Sister wants advice since I disagreed with her financial advisers.

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offthetop
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Sister wants advice since I disagreed with her financial advisers.

Post by offthetop »

Emergency funds:
3 months

Debt: 241K
2 student loans $23k/each total $46K 5.75% interest
Mortgage $124K 3.3%
my car loan $25K 3.4%
his car loan $40K 4.9%
CC debt $6K interest free always paid off before interest charges
2 personal loans: $42K ($21k each) 4.25%

Expenditures:
$7650/ month increasing to 8k next year:
Mortgage $1400/ month nearly the minimum and includes taxes ect.
Student loans: $350/ month (2@ $175)
Car loans: his $700/month her:$600/month
Cable, Internet, Phone: $130/month
Cell phone $280/month
Groceries: $400/month
Personal Loans: $1000/month
School Tuition currently $575/month but will go up to $12K next year
Daycare $1000/month
Health Insurance $1400/month
Dental: $90
2 500K life insurance policies for him and her $1400/year
2 529 plans for each child: $200/ month. Currently putting $100 in each account per month but would like to increase to max as both kids will be attending private schooling for education


Tax Filing Status:
Married Filing Jointly

She writes 400 sqft off on the taxes for her business (LLC)

Tax Rate: xx% Federal, xx% State:
Unsure of the tax rate but they live in Dane county Wisconsin


Age:
M 36
F 33
kids are 7 and 2

Income:
His:
$48K/ year no benefits but gets a check for 3% at the end of year for retirement.

Her:
Self-employed in the medical field
Income is variable but is roughly $220k-250k/year
$105/Hr-200/Hr
Working 40-45 hours a week
Planning to partner with one of her colleagues at no cost to her. She is not sure what is the best for her situation so I am not sure on the details of her practice.



As for allocation I think that they would want to be heavier on the stock end for quite a few more years as they are young and healthy. Main goal is growing the accounts to 7M-10M by retirement with the best tax savings possible.

Current retirement assets

His retirement:
Both at EJ advisory solutions. The funds do not matter as they will be selling to move to vanguard or another local adviser unless I can talk them into not paying a 1.25% fee on accounts by doing the 3 or 4 fund that is discussed here.
Roth 11k
T-ira 11k

Her Retirement:
all at EJ as well
Roth 27K
Inherited T-IRA 106K
401k- 50K


Contributions:

Currently they are being told that they need to start a LIRP (Life Insurance Retirement Plan) to do any saving so they are unsure what to do with extra income.

Available funds:

Will be going to vanguard so I will be suggesting VOO, VTIAX, VFIAX, VTSAX, and for their comfort initially having them go with an adviser at vanguard to answer questions I do not feel comfortable answering.

Her Questions:
1. Why should I move from Edward Jones since he has been so helpful with answering my questions and setting up accounts for me and guiding me through the process.
2. Why should I move to vanguard or fidelity vs a local financial adviser.

If I move to vanguard
3. What is the best way to save money for retirement as I have been told the only way I can save is through a LIRP type of account.
4. Should we continue to file jointly or is there an advantage to filing separately so he can contribute to a Roth and T-IRA
5. Goals are to be debt free in 6 years unless investing should be more of a priority due to fixed low loan rates. To retire with 7-10M
6. Will the advisers be able to answer business related questions for investing my income
7. How much will making the switch save me by the time I retire.
8. Should I consider opening my own practice or partnering with someone I know and live very much and have worked for before.


Thank you all for taking the time to help my sister save a substantial amount of money and educate her on how easy it is to manage her own retirement plans.
elainet7
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by elainet7 »

call rick ferri a well known author and advisor to give you a plan and then you can set up the investments with vanguard
with income at that level you gotta learn how to invest on your own or it will cost you dearly by making mistakes
do not use advisors who charge an aum fee; use an hourly advisor to get you on the right track from the get go and START READING books by bogle, swedroe, malkiel, and Bernstein
Google " IF YOU CAN HOW MILLENIALS CAN GET RICH SLOWLY"-COPY IT AND FOLLOW HIS ADVICE PRONTO!!!!!!!!!!!!!!
123
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by 123 »

The number of loans indicates that there is some need for a budget and cost cutting. Student loans, car loans, personal loans seem to indicate a free-spending lifestyle. Beyond accumulating an adequate emergency fund I would prioritize getting rid of debt (other than mortgage) and taking advantage of work related retirement plans. They don't need Edward Jones to hold more of their money.
The closest helping hand is at the end of your own arm.
ExitStageLeft
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by ExitStageLeft »

elainet7 wrote: Wed Jan 01, 2020 5:58 pm ...
Google " IF YOU CAN HOW MILLENIALS CAN GET RICH SLOWLY"-COPY IT AND FOLLOW HIS ADVICE PRONTO!!!!!!!!!!!!!!
Here it is: http://flip4u.org/docs/If%20You%20Can%2 ... nstein.pdf

Definitely worth reading no matter your age.

The adviser is looking to sell a product that gets them a fat commission. Never couple insurance and investing. The only guarantee in that regard is that the insurance company gets a tidy profit.
HEDGEFUNDIE
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by HEDGEFUNDIE »

Have your sister read this and then ask her why Edward Jones didn't mention these options:

https://obliviousinvestor.com/sep-vs-si ... solo-401k/
MotoTrojan
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by MotoTrojan »

elainet7 wrote: Wed Jan 01, 2020 5:58 pm call rick ferri a well known author and advisor to give you a plan and then you can set up the investments with vanguard
with income at that level you gotta learn how to invest on your own or it will cost you dearly by making mistakes
do not use advisors who charge an aum fee; use an hourly advisor to get you on the right track from the get go and START READING books by bogle, swedroe, malkiel, and Bernstein
Google " IF YOU CAN HOW MILLENIALS CAN GET RICH SLOWLY"-COPY IT AND FOLLOW HIS ADVICE PRONTO!!!!!!!!!!!!!!
I would recommend they spend the money for a one time sit down with Rick 110%. Will achieve two things:

1: They’ll get to chat with another friendly and helpful pro to give them the same sense of ease.

2: If (when) the market dumps, it won’t be your fault.

