Wife's Money - 50K - Her Advisor vs My DIY - Help

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NotWhoYouThink
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Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by NotWhoYouThink » Wed Apr 19, 2017 8:06 am

From your previous posts,
Folks, Thanks again to everyone on this wonderful forum.

Today, I've opned my first Vanguard account - VPAS - Personal Avisory account - they said they offer comprehensive financial plan on 30 bps on 50K. I' recently also open Schwab SIA (Intelligent Asvise) account with finanical plan but Schwab invests in too many ETFs with 28 bps and too much in cash. Al-tough Schwab has great service, this cash drag and deep down "non fiduciary" is not sitting well, so trying my luck with Vanguard. Sales guy at VPAS said even if Vanguard VPAS folks are not CFPs like Schwab IA, they have Vanguard 'quality' - like this BH philosophy of low cost and fiduciary. I will keep my Schwab IA/IP and see if Vanguard is of any value.

Anyone has any experience with VPAS? How 'comprehensive' is VPAS plan?

With me luck on this journey!

and
Hi I've become a big fan of Jack Bogle. I am also a fan of index funds. Any help for a newbie such as myself when comparing Vanguard to Peter Mallouk's Creative Planning? Since the threshold at Creative Planning is now low enough for the average investor such as myself to participate- does CP offer any substantial advantage over one of Vanguard's index funds?

and
Total Assests : 700K
Inflows: 11K/Month Take Home,
Outflows: Yearly Expenses: 100K (8K/Month)

Emergency funds: 3 Months, 25K (8K/m *3) @ BoA Checking 0.0%
Debt: 300K primary home mortgage, 2.5 APY 10 Year Fixed

Tax Filing Status: Married Filing Jointly, 2 Kids (6/6)
Tax Rate: 28% Federal, 10% State
Effective Rate: 20%
State of Residence: CA
Taxes Paid 2016 = 34K

Him: 41 Job-1 130K, Job-2 30K (Temp)
Her: 40 Job-1 80K

Him/Her Full 401K Contribution 18K+18K
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 25% of stocks

Current retirement assets

Taxable:

1.-- 20% 100K Goal: Short Term (Emergency Fund II 50K, RoomAdd 50K @ 2020) at BOA/ME

Static AA 30:70 vs Ally Savings 1%, Risk Loss Max - 15%: 7.5K on 50K

20% US iShares Core S&P Total U.S. Stock Market ETF (ITOT) 0.08
10% Global iShares Core MSCI Total International Stock ETF (IXUS) 0.08
20% US iShares Core Total USD Bond Market ETF (IUSB) .08
10% Global iShares Core International Aggregate Bond ETF (IAGG) .08
20% US iShares iBonds Dec 2022 Term Muni Bond ETF (IBMK) | VTEB |MUB .08
20% CA MUNI iShares CA Muni CMF|CXA .25

2. -- 50K Goal: Long Term (Retireby60) at Schwab AA: 80:20

LumpSum (50K) + Monthly (Her 3K/Month) AA 80:20

One Fund Schwab Target 2035 Index Fund Institutional Shares SWYFX 0.08

3. -- His 401k at Fido - Company Match 7.5K/year

50% 300K - Fidelity Target 2040 Index Fund Institutional Shares ER 0.18

it feels like you are thrashing a bit - heading to Schwab, to Vanguard PAS, maybe to Creative Planning, to an insurance salesman, it seems......

Maybe it's best to go back to your original questions in the "Asking Portfolio Questions" thread, and think about how to allocate your entire investment portfolio. Letting different advisors turn your head about how to allocate $50K here or $50K there isn't going to get you anywhere but lost.

good luck

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ruralavalon
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Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by ruralavalon » Wed Apr 19, 2017 8:44 am

confusedinvestor wrote:Thanks to everyone for good advises ! I've forwarded this forum thread (advises for everyone) to my wife so she can review this .

After everyone's feedback and additional reading, we are not comfortable buy IUL or act open on any advises he offers.

This advisor has a CFP and we haven't singed anything yet, except, paid 2 hour, $250/hr fees for a high level review of our finances which the advisor will present his recommendations, options for sign up with his services in our next meeting.
. . . . .
Wife still wants to attend the 2nd meeting with Advisor to see what he has to say but we will not act on it.

