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Under: Investing & Retirement
Opening a Roth IRA. Should I enlist a Financial Adviser?
  • rarudwall
    Ladies of Learnvest,

    After a couple years of waffling, I'm finally ready to open a Roth IRA. Now all I need to do (other than pry my tightly clamped fingers from a couple g's) is find the outlet to do so.

    Through LV I've gathered suggestions for websites that can help me find the Roth that's right for me. Additionally, I have an old business contact who is now a Financial Adviser at a large national firm. This contact is eager for me to open an IRA through her, however she has only worked in finance for 2 years.

    What may be the benefits and drawbacks of enlisting this Financial Adviser's help?

    Thanks for any insight!
  • lmrav
    Roth IRAs are pretty cut and dried, so save yourself some cash and just set it up yourself! Financial advisors usually take a pretty healthy cut of your investment in fees, and a lot of banks have high fund maintenance fees too (whether the friend cuts you a deal or not)

    Just keep in mind the following when choosing where you want to set it up:

    1) Check out their fees--you want to keep them as low as possible
    2) Is there a minimum initial investment? (for example, Vanguard requires a minimum of $3000 in your account)
    3) Do you like the investment options available?

    Lowest fees tend to be at T Rowe Price, Vanguard, or TIAA Cref.
  • monkeyfurball
    Personally, I don't use financial advisors. I choose to do my own research online, reading books, reading financial articles. It will save you a boatload of advisor fees over a lifetime if you can do it yourself. I'm a fan of the "John Bogle" camp of financial gurus. I put my retirement money in broad based index funds---mostly at Vanguard since they have the lowest fee structure in the industry. Actually I only use 3 index funds for most of my 401k and IRA money. Check out their Target Retirement funds. Financial advisors will hit you with at least a 1% annual management fee, might put you in "load" funds and there are hidden fees everywhere such as in bid and ask spreads, 12b1 fees, and flat annual fees. Even though they might be your friend, do your best to not use them. As your account balance grows they will take even more of your money in fees. After awhile, its not a paltry sum. Read a couple books, do some homework. It's not hard to invest your money for the long term. Use broad based index funds and you can buy and hold with more confidence.
  • KristenNYC
    @monkeyfurball -

    I think you make a great point, if you can do the leg work yourself it saves alot of money - and gives you more control over your financials. Do you have any good recommendations for books?
  • selinger
    I am also thinking about opening a Roth IRA because my employer does not match contributions and only offers MetLife funds which have high fees. I am very likely going to open a Roth IRA through teh Vanguard STAR fund next week. The Vanguard STAR fund requires a $1,000 minimum but no annual fees and the management fee is 0.2%!

    I am choosing to open a Roth IRA instead of a regular pre-tax IRA through my employer because I am in the 15% tax bracket (I made very little) so I wouldn't save too much on taxes anyway and I will be able to take it out tax-free afterwards. If I do get a job that pays more and matches, I will open an IRA through them but for now I think this is my best option.
  • kindaslightly
    What about TD AmeriTrade or Ally? Has anyone had any experience working with these two for IRAs?
  • buttercup4
    I went with a credit union Roth IRA. I got the *free* advice and continued support of the bank staff but still the benefit of very competitive payout. Plus, because my paycheck goes to the same bank, the auto-withdraw is easy and if I need to modify how much to withdraw to the IRA, it's a simple phone call away.
  • retinasurgeon
    I would recommend Vanguard, they have some of the lowest fees, and it's relatively easy to use. I would recommend a retirement target fund and call it a day.

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