Nervous about not using a personal wealth manager. How do I do this myself?

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maxsamson
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Re: Nervous about not using a personal wealth manager. How do I do this myself?

Post by maxsamson » Thu Aug 02, 2018 1:15 am

teen persuasion wrote:
Wed Aug 01, 2018 9:05 pm
The question is: does the advisor's prioritization match your prioritization?
Our priority is to have the advisable emergency funds first, then max out tax-advantaged accounts second, then save for a down payment, then invest the rest in taxable retirement accounts. While it's clear that I need to look into backdoor roth's more, it seems to me that this prioritization is appropriate.
teen persuasion wrote:
Wed Aug 01, 2018 9:05 pm
Regarding the backdoor Roth IRAs - until you find a way to eliminate the traditional IRAs, backdoor Roth IRAs will be difficult/messy. If you can roll an IRA into an employer's 401k, then you can cleanly execute backdoor Roth IRAs. Further clarification needed: do each of you have a tIRA, or only one of you? If one of you has no tIRA, that person can execute a backdoor Roth IRA at least.
Only I have a tIRA. Not sure about rolling an IRA into my employer's 401k.
teen persuasion wrote:
Wed Aug 01, 2018 9:05 pm
If you cannot roll the tIRA into your 401k plan, does either spouse's 401k allow after tax contributions and either conversions of that after tax amount to Roth 401k or in-service distributions (to a Roth IRA). This would be an alternative way to increase Roth space and retirement contributions.
Not sure, but thanks for an overview of the options! I'll be sure to dig into these details soon.
teen persuasion wrote:
Wed Aug 01, 2018 9:05 pm
What are the details of the proposed investments: indexed or active, expense ratios, any extraneous fees, etc.?
Index funds, not sure about the expense ratios or other fees yet because they have yet to be purchased.
teen persuasion wrote:
Wed Aug 01, 2018 9:05 pm
More expensive funds are not better, for the investor at least, they just cost more (which cuts into your growth). They are better for the salesman, though.
But this is only true if the my financial planner doesn't have fiduciary duty, right? My understanding is that the only income he'd make is the management fee.

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teen persuasion
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Re: Nervous about not using a personal wealth manager. How do I do this myself?

Post by teen persuasion » Thu Aug 02, 2018 6:58 am

maxsamson wrote:
Thu Aug 02, 2018 1:15 am

Our priority is to have the advisable emergency funds first, then max out tax-advantaged accounts second, then save for a down payment, then invest the rest in taxable retirement accounts. While it's clear that I need to look into backdoor roth's more, it seems to me that this prioritization is appropriate.
That sounds appropriate.
maxsamson wrote:
Thu Aug 02, 2018 1:15 am
teen persuasion wrote:
Wed Aug 01, 2018 9:05 pm
What are the details of the proposed investments: indexed or active, expense ratios, any extraneous fees, etc.?
Index funds, not sure about the expense ratios or other fees yet because they have yet to be purchased.
Sorry, I should have been more explicit: what are the fund names and tickers? You can examine the fund particulars before you purchase; indeed, you should learn the details before purchase. For example, my Roth IRA contains Vanguard Total Stock Market, admiral shares, ticker symbol VTSAX, with an expense ratio of .04 and no additional fees.

BuckyBadger
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Re: Nervous about not using a personal wealth manager. How do I do this myself?

Post by BuckyBadger » Thu Aug 02, 2018 7:01 am

I can't conceive of a reason he wouldn't be able to tell you what the fees would be. Fees would and should be a massive consideration when deciding to go with a manager.

IS he claiming to be a fiduciary or not? You're using the word "if." Even if he's claiming to only get paid the management fees, that still gives him an incentive to NOT work for your best interests, because keeping more money handled by him then becomes the goal. An additional goal? Convincing you that investing is so gosh darn complicated that there's so way you could do it without him.

Even if the priorities of the order you will fund your accounts is correct, what about all the other priorities. Ones like: priority of low fees, of understanding your investment plan, of not having a quarter of your profits taken away by someone?

The two grand is gone. Don't throw good money after bad by also promising him a quarter to a third of all the money you'll make off your investments for the next 30 years.

I'll say it again. You can manage your own investments and once you're set up it will take you maybe two hours A YEAR and will cost you nothing.

retiredjg
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Re: Nervous about not using a personal wealth manager. How do I do this myself?

Post by retiredjg » Thu Aug 02, 2018 7:25 am

maxsamson wrote:
Thu Aug 02, 2018 1:15 am
But this is only true if the my financial planner doesn't have fiduciary duty, right? My understanding is that the only income he'd make is the management fee.
While this may be true in your case, since your advisor intends to put you in index funds, it is not an accurate statement. In addition to charging an AUM fee, a fiduciary could still put you in higher cost funds. What they could not do under the recent fiduciary rules was sell you funds that had loads for your IRA. But they could still sell you funds that had loads for your taxable account.

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Re: Nervous about not using a personal wealth manager. How do I do this myself?

Post by NotWhoYouThink » Thu Aug 02, 2018 8:04 am

If I had the discipline to save and the risk tolerance to ride out a market correction, then I would be more nervous about using an investment manager than not using one. These people are trained in and expert at sales and client retention, not finance or investment management.