It's great to see that you and your wife are now on the same page, and both see that IUL is a very bad idea.


confusedinvestor wrote:Wife doesnt trust me nor do I trust myself (b/c of lack of knowledge, afraid of DIY) on our finances . So I need to continue searching for advisor.

I suggest that you read one or two books on general investing. Wiki article, "Books: recommendations and reviews".

Here is some advice on finding an advisor: Ch. 10, "On Your Own or Hire an Advisor".

Two links for finding an advisor:
http://www.napfa.org/consumer/index.asp
http://www.garrettplanningnetwork.com/ .


confusedinvestor wrote:This 50K is just for mid-term-$ for vaccation/etc for Years to Withdrawal 5-10 yrs with Years Withdrawl to Continue for 5-10 yrs. We came up with AA 60:40 per this Guide, Table 1

https://www3.troweprice.com/usis/conten ... dology.pdf

In my opinion, 60/40 or 50/50 is reasonable for that time frame.

You could consider simply using Vanguard Balanced Index Fund Admiral Shares (VBIAX) ER 0.08%, or Vanguard Tax-Managed Balanced Index Fund (VTMFX) ER 0.11% if you are in a high tax bracket.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

sls239
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Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by sls239 » Wed Apr 19, 2017 5:20 pm

I'm still not clear on what this money is to be allocated for.

I'm pretty sure it is not actually for a $50K vacation 5-10 years from now.

Most families use some version of sinking funds for vacations - that is they allocate a monthly amount out of their current income and plan vacations approximately yearly to match that amount. That makes it more of a budgeting item than an investing item.

Also, is your wife aware of and confident in the adequacy of the term life insurance policies you guys have already?

There is a family finances board on BabyCenter that is chock full of moms that help their families make both budgeting and investing decisions. I think that might be a better use of her time than going to the "advisor."

confusedinvestor
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Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by confusedinvestor » Wed Apr 19, 2017 6:55 pm

Advisor told us we have less Term Life Insurnace we should.

I've 1.2 M and wife has 750K Term - 20 year, we are 6 yrs into term. I guess that was his reasoning into IUL to supplement our term-life - not sure. we will find out on our next (and last meeting)

Question is How do BH decides how much insurance we need?

I read https://www.bogleheads.org/wiki/Life_insurance but still unsure to come up with the correct calculation.


sls239 wrote:I'm still not clear on what this money is to be allocated for.


Also, is your wife aware of and confident in the adequacy of the term life insurance policies you guys have already?

"

FoolStreet
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Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by FoolStreet » Wed Apr 19, 2017 9:02 pm

confusedinvestor wrote:Advisor told us we have less Term Life Insurnace we should.

I've 1.2 M and wife has 750K Term - 20 year, we are 6 yrs into term. I guess that was his reasoning into IUL to supplement our term-life - not sure. we will find out on our next (and last meeting)

Question is How do BH decides how much insurance we need?

I read https://www.bogleheads.org/wiki/Life_insurance but still unsure to come up with the correct calculation.


sls239 wrote:I'm still not clear on what this money is to be allocated for.


Also, is your wife aware of and confident in the adequacy of the term life insurance policies you guys have already?

"


Your "number". Pay off the house, fully fund 529s and guarantee enough for a nest egg from which one of you would take a 4% annual disbursement to cover expenses.

confusedinvestor
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Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by confusedinvestor » Wed Apr 19, 2017 11:58 pm

All,
Thank you again for all the feedback and advises. Wife still wants to go with a financial advisor, given we dont have the experience and expertise and I'm not confident myself as DIY. As we already learnt in hard way with this local advisor trying to sell us IUL, we are thinking of considering one of 2 advisor.

