Portfolio Review - Leaving Financial Advisor

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Topic Author
houseofnine
Posts: 10
Joined: Sat Jan 11, 2020 4:40 pm

Portfolio Review - Leaving Financial Advisor

Post by houseofnine » Sat Jan 11, 2020 5:03 pm

Been lurking & learning on the site but this is my very first post! I've listed out my investment details followed by questions. Hope I've done this right...

NOTE: All assets with financial advisor (FA) unless otherwise noted.

Emergency fund: Yes

Debt: Primary Residence $106,000 balance @ 3.0% (doubling payments - $2,000/month)
Rental Property $19,000 balance @ 3.25% (payed off in 6 months)

Tax Filing Status: Married Filing Jointly

Tax Rate: 22% Federal, 6% State

State of Residence: WI

Age(s): 51/57

Desired Asset allocation: 65% stocks / 35% bonds Desired International allocation: 25% of stocks

Total Portfolio: Just into seven figures, not including real estate

Current retirement assets

HIS Taxable
1.10% Vanguard Wellesly Inc Admiral (VWIAX) 0.16%
0.59% Washington Mutual Inv Fund-F2 (WMFFX) 0.36%
0.53% Capitol World Growth & Income-F2 (WGIFX) 0.54%
0.53% PIMCO Total Return Inst (PTTRX) 0.71%
0.19% Cash

HIS Individual Annuity
2.95% AST T Rowe Large Cap Growth 0.90%
2.37% AST Mid-Cap Growth Portfolio 1.02%
2.37% AST MFS Global Equity 1.11%
1.13% AST Small Cap Growth Opps 1.05%
1.07% AST Small Cap Value 1.06%

HIS Brokerage Acct (Etrade)
3.17% AAPL
0.23% ACC
3.32% ACN
0.98% ADBE
1.99% AMZN
1.26% AYX
0.22% BRK.B
0.20% EB
1.11% ETSY
1.89% IDXX
0.24% MKC
0.49% TCEHY
0.51% UA

HIS Roth IRA
1.73% American Growth Portfolio (GWPEX) 0.48%
0.70% Fidelity Adv Health Care (FHCIX) 0.76%
0.01% Cash

HIS 401K
0.92% Sel Met West Total Rtn Bond (MSPGX) 0.79%
0.84% Sel Fndmntl Val (BwHly/BsPt) (MFULX) 0.93%
0.30% Select Eq Opps (Wellington/TRP) (MMFVX) 1.04%
0.88% Sel Gr Opps (Sands/JSP) (MAGLX) 1.04%
0.84% Sel Mid Cap Gr (TRP/Frontier) (MMELX) 1.01%
0.27% Sel SM CO Value (AB/Am Cent) (MMYLX) 1.25%
0.58% Premier Global (Invesco) (MGFLX) 1.17%
0.28% Euro Pacific Growth (American) (RERCX) 1.14%
8.03% MM Sel TRP Ret 2030 (MMTQX) 1.16%

0.99% HIS Money Market (Capital One)
0.98% HIS CD (SallieMae)
0.56% HIS HSA
2.40% Checking
1.05% Savings
1.34% Rental Property Checking

HER Taxable
1.15% Vanguard Tax Mngd (VTMFX) 0.09%
0.96% Washington Mutual Investors (WMFFX) 0.36%
0.86% American Fundamental (FINFX) 0.40%
0.77% American Growth Fund (GFFFX) 0.41%
0.77% Income Fund of America (AMEFX) 0.37%
0.58% Capital Income (CAIFX) 0.38%
0.58% International Gr & Inc (IGFFX) 0.66%
0.38% Altria (MO)
0.29% Cash
0.29% Fidelity Small Cap (FDSCX) 0.75%
0.19% Merck (MRK)
0.19% American Funds New World (NFFFX) 0.71%
0.19% Capital World GR & Inc (WGIF) 0.54%

HER Traditional IRA
3.93% Fidelity Income (FSRIX) 0.74%
3.36% American New Perspective (ANWFX) 0.52%
3.26% American Mutual (AMRFX) 0.39%
3.16% Prudential Global (PZTRX) 0.63%
3.07% Dodge & Cox Income (DODIX) 0.42%
2.78% Janus Balanced (JBALX) 0.64%
2.30% TRP Div Growth (PDGIX) 0.51%
2.21% Franklin Utilities (FRUAX) 0.59%
1.15% Virtus Equity Mid Cap (VIMCX) 0.95%
1.15% Prudential Jennison (PJFZX) 0.71%

HER Roth IRA
2.21% Vanguard Wellesley (VWIAX) 0.16%
1.25% American Funds (AMCFX) 0.47%
1.25% TRP Strategic Income (PRSNX) 0.69%
0.96% TRP Growth (PDGIX) 0.51%
0.96% American Funds New Perspective (ANWFX) 0.52%
0.67% PIMCO Total Return (PTTRX) 0.71%
0.48% Performance Trust Bnd (PTIAX) 0.81%
0.48% American Mutual (AMRFX) 0.39%
0.48% Blackrock Mid Cap (CMGIX) 0.80%
0.48% Fidelity Adv Utilities (FUGIX) 0.81%

0.98% HER CD (SallieMae)

Currently contributing 23%/yr to 401K. Company matches 100% of 1st 4% and 50% of next 2%. Also variable profit sharing, at 5% of current 401k value. $8,000/yr to HSA going forward. Employer contributes 15% of that amount. 40% of HSA invested as follows:
MFS International Value (MINIX) 0.73%
PIMCO Income (PIMIX) 1.05%
We’re also funding our Roth IRAs to maximum.

