Requesting advice for financial planning

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Topic Author
kaspa
Posts: 4
Joined: Fri Aug 14, 2020 9:00 pm

Requesting advice for financial planning

Post by kaspa »

Looking for some advice from this forum of knowledgeable posters.

We are a couple in mid-fifties and have done reasonably well in accumulating a seven-digit portfolio, mainly through savings and regular investing. I have always been a DIY investor, mostly Buy-and-hold with low-fee approach, although not necessarily a complete indexer. As we approach retirement, we are thinking about getting some advice for overall financial planning to map out path to retirement and post-retirement, review of overall portfolio to provide recommendations, review of estate planning and any advice on some financial matters as they arise (e.g., mortgage payout), tax planning, etc. The options on the table are
1. Continue on the DIY path, gain more knowledge about other financial aspects.
2. Schwab Intelligent Portfolios Premium - Have most of my accounts here and the charges are reasonable $300 for initial meeting, $30/month fees, unlimited financial advice through CFP. No other fees
3. An advisor which uses a yearly retainer model such as Facet Wealth - Charge is about $2500-3000/year for a dedicated CFP, unlimited meetings for advice as needed throughout the year, no other fees. They can also manage assets for the same fee, but I may decline that part.
4. A more traditional advisor with hourly fee in the range of $250-280/hour. Initial plan may cost about $3000-5000 depending on scope/time. I have found a couple of options through my searches, but open to recommendations here.
5. Assets under management-based overall planning, such as Creative Planning which will be about 1.0-1.2% fee for me.

For 1, although I have done this in the past, going forward wishing to spend my time on other interests. Besides, wife has much less interest and knowledge and at some point we will need some handholding.

For 2, it is quite low cost and works out to to be less than 0.1% of our portfolio. There is no requirement to keep all our assets under their roboadvisor type platform (need to keep at least $25,000) to get advice for all portfolio. The quality of advice is unclear as the costs do look low, and we may get bottom-tier (whatever that means) CFPs and not the same ones every time.

for 3 and 4, the fees are a little higher, but not exhorbitant in relation to our portfolio, around 0.2-0.3%. Besides, at least for option 4, I won't need to recreate a complete plan every year.

Another option, not mentioned above is vanguard advisors at 0.3%. I am not clear if Vanguard will provide overall financial planning advice and not just investment advice. Also, if they need moving assets to vanguard, this can result in substantial turnover and tax burden.

If the posters here can review my thinking and provide some suggestions, they will be sincerely appreciated. Thank you very much!
dbr
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Joined: Sun Mar 04, 2007 9:50 am

Re: Requesting advice for financial planning

Post by dbr »

It is probably best to cover estate planning issues as well as anticipating elder care concerns with POA, health care POA, etc. with an estate attorney and not a financial advising service. This is necessary work.

Assets under management proposes a perpetual relationship at a high cost. This should be avoided.

I have no recommendation for an hourly consultant or one time plan, which would be the better fit if you can find someone to do it that is not just a come on to a sales pitch.
tashnewbie
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Joined: Thu Apr 23, 2020 12:44 pm

Re: Requesting advice for financial planning

Post by tashnewbie »

I agree with poster above that you should really look into someone who specializes in estate planning and related issues, such as an estate attorney and tax attorney.

It might be helpful to simplify your portfolio holdings as much as reasonably possible. That way, even if you decide to continue DIY, it'll be a lot more manageable, even for your wife (you would need to involve her in the mechanics of managing the portfolio, so that she has the confidence to do so if you pass before her). Otherwise, a simpler portfolio should also be easier for an advisor to manage. I would probably only use a fee-only advisor or someone who charges AUM fee of <0.5%, and it would be worth telling them that you want to keep a low-cost portfolio, using mainly index funds.
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WoodSpinner
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Re: Requesting advice for financial planning

Post by WoodSpinner »

OP,

I would vote for your Option 4. Pay a CFP who understands Retirement planning, Taxes, and Estate Plans to pull together a Retirement plan. You don’t seem to need someone to manage your portfolio at this point. Perhaps start out with an initial meeting to layout your circumstances and key questions and then decide from there.