I would hate to be the brother that “ruined her financial life”.
mhalley
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by mhalley »

He has been helpful setting up accounts that will maximize his Income, not out of the goodness of his heart. If you can find a local, fee only do that works fine, look into Garret planning network. The fact that the advisor is recommending lirp as the "only" way to invest for retirement shows he is looking to maximize HIS retirement, not yours.
Last edited by mhalley on Wed Jan 01, 2020 6:20 pm, edited 3 times in total.
HomeStretch
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by HomeStretch »

Your sister currently has a portfolio of $205k and non-mortgage debt of $159k for a net worth of $46k excluding house and pension value. My suggestion is that she and spouse prioritize paying off all non-mortgage debt and setting up a budget.

As far as investing goes, right now the amount they contribute will have the biggest impact on their portfolio. Keeping costs low is a good goal and I don’t believe that will happen at EJ. As they are just starting their investing, now is a great time to move to a low-cost provider.

Not familiar with LIRPs but I don’t believe mixing insurance and investments maximizes returns. A lot of these products involve high commissions paid to the advisor.

Your sister should look into a self-employed retirement plan like a Solo 401k (if no partners/employees). If she will have a partner there are other plans.

Your sister can do a backdoor Roth as it looks like she does not have any (pretax) IRAs. Her spouse could do a backdoor Roth but would be subject to the pro rata rule due to his $11k traditional IRA. The easiest thing to do would be to convert that to Roth, pay the taxes and then be able to do a backdoor Roth as well.

A Solo 401k has a maximum 2020 limit for employee/employer contributions of $57k. 2 backdoor Roths at $6k each for 2020. The total of just these two savings vehicles is $69k. If your sister will have more to contribute for 2020, let us know as we can come up with additional suggestions like iBonds, Taxable account, etc.

To determine whether they should file separately or jointly, they or a tax advisor need to run tax projections both ways to see which is more advantageous.

Your sister would do better to consult a tax accountant and/or attorney for tax advice related to her business. I don’t believe the EJ advisor or an advisor from a low-cost brokerage will offer tax advice.
retired@50
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by retired@50 »

offthetop wrote: Wed Jan 01, 2020 5:50 pm Her Questions:
1. Why should I move from Edward Jones since he has been so helpful with answering my questions and setting up accounts for me and guiding me through the process.
2. Why should I move to vanguard or fidelity vs a local financial adviser.

If I move to vanguard
3. What is the best way to save money for retirement as I have been told the only way I can save is through a LIRP type of account.
4. Should we continue to file jointly or is there an advantage to filing separately so he can contribute to a Roth and T-IRA
5. Goals are to be debt free in 6 years unless investing should be more of a priority due to fixed low loan rates. To retire with 7-10M
6. Will the advisers be able to answer business related questions for investing my income
7. How much will making the switch save me by the time I retire.
8. Should I consider opening my own practice or partnering with someone I know and live very much and have worked for before.


Thank you all for taking the time to help my sister save a substantial amount of money and educate her on how easy it is to manage her own retirement plans.
Before the questions... I'm a little perplexed how all this debt happened. There appears to be over $250K in income coming into a house where under $100K is being spent annually. This should leave plenty of budgeting room to pay off the debt, pronto.

1. People who are being paid well, tend to be courteous. With over $200K in assets under management, EJ is taking over $2,500 per year for the several conversations per year.
2. The local adviser will likely take as much as EJ does.
3. There are a variety of savings options for self employed persons. The best plan will likely depend on whether or not there are any employees, or if things remain as a sole proprietor.
4. The couple may need to look into the backdoor Roth IRA strategy. Given current traditional IRA balances, using the back door strategy may take a few years to implement.
5. I'd speed up the debt payoff. I think the 7-10 million may be a stretch unless the savings rate climbs to over $100K per year.
6. Vanguard will be able to handle any questions you may have about using the chosen retirement plan for a self-employed person.
7. Hundreds of thousands of dollars.
8. I don't know.

Regards,
This is one person's opinion. Nothing more.
delamer
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by delamer »

You could suggest that they stop contributing to the accounts at EJ, open retirement accounts at Vanguard, put the money in one of the Target Retirement funds, and see whether EJ or Vanguard has a better return (after expenses) over the next couple years.

I’d print this 16 pages of wisdom and have them read it: https://www.etf.com/docs/IfYouCan.pdf
Bobby206
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Bobby206 »

I would argue the counter that they should keep everything at Ed Jones. The accounts are so small that the 1.25% is nothing in real dollars and she likes the advice and comfort her advisor gives her. Not everybody is a DIYer. Some people like having their own advisor to reach out to. We on BH tend to forget this and assume everybody thinks like we mostly do. I think she should keep it as is. Well, not the life insurance retirement nonsense but otherwise I'd stay with Ed. Just my two cents.
Jimmie
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Jimmie »

Bobby206 wrote: Wed Jan 01, 2020 7:05 pm I would argue the counter that they should keep everything at Ed Jones. The accounts are so small that the 1.25% is nothing in real dollars and she likes the advice and comfort her advisor gives her. Not everybody is a DIYer. Some people like having their own advisor to reach out to. We on BH tend to forget this and assume everybody thinks like we mostly do. I think she should keep it as is. Well, not the life insurance retirement nonsense but otherwise I'd stay with Ed. Just my two cents.
How will they get anywhere near their 7-10 million goal with this kind of respect for the money they have right now? The EJ rep will get to that milestone way earlier.
MotoTrojan
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by MotoTrojan »

Bobby206 wrote: Wed Jan 01, 2020 7:05 pm I would argue the counter that they should keep everything at Ed Jones. The accounts are so small that the 1.25% is nothing in real dollars and she likes the advice and comfort her advisor gives her. Not everybody is a DIYer. Some people like having their own advisor to reach out to. We on BH tend to forget this and assume everybody thinks like we mostly do. I think she should keep it as is. Well, not the life insurance retirement nonsense but otherwise I'd stay with Ed. Just my two cents.
This isn't how compound growth works.
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Abe
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Abe »

Bobby206 wrote: Wed Jan 01, 2020 7:05 pm I would argue the counter that they should keep everything at Ed Jones. The accounts are so small that the 1.25% is nothing in real dollars and she likes the advice and comfort her advisor gives her. Not everybody is a DIYer. Some people like having their own advisor to reach out to. We on BH tend to forget this and assume everybody thinks like we mostly do. I think she should keep it as is. Well, not the life insurance retirement nonsense but otherwise I'd stay with Ed. Just my two cents.
I disagree with the above post. The longer they stay with EJ, the more money they lose to fees. It's better to leave now than later. If they need a financial advisor, Vanguard has an advisory service at a very low cost.
Slow and steady wins the race.
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GreatOdinsRaven
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by GreatOdinsRaven »

Bobby206 wrote: Wed Jan 01, 2020 7:05 pm I would argue the counter that they should keep everything at Ed Jones. The accounts are so small that the 1.25% is nothing in real dollars and she likes the advice and comfort her advisor gives her. Not everybody is a DIYer. Some people like having their own advisor to reach out to. We on BH tend to forget this and assume everybody thinks like we mostly do. I think she should keep it as is. Well, not the life insurance retirement nonsense but otherwise I'd stay with Ed. Just my two cents.
This seems like very bad advice to me. Why should they pay 1.25% for a commoditized service when they could get it at Vanguard via PAS for ?0.3%. Not to mention the benefit of using low expense ratio products that are tax efficient. The sister has a high income and should have a taxable account. She would benefit from low cost Vanguard index mutual funds/ETFs or other similarly low ER fee ETFs from providers like Schwab or iShares.