Aside from available funds stated above, we have a HELOC of $50,000. No balance. We will likely utilize all or part of this to build a barn this year.

Now for the questions:
It seems that between the various fund expenses and AUM with the FA (1.25%), fees are eating away at our portfolio. My first thought is to abandon the FA and move to a DIY scenario. Given the info I’ve provided, where should I go and how difficult should I expect the move to be? I considered moving everything to Etrade since I already have an account there and would like a single site for portfolio mgmt. However, while compiling this info I noticed that all of the funds I looked up on Etrade showed a $19.99 transaction fee. How does this compare to other providers?

As for goals, I would like to retire to something else in the next 5-7 years. How feasible is this given our current situation? My better half left corporate life a few years ago and now works part time for $15-20,000/yr. I would expect us to generate $30,000/yr or so combined income in our “retirement”, and hope to maintain that over the next 15-20 years.

Thanks in advance for any input and for your patience. I really appreciate any opinions/education.

~Patrick

elainet7
Posts: 388
Joined: Sat Dec 08, 2018 1:52 pm

Re: Portfolio Review - Leaving Financial Advisor

Post by elainet7 » Sun Jan 12, 2020 6:16 pm

DECLUTTER THIS PORTFOLIO ASAP SIMPLICITY IS MORE SUCCESSFUL
ALL YOU NEED IS 5-8 VANGUARD FUNDS

retired@50
Posts: 1061
Joined: Tue Oct 01, 2019 2:36 pm

Re: Portfolio Review - Leaving Financial Advisor

Post by retired@50 » Sun Jan 12, 2020 7:04 pm

You're getting creamed on fees. 7 figures @ 1.25% = $12,500 or more per year to your FA + the high expense ratios you're paying to the mutual funds.

The portfolio is wildly complex. I'd move to Vanguard instead of E*Trade, but that's me. I like the low cost mutual fund and ETF options that don't have any transaction fees of any kind. You might need to transfer taxable accounts "in-kind" to avoid or delay any tax consequences, but all Roth and tax-deferred money should move over without any tax consequences. Look into the Three-Fund Portfolio on the Boglehead Wiki. Something along these lines is really all you need.

Article about how complexity sells... FYI.

https://www.researchaffiliates.com/docu ... ty_pdf.pdf

Regards,
Last edited by retired@50 on Sun Jan 12, 2020 8:20 pm, edited 1 time in total.
Boggle - a game from Parker Brothers. Bogle - investor, founder of Vanguard.

veggivet
Posts: 484
Joined: Sun Jan 25, 2015 1:07 pm
Location: New England

Re: Portfolio Review - Leaving Financial Advisor

Post by veggivet » Sun Jan 12, 2020 8:15 pm

Run, don't walk, away from your FA ASAP and simplify, simplify, simplify.
If you watch your pennies, your dollars will take care of themselves.

Topic Author
houseofnine
Posts: 10
Joined: Sat Jan 11, 2020 4:40 pm

Re: Portfolio Review - Leaving Financial Advisor

Post by houseofnine » Sun Jan 12, 2020 8:51 pm

Got it. Onward to simplification. Regarding moving from the FA, does anyone know how the annuity account gets handled in this scenario?

retired@50
Posts: 1061
Joined: Tue Oct 01, 2019 2:36 pm

Re: Portfolio Review - Leaving Financial Advisor

Post by retired@50 » Mon Jan 13, 2020 12:28 am

houseofnine wrote:
Sun Jan 12, 2020 8:51 pm
Got it. Onward to simplification. Regarding moving from the FA, does anyone know how the annuity account gets handled in this scenario?
Re: annuity account
I don't know off the top of my head, but I'd suggest you contact the "future custodian", Vanguard or whoever you decide upon, with the annuity statement and documentation in hand. That way, when questions about the annuity product come up, you'll hopefully be able to answer them, and they will let you know if the account can be transferred "as is" or if it must be liquidated first.

Regards,
Boggle - a game from Parker Brothers. Bogle - investor, founder of Vanguard.

typical.investor
Posts: 1364
Joined: Mon Jun 11, 2018 3:17 am

Re: Portfolio Review - Leaving Financial Advisor

Post by typical.investor » Mon Jan 13, 2020 12:41 am

houseofnine wrote:
Sat Jan 11, 2020 5:03 pm
However, while compiling this info I noticed that all of the funds I looked up on Etrade showed a $19.99 transaction fee. How does this compare to other providers?
$19.99 to transact mutual funds, not bad. But just avoid it.