1st Choice: Amy H, CFA, CFP http://www.radixfinancial.com/our-team

Pros:
She has CFA (not just CFP), will not do any comprehensive plans (as she is busy doing her Phd) but just hourly $150/hr but need $500/month investing with her at TD, no account minimum. Her website mentions Jack Bogle and ADV-2 mentions MPT. She was also a top advisor under 40, that how we found her.

https://www.onefpa.org/business-success ... er-40.aspx
http://www.investmentnews.com/section/4 ... Amy-Hubble

Cons:
- No planning
- Will not advise on self-taxable-investments (will advise on 401Ks, and portfolio at TD in her management, 1.1% fees < 180K, no account mim)

2nd Choice: James S, CFA, CFP

http://www.xyplanningnetwork.com/adviso ... y-cfa-cfp/

http://petersenwest.com/_money/foundation-plan/

Pros:
CFA (not just CFP), Belives is MPT, Low Cost Funds, Will do comprehensive planning for $500 (which my wife wants), and then $100/month for account upto $150K in TD (not additional AUM fees and access to DFA funds), we dont have to invest anything if we choose not to but $100/month fixed fee - I feel it is a real deal
Cons:
5 yrs experience but has CFA
1st year expense = $500 (one-time) + $100/month = $1700 for a comprehensive plan

Given our situation, which Advisor would you choose ?

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BL
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Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by BL » Thu Apr 20, 2017 12:33 am

How about Vanguard PAS? (telephone or possibly video-conferencing)
50,000 invested:
0.3% AUM=$150/yr
with low-ER funds, below 0.2% not deducted but comes out of NAV: $100/yr

Total cost may be less than the cost of most of your funds elsewhere.

https://investor.vanguard.com/financial-advisor/financial-advice
Our advisors are required to act in their clients' best interests at all times. Learn how a Vanguard advisor partners with you

confusedinvestor
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Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by confusedinvestor » Thu Apr 20, 2017 1:05 am

Yes, we have a appointment with Vanguard end of this month. They are backed up.

Most of the reviews we saw on VPS is Vanguard advisor will be very cookie-cutter (which may satisfy us anyway) but will not be a CFP and will not review our insurances etc - not comprehensive planning, will not review our 529s, 401Ks.

We will see how it goes, it is hard to get a good advisor with reasonable fees


BL wrote:How about Vanguard PAS? (telephone or possibly video-conferencing)
50,000 invested:
0.3% AUM=$150/yr
with low-ER funds, below 0.2% not deducted but comes out of NAV: $100/yr

Total cost may be less than the cost of most of your funds elsewhere.

https://investor.vanguard.com/financial-advisor/financial-advice
Our advisors are required to act in their clients' best interests at all times. Learn how a Vanguard advisor partners with you

mortfree
Posts: 549
Joined: Mon Sep 12, 2016 7:06 pm

Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by mortfree » Thu Apr 20, 2017 1:14 am

1200 per year on a 50k investment?? Might as well just make a charitable donation because those fees are going to eat up that balance pretty quickly.

You are over thinking this and making it more complicated than it really is.

This will be an expensive lesson that most likely will not end well.

confusedinvestor
Posts: 277
Joined: Thu Mar 15, 2012 11:04 am

Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by confusedinvestor » Thu Apr 20, 2017 1:21 am

Yah, $1200 for investment upto $15000 in TD institutional and this advisor said weighted ER is like 8 - 11 bps

We get comprehensive plan which my wife wants - i stil think it is a waste of $ but may be we should do it thinking we would waster another $1200

mortfree wrote:1200 per year on a 50k investment?? Might as well just make a charitable donation because those fees are going to eat up that balance pretty quickly.

You are over thinking this and making it more complicated than it really is.

This will be an expensive lesson that most likely will not end well.

sweeden22
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Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by sweeden22 » Thu Apr 20, 2017 3:48 am

What about a Vanguard target date fund? That might take some of her uneasiness to DIY away?

Mr.BB
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Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by Mr.BB » Thu Apr 20, 2017 5:37 am

What ever you and your wife choose to do, try this.
Set up a basic spreadsheet with 3 categories
1) Set up with whatever funds your adviser chooses for you, as well as expense ratios and yearly costs and gains/losses for the year
2) Set up another tab with a basic Vanguard Target Date fund along with expense ratio, and yearly costs and gains/losses for the year
3) Last tab with one of the basic allocations that were recommend here (2-3 fund portfolio)

After 3 years compare the losses/gains and costs
Would be interesting to see your results.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

FoolStreet
Posts: 425
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Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by FoolStreet » Thu Apr 20, 2017 7:27 am

confusedinvestor wrote:Yes, we have a appointment with Vanguard end of this month. They are backed up.