Paying more now for what seems like bad advice (insurance products) will have compounding deleterious effects on their terminal net worth.

Run fast and far away from this EJ “advisor”.

GOR
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dogagility
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by dogagility »

offthetop wrote: Wed Jan 01, 2020 5:50 pm Her Questions:
1. Why should I move from Edward Jones since he has been so helpful with answering my questions and setting up accounts for me and guiding me through the process.
Suggest showing her this link: https://www.nerdwallet.com/blog/investi ... gs-impact/
offthetop wrote: Wed Jan 01, 2020 5:50 pm 2. Why should I move to vanguard or fidelity vs a local financial adviser.
To increase her net worth substantially. (See above link).
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Jack FFR1846
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Jack FFR1846 »

The problem with prying her away from EJ is that it appears she has a death grip need for someone local who she can visit in a local office. Vanguard doesn't have that. Although Fidelity, Schwab and TDAmeritrade may have local offices, and may answer all here questions, will they guide her to high cost stuff and maybe even insurance products?

I get the thoughts that everyone must escape EJ. Us DIY'ers are very big on saying that and I'm certainly guilty of this. My mom has "a guy" and some investments I don't like. But she likes him and he's very responsive.
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GreatOdinsRaven
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by GreatOdinsRaven »

Jack FFR1846 wrote: Wed Jan 01, 2020 7:28 pm The problem with prying her away from EJ is that it appears she has a death grip need for someone local who she can visit in a local office. Vanguard doesn't have that. Although Fidelity, Schwab and TDAmeritrade may have local offices, and may answer all here questions, will they guide her to high cost stuff and maybe even insurance products?

I get the thoughts that everyone must escape EJ. Us DIY'ers are very big on saying that and I'm certainly guilty of this. My mom has "a guy" and some investments I don't like. But she likes him and he's very responsive.
Many of us know people who like to talk to their “guy”. I’m reminded of something Bill Bernstein says about investors being “...engaged in a life-and-death struggle with the financial services industry. Every dollar in fees and expenses you pay them comes directly out of your pocket.”

Just because you like something doesn’t mean it’s good for you.

Caveat emptor.

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Big Dog
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Big Dog »

I'm guessing that the personal loan was from friends/family to help with the down payment on the house? Regardless, get it paid off. Agree with the others. A consulting phone call with Rick would be a good use of a few hundred bucks. Finally, not enuf life insurance, IMO, particularly with kids in private schools.

Move on from EJ.
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amp
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by amp »

Bobby206 wrote: Wed Jan 01, 2020 7:05 pm I would argue the counter that they should keep everything at Ed Jones. The accounts are so small that the 1.25% is nothing in real dollars and she likes the advice and comfort her advisor gives her. Not everybody is a DIYer. Some people like having their own advisor to reach out to. We on BH tend to forget this and assume everybody thinks like we mostly do. I think she should keep it as is. Well, not the life insurance retirement nonsense but otherwise I'd stay with Ed. Just my two cents.
1.25% sounds like it's the account management fee. But there will be mutual fund fees as well. EJ is certainly not putting people into low-cost funds, so it's likely that those fees will run another 1-2% on top of the 1.25%. And of course there may be fund loads as well.

If you consider that the historical real return of the stock market is between 6-8% (depending on how it's measured), then even a 1.25% fee is a lot. Also a lot of people think future returns may be lower. If real returns turn out to be only 4% in the future, and the total fees charged are in the 3% range, then EJ could end up with 3/4 of the money earned. It's unconscionable! (And it's even worse than that since they get their money every year regardless of the actual performance of the account.)


ETA: I may have misunderstood the OP, as I just noticed this.
Both at EJ advisory solutions. The funds do not matter as they will be selling to move to vanguard or another local adviser unless I can talk them into not paying a 1.25% fee on accounts by doing the 3 or 4 fund that is discussed here.
Does this mean that his sister intends to stay at EJ but invest in Vanguard funds? As far as I know that's not possible. In fact, if you look up Vanguard at the below link on the EJ site, all the Vanguard funds are marked as "SELL ONLY".
https://www.edwardjones.com/planfees/fe ... -fees.html
Last edited by amp on Wed Jan 01, 2020 8:19 pm, edited 1 time in total.
lkar
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by lkar »

HomeStretch wrote: Wed Jan 01, 2020 6:18 pmYour sister would do better to consult a tax accountant and/or attorney for tax advice related to her business. I don’t believe the EJ advisor or an advisor from a low-cost brokerage will offer tax advice.
This.

Whether or not to stick with the EdJo guy is an important question but they are in serious need of an overall plan. Including tax and corporate structure planning.

They are living beyond their means and if they are serious about reaching their goals they are frittering away very peak savings and planning years, in an extremely low (maybe historically low) tax friendly environment for self employed married people who can organize as pass through and who have taxable income under the 199A phase out.

Unless their income is expected to be on a serious upwards trajectory, they are going to need to start thinking about serious changes to reach their goals. Or they are going to leave the kids with serious student loans. They are looking at 12x2 years of private school before college and they are currently paying 6.5 times more for their cars than they are putting in 529s and paying personal loans despite $250 to $300k annual income.

If she has the opportunity to structure as a pass through entity she and her husband are below the QBID threshold and they have the opportunity to be socking away upwards over $50,000 per year in a tax advantaged way. They are going to need upwards of $1 million to get the kids through 24 combined years of private school and college at 2032 and 2036 rates. Probably more. He is going to be 56 when their youngest is a senior in college and so will be around the age where you need to start thinking about sacrificing higher returns for more conservative asset allocation. Not sure what maxing out the 529s means but it needs to seriously modified.