The term fee-only is used here a lot, but used loosely most of the time. At your income level, paying a one-time fee for a financial review makes sense, and you might want to pay an hourly fee once every couple of years to review it. But there is no income or asset level short of 9 figures at which paying an AUM fee (which also qualifies as fee-only management) makes sense for someone capable of comprehending the logic behind a 3 fund portfolio. I mean if you are rich enough you can squander your money any way you want and it won't affect your life, but if you want to be picky about not wasting your money on services from which you don't benefit, then make a plan and stick to it. It will take a few hours every couple of years to make the plan, and about another hour a year to make sure you are sticking to it.

Cheryl604
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Re: Nervous about not using a personal wealth manager. How do I do this myself?

Post by Cheryl604 » Thu Aug 02, 2018 10:06 am

This worries me: your statement about using index funds but you aren't sure of the fees yet because this financial planner is waiting to see if you use the wealth management services or not.... ack! If you choose no wealth management services, it's likely that he will put you into funds that charge a sales load which can go as high as 5% of all money invested! You need to see a clear fee breakdown before agreeing to invest. But, I f I were you, I would run away and put all my money into Vanguard.

I get that you don't really want to trust a bunch of people on the Internet, but maybe you will trust the SEC. Here is an SEC bulletin that explains how fees eat up returns. Keep in mind, the highest fee that the SEC uses in this document is 1%. If you go with WM with this person, the fee for services is almost 1% and does not include any of the fees from the actual investments themselves, which would certainly push you over the 1% - so your returns would be even worse than what the SEC is describing here.

https://www.sec.gov/investor/alerts/ib_ ... penses.pdf

My highest expense ratio that I have in any of my accounts is .16, and my average weighted expense ratio across all accounts is .06. I know exactly what all my fees are. You should too.

Also while I was googling around looking for the above link, I found this also from the SEC which explains all the different types of fees there could be for mutual funds.

https://www.sec.gov/fast-answers/answersmffeeshtm.html

You should ask your WM advisor about how much you are paying for each one of these.

You've been given a lot of resources here, but it doesn't seem like you are reading them. I really hope you do.

Jack FFR1846
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Re: Nervous about not using a personal wealth manager. How do I do this myself?

Post by Jack FFR1846 » Thu Aug 02, 2018 10:22 am

If the guy is actually working for YOU, then he should be able to tell you for that already paid $2,000 fee something like:

I've got your investments split into 3 classes. US equity, US bond and international stock. Here's the breakdown percentage wise in each of your accounts: (class of investment for each, this should include any tax advantaged accounts where he can't get his grubby mitts on).

Note that so far, there are no specific funds specified. He should tell you why fund types are in each account. Like: "This type of fund is NOT in that account because it's not good from a tax perspective" as an example.

Ideally, you could stop him there and say "thank you, shut off the clock, let me write you the check for your time" and choose your own funds to meet the above criteria.

If he goes on to then recommend funds and why, you'd want to NOT hear "past performance, good managers, my retail relationship etc". You would want to understand why he's not recommending Fidelity's new zero ER funds, for example. You don't want a bazillion funds either. Especially now with everyone offering near zero or actual zero ER index funds, it makes no sense to pay more just to create your own version. Say you want more small cap than total market offers. Ok, buy a bit of small cap on top of total market. But get the low cost benefit of zero ER total market as your baseline. But, of course, that's complicating things. Buy the haystack. You get the needle if you do that.
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tfb
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Re: Nervous about not using a personal wealth manager. How do I do this myself?

Post by tfb » Thu Aug 02, 2018 12:13 pm

maxsamson wrote:
Wed Aug 01, 2018 1:04 am
My new wife and I just spent about $2k on a financial planner to get an investment plan in place. We really liked the advisor we worked with and found the process very helpful. We're unsure of whether to do this. It appears that the general opinion on this forum is that private wealth management is a waste of money because you can easily do it yourself.
Following a plan is like following a doctor's order (assuming the plan is sound, the same as in a doctor's order). When the doctor says take one pill of this med once a day first thing in the morning plus two pills of this other med three times a day after meals, you just do that. Private wealth management is like going to the doctor every day and having the doctor feed you those pills. You can easily see how expensive that would be for no good reason. Following the investment plan is even simpler than taking pills because you only set it up once for the most part. When things change, you go back to the planner to get a new adjusted plan, just like when you book a follow-up appointment or an annual physical with a doctor. After you get the new plan, you follow that new plan.

Now, this is all assuming the plan itself is sound. Those who do private wealth management can offer a plan with built-in biases. So far I haven't seen big red flags. There can be minor quibbles here and there. I would give the benefit of the doubt to the plan. So just follow the plan yourself like following a doctor's order. You still have to be careful about not taking the wrong pills or the wrong dosage but most people don't get nervous and give up over taking the pills themselves.
Harry Sit, taking a break from the forums.

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Re: Nervous about not using a personal wealth manager. How do I do this myself?

Post by Dottie57 » Thu Aug 02, 2018 12:40 pm

Jack FFR1846 wrote:
Thu Aug 02, 2018 10:22 am
If the guy is actually working for YOU, then he should be able to tell you for that already paid $2,000 fee something like:

I've got your investments split into 3 classes. US equity, US bond and international stock. Here's the breakdown percentage wise in each of your accounts: (class of investment for each, this should include any tax advantaged accounts where he can't get his grubby mitts on).