In tax deferred accounts, select to transfer as cash. I don't think you will get hit with a fee to sell where you are, and then transfer. Why pay $19.99 at the new broker to sell. Why continue to hold when you can switch to cheaper funds with no tax cost.

That said, what is your AA? As much as possible, I would try to keep to a similar AA (in terms of stock-bond %, US-International%, large cap -small cap%, and growth-value%.

I know it's a hassle but value hasn't done well this last decade and now is not the time to sell your value funds and put all the money into growth.

I used Morningstar (got a subscription for a year) to see where I stood, and then just transferred into low cost index funds that gave me a similar exposure.

You may or may not want to sell your mutual funds in taxable. If there isn't a huge tax hit, I probably would as ETFs are more tax friendly and you can also lower your ER. Vanguard Mutual Funds with an ETF share class are also as tax friendly as ETFs.

GuyInFL
Posts: 265
Joined: Thu Aug 04, 2016 7:17 pm

Re: Portfolio Review - Leaving Financial Advisor

Post by GuyInFL » Mon Jan 13, 2020 12:55 am

E*TRADE has 4400 no-load, no transaction fee mutual funds and no commissions on ETFs. Most of the biggies have dropped ETF/stock commissions.

Oddball
Posts: 69
Joined: Thu May 03, 2018 9:35 am

Re: Portfolio Review - Leaving Financial Advisor

Post by Oddball » Mon Jan 13, 2020 10:09 am

houseofnine wrote:
Sun Jan 12, 2020 8:51 pm
Got it. Onward to simplification. Regarding moving from the FA, does anyone know how the annuity account gets handled in this scenario?
I had a previous FA who put my old 401k funds into an annuity, all pre-tax money. I ended up rolling it into my tIRA but I did have to pay some fees to get the money out of the annuity. Transferred the funds from NW mutual (FA) to vanguard.

MadHungarian
Posts: 30
Joined: Tue Jan 02, 2018 4:53 pm

Re: Portfolio Review - Leaving Financial Advisor

Post by MadHungarian » Mon Jan 13, 2020 11:48 am

Interesting. That's sort of like what my Mom's portfolio probably looks like. She uses mutual funds like stocks. Hasn't quite figured out that they're not stocks and you don't need to have a bunch of them for diversification or whatever.

Topic Author
houseofnine
Posts: 10
Joined: Sat Jan 11, 2020 4:40 pm

Re: Portfolio Review - Leaving Financial Advisor

Post by houseofnine » Mon Jan 13, 2020 8:34 pm

Oddball wrote:
Mon Jan 13, 2020 10:09 am
houseofnine wrote:
Sun Jan 12, 2020 8:51 pm
Got it. Onward to simplification. Regarding moving from the FA, does anyone know how the annuity account gets handled in this scenario?
I had a previous FA who put my old 401k funds into an annuity, all pre-tax money. I ended up rolling it into my tIRA but I did have to pay some fees to get the money out of the annuity. Transferred the funds from NW mutual (FA) to vanguard.
Thanks, this is very helpful!

Topic Author
houseofnine
Posts: 10
Joined: Sat Jan 11, 2020 4:40 pm

Re: Portfolio Review - Leaving Financial Advisor

Post by houseofnine » Mon Jan 13, 2020 8:37 pm

GuyInFL wrote:
Mon Jan 13, 2020 12:55 am
E*TRADE has 4400 no-load, no transaction fee mutual funds and no commissions on ETFs. Most of the biggies have dropped ETF/stock commissions.
Yeah, I see now that the load funds carry a transaction fee, but you can list by no fee and low ER as well.

Topic Author
houseofnine
Posts: 10
Joined: Sat Jan 11, 2020 4:40 pm

Re: Portfolio Review - Leaving Financial Advisor

Post by houseofnine » Mon Jan 13, 2020 8:40 pm

typical.investor wrote:
Mon Jan 13, 2020 12:41 am
houseofnine wrote:
Sat Jan 11, 2020 5:03 pm
However, while compiling this info I noticed that all of the funds I looked up on Etrade showed a $19.99 transaction fee. How does this compare to other providers?
$19.99 to transact mutual funds, not bad. But just avoid it.

In tax deferred accounts, select to transfer as cash. I don't think you will get hit with a fee to sell where you are, and then transfer. Why pay $19.99 at the new broker to sell. Why continue to hold when you can switch to cheaper funds with no tax cost.

That said, what is your AA? As much as possible, I would try to keep to a similar AA (in terms of stock-bond %, US-International%, large cap -small cap%, and growth-value%.

I know it's a hassle but value hasn't done well this last decade and now is not the time to sell your value funds and put all the money into growth.

I used Morningstar (got a subscription for a year) to see where I stood, and then just transferred into low cost index funds that gave me a similar exposure.

You may or may not want to sell your mutual funds in taxable. If there isn't a huge tax hit, I probably would as ETFs are more tax friendly and you can also lower your ER. Vanguard Mutual Funds with an ETF share class are also as tax friendly as ETFs.
Thanks for the suggestions. For AA, I’m probably leaning 65/35 broadly. Haven’t broken it down beyond that yet. I like your idea about using Morningstar.

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