I get it. They had debt, two parents working with young kids is hard and expensive. These are the super fun years. But if the 7-10 million thing is really their goal, the compounding fee they are paying their guy is not helping, but it is secondary at this point. They need a big picture plan.
mw1739
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by mw1739 »

What a mess. Frankly I would steer clear of this situation. She seems like the type that will blame you when the market underperforms. If you must help, here is what I would focus on: Where is the rest of your sisters money going after their ~ $96k in expenses. Even after taxes, I would expect at least another $50k to throw at debt or retirement. I agree with others that say she needs to implement some form of small biz retirement plan. Also her life insurance is too expensive and too little. Similar age here and my wife and I have 2.75 million for a similar cost.
Jimmie
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Jimmie »

Regarding fees, my argument with people who say: "A percentage point or two is nothing. I'm making way more that that" is done by using a mortgage analogy.

Anyone with a 3.5% mortgage compared to 5.5% will save a significant amount of money over a 30 year term. Turn that around to be investment fees of about 2%. However, an investment horizon might be 40+ years, reinforcing the argument.

Compound interest is compound interest. Period. The math never lies.
Katietsu
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Katietsu »

Get her the book:
James M Dahle MD
The White Coat Investor: A Doctor's Guide To Personal Finance And Investing

It does not matter if she is a physician or not. She sounds like the ideal candidate for this book. It is a relatively short easy to digest book that covers the wide range of personal finance topics. It also guides the reader to DIY or to find the right kind of advisor. She might wish to check out the website whitecoatinvestor.com as well. But frankly, I think the book is a well organized cheap way to quick start personal finance for people like this couple.

She may need an investment advisor, a CFP, a CPA or just a tax preparer. But, right now, she has the worst of both worlds. She is paying high fees for bad advice from a salesman not a business professional.

I know many have recommended Rick Ferri. You might end up there, but I would probably not start there. I agree with those who have indicated that the investments are not the first priority right now.
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Wiggums
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Wiggums »

They have $300k salary with $96k in annual expenses.
Maybe the expenses does not include taxes ?

When investing, fees matter. Both AUM and fund load fees will affect total return.

Retire savings rate is low given 7-10 million goal. This does not appear to be a reasonable goal at this point.

$75k in car loans. 40k at 4.9% is high.

Put the investing question aside for a minute. I think they need a financial plan that will help them meet their long and short term goals.

I’d eliminate the debt faster than 6 years.
I’d suggest that they track expenses to a written budget.
I’d verify the annual expenses.
Private school goal but only $1,200 a year in 529. I’m assuming private elementary school for 7 year old?
Is this term life insurance? He might be over insured at 500k and she might be under insured.
Last edited by Wiggums on Wed Jan 01, 2020 8:47 pm, edited 2 times in total.
SlowMovingInvestor
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by SlowMovingInvestor »

Jack FFR1846 wrote: Wed Jan 01, 2020 7:28 pm The problem with prying her away from EJ is that it appears she has a death grip need for someone local who she can visit in a local office. Vanguard doesn't have that. Although Fidelity, Schwab and TDAmeritrade may have local offices, and may answer all here questions, will they guide her to high cost stuff and maybe even insurance products?
I'm sure others have different experiences, but I've found my Fido advisor to be extremely good about not pushing high cost products, and even discouraging insurance products.
scubadiver
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by scubadiver »

I'm inferring from the level of detail you provided concerning their finances that your sister and brother-in-law are receptive to your input.

Maybe a good starting point would be to focus on educating them about personal finance in general. LBYM. Asset Allocation. Risk Tolerance. Tax-advantaged savings. Active vs. passive investing. Etc. Help them understand these concepts and the role they play in developing a financial plan.

I'm firmly believe no educated person would ever invest with Edwards Jones (apologies to anyone reading this post who is a current EJ investor). Help them get educated. The case for dumping the advisor and switching to Fidelity or Vanguard will sell itself.

Good luck,
Scubadiver
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BL
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by BL »

Check term4sale.com or selectQuote or independent insurance agent for estimates on Term Insurance for each of you. I expect you could each get 1 million 20 year term for less than you are currently paying for 500k each.

Check out V. PAS to get suggested portfolio, then decide whether to use them or not.

Maybe Dave Ramsey for debt reduction.
TallBoy29er
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by TallBoy29er »

Just one more voicing a note of caution. Listen, we all agree with you that she should move from EJ. But here's the deal, you don't want to be in the hot seat when the market tanks, and her investments drop. You'll be blamed, and I would guess your relationship with her means a great deal to you. I would give her some high level thoughts, maybe a little light reading, and let her take it from there. If she bites, awesome. If not, you'd be best to ease off.

I've been in a similar situation. I value the relationship too much to push.
pkcrafter
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by pkcrafter »

offthetop wrote: Wed Jan 01, 2020 5:50 pm
As for allocation I think that they would want to be heavier on the stock end for quite a few more years as they are young and healthy. Main goal is growing the accounts to 7M-10M by retirement with the best tax savings possible.

Current retirement assets

His retirement:
Both at EJ advisory solutions. The funds do not matter as they will be selling to move to vanguard or another local adviser unless I can talk them into not paying a 1.25% fee on accounts by doing the 3 or 4 fund that is discussed here.

I don't understand the above. Are you saying they might stay with EJ if the 1.25% advisory fee is waived?
Roth 11k
T-ira 11k

Her Retirement:
all at EJ as well
Roth 27K
Inherited T-IRA 106K
401k- 50K

Is the 401k a self-employed individual plan through EJ? What are the holdings?


Contributions:

Currently they are being told that they need to start a LIRP (Life Insurance Retirement Plan) to do any saving so they are unsure what to do with extra income.

Terrible idea. No.

Available funds:

Will be going to vanguard so I will be suggesting VOO, VTIAX, VFIAX, VTSAX, and for their comfort initially having them go with an adviser at vanguard to answer questions I do not feel comfortable answering.

You are suggesting two S&P500 funds and a total market fund. You need only total market and bonds. Bonds go in tax-advantaged accounts. In tax-advantaged accounts they may also consider target funds or Lifestrategy funds. For retirement, consider all accounts as parts of one unified portfolio.

Her Questions:
1. Why should I move from Edward Jones since he has been so helpful with answering my questions and setting up accounts for me and guiding me through the process.

