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Select the Right Financial Adviser

Select the Right Financial Adviser

When it comes to investing, doctors are notoriously active traders. Who among you doesn't know a day-trading radiologist or an orthopedic surgeon who speculates in farmland?

John Kidwell, a Dallas dentist, was no different.

By his own account, he fumbled around with various brokers and financial advisers over the years. There were limited partnerships. There were oil and gas deals. When the tech bubble burst at the end of the '90s, he lost half of his savings.

"It seemed like everybody but me made money," said Kidwell, 65, referring to the advisers he paid along the way. After the 2008 financial crisis, he quit working with investment managers altogether, but didn't love the idea of a completely do-it-yourself role.

If the new realities of physician compensation and the old ways of dealing with investment advisers and brokers have left you nervous about having enough for a comfortable future, it might be time to look for a new path.

First, some good news: Just as online trading and discount brokerages cut transaction fees more than a decade ago, costs for broader portfolio and financial planning advice are dropping, even as regulators beef up the standard of care many advisers must take with customers. And there are more options than ever for choosing the way you want to interact with an adviser, whether that's over filet mignon at the hottest restaurant in town or in your bunny slippers at 4 a.m.

The challenge is finding the right type of advice while staying aware of whatever caveats come with your choice.


Today, Kidwell's financial advice team includes an accountant who specializes in private practice issues, an investment adviser who recommends exchange-traded funds and index mutual funds with rock-bottom expenses in his IRA, and a so-called robo-adviser, Betterment, for managing his taxable savings account.

Digital investment managers — from independents like Wealthfront and Betterment to industry mainstays Charles Schwab and Vanguard — hold a portfolio of mutual funds or exchange-traded funds, rebalance it automatically without involving you, and typically charge much less than the standard industry practice of 1 percent of assets under management, plus investment costs for a face-to-face adviser. Wealthfront charges 0.25 percent of assets per year, and Betterment comes in at 0.15 percent for accounts above $100,000.

Schwab has a digital platform that charges no advisory fees at all, though the company makes money on customers' cash and underlying investments. Vanguard and other services, including Personal Capital, mix in live advisers, typically via phone.

Mainly targeted to younger investors with modest assets, the digital investment world is beginning to branch into higher net worth and older customers.

Betterment, for example, which says a significant number of its customer base is 50-plus years old, offers a draw-down strategy for retirement income as part of its service.

Kidwell happened to be the childhood dentist of Jon Stein, Betterment's founder, and chatted up the startup entrepreneur about the service before signing on.

"I've had [live advisers] who held my hand before, and they panicked, too in market downturns," Kidwell said. "What appealed to me was being able to pick the risk I wanted to take and then not think about it very often."

Robos don't pump and dump stocks, trade rapidly to run up commissions or, go on vacation just when you wanted to talk about your plan.


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