Most of the reviews we saw on VPS is Vanguard advisor will be very cookie-cutter (which may satisfy us anyway) but will not be a CFP and will not review our insurances etc - not comprehensive planning, will not review our 529s, 401Ks.

We will see how it goes, it is hard to get a good advisor with reasonable fees


BL wrote:How about Vanguard PAS? (telephone or possibly video-conferencing)
50,000 invested:
0.3% AUM=$150/yr
with low-ER funds, below 0.2% not deducted but comes out of NAV: $100/yr

Total cost may be less than the cost of most of your funds elsewhere.

https://investor.vanguard.com/financial-advisor/financial-advice
Our advisors are required to act in their clients' best interests at all times. Learn how a Vanguard advisor partners with you



If you post all your details in the recommended format, you will receive a plan from us, including 401k, IRa and taxable etc

It is not rocket science. We look at your overall portfolio across these accounts and recommend a 3-fund portfolio. That's it. It got complicated for you because you didn't start by asking for overall advice from us. You asked for advice on an insurance scheme. Then advice on an advisor. Ask us for advice on the whole shebang.

Some people around the country don't get a tax rebate for 529, so we typically say just invest in an IRA or mac your 401k instead.

And calculating your needed insurance isn't hard.

This is a DIY site so that's the advice you get. Nothing wrong with an advisor.

Do you see the instructions on how to request portfolio advice on this board?

NotWhoYouThink
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Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by NotWhoYouThink » Thu Apr 20, 2017 7:51 am

FoolStreet wrote:
confusedinvestor wrote:Yes, we have a appointment with Vanguard end of this month. They are backed up.

Most of the reviews we saw on VPS is Vanguard advisor will be very cookie-cutter (which may satisfy us anyway) but will not be a CFP and will not review our insurances etc - not comprehensive planning, will not review our 529s, 401Ks.

We will see how it goes, it is hard to get a good advisor with reasonable fees


BL wrote:How about Vanguard PAS? (telephone or possibly video-conferencing)
50,000 invested:
0.3% AUM=$150/yr
with low-ER funds, below 0.2% not deducted but comes out of NAV: $100/yr

Total cost may be less than the cost of most of your funds elsewhere.

https://investor.vanguard.com/financial-advisor/financial-advice
Our advisors are required to act in their clients' best interests at all times. Learn how a Vanguard advisor partners with you



If you post all your details in the recommended format, you will receive a plan from us, including 401k, IRa and taxable etc

It is not rocket science. We look at your overall portfolio across these accounts and recommend a 3-fund portfolio. That's it. It got complicated for you because you didn't start by asking for overall advice from us. You asked for advice on an insurance scheme. Then advice on an advisor. Ask us for advice on the whole shebang.

Some people around the country don't get a tax rebate for 529, so we typically say just invest in an IRA or mac your 401k instead.

And calculating your needed insurance isn't hard.

This is a DIY site so that's the advice you get. Nothing wrong with an advisor.

Do you see the instructions on how to request portfolio advice on this board?


You mean like he did in this post 2 weeks ago?
viewtopic.php?f=1&t=215483&p=3309822

aristotelian
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Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by aristotelian » Thu Apr 20, 2017 8:21 am

confusedinvestor wrote:All,
Thank you again for all the feedback and advises. Wife still wants to go with a financial advisor, given we dont have the experience and expertise and I'm not confident myself as DIY. As we already learnt in hard way with this local advisor trying to sell us IUL, we are thinking of considering one of 2 advisor.

