Financial advise

[thyme4change]

For years and years I have been a little uneasy if I have my allocations correct in our investments. I told my husband this and he called a friend who did a financial plan for us which focused on when we would retire and how much we would have. I asked him several times if my allocations were correct and he blew me off. I probably could have gotten more aggressive- but (a) I don’t like working with friends and (b) I don’t want to work with someone who won’t listen to me unless I get violent.

I talked to my Dad and he said a couple of times in his life he has just looked up the suggested distribution and if he felt like it he rebalanced - but what he had was working for him and now he has gobs of money, so it must have been the right move (or investing for the past 50 years has been incredibly productive for anyone who is using a buy and hold strategy with a reputable company using standard index funds.)

Should I find someone who can look over my balances one time? How would I find one? Everyone I ask is either flailing around just as I am or using someone who manages their investments continually.

How are all you handling your investments?

[azucena]

We paid ameriprise about $600 for this type of advice. Premeeting to show them all our info and outline our goals and questions. Meeting where they reviewed and adjusted our investments. Meeting a month later for a few more questions. We were clear and upfront that we weren't interested in moving our investments to them. They tried a little upsell but we politely declined. Very happy with the service as it was what we needed. May do it again in 5 yrs or if something major changes.

[MN-Investor]

The ideal financial advisor is one who charges you a one-time fee to analyze your situation and to make recommendations.

So many advisors, however, don't charge anything. Instead they make their money by recommending investments which provide lucrative fees for themselves while locking your money into investments which are not the best long term investments for you.

So what to do?

My husband and I did extremely well on our own. We realized early that we needed to live within our means, save often, and invest well. For us, we decided that we would invest almost 100% in stocks during most of our accumulation years. It was a mix of index stock funds and stocks of the companies we worked for. It wasn't until a couple years before my sweetie retired that we modified our asset allocation. We were at a 60% stock / 40% cash & bonds allocation when my husband retired in 2016.

Only you can determine what asset allocation works for you. I highly recommend checking out Bogleheads. They're a group who share practical advice on investing on your own. They have a very active forum and a very informative wiki. I suggest you start by reading their Investment Philosophy.

Edited to add - Bogleheads is all about simplicity. Decide on an asset allocation you can live with, invest mostly in index funds, and tweak your investments maybe once a year.

[resolution]

I use the free Portfolio Watch that is built into the Vanguard platform. It highlights areas in my portfolio that are different than the standard recommendations. Vanguard keeps emailing me about their financial planners, but so far I have been more comfortable just managing things on my own. Their fee only planners cost $30 for every $10,000 you have invested.

There are organizations of fee only advisors that you can google to find a fiduciary, I don't know if I would just go with the vanguard advisor or try to find one cheaper.

[MN-Investor]

Apr 17, 2023 15:45:26 GMT -5 resolution said:

Vanguard keeps emailing me about their financial planners, but so far I have been more comfortable just managing things on my own. Their fee only planners cost $30 for every $10,000 you have invested.

I love doing the math on these things.

$30 per $10,000 is .3%. Doesn't seem like a lot.

Now imagine that you're retired with $1M in your account. General rule of thumb advises you that 4% is a safe withdrawal rate. So... $40,000 this year. But what about that .3% investment fee? On $1M, that amounts to $3,000. So, of that $40,000 you can take out, $3,000 is supposed to go to these advisors? That's 7.5% of your safe withdrawal.

And that is why I choose to invest on my own.

[resolution]

Apr 17, 2023 16:17:20 GMT -5 MN-Investor said:

Apr 17, 2023 15:45:26 GMT -5 resolution said:

Vanguard keeps emailing me about their financial planners, but so far I have been more comfortable just managing things on my own. Their fee only planners cost $30 for every $10,000 you have invested.

I love doing the math on these things.

$30 per $10,000 is .3%. Doesn't seem like a lot.

Now imagine that you're retired with $1M in your account. General rule of thumb advises you that 4% is a safe withdrawal rate. So... $40,000 this year. But what about that .3% investment fee? On $1M, that amounts to $3,000. So, of that $40,000 you can take out, $3,000 is supposed to go to these advisors? That's 7.5% of your safe withdrawal.

And that is why I choose to invest on my own.

It is a one time fee, rather than an annual one. But I agree it is too high, which is why I have been ignoring all their emails and just using the free Portfolio Watch. However if I decide to retire this year, I might pay a fee one time to get some advice as I transition to retirement. But maybe with the Garrett financial planning network, if they are cheaper.

[lurkyloo]

I’ve actually been meaning to post on how to choose a financial planner.  I generally just throw money in relatively no brainer investments (index funds, lifecycle funds) but now we have a giant disorganized hodgepodge of them.  I have roth iras and 401ks at both vanguard and fidelity (in my defense this is down from 4 different 401k custodians this fall). About to add another layer of complexity too. And, we have enough assets that I’m really not a fan of paying an annual percentage even a small one.

I have a couple of recommendations for advisors ($$) from the trust attorney, and I was looking at the list of fee only financial planners.  Don’t think there are any super close though.

DH also has a bunch of assets and we’re not coordinating them, because it just hasn’t been high priority.    I will surrender my YM card at the door.