Note that so far, there are no specific funds specified. He should tell you why fund types are in each account. Like: "This type of fund is NOT in that account because it's not good from a tax perspective" as an example.

Ideally, you could stop him there and say "thank you, shut off the clock, let me write you the check for your time" and choose your own funds to meet the above criteria.

If he goes on to then recommend funds and why, you'd want to NOT hear "past performance, good managers, my retail relationship etc". You would want to understand why he's not recommending Fidelity's new zero ER funds, for example. You don't want a bazillion funds either. Especially now with everyone offering near zero or actual zero ER index funds, it makes no sense to pay more just to create your own version. Say you want more small cap than total market offers. Ok, buy a bit of small cap on top of total market. But get the low cost benefit of zero ER total market as your baseline. But, of course, that's complicating things. Buy the haystack. You get the needle if you do that.
This is good advice.

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Re: Nervous about not using a personal wealth manager. How do I do this myself?

Post by Katietsu » Thu Aug 02, 2018 12:42 pm

I would at least read

The White Coat Investor: A Doctor's Guide To Personal Finance And Investing By James Dahle.

It is a short read. And I am pretty sure it will save you more than the $20 purchase price by many times. It might not give you everything you need to do it on your own. But it should stop you from making big mistakes. It will help you reevaluate your priorities. I still maintain paying loans should be more important than taxable retirement investing for almost everyone. And it will help you evaluate a financial advisor, if do not wish to manage on your own.
Last edited by Katietsu on Thu Aug 02, 2018 1:07 pm, edited 2 times in total.

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Re: Nervous about not using a personal wealth manager. How do I do this myself?

Post by tfb » Thu Aug 02, 2018 12:54 pm

Katietsu wrote:
Thu Aug 02, 2018 12:42 pm
I wonder if tfb noticed the VUL policy when he said there were no red flags.
Where? I didn't see anything posted by the OP. That said, if the plan isn't good, the OP should get a good plan and then follow it him/herself.
Harry Sit, taking a break from the forums.

Katietsu
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Re: Nervous about not using a personal wealth manager. How do I do this myself?

Post by Katietsu » Thu Aug 02, 2018 1:04 pm

tfb wrote:
Thu Aug 02, 2018 12:54 pm
Katietsu wrote:
Thu Aug 02, 2018 12:42 pm
I wonder if tfb noticed the VUL policy when he said there were no red flags.
Where? I didn't see anything posted by the OP. That said, if the plan isn't good, the OP should get a good plan and then follow it him/herself.
Sorry, I read two very similar threads back to back. My error.

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Meg77
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Re: Nervous about not using a personal wealth manager. How do I do this myself?

Post by Meg77 » Thu Aug 02, 2018 2:03 pm

BuckyBadger wrote:
Wed Aug 01, 2018 4:04 pm
maxsamson wrote:
Wed Aug 01, 2018 3:57 pm
Meg77 wrote:
Wed Aug 01, 2018 3:18 pm
It's just so much cheaper, more efficient and easier - with much quicker trading/response times - to let an algorithm or other process do the investment management once you/they determine your AA and fund choices.
So are you recommending something like Betterment?
Just do it yourself, seriously. It'll take a couple evenings on this board to figure out what you want to do, a few hours to get it all sorted out, and like 15 minutes a month for the rest of your life.

It's really not hard, and you don't have to do everything that everyone talks about.

For example, i don't do tax loss harvesting. Maybe it would do a little bit better for me, but I'd rather be comfortable and understand what I'm doing. The difference would be negligible with a portfolio like mine.

You don't need robo advisors, human advisors, it anything else.

I promise you that you can handle it!!

If you post a portfolio review with all your available funds people will show you EXACTLY what to do! We love doing that over here!
Betterment is a fine option, but every index fund uses algorithms, as do target date funds. Investing directly into one of those vehicles is also a good, cheaper and more efficient option. With betterment, rebalancing and tax loss harvesting are automatic. With target date funds or balanced funds, rebalancing is automatic. With index funds, you have to do the rebalancing and tax loss harvesting yourself (if you choose to do them at all), which is why they are the cheapest of all routes.

My point is that even professional advisors use these tools now, or some version of them. People are not sitting around inputting trades all day any more or manually tallying up rebalancing spreadsheets which used to be a huge time intensive project (I did it for hours a day as an intern back in the early 2000s for a major wealth firm). And since that technology and knowledge is now available to the masses, it makes a lot less sense to pay a middleman for the investment management (i.e. trading, asset allocation selection, fund selection, stock picks). Paying for ADVICE and PLANNING make lots of sense in many cases though. That's why more and more financial/wealth planners/advisors/managers are finding ways to price for that separately.
"An investment in knowledge pays the best interest." - Benjamin Franklin

retiredjg
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Re: Nervous about not using a personal wealth manager. How do I do this myself?

Post by retiredjg » Thu Aug 02, 2018 5:06 pm

I think the discussion about the specific funds has gone off in the wrong direction. I do not believe that an advisor will usually say "if you invest your money with me, your portfolio will look like this". If that were the case, the advisor has just given away his secret sauce and some investors will take it and go build their own burger.