1st Choice: Amy H, CFA, CFP http://www.radixfinancial.com/our-team

Pros:
She has CFA (not just CFP), will not do any comprehensive plans (as she is busy doing her Phd) but just hourly $150/hr but need $500/month investing with her at TD, no account minimum. Her website mentions Jack Bogle and ADV-2 mentions MPT. She was also a top advisor under 40, that how we found her.

https://www.onefpa.org/business-success ... er-40.aspx
http://www.investmentnews.com/section/4 ... Amy-Hubble

Cons:
- No planning
- Will not advise on self-taxable-investments (will advise on 401Ks, and portfolio at TD in her management, 1.1% fees < 180K, no account mim)

2nd Choice: James S, CFA, CFP

http://www.xyplanningnetwork.com/adviso ... y-cfa-cfp/

http://petersenwest.com/_money/foundation-plan/

Pros:
CFA (not just CFP), Belives is MPT, Low Cost Funds, Will do comprehensive planning for $500 (which my wife wants), and then $100/month for account upto $150K in TD (not additional AUM fees and access to DFA funds), we dont have to invest anything if we choose not to but $100/month fixed fee - I feel it is a real deal
Cons:
5 yrs experience but has CFA
1st year expense = $500 (one-time) + $100/month = $1700 for a comprehensive plan

Given our situation, which Advisor would you choose ?


Amy is cuter and I like that she plays kickball, but that 1.1% assets-under-management fee is automatic dealbreaker for me.

I like James better, although it sounds like what you want is his "growth" plan, which is $200/month, or $3,400 for the first year. Also, it appears that he will try to use the plan to lure you into asset management, which your wife will almost certainly want.

If you take a meeting with either, the key question you should ask is, if my investment philosophy is to own the market using low cost index funds, what is it that you provide?

I agree that what you need is in fact a comprehensive plan, not a sub-portfolio for your vacation fund and another for your college savings. But before you do that, you still need to slow things down. Sit down with your wife and come up with some general parameters (what money is "hers", what money is joint, do you need a professional, etc). I do not believe that you are ready to choose a professional, and I do not believe that she is ready to trust you (and she may be right on this). So the two of you are in a quandary that needs to be resolved before you move forward. No professional or poster on this board can help you until you and your wife have a clear understanding of how you are going to be making decisions together.

Then you can decide whether to go to a pro or come back to this board to do a comprehensive (but simple) financial plan.

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oldcomputerguy
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Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by oldcomputerguy » Thu Apr 20, 2017 8:45 am

BL wrote:It sounds like your "advisor" is an insurance salesman, is that correct? Insurance companies want to sell insurance, and are not known as a good place for investments. Hopefully you didn't sign anything, and I recommend you don't without at least a 6-month cooling off period for such a big commitment. Also you should ask for a copy of the contract to take home so you can read every word, calculate every cost, fee, charge, and whatever else they may call it. You probably should have a lawyer vet it as well.

Anyway, the salesman gets a big commission for selling the policy. Guess who ends up paying for it? It also means if you change your mind and want to get your money out, they will charge a large surrender fee for 7-10 years since they have to recoup the money they paid to the advisor you paid to give you good advice such as to buy an expensive insurance policy.

If you need life insurance, buy term insurance (see term4sale.com for estimates). If you want to invest, put your money in a low cost brokerage like Vanguard, Fidelity, etc., and buy only low-ER INDEX funds with no loads and no AUMs. (Do e-statements at V to avoid low account charges.)

Both of you should read this 16-page pdf booklet by a recommended author before/if you go back. Especially read Hurdle #5 carefully on "advisors".
https://www.etf.com/docs/IfYouCan.pdf


You might also check out Paul Merriman's "Get Smart or Get Screwed", a book on what to watch out for when choosing a financial advisor. Mr. Merriman makes it available in PDF format as a free download.
Anybody know why there's a 20-pound frozen turkey up in the light grid?

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ruralavalon
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Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by ruralavalon » Thu Apr 20, 2017 8:50 am

I think what you need is advice on setting up a plan, not management of your portfolio.

I suggest posting your details on this forum for free planning suggestions. Please see this for format: "Asking Portfolio Questions".

I also suggest that you read one or two books on general investing. Wiki article, "Books: recommendations and reviews".
Last edited by ruralavalon on Thu Apr 20, 2017 8:51 am, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

pkcrafter
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Re: Wife's Money - 50K - Her Advisor vs My DIY - Help

Post by pkcrafter » Thu Apr 20, 2017 8:51 am

"Amy is cuter" is going to be hard to beat, but also look at Garrett Financial Network.

Note that finding a local advisor is not necessary as many advisors now do online meetings.

http://www.garrettplanningnetwork.com/about/faqs

Vanguard Advisors

https://investor.vanguard.com/financial ... er?lang=en

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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