No. 3. Would it have been another Allen Stanford, the now-convicted fraudster who operated a multibillion-dollar Ponzi scheme? This reader spent their life navigating the after-effects of losing their life savings. Yes, it's a dramatic example. Still, you avoided disaster, even if you did not meet or beat average market returns.
Take a bow. Tripling your money equates to an annual return of 4.5% a year. Historically, the S&amp;P 500 has averaged a return of 10% per year nominal, before inflation. So you're looking at closer to 6%-7% a year after inflation. So you did not match the average annual returns of the S&amp;P 500 SPX. That's a crude comparison, not exactly apples to apples, but provides some context.
There is a caveat to your outcome: If, on the other hand, you were withdrawing 4% a year from your theoretical $100,000 retirement fund - increasing the amount inline with inflation over those years - and you still had tripled your money over 25 years, you would have had to average an annual return of more than 8.5%.  That's clearly a better result - and a tall order.
Your approach had its pros and cons. As you say, you avoided those high fees and commissions (and who knows what else with those two advisers). You and your wife sustained a lifestyle your income could support. You likely took less risk than putting the lion's share of your money into an S&amp;P 500 portfolio. And you did not outlive your money.
Safer investment options
Instead, disappointed by their attitude and apparent lack of ethics, you lost faith in handing over your fortunes to a third party. Sure, there were other options for you. You could have gone with a larger financial-services firm where, at least, your savings would have been more secure, and you could have invested in a mutual or exchange-traded fund.
You made reasonable decisions given your experiences. Your retirement bears the fruit of financial success rather than missed opportunity. A fee-only fiduciary adviser might have helped you at that time, but you traded maximum returns for simplicity and peace of mind. Don't look back with regret or what ifs. Remember, the past is another country.
There are other, safer, options that are still open to you, including bonds, CDs and high-yield savings accounts. The Federal Deposit Insurance Corporation covers deposits up to $250,000. Some companies work with financial advisers and a network of banks to maximize deposit insurance coverage as well as interest rates on cash balances.
You (and others) can learn about I-bonds through this site. They are U.S. savings bonds issued by the government. You can buy up to $10,000 worth of I-bonds per individual each calendar year, so the new calendar year reset on Jan. 1, opening up purchases again. A brokerage account would enable you to purchase CDs from multiple banks at the same time.
Read more about Liquid Insured Deposits here. They are insured in aggregate by up to $2.5 million. There are also U.S. Treasuries. (For maturities up to 12 months,  they are known as U.S. Treasury Bills, or T-Bills. For 2 years to 10 years, they are U.S. Treasury Notes, and for 20 or 30 years, they are Treasury Bonds.)
In practical terms, if you had $100,000 25 years ago, you would have $300,000 today if you tripled your investment (or $3 million if you started with $1 million). Based on historical averages, you would have probably had $543,000 after 25 years assuming a 7% annual return on the S&amp;P 500 after 25 years. With a 10% return, you'd have $1 million.
Lower-risk strategy
You also, for better or for worse, managed to limit your sequence-of-returns risk, the danger that poor market returns early in your retirement will adversely impact your portfolio when you need to start making withdrawals to replace your working income. Your light investment in equities mitigated this risk and allowed you to rely more on Social Security and other income.
Your lower risk money-management strategy also helped you to avoid the dot-com crash (2000-2002) and the subprime mortgage crisis and subsequent dive in equities (2008-2009) when stocks fell by over 50% and, yes, the market downturn due to the pandemic in 2020 when markets fell by roughly one-third of their value. Markets did recover to reach new highs.
Others reading your story should know whether their financial adviser is a fiduciary or whether they're receiving commissions before they sign on the dotted line. Some money managers are fiduciaries and must act in their clients' best interest under the Investment Advisers Act of 1940. If they're a member of the Financial Industry Regulatory Authority (Finra), it doesn't hurt.
The National Association of Personal Finance Advisors has rules to help ensure the protection of investors such as yourself. There is, for better or for worse, a difference between outright fraud, misconduct and negligence. Some examples of the latter include unsuitable investments, failure to disclose important information and overconcentration of investments.
Ultimately, you were loyal to your instincts and to your unwillingness to take higher risks with your retirement fund. It got you to where you needed to go. Our financial decisions can dictate the course of our lives, and yours did not take you down any stray paths. You remained true to yourself and had a life of friends, stability, happiness and longevity.
That seems like a pretty good investment to me.
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-Quentin Fottrell
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(END) Dow Jones Newswires
01-09-26 0621ET

<p>A reader shares their experience of rejecting two financial advisers due to high fees and aggressive investment strategies. They managed their retirement savings independently, resulting in a tripling of their funds over 25 years. The reader questions whether they should have hired an adviser and if their investment strategy was wise. The response highlights the reader's success in avoiding high fees and maintaining a sustainable lifestyle, while also noting that their returns were below the historical average of the S&P 500.</p>

'He even bragged about his Mercedes-Benz:' I rejected two egotistical advisers. I managed my life savings and they tripled over 25 years. Did I do OK?