The fact that this advisor has not specified certain funds is not a red flag to me at all. I do think it is fair to ask if all the funds will be index funds/ETFs or just some of them. I do think it is fair to ask for the range of possible expense ratios that could be involved.

Even if the answers to these questions look promising, I would not suggest paying any advisor 0.9% a year to manage a portfolio that could be managed at Vanguard for 0.3%. And we can probably tell you what a portfolio at Vanguard would look like.

One of the things I like best about using Vanguard is you can terminate their management at any point with no charge and no change to your portfolio. You simply just take over when you want. The portfolio is simple enough for almost anyone to understand and managing it on your own is not terrible difficult.

One of the things I like least about some of these other places is they will place you in 15 to 50 funds that you do not understand. If you decide to leave, you may or may not be able to take those funds with you. Even if you can take them with you, you may not be able to buy any more. DFA funds are a good example of this. So you might be forced to completely reconstruct your portfolio and this can cost money.

maxsamson
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Re: Nervous about not using a personal wealth manager. How do I do this myself?

Post by maxsamson » Thu Aug 02, 2018 9:57 pm

retiredjg wrote:
Thu Aug 02, 2018 5:06 pm
One of the things I like least about some of these other places is they will place you in 15 to 50 funds that you do not understand. If you decide to leave, you may or may not be able to take those funds with you. Even if you can take them with you, you may not be able to buy any more. DFA funds are a good example of this. So you might be forced to completely reconstruct your portfolio and this can cost money.
I'm pretty certain that we will not end up paying for private wealth management given all the feedback I've received in this thread and my wife's instincts even prior to me posting here. Having said that, we were still going to let the financial planner make the the initial selection of funds. What should I ask him to ensure that we can do whatever we want with the portfolio afterwards without incurring any additional expenses?

maxsamson
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Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by maxsamson » Thu Aug 02, 2018 10:37 pm

[Thread merged into here, see below. --admin LadyGeek]

My new wife and I just spent about $2k on a financial planner to get an investment plan in place. We really liked the advisor we worked with and found the process very helpful. After getting tons of helpful feedback in a previous post of mine on weather to use his firm for wealth management, I am pretty certain we will not.

Given that, the last step in the planning process with him is that he would make the initial investments of our money. We have all our money sitting in a few different Schwab Brokerage accounts (one for emergency funds, one for long purchase savings, one for retirement) that has yet to actually be used to invest in any funds. Many responses to my previous post made clear to me that I should get information on the funds he plans to purchase before telling him to go ahead.

What information should I ask for? I'm currently planning on requesting the following:

1. Fund expense ratios
2. Whether any have "loads" (is there any justification for buying ones with loads?)

What else? I'm happy to let him make the initial purchase of funds, but I want to make sure that they are good ones to invest in, don't incur any unnecessary costs up front, and won't cost me anything to switch to different ones if I so choose.

Nummerkins
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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by Nummerkins » Thu Aug 02, 2018 10:44 pm

Just purchase funds yourself. There is no upside and tons of downside to having an advisor do it. Why go through the aggravation?

Post the plan he came up with and let the Bogleheads pick through it.
Last edited by Nummerkins on Thu Aug 02, 2018 10:47 pm, edited 1 time in total.

Jablean
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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by Jablean » Thu Aug 02, 2018 10:46 pm

You don't want to use him but you are going to use him? I don't understand. Either do or don't but don't lead him on just like you don't want him leading you on. Are you at least paying him for the advice he's so far given you?

keepingitsimple
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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by keepingitsimple » Thu Aug 02, 2018 11:19 pm

maxsamson wrote:
Thu Aug 02, 2018 10:37 pm
My new wife and I just spent about $2k on a financial planner to get an investment plan in place. We really liked the advisor we worked with and found the process very helpful. After getting tons of helpful feedback in a previous post of mine on weather to use his firm for wealth management, I am pretty certain we will not.

Given that, the last step in the planning process with him is that he would make the initial investments of our money. We have all our money sitting in a few different Schwab Brokerage accounts (one for emergency funds, one for long purchase savings, one for retirement) that has yet to actually be used to invest in any funds. Many responses to my previous post made clear to me that I should get information on the funds he plans to purchase before telling him to go ahead.

What information should I ask for? I'm currently planning on requesting the following:

1. Fund expense ratios
2. Whether any have "loads" (is there any justification for buying ones with loads?)

What else? I'm happy to let him make the initial purchase of funds, but I want to make sure that they are good ones to invest in, don't incur any unnecessary costs up front, and won't cost me anything to switch to different ones if I so choose.
I would simply ask your advisor which specific funds are being recommended and to educate you on why those funds in particular were selected. Request the name of each fund, as well as the ticker symbol (to eliminate any confusion). Then come back to this forum and post the responses and ask for feedback. Further, I would not have the advisor place the order on your behalf, as this is something with which you should become familiar. If you have questions on how to place an order, simply contact Schwab customer service by telephone or via online chat through their website (available 24 hours a day). This is assuming you plan to make the purchases through Schwab, which I would recommend.

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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by pkcrafter » Thu Aug 02, 2018 11:49 pm

maxsamson wrote:
Thu Aug 02, 2018 10:37 pm
My new wife and I just spent about $2k on a financial planner to get an investment plan in place. We really liked the advisor we worked with and found the process very helpful. After getting tons of helpful feedback in a previous post of mine on weather to use his firm for wealth management, I am pretty certain we will not.