EJ is a very expensive way to invest and not recommended by Bogleheads. EJ employees work for EJ. This is your money and you have a responsibility to grasp the basics. You can pay an hourly fee for consultation with a fee-only registered advisor if and when you need it. You can also get the basics right here.

2. Why should I move to vanguard or fidelity vs a local financial adviser.

Again, costs. If you decide you need an advisor, then you still need some basics on what to look for.


https://investingroadmap.wordpress.com/ ... n-advisor/

If I move to vanguard
3. What is the best way to save money for retirement as I have been told the only way I can save is through a LIRP type of account.

This is a very bad idea, but certainly good for EJ. Don't mix insurance and investing, it's very expensive and full of limitations.

4. Should we continue to file jointly or is there an advantage to filing separately so he can contribute to a Roth and T-IRA

I don't think that will work.

https://www.investopedia.com/articles/p ... -rules.asp

But, check this out.

https://www.bogleheads.org/wiki/Backdoor_Roth


5. Goals are to be debt free in 6 years unless investing should be more of a priority due to fixed low loan rates. To retire with 7-10M
6. Will the advisers be able to answer business related questions for investing my income

Yes, but probably can also be answered here. We have several posters who are very knowledgeable on advisory services and taxes.

7. How much will making the switch save me by the time I retire.


Tens of thousands!

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.
HomeStretch
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by HomeStretch »

Consider sending your sister a link to this thread and letting her decide how to proceed after reading the responses.
Luckywon
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Luckywon »

Bobby206 wrote: Wed Jan 01, 2020 7:05 pm I would argue the counter that they should keep everything at Ed Jones. The accounts are so small that the 1.25% is nothing in real dollars and she likes the advice and comfort her advisor gives her. Not everybody is a DIYer. Some people like having their own advisor to reach out to. We on BH tend to forget this and assume everybody thinks like we mostly do. I think she should keep it as is. Well, not the life insurance retirement nonsense but otherwise I'd stay with Ed. Just my two cents.
They are going to stay small unless she leaves Edward Jones.
EnjoyIt
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by EnjoyIt »

Bobby206 wrote: Wed Jan 01, 2020 7:05 pm I would argue the counter that they should keep everything at Ed Jones. The accounts are so small that the 1.25% is nothing in real dollars and she likes the advice and comfort her advisor gives her. Not everybody is a DIYer. Some people like having their own advisor to reach out to. We on BH tend to forget this and assume everybody thinks like we mostly do. I think she should keep it as is. Well, not the life insurance retirement nonsense but otherwise I'd stay with Ed. Just my two cents.
This is by far some of the worst advice I have seen on this forum. Not only are they paying a 1.25% AUM fee, they are also likely buying loaded funds and funds with expense ratios well over 1%. Edward Jones are a bunch of crooks and OP should run from them and this advise as fast as possible.

If they really want some hand holding which is just fine the advisors at Vanguard will charge 0.3% AUM and put them in low cost index funds with no loads.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
inbox788
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by inbox788 »

offthetop wrote: Wed Jan 01, 2020 5:50 pm Debt: 241K High debt!
his car loan $40K 4.9% High interest rate
CC debt $6K interest free always paid off before interest charges High credit card debt
2 personal loans: $42K ($21k each) 4.25% High expenses

Expenditures:
$7650/ month increasing to 8k next year: High recurring expenses
Cell phone $280/month High cell phone bills
Personal Loans: $1000/month High past debt still being paid off

As for allocation I think that they would want to be heavier on the stock end for quite a few more years as they are young and healthy. Main goal is growing the accounts to 7M-10M by retirement with the best tax savings possible.

Currently they are being told that they need to start a LIRP (Life Insurance Retirement Plan) to do any saving so they are unsure what to do with extra income.

1. Why should I move from Edward Jones since he has been so helpful with answering my questions and setting up accounts for me and guiding me through the process.
2. Why should I move to vanguard or fidelity vs a local financial adviser.

If I move to vanguard
3. What is the best way to save money for retirement as I have been told the only way I can save is through a LIRP type of account.
4. Should we continue to file jointly or is there an advantage to filing separately so he can contribute to a Roth and T-IRA
5. Goals are to be debt free in 6 years unless investing should be more of a priority due to fixed low loan rates. To retire with 7-10M
6. Will the advisers be able to answer business related questions for investing my income
7. How much will making the switch save me by the time I retire.
8. Should I consider opening my own practice or partnering with someone I know and live very much and have worked for before.
7. She will save over $1M by switching away from high fee advisor and poor investment advice or she can retire many years earlier.

LIRP doesn't make any sense -- it's a scam! Just invest in low cost index funds and she'll do much better. It's that simple and easy!

https://www.bogleheads.org/wiki/Boglehe ... philosophy

EJ advisor is expensive and often bad investing advice and they're likely worse business and tax advice. They're not strong at financial planning either. She won't know how bad the advice she's getting if she's fixated on LIRP because she trusts the individual and has no understanding or comparison. Same with other bad advice she's likely getting and following. Some say ignorance is bliss, but that just makes you a good mark and easy to take advantage of.
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Wiggums
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Wiggums »

LIRP : is not an insurance, nor a retirement plan.

Just like all other financial instruments, expenses are part of a LIRP. With term life insurance, you are only paying for the actual cost of insurance, whereas with permanent life insurance, part of your premium is going towards your cash value. It’s only logical to conclude that the cost would be higher for a policy with savings component.

Poor Returns on LIRPS. Some argue that the rate of return is lower with an indexed UL policy than the actual stock market. We have found that over time, an IUL can compete with the market even with the expenses in the policy. Even though the growth is slow and steady with a LIRP, you have easier access to your money tax-free a giant plus when you consider the LIRP pros and cons.