[Rukh O'Rorke]

Apr 17, 2023 13:11:43 GMT -5 thyme4change said:

For years and years I have been a little uneasy if I have my allocations correct in our investments. I told my husband this and he called a friend who did a financial plan for us which focused on when we would retire and how much we would have. I asked him several times if my allocations were correct and he blew me off. I probably could have gotten more aggressive- but (a) I don’t like working with friends and (b) I don’t want to work with someone who won’t listen to me unless I get violent.

I talked to my Dad and he said a couple of times in his life he has just looked up the suggested distribution and if he felt like it he rebalanced - but what he had was working for him and now he has gobs of money, so it must have been the right move (or investing for the past 50 years has been incredibly productive for anyone who is using a buy and hold strategy with a reputable company using standard index funds.)

Should I find someone who can look over my balances one time? How would I find one? Everyone I ask is either flailing around just as I am or using someone who manages their investments continually.

How are all you handling your investments?

Thyme, why don't you give the bogleheads community a try?


www.bogleheads.org/forum/viewtopic.php?t=6212&sid=cca8040d9f15cec5dc2556af34faf925

Posting



When you have researched your retirement plan options and have a list of your current investments, it is time to post. We do not need to know your name or the amount of money you have invested or anything else that will identify you. To help us help you please post in this format:



Emergency funds: Three to six months of expenses (indicate if you have this, but it is generally not part of your asset allocation)



Debt: Indicate if you have any debt (credit card, school loans, car loans, mortgage) and the interest rate you are paying on each loan.



Tax Filing Status: (Single, Married Filing Jointly, Married Filing Separately, Head of Household, Qualifying Widow/Widower with Dependent Children)



Tax Rate: xx% Federal, xx% State



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Desired Asset allocation: xx% stocks / xx% bonds

Desired International allocation: xx% of stocks

They will look into the details very hard for you! I wanted to do this with them, but I couldn't even begin to pull together all that info for them!! LOL, tedious and invasive because I don't invest in index stuff unless I have no choice. Just so I can keep up my boycotting of McD and such  .

But - I wonder if any amount of reassurance is going to put your mind at ease? The standard portfolio of index funds with stocks/bonds with anything from 60/40 to 80/20 is going to be pretty ok to most advisors. MY perception is that advisor like to advise, so whatever you have they are going to tell you to make a change, just so be "advising". So if you have 60/40 - they will say - hey you have higher net worth, you can be more aggressive, but if you are 80/20 they will say - whoa! you are older, you need to be a little more conservative. 

What will or could an advisor say that would make you feel more secure? 

Some bogleheads are super conservative and go as low as 40/60 I think - and I'm sure an adviosr would tell them not too!

Personally - I think I am going to aim for 90/10, with the 10 being all in ibonds or treasuries, no corporate bond funds or even treasury funds. will go through treasury direct. It is definitely tilted towards higher risk/reward, but that's just me.

[tallguy]

Very few people actually need a financial advisor.  Yes, Bogleheads does have some really good and knowledgeable people on it.  They like to help (or teach) and they generally preach simplicity, not to mention that they work cheap!  It should be stated, however, that there really is no such thing as an ideal asset allocation that works for everybody.  I myself am effectively 100/0 and will be for life.  I am simply not psychologically suited to holding bonds, and I cannot foresee anything that could or would change that.  I would never recommend that for anyone else since their numbers and situations will be different.  Their plan must be right for them, but there is a large range of plans that would work out just fine.  Within that range, the best allocation for anyone would be the one that allows them to sleep well at night.  If you are worried about whether you should be 80/20 or 60/40 or whatever, you are worried about the wrong thing.  The specific number doesn't matter that much.  Does your plan work for you?  Everyone should learn at least the basics of investing.  And really, without knowing that how can you tell if an advisor is even doing a good job for you?  The other important thing to know is who you are, and what you want, need, and can handle.  Learning will help you.  Stressing about it will not.

[lurkyloo]

Thanks Rukh for the reminder about bogleheads!

I want to talk to an adviser for advice about how to manage some upcoming transitions, specifically from a not paying unnecessary taxes standpoint.  I am inheriting some significant assets and absolutely flinching at some of the decisions that were made previously.  In particular I am going to need to draw down an inherited partial IRA and this year is possibly the worst possible time to do it (DH is getting a large delayed bonus this year) tax wise.  Probably also looking at some significant capital gains from my grandparents’ generation skipping trusts although it eventually dawned on me that I don’t have to sell and thereby realize those gains until I’m ready.  And, DS nominally is getting a chunk of change from Dad as well and I am wavering on where to put it (he has 4 years prepaid in state tuition plus another chunk in a 529, disinclined to just save it for college).

I don’t think it would be the worst thing to pay a fee only planner for a sit down overview, in the process, but tallguy is probably right that I can mostly figure this out myself.  Life has been nuts and I haven’t had the bandwidth to do much due diligence but I am hopeful I’m starting to get around to a lot of my delayed adulting.

[Regis]

We found a financial advisor who looked at our portfolio and made recommendations for adjustment to our allocation.  She doesn't control any of our money, took most of her recommendations and let her know why we didn't use the others.  We get together once a year to make sure we're still good with the allocations and that we have enough money to retire in the right places to minimize taxes.  We can also email her at any time and ask questions or run scenarios past her.  She charges us $250/quarter.

Before we found her, we had talked to two other advisors who both wanted us to relinquish control over our investments to them.  We just had to keep searching, and communicate exactly what we were looking for.