Given that, the last step in the planning process with him is that he would make the initial investments of our money.
That doesn't sound like the last step, it sounds like the first step in putting your assets under management. Once he does that you will be charged at least 3 months of whatever his management fee is. I think you will have to decide whether you are going to invest on your own or use an advisor before you make that move. Another possibility is Schwab's Robo service, Schwab Intelligent Portfolio.

I'm not sure if you saw my post in the earlier thread, but here it is:

Yes, you can manage your assets.

What is your overall asset allocation?

Buy, hold, stay on track.
Think of all retirement accounts as one portfolio. Don't include emergency funds or house savings.
Rebalance with new money and/or rebalance if necessary once or twice a year.
Only tax-efficient funds in taxable retirement account.

I think you will find that after 3-4 months of managing your portfolio, you will be comfortable with it.

The 3-fund--

viewtopic.php?f=10&t=88005

Schwab has equivalent low cost index funds.

Taxable Retirement Savings: $62k (34% US stock, 33% International stock, 24% fixed income, 8% alternatives, 1% cash & equivalents)
Contribute $2k/month

401k: 80k (same allocations as taxable retirement savings)
Max out annually

Roth IRA: $20k (same allocations as taxable retirement savings)
No further contributions
Please list these holdings by name and ticker.

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.

mhalley
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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by mhalley » Fri Aug 03, 2018 12:23 am

A few things to find out
1. Is he a fiduciary
2. What fee structure does he use, what will be the cost of funds, asset under management fees, etc.

retiredjg
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Re: Nervous about not using a personal wealth manager. How do I do this myself?

Post by retiredjg » Fri Aug 03, 2018 5:53 am

maxsamson wrote:
Thu Aug 02, 2018 9:57 pm
Having said that, we were still going to let the financial planner make the the initial selection of funds.
This is not a good idea.

BuckyBadger
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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by BuckyBadger » Fri Aug 03, 2018 7:19 am

As discussed in your other thread, can you pinpoint specifically why you don't think you can do this on your own? There's absolutely no reason that you can't, but starting out like this will make it much more complicated than it needs to be.

As was also mentioned, please consider posting a portfolio review and let us help you. We're actually very good at it! And we're free!

retiredjg
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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by retiredjg » Fri Aug 03, 2018 7:36 am

maxsamson wrote:
Thu Aug 02, 2018 10:37 pm
Given that, the last step in the planning process with him is that he would make the initial investments of our money.
Do not do this. It is not a good idea.

If you don't want to use his wealth management service, you should buy your own funds. Since you don't know what to buy, people here could help you figure that out.

I'd suggest that you follow the "3 fund portfolio" idea.

Your first post was about whether to use the planner or not. If you decide not to use the planner and want us to help you do it yourself, you need to present what you have in the format we use to help people. People here can help you set up a simple portfolio that you can manage.

The way to get that help is to follow the format in the link at the bottom of this message. The closer you follow the format, the easier it is to help you. If you need assistance along the way, just ask.

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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by livesoft » Fri Aug 03, 2018 7:38 am

I'm reading these two threads and it sure seems like folks are talking to a brick wall.
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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by 3-20Characters » Fri Aug 03, 2018 8:05 am

I consulted a financial planner many years ago under the best of circumstances:

— Someone I know personally to be qualified and of very high moral caliber.

— Charged me a very reasonable fee to look over current, short, and long term picture and make recommendations.

— Outlined a very clear plan to put in place.

— Was available for follow ups for a fee but did not put me into a subscription fee situation.

With all that, I still wouldn’t recommend a financial planner because he didn’t add value other than holding my hand and he needlessly complicating my fund holdings in the interest of over-diversification of funds (all with good intentions and beliefs on his part). I ended up creating a complicated spreadsheet to keep track of everything and I was paying fees I didn’t want to pay because some funds were active.

It’s maybe hard to believe for some, but everything you need is right here in these forums, in great detail, and there people here are a available to answer questions and help. You also learn a lot and become better at handling your own financial affairs, which can never be a bad thing.

For the least interested or willing to do any work, use a lifestyle fund or target date fund of your choice. If you’re willing to do some basic things on your own, use a 3 fund. If you’re all into the nitty gritty, you can find all sorts of slice and dice advice and high end stuff which makes my head spin.

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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by Jack FFR1846 » Fri Aug 03, 2018 8:14 am

Go to the bank. Get out $10k in $100 bills. Light them on fire.

It will be less expensive than your present plan.
Bogle: Smart Beta is stupid

typical.investor
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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by typical.investor » Fri Aug 03, 2018 8:32 am

maxsamson wrote:
Thu Aug 02, 2018 10:37 pm
What else? I'm happy to let him make the initial purchase of funds, but I want to make sure that they are good ones to invest in, don't incur any unnecessary costs up front, and won't cost me anything to switch to different ones if I so choose.
Where will the funds be held? Who will have access to the account?

If it's at Schwab, you might to able to eventually have the advisor removed. Probably similar at other brokers too.

In the meantime, your advisor may have control of the account and be expecting to handle it.