There are likely to be surrender fees with LIRPS once you realize that it’s not right for you.
Last edited by Wiggums on Thu Jan 02, 2020 3:45 am, edited 3 times in total.
HomeStretch
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by HomeStretch »

The ER advisor may receive 2% between the AUM fee, ERs and front loads. Sister could pay fees of $200k annually on a $10 million portfolio. Or she could pay $30k annually to VPAS. Or she could pay $5k annually to DIY in low-cost funds.
Ivygirl
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Ivygirl »

offthetop wrote: Wed Jan 01, 2020 5:50 pm Groceries: $400/month
Unless they are doing something unusual, like maximum oatmeal and lentils, for a family of four I think they are probably spending much more than this on groceries. Possibly hundreds of dollars more. It might be worth tracking this expenditure, as well as tracking how much food waste is occurring, for an easy win to double the amount being saved for kids' college funds.
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Wiggums
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Wiggums »

Ivygirl wrote: Thu Jan 02, 2020 4:32 am
offthetop wrote: Wed Jan 01, 2020 5:50 pm Groceries: $400/month
Unless they are doing something unusual, like maximum oatmeal and lentils, for a family of four I think they are probably spending much more than this on groceries. Possibly hundreds of dollars more. It might be worth tracking this expenditure, as well as tracking how much food waste is occurring, for an easy win to double the amount being saved for kids' college funds.
Good point. I had a similar question about their expenses.
Ivygirl
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Ivygirl »

Wiggums wrote: Thu Jan 02, 2020 4:39 am
Ivygirl wrote: Thu Jan 02, 2020 4:32 am
offthetop wrote: Wed Jan 01, 2020 5:50 pm Groceries: $400/month
Unless they are doing something unusual, like maximum oatmeal and lentils, for a family of four I think they are probably spending much more than this on groceries. Possibly hundreds of dollars more. It might be worth tracking this expenditure, as well as tracking how much food waste is occurring, for an easy win to double the amount being saved for kids' college funds.
Good point. I had a similar question about their expenses.
Odd but true, this might be a bigger financial drain than their EJ guy, and more important to get in check.

With the two kids in daycare, and the two working adults out of the house, it's possible their grocery bill really is $400, but their restaurant and takeout bill is $800. No way to know unless it is tracked.
Grt2bOutdoors
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Grt2bOutdoors »

mw1739 wrote: Wed Jan 01, 2020 8:05 pm What a mess. Frankly I would steer clear of this situation. She seems like the type that will blame you when the market underperforms. If you must help, here is what I would focus on: Where is the rest of your sisters money going after their ~ $96k in expenses. Even after taxes, I would expect at least another $50k to throw at debt or retirement. I agree with others that say she needs to implement some form of small biz retirement plan. Also her life insurance is too expensive and too little. Similar age here and my wife and I have 2.75 million for a similar cost.

Totally agree on the lack of sufficient life insurance. The sister is the main breadwinner, has 2 kids and a boatload of debt. At the minimum she needs $2 million. Buy term life insurance though term4sale.com or give Zander.com a try. Buy the cheapest 20 year policy. How about disability insurance? Does she have one? Ditch Edward Jones. 1.25% for 20 years is 25% of her savings going to the advisor- does that sound good to her? Over 30 years it will cost her close to 40% of what could have been a healthy chunk of retirement savings, all in the pocket of her “nice, sweet, kind EJ advisor”. If she wants to accumulate 7-10 million she is going to have to save a boatload of money, first thing is to cut expenses to the bone including any middlemen grabbing an unfair piece of the pie.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Ivygirl
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Ivygirl »

Grt2bOutdoors wrote: Thu Jan 02, 2020 5:18 am
mw1739 wrote: Wed Jan 01, 2020 8:05 pm What a mess. Frankly I would steer clear of this situation. She seems like the type that will blame you when the market underperforms. If you must help, here is what I would focus on: Where is the rest of your sisters money going after their ~ $96k in expenses. Even after taxes, I would expect at least another $50k to throw at debt or retirement. I agree with others that say she needs to implement some form of small biz retirement plan. Also her life insurance is too expensive and too little. Similar age here and my wife and I have 2.75 million for a similar cost.

Totally agree on the lack of sufficient life insurance. The sister is the main breadwinner, has 2 kids and a boatload of debt. At the minimum she needs $2 million. Buy term life insurance though term4sale.com or give Zander.com a try. Buy the cheapest 20 year policy. How about disability insurance? Does she have one? Ditch Edward Jones. 1.25% for 20 years is 25% of her savings going to the advisor- does that sound good to her? Over 30 years it will cost her close to 40% of what could have been a healthy chunk of retirement savings, all in the pocket of her “nice, sweet, kind EJ advisor”. If she wants to accumulate 7-10 million she is going to have to save a boatload of money, first thing is to cut expenses to the bone including any middlemen grabbing an unfair piece of the pie.
While it is true the EJ advisor is suboptimal from a purely financial standpoint, this lady is super-busy. She wants an advisor to take one of the loads off her, the same way she might hire someone to take care of the lawn, clean the house, or deliver her groceries. If a person wants personal service, they have to pay. If you want someone to pick up the phone when you call, listen, and care about your concerns when you need them, that is going to cost. It is not irrational for a very high earning couple to pay for this service. I realize this is a minority opinion here, but little ones in the household having needs on top of two busy careers and a lot of driving around - Mr. EJ could well seem a godsend.
Grt2bOutdoors
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Grt2bOutdoors »

Ivygirl wrote: Thu Jan 02, 2020 5:28 am
Grt2bOutdoors wrote: Thu Jan 02, 2020 5:18 am
mw1739 wrote: Wed Jan 01, 2020 8:05 pm What a mess. Frankly I would steer clear of this situation. She seems like the type that will blame you when the market underperforms. If you must help, here is what I would focus on: Where is the rest of your sisters money going after their ~ $96k in expenses. Even after taxes, I would expect at least another $50k to throw at debt or retirement. I agree with others that say she needs to implement some form of small biz retirement plan. Also her life insurance is too expensive and too little. Similar age here and my wife and I have 2.75 million for a similar cost.

