Financial advisor confusion

I think you are right to be concerned; any commission-based advisor, no matter how good, will be have bias on what they want to you buy. Some years back, we found an advisor who charged an hourly fee, did a bunch of planning homework, met with the advisor, and put a plan in motion which was set up to pretty much last our whole lives. It was an absolutely great experience. Unfortunately, he is no longer available as a planner, as he moved into doing programming work for market analysis instead. But I'm sure there are good people out there!

You raise some good issues for consideration. First, I would not continue with a commission-based advisor. Most will not have your best interest at stake and will put you into funds with high fees and commissions. They will also try to sell you expensive life insurance policies with lots of hidden costs. You only need term life insurance until your kids are older and you feel more established financially. I fired my commission-based financial advisor ten years ago for these reasons. We moved our IRA accounts to Rebalance360 and have been very pleased with their methodology. They charge low fees and allocate the money into different sectors using ETFs, based on your risk tolerance, and then they balance the asset mix several times a year to maintain your desired percentages. It’s a very disciplined approach, similar to Vanguard’s Target Retirement Funds. Vanguard is an excellent option if you don’t meet Rebalance’s minimum account size or want to manage it yourself. Open a 529 account at Vanguard for each kid for college savings; they have special funds for this purpose depending on your child’s age. Contribute as much as you can to your 401k, IRA, or whatever other retirement plans you have access to. For the non-retirement assets, Rebalance can also manage those, or you can consider Vanguard’s LifeStrategy Funds. Low fees are very important for growing your portfolio over time. Paying 1% or more to an advisor will eat into your returns. Vanguard and/or Rebalance offer a low-cost, disciplined approach that should help you avoid wild market swings. 

Fixed-index annuities and life insurance can be great products, depending on the companies that developed them (e.g., Transamerica, Nationwide, etc.), These are different from variable products that gain or lose value depending on the market. I have money in fixed-index annuities and life insurance, and especially with the life insurance, I went with a company that had a cumulative history (including the year 2008) that outperformed the s&p over time. I value a mix of fixed-index insurance products along with variable products that I would watch and trade myself. The beauty of fixed-index products -- which as far as I know are insurance-only products -- is that the instruments follow the market but allow you to lock in your gains, so there's always a steady upward trend and you don't lose what you gain. If you think about it -- if you lose money in a variable product it takes longer to regain your losses than it does to lose. For example, the market takes a 50% dive, so your $10 dropped to $5. Next week the market goes up 50%. What do you earn? Not the $5 you lost, but only $2.50. In this example, the market has to go up 100% to make up for the 50% loss. As you know, though, variable products generally offer the opportunity for higher gains. People ask how companies can afford to offer fixed-index products, and the answer is simply that they do the math. They watch the market and adjust earnings so the consumer never earns huge profits, as they might with a particular stock -- yet the earnings do follow the market and they tend to earn more than fixed products. I used to be in financial services and I know from experience that there are problems with both commission-based and fee-based advisors. It all depends on the advisor. Something I really dislike about most fee-based arrangements is that the advisor / investment house takes your money whether you earn or lose! Money isn't all that complicated -- there are fixed, variable, and fixed-index products available. You just need to know how any particular product has performed over time. I'll never forget one fee-based advisor who, when we signed up and I asked what would happen if we liked the fund but decided to go with a different investment house, said, "Well, I don't know WHAT we'd do..." She was suggesting that her company had exclusive access to the fund! This was before my financial-services days. I looked ignorant but I'm not stupid, and I promptly found the fund on an online trading platform and dropped that advisor. Finally, I recommend that if you're not already familiar, check out the Rule of 72. This is a simple mathematical rule that highlights the power of the interest rate. As an example, if you have earnings or debt of 1%, generally speaking it takes 72 years for the investment or debt to double. Compare that to 6% -- 6% doesn't seem like that much more than 1%, but if you have earnings or debt of 6%, it takes only 12 years for the investment or debt to double! Real financial arrangements are a little more complicated, of course, but this dynamic is enlightening. Good luck!

Both fee and non fee advisors have their advantages and disadvantages to be sure. My wife and I have used a fee based one (who charges 1% of the value of the stocks) and have been pleased with the results. The big advantage and incentive is that the more the account increases in value the more money he makes.  Regarding annuities. Whichever type of adviser you choose and are thinking about this type of financial asset please do a lot of investigating as there are many plus and minus characteristics regarding them and you should try to know all of them before deciding whether of not to buy any of them. Good luck.