I found it was easier to do everything myself than pick up the phone and make a call even though the advisor's assistant was always there, mostly free, and could handle everything.

I'd use Schwab's Intelligent advisory (Certified Financial Analyst access), Vangaurd's Personal Advisory Service, and may Fidelity GO (though I'm not so familiar with that), if I didn't think this board had good enough advice. Those advisory services are 0.28%-0.35%. Schwab's Schwab's Intelligent Portfolio is a little cheaper but doesn't offer the CFA access.

rixer
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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by rixer » Fri Aug 03, 2018 8:39 am

You could even buy into a balanced fund and probably be better off.

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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by sschullo » Fri Aug 03, 2018 8:47 am

OP: I think you came to the wrong forum. I know you are asking for help, but this is the bogleheads investment forum, the vast majority are doing it ourselves, who would never pay an adviser buy funds for us, or construct a low-cost portfolio, and or manage our portfolio for a rip off cost of .50% assets under management or more. If we want tax advice, we either use turbo tax, or hire a tax expert for a flat fee, or hire an attorney for several hundred bucks (another flat fee) to set up a trust. We invest in either Vanguard, TIAA or Fidelity (only Fidelity's low-cost index funds).
I not sure of how many Bogleheads have not used an adviser, but I have not had an adviser for 25 years because I originally got the most self-conflicted advice known to the investment world, annuities with hideous surrender fees. This so-called adviser did NOT add value, ARE WE SERIOUS! That experience propelled me to DIY!
Public School K-12 Educators: "Ask NOT what your annuity sales person can do for you, ask what you can do to be a Do-It-Yourselfer (DIY)."

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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by tfb » Fri Aug 03, 2018 12:30 pm

maxsamson wrote:
Thu Aug 02, 2018 10:37 pm
My new wife and I just spent about $2k on a financial planner to get an investment plan in place. We really liked the advisor we worked with and found the process very helpful. After getting tons of helpful feedback in a previous post of mine on weather to use his firm for wealth management, I am pretty certain we will not.

Given that, the last step in the planning process with him is that he would make the initial investments of our money.
I doubt the planner will actually make the initial purchases for you if you don't agree to wealth management, but even if he does, you don't want it anyway. You want the planner to tell you exactly which funds should be bought where in what amount, and then you buy them yourself. Having the planner buy them adds no value to you except for the clerical work. Asking questions before the planner buys them is much less efficient than seeing the exact action plan in writing. So forget about asking questions, get the actual action plan.
Harry Sit, taking a break from the forums.

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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by livesoft » Fri Aug 03, 2018 12:37 pm

The OP can ask the planner for this information:

1. What are the ticker symbols of the investments that I am going to buy?

2. What asset class does each of the ticker symbols fulfill?

3. Can you show me how the percentages of each asset class that you have recommended in my plan match up to the ticker symbols that you just told me about please?

4. What other ticker symbols can I use for these same asset classes?

5. Why did you pick the ticker symbols in #1 instead of some of the ticker symbols in #4?

6. What do you think about me asking the folks at bogleheads.org to check your work and advice?
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maxsamson
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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by maxsamson » Fri Aug 03, 2018 1:33 pm

mhalley wrote:
Fri Aug 03, 2018 12:23 am
A few things to find out
1. Is he a fiduciary
2. What fee structure does he use, what will be the cost of funds, asset under management fees, etc.
1. Yes he is
2. He's not going to manage the assets, so no management fees

maxsamson
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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by maxsamson » Fri Aug 03, 2018 1:36 pm

typical.investor wrote:
Fri Aug 03, 2018 8:32 am

Where will the funds be held? Who will have access to the account?

If it's at Schwab, you might to able to eventually have the advisor removed. Probably similar at other brokers too.

In the meantime, your advisor may have control of the account and be expecting to handle it.
At schwab, and the advisor will be removed after making the initial fund investments.

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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by BuckyBadger » Fri Aug 03, 2018 1:39 pm

maxsamson wrote:
Fri Aug 03, 2018 1:36 pm
typical.investor wrote:
Fri Aug 03, 2018 8:32 am

Where will the funds be held? Who will have access to the account?

If it's at Schwab, you might to able to eventually have the advisor removed. Probably similar at other brokers too.

In the meantime, your advisor may have control of the account and be expecting to handle it.
At schwab, and the advisor will be removed after making the initial fund investments.
At the risk if sounding like we're ganging up on you, i have to ask why?

Why do you want him to do the initial investments for you?

maxsamson
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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by maxsamson » Fri Aug 03, 2018 1:43 pm

livesoft wrote:
Fri Aug 03, 2018 7:38 am
I'm reading these two threads and it sure seems like folks are talking to a brick wall.
Why is that? In my previous post I was asking whether to use wealth management. The advice was clearly that I should not and as a result I am not going to.