Totally agree on the lack of sufficient life insurance. The sister is the main breadwinner, has 2 kids and a boatload of debt. At the minimum she needs $2 million. Buy term life insurance though term4sale.com or give Zander.com a try. Buy the cheapest 20 year policy. How about disability insurance? Does she have one? Ditch Edward Jones. 1.25% for 20 years is 25% of her savings going to the advisor- does that sound good to her? Over 30 years it will cost her close to 40% of what could have been a healthy chunk of retirement savings, all in the pocket of her “nice, sweet, kind EJ advisor”. If she wants to accumulate 7-10 million she is going to have to save a boatload of money, first thing is to cut expenses to the bone including any middlemen grabbing an unfair piece of the pie.
While it is true the EJ advisor is suboptimal from a purely financial standpoint, this lady is super-busy. She wants an advisor to take one of the loads off her, the same way she might hire someone to take care of the lawn, clean the house, or deliver her groceries. If a person wants personal service, they have to pay. If you want someone to pick up the phone when you call, listen, and care about your concerns when you need them, that is going to cost. It is not irrational for a very high earning couple to pay for this service. I realize this is a minority opinion here, but little ones in the household having needs on top of two busy careers and a lot of driving around - Mr. EJ could well seem a godsend.
I disagree, the thought of Mr EJ being a godsend is an illusion or a mirage of a small pond with a date tree in the midst of a desert. The OP’s sister is going to be in for a rude awakening in 10 years when she finds herself nowhere close to 2 million let alone 4 million and tick-tock time is running out. She only has a few levers: control costs, save more, spend less. Investing should be like watching paint dry on the wall. She could pick one fund in a retirement plan - Target retirement funds are perfect for the individual who doesn’t have time, and it will cost 90 percent less than what Mr. EJ charges on an annual basis. We know Mr EJ isn’t so wonderful when he says a Life insurance retirement plan is the only way to save for retirement; it’s dishonest and self serving on his part to create a lifetime annuity for him: each contribution is a cha-Ching in his commission account and a whole lot less in her retirement accounts.
Last edited by Grt2bOutdoors on Thu Jan 02, 2020 5:40 am, edited 1 time in total.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Ivygirl
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Ivygirl »

Grt2bOutdoors wrote: Thu Jan 02, 2020 5:34 am
Ivygirl wrote: Thu Jan 02, 2020 5:28 am
Grt2bOutdoors wrote: Thu Jan 02, 2020 5:18 am
mw1739 wrote: Wed Jan 01, 2020 8:05 pm What a mess. Frankly I would steer clear of this situation. She seems like the type that will blame you when the market underperforms. If you must help, here is what I would focus on: Where is the rest of your sisters money going after their ~ $96k in expenses. Even after taxes, I would expect at least another $50k to throw at debt or retirement. I agree with others that say she needs to implement some form of small biz retirement plan. Also her life insurance is too expensive and too little. Similar age here and my wife and I have 2.75 million for a similar cost.

Totally agree on the lack of sufficient life insurance. The sister is the main breadwinner, has 2 kids and a boatload of debt. At the minimum she needs $2 million. Buy term life insurance though term4sale.com or give Zander.com a try. Buy the cheapest 20 year policy. How about disability insurance? Does she have one? Ditch Edward Jones. 1.25% for 20 years is 25% of her savings going to the advisor- does that sound good to her? Over 30 years it will cost her close to 40% of what could have been a healthy chunk of retirement savings, all in the pocket of her “nice, sweet, kind EJ advisor”. If she wants to accumulate 7-10 million she is going to have to save a boatload of money, first thing is to cut expenses to the bone including any middlemen grabbing an unfair piece of the pie.
While it is true the EJ advisor is suboptimal from a purely financial standpoint, this lady is super-busy. She wants an advisor to take one of the loads off her, the same way she might hire someone to take care of the lawn, clean the house, or deliver her groceries. If a person wants personal service, they have to pay. If you want someone to pick up the phone when you call, listen, and care about your concerns when you need them, that is going to cost. It is not irrational for a very high earning couple to pay for this service. I realize this is a minority opinion here, but little ones in the household having needs on top of two busy careers and a lot of driving around - Mr. EJ could well seem a godsend.
I disagree, the thought of Mr EJ being a godsend is an illusion or a mirage of a small pond with a date tree in the midst of a desert. The OP’s sister is going to be in for a rude awakening in 10 years when she finds herself nowhere close to 2 million let alone 4 million and tick-tock time is running out. She only has a few levers: control costs, save more, spend less.
Yes you are right of course according to the math, but math is not the right lens to see this through. The sister is resisting losing her adviser because he makes her life easier. The theoretical benefits of x dollars decades from now mean nothing to her compared to the ability to say "Yes, darling?" when the little one says "Mommy, Mommy." We only have so much reserve of time and attention. She'd rather spend it doing other things. And this decision is not wrong. It is the right decision.

So if OP wants to persuade the sister to give up Mr. EJ, it's necessary to show how her life can still be easy, just paying less for it. Hammering on the math is beside the point.
lifeisinmirrors
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by lifeisinmirrors »

This couple should be wealthy, but they're living beyond their means. Edward Jones is a bad choice for sure, but their spending is the real problem. Someone with that income should not have to do things like take out unsecured personal loans, and open credit cards for the 0% balance transfer.
Ivygirl
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Ivygirl »

Grt2bOutdoors wrote: Thu Jan 02, 2020 5:34 am
Ivygirl wrote: Thu Jan 02, 2020 5:28 am
Grt2bOutdoors wrote: Thu Jan 02, 2020 5:18 am
mw1739 wrote: Wed Jan 01, 2020 8:05 pm What a mess. Frankly I would steer clear of this situation. She seems like the type that will blame you when the market underperforms. If you must help, here is what I would focus on: Where is the rest of your sisters money going after their ~ $96k in expenses. Even after taxes, I would expect at least another $50k to throw at debt or retirement. I agree with others that say she needs to implement some form of small biz retirement plan. Also her life insurance is too expensive and too little. Similar age here and my wife and I have 2.75 million for a similar cost.

Totally agree on the lack of sufficient life insurance. The sister is the main breadwinner, has 2 kids and a boatload of debt. At the minimum she needs $2 million. Buy term life insurance though term4sale.com or give Zander.com a try. Buy the cheapest 20 year policy. How about disability insurance? Does she have one? Ditch Edward Jones. 1.25% for 20 years is 25% of her savings going to the advisor- does that sound good to her? Over 30 years it will cost her close to 40% of what could have been a healthy chunk of retirement savings, all in the pocket of her “nice, sweet, kind EJ advisor”. If she wants to accumulate 7-10 million she is going to have to save a boatload of money, first thing is to cut expenses to the bone including any middlemen grabbing an unfair piece of the pie.
While it is true the EJ advisor is suboptimal from a purely financial standpoint, this lady is super-busy. She wants an advisor to take one of the loads off her, the same way she might hire someone to take care of the lawn, clean the house, or deliver her groceries. If a person wants personal service, they have to pay. If you want someone to pick up the phone when you call, listen, and care about your concerns when you need them, that is going to cost. It is not irrational for a very high earning couple to pay for this service. I realize this is a minority opinion here, but little ones in the household having needs on top of two busy careers and a lot of driving around - Mr. EJ could well seem a godsend.
I disagree, the thought of Mr EJ being a godsend is an illusion or a mirage of a small pond with a date tree in the midst of a desert. The OP’s sister is going to be in for a rude awakening in 10 years when she finds herself nowhere close to 2 million let alone 4 million and tick-tock time is running out. She only has a few levers: control costs, save more, spend less. Investing should be like watching paint dry on the wall. She could pick one fund in a retirement plan - Target retirement funds are perfect for the individual who doesn’t have time, and it will cost 90 percent less than what Mr. EJ charges on an annual basis. We know Mr EJ isn’t so wonderful when he says a Life insurance retirement plan is the only way to save for retirement; it’s dishonest and self serving on his part to create a lifetime annuity for him: each contribution is a cha-Ching in his commission account and a whole lot less in her retirement accounts.
Responding to the additional comments in your edited post. Mr. EJ is indeed looking out for himself and will get nicely paid if he gets his way. But he is not stealing. He is offering a service which OP's sister can buy or not buy. It is for her to say whether he is charging more than she wants to pay.