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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by MotoTrojan » Fri Aug 03, 2018 1:48 pm

maxsamson wrote:
Fri Aug 03, 2018 1:43 pm
livesoft wrote:
Fri Aug 03, 2018 7:38 am
I'm reading these two threads and it sure seems like folks are talking to a brick wall.
Why is that? In my previous post I was asking whether to use wealth management. The advice was clearly that I should not and as a result I am not going to.
Then why not construct your own plan, or at least let us review his? And buy funds yourself...

maxsamson
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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by maxsamson » Fri Aug 03, 2018 1:49 pm

BuckyBadger wrote:
Fri Aug 03, 2018 1:39 pm
Why do you want him to do the initial investments for you?
I need advice from somewhere on what funds to invest in, and I have had a good experience with this financial planner and felt I could trust his advice on this. Whether he then makes the purchase of the funds or I do seems like a minor detail so long as the desirable funds are being purchased. I gather that many financial planners are a bit (or a lot) of a scam and therefore I shouldn't simply trust him to pick the funds but I should get them vetted here.

maxsamson
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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by maxsamson » Fri Aug 03, 2018 1:50 pm

MotoTrojan wrote:
Fri Aug 03, 2018 1:48 pm
maxsamson wrote:
Fri Aug 03, 2018 1:43 pm
livesoft wrote:
Fri Aug 03, 2018 7:38 am
I'm reading these two threads and it sure seems like folks are talking to a brick wall.
Why is that? In my previous post I was asking whether to use wealth management. The advice was clearly that I should not and as a result I am not going to.
Then why not construct your own plan, or at least let us review his? And buy funds yourself...
Thats why I've started this thread -- to know what info I should get from him on the planned funds purchase so that it can be reviewed.

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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by HornedToad » Fri Aug 03, 2018 1:55 pm

maxsamson wrote:
Fri Aug 03, 2018 1:49 pm
BuckyBadger wrote:
Fri Aug 03, 2018 1:39 pm
Why do you want him to do the initial investments for you?
I need advice from somewhere on what funds to invest in, and I have had a good experience with this financial planner and felt I could trust his advice on this. Whether he then makes the purchase of the funds or I do seems like a minor detail so long as the desirable funds are being purchased. I gather that many financial planners are a bit (or a lot) of a scam and therefore I shouldn't simply trust him to pick the funds but I should get them vetted here.
If you want to do it just do it. Basically you are taking a risk of letting someone buy funds for you instead of spending the ~30 minutes to buy them yourself after he said here's the different ticker symbols and how much to buy of each fund.

Are the risks of letting him buy the funds worth saving 30 minutes?

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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by teen persuasion » Fri Aug 03, 2018 2:03 pm

maxsamson wrote:
Thu Aug 02, 2018 10:37 pm
My new wife and I just spent about $2k on a financial planner to get an investment plan in place. We really liked the advisor we worked with and found the process very helpful. After getting tons of helpful feedback in a previous post of mine on weather to use his firm for wealth management, I am pretty certain we will not.
If you don't yet know what investments the advisor will buy, what exactly was in the investment plan he developed for you?

I haven't worked with an advisor before, but I'd expect them to define an asset allocation and recommend specific funds to fit the asset allocation, OR to recommend a list of essentially equivalent funds for me to choose from (presumably based on available funds in each platform: his 401k, her 401k, taxable, etc.). For example, we hold Vanguard Total Stock market in our Roth IRAs, but my DH has no Total Stock market fund available in his 401k; an S&P 500 fund is a close enough equivalent.

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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by mhadden1 » Fri Aug 03, 2018 2:17 pm

My 401k has a Schwab brokerage window hooked up to it, so I use Schwab funds myself.

If your adviser came up with a stocks/bonds asset allocation that you accept, then, do what I did and just buy the right amount of

SCHB - US Broad Market ETF - 0.03 ER
SCHF - International Equity ETF - 0.06 ER
SCHB - US Aggregate Bond ETF - 0.04 ER

Or, buy the mutual fund versions if you prefer.
Oh I can't, can I? That's what they said to Thomas Edison, mighty inventor, Thomas Lindberg, mighty flyer,and Thomas Shefsky, mighty like a rose.

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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by MotoTrojan » Fri Aug 03, 2018 2:17 pm

maxsamson wrote:
Fri Aug 03, 2018 1:50 pm
MotoTrojan wrote:
Fri Aug 03, 2018 1:48 pm
maxsamson wrote:
Fri Aug 03, 2018 1:43 pm
livesoft wrote:
Fri Aug 03, 2018 7:38 am
I'm reading these two threads and it sure seems like folks are talking to a brick wall.
Why is that? In my previous post I was asking whether to use wealth management. The advice was clearly that I should not and as a result I am not going to.
Then why not construct your own plan, or at least let us review his? And buy funds yourself...
Thats why I've started this thread -- to know what info I should get from him on the planned funds purchase so that it can be reviewed.
What fund tickers, amounts, and in what accounts, along with any other assets you have.

To be frank if you aren’t comfortable buying them yourself, how are you going to manage it longterm?

maxsamson
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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by maxsamson » Fri Aug 03, 2018 3:43 pm

HornedToad wrote:
Fri Aug 03, 2018 1:55 pm
If you want to do it just do it. Basically you are taking a risk of letting someone buy funds for you instead of spending the ~30 minutes to buy them yourself after he said here's the different ticker symbols and how much to buy of each fund.

Are the risks of letting him buy the funds worth saving 30 minutes?
MotoTrojan wrote:
Fri Aug 03, 2018 2:17 pm
To be frank if you aren’t comfortable buying them yourself, how are you going to manage it longterm?
Great, I'll be sure to make the purchase myself. That will ensure that a) I know how to do it going forward as I manage my portfolio and b) eliminate the risk of him buying things I don't want.