A target retirement fund will not answer the phone when she calls with questions, nor will it create a full financial plan for her. What she wants is for a person to take a load off her shoulders and give advice, so she can concentrate on her career and her family. There are lower-cost ways than Mr. EJ to get this. OP should recommend such a way if he can, but respect his sister's unwillingness to take on yet another source of responsibility and stress.
Ivygirl
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by Ivygirl »

lifeisinmirrors wrote: Thu Jan 02, 2020 6:01 am This couple should be wealthy, but they're living beyond their means. Edward Jones is a bad choice for sure, but their spending is the real problem. Someone with that income should not have to do things like take out unsecured personal loans, and open credit cards for the 0% balance transfer.
A possibility is that, odd as it sounds, paying more might stabilize their finances.

Pay for a house cleaner
Pay for grocery delivery
Pay for drop-off laundry
Pay for lawn care
Pay for pool care, if they have one
Pay for a landscaper to plant flowers in spring instead of trying to do it themselves
Pay for a part-time nanny to pick up the kids and sit with them a few hours

This way the real costs come in an actual bill. When life is busy and in chaos sometimes there are money leaks that happen just because there isn't sufficient attention to pay to stop them. Example would be food waste, or buying batteries when there are already three packs in three different drawers, or going to a restaurant to get away from a dirty kitchen. When life calms down as the kids get older maybe some of these services could be discontinued. But at least with a bill it will be plain how much they cost.
onourway
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by onourway »

Yes she should leave EJ but investments are not at the top of their list right now. Getting their basic finances under control is the first priority as they appear to have a free spending lifestyle that is likely to leave them nowhere near reaching their retirement goals, or needing to work an extra decade-plus to get there, while leaving their kids with huge college debt.

I would suggest she read The Millionaire Next Door as it’s so easy to read she could do it in an evening, and it should help to get the main point across. If she’s receptive to that, add The Bogleheads Guide to Investing Which will take a bit longer but is worth literally hundreds of thousands, if not millions of dollars over the investing lifetime of someone in her position. It’s the best investment she could make right now.
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offthetop
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Re: Sister wants advice since I disagreed with her financial advisers.

Post by offthetop »

WOW. Great information here, some of which I am glad got brought up. From the reading materials to budget, and questions.

I will try to get more information for you.

Her income just started getting high and along with it came lifestyle creep. She knows she needs a budget and doesnt know what is appropriate spending but is very interested in it, but time is her weak point. She is not a boglehead yet but she can be converted once she sees through the haze of the industry.

She is a materialistic person and has always been proud of a nice car and possessions but I think getting her to this forum will be a change of reality for her. As we all know it doesnt matter what other people think about us its what we think about ourselves that matters most. I drive my cars into the ground and I hope we can help her realize that by doing that she will save a lot.

The personal loans were from a bank for various purchases including a large addition that her husband and I put on to the house and a whole new kitchen that is envious of any home cook. Celiac disease runs in the family so eating out is not a huge hit on the list although I will say the monthly spending is most likely higher than she thinks, and I would imagine there are other expenditures that are not on the fore front of being noticed.

I started having her look at some of the replys and she is open to the ideas shared. In terms of some saying that I should not push the ideas if the market were to crash just doesnt make since to me due to the fact that she has goals and I can not watch some advisor end up with a butt load of her earned money. We all know here that it wont mater who your financial advisor is when the market crashes, it crashes and it's a discount sale on stocks so buy more. Even a great advisor wont be able to help you when it does crash in fact the advisor hurts you bigtime in a down market with their fees. I do understand the relationship aspect and I think if she learns the market will do what it does so buy at set intervals whether high or low to DCA and hold on to it then she will be set for the long term.



I gave her my log in information last night so she could check out the discussion and she just called to say she is currently listening to a pod cast " Choose FI: Blueprint to Financial Independance" and plans to get some books. I hope I can teach her how to reply properly so she can reply and become a memeber. Any other suggested podcast ideas or books I think she would greatly appreciate.


Again THANK YOU ALL for your time and I hope you know that you have saved another person from an EJ financial advisor. I will try to help her reply to as many of the questions regarding her current situation, maybe even get her to become a forum member so she can ask questions and get real unbiased answers. :twisted:
onourway
Posts: 2703
Joined: Thu Dec 08, 2016 3:39 pm

Re: Sister wants advice since I disagreed with her financial advisers.

Post by onourway »

The replies in this sort of situation will tend to be a little harsh, so I hope she can see her way through that. The position they are in is not uncommon - rather it’s likely the norm for most in their situation. You work hard to get through your education and land a big job, and you want to splurge a bit.

The advice here will try to help you to see the larger picture. You should have the ability to drive nice vehicles and own a nice home, etc. But that should come after your financial house is fully in order. Taking a few more years to get everything sorted out, get used to living on a budget, saving enough, etc. will not only put your retirement goals on track, but will make it so you no longer need to rely on debt to acquire the things you want - cars, vacations, down payments, etc will all be paid for in cash (or at least financed but backed by the cash in the bank or investments). This is the much more stable way to run your financial life in the long-term.

Good luck!
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ResearchMed
Posts: 10762
Joined: Fri Dec 26, 2008 11:25 pm

Re: Sister wants advice since I disagreed with her financial advisers.

Post by ResearchMed »

Have her set up her own BH account.

That's the way to do it, and also then we'll know which posts are yours and which are hers.
Remind her to use a non-identifying userID.

And we all welcome her!

RM
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