Thanks!

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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by MotoTrojan » Fri Aug 03, 2018 3:54 pm

maxsamson wrote:
Fri Aug 03, 2018 3:43 pm
HornedToad wrote:
Fri Aug 03, 2018 1:55 pm
If you want to do it just do it. Basically you are taking a risk of letting someone buy funds for you instead of spending the ~30 minutes to buy them yourself after he said here's the different ticker symbols and how much to buy of each fund.

Are the risks of letting him buy the funds worth saving 30 minutes?
MotoTrojan wrote:
Fri Aug 03, 2018 2:17 pm
To be frank if you aren’t comfortable buying them yourself, how are you going to manage it longterm?
Great, I'll be sure to make the purchase myself. That will ensure that a) I know how to do it going forward as I manage my portfolio and b) eliminate the risk of him buying things I don't want.

Thanks!
Still suggest you post what was recommended. I know I’m curious. Hopefully it incorporated all account types you have (or should use).

maxsamson
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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by maxsamson » Fri Aug 03, 2018 5:05 pm

MotoTrojan wrote:
Fri Aug 03, 2018 3:54 pm
maxsamson wrote:
Fri Aug 03, 2018 3:43 pm
HornedToad wrote:
Fri Aug 03, 2018 1:55 pm
If you want to do it just do it. Basically you are taking a risk of letting someone buy funds for you instead of spending the ~30 minutes to buy them yourself after he said here's the different ticker symbols and how much to buy of each fund.

Are the risks of letting him buy the funds worth saving 30 minutes?
MotoTrojan wrote:
Fri Aug 03, 2018 2:17 pm
To be frank if you aren’t comfortable buying them yourself, how are you going to manage it longterm?
Great, I'll be sure to make the purchase myself. That will ensure that a) I know how to do it going forward as I manage my portfolio and b) eliminate the risk of him buying things I don't want.

Thanks!
Still suggest you post what was recommended. I know I’m curious. Hopefully it incorporated all account types you have (or should use).
I definitely will, thanks!

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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by retiredjg » Fri Aug 03, 2018 5:25 pm

I think if you tell your advisor that you have decided not to use his management services at this time that he still owes you a portfolio suggestion as part of your $2k consultation - meaning a portfolio suggestion that you implement, not something he would set up for you.

I think the do-it-yourself suggestion will be a different portfolio from the one he might use if he were managing your portfolio. It is entirely possible that the do-it-yourself suggestion will look a lot like what people here would suggest.

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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by BL » Fri Aug 03, 2018 7:37 pm

1. Are there any front loads or other loads with the funds he recommends?

2. What is the range of ERs with those funds? Do they include 12b-1 kickbacks to him or his organization?

3. How many funds will be recommended?

4. What will be the AA (asset allocation) of his recommendation?

5. Please print out the exact recommendations with above information included.

Did you read this free 16-page pdf, especially Hurdle # 5?
https://www.etf.com/docs/IfYouCan.pdf

typical.investor
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Re: Financial Planner is going to buy funds for me. What should I find out first before letting him?

Post by typical.investor » Fri Aug 03, 2018 8:52 pm

BuckyBadger wrote:
Fri Aug 03, 2018 1:39 pm
maxsamson wrote:
Fri Aug 03, 2018 1:36 pm
typical.investor wrote:
Fri Aug 03, 2018 8:32 am

Where will the funds be held? Who will have access to the account?

If it's at Schwab, you might to able to eventually have the advisor removed. Probably similar at other brokers too.

In the meantime, your advisor may have control of the account and be expecting to handle it.
At schwab, and the advisor will be removed after making the initial fund investments.
At the risk if sounding like we're ganging up on you, i have to ask why?

Why do you want him to do the initial investments for you?
In a way, it makes sense to me. I'm sure the OP's wife is more comfortable taking advice from a fiduciary than random posters on the internet. That's an important consideration too. We know the quality of advice here because we obsess over it. That's not true for everyone.

If you are going to manage the funds after setup, I'd ask:

Why did you choose this asset allocation, and what role do you expect each asset to play?

Then for each suggested asset class (and this can be as simple as US stocks, International stocks and bonds, but maybe the advisor will include some others to specifically target inflation or whatever), I would look for the cheapest way to get exposure to that asset.

Anyway, having the advisor set it up and then step out seems fine to me. Just know what your are getting and why.
Last edited by typical.investor on Sat Aug 04, 2018 9:07 pm, edited 1 time in total.

Lafder
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Re: Nervous about not using a personal wealth manager. How do I do this myself?

Post by Lafder » Fri Aug 03, 2018 11:11 pm

Welcome here!

DO you understand about ER's (Expense Ratios) and load fees (front load and back load) ?

If your advisor chooses funds with high ERs or loads, it wipes out your investment from the start and takes from it every year.

Index funds with low ERs allow you to buy the market instead of trying to pick what is hot.

Here is a thorough discussion on 3 fund portfolios. They answered every question I could think of, and that was after I had spent hours reading on this website. viewtopic.php?f=10&t=88005

Do not give the advisor the go ahead to invest. Tell him you want the proposed investments with ERs and fees to study them in more detail and come back here and post them to discuss them.

lafder

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