FWIW, I am a DIYer as well and built my own plan. Retired about 3 years now and it’s still on track. That said, I am going to supplant my efforts with a detailed review and plan (your Option 4) to:
- Make sure I haven’t missed any major points
- Review my decisions and reasoning
- Get my wife familiar with the advisor in case I am incapacitated


WoodSpinner
Topic Author
kaspa
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Joined: Fri Aug 14, 2020 9:00 pm

Re: Requesting advice for financial planning

Post by kaspa »

Thank you all for your replies so far.

No one has commented on #2 and #3. Any experience with those at all? I did look around this site and others, and info seems limited as both may be relatively new.

Schwab CFPs (with intelligent portfolios premium) may be a loss leader to attract more assets. Both Schwab and Facet claim that use of technology has simplified some aspects, reducing time spent in more routine analysis, which is why they are lower costs vs. hourly-fee-based CFPs. If this is true, CFP quality may not be as bad, but then again it can all be a sales pitch, which is why I was wondering if anyone has direct experience of using them.

Regarding the suggestion of using specialists for some aspects -- I was leaning towards that viewpoint and your support provides the affirmation I likely needed to make that decision concrete. I have already engaged a tax professional based on a good reference and hoping to get hourly-fee based advice on one topic of interest (ISO option exercise strategy). For setting up a trust, I did use an attorney few years back and it is about time to have another look as there have been some small changes.
ColoRetiredGirl
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Location: Colorado

Re: Requesting advice for financial planning

Post by ColoRetiredGirl »

Since you have been a DIY investor, you can visit with a Schwab Representative twice a year to review your portfolio. They analyze your portfolio by running it through their software coupled with an understanding of your retirement goals for free. What I did was completed the BH’s IPS (Investment Policy Statement) and reviewed it with the Representative along with this service. I can call anytime to get help with my portfolio within reason with the representative or just call the 24/7 help desk at anytime. They will call in a specialist if needed. Schwab does have their own CFPs which will give you more detailed (handhold) services for 80 basis points for your portfolio/ year. You have input about your portfolio. Going with Creative Planning you are giving up control to them. I am a control freak so not my cup of tea. Personally, I use the free service along with NewRetirement software and of course this site to monitor my portfolio. I continue to educate myself on investing. Finally, you may want to check out Suzie Orman’s estate planning software. You can fill it out and get a lot of free professional help to complete it. You can change your estate planning and health directives anytime you want. You would just have to get it notarized each time. I plan to stick with Schwab due to their excellent customer service and the fact I can visit their offices in person.
Northster
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Joined: Wed Oct 28, 2009 3:30 pm

Re: Requesting advice for financial planning

Post by Northster »

I would second the suggestion of a CFP. I had good luck with a couple of people in the Garrett network. They made a subtle pitch toward an asset management approach but not too pushy. They mostly confirmed my existing approach but gave some good tips and peace of mind.
rixer
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Re: Requesting advice for financial planning

Post by rixer »

Or you could just move into a low cost, balanced mutual fund of indexes and be done with it.
dbr
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Joined: Sun Mar 04, 2007 9:50 am

Re: Requesting advice for financial planning

Post by dbr »

kaspa wrote: Wed Sep 09, 2020 1:47 am Thank you all for your replies so far.

No one has commented on #2 and #3. Any experience with those at all? I did look around this site and others, and info seems limited as both may be relatively new.
That would be because #2 and #3 involve things you don't need and shouldn't pay for and very possibly could even be bad choices. Even worse these may not even include what you should hope to accomplish with #1 assisted by #4 plus talking to a good estate attorney. A huge obstacle to overcome is not being sold things that are not to your benefit and being able to stay out of complicated arrangements you don't understand and can't control.
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Stinky
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Re: Requesting advice for financial planning

Post by Stinky »

dbr wrote: Wed Sep 09, 2020 10:05 am
kaspa wrote: Wed Sep 09, 2020 1:47 am Thank you all for your replies so far.

No one has commented on #2 and #3. Any experience with those at all? I did look around this site and others, and info seems limited as both may be relatively new.
That would be because #2 and #3 involve things you don't need and shouldn't pay for and very possibly could even be bad choices. Even worse these may not even include what you should hope to accomplish with #1 assisted by #4 plus talking to a good estate attorney. A huge obstacle to overcome is not being sold things that are not to your benefit and being able to stay out of complicated arrangements you don't understand and can't control.
+1

My thoughts exactly.
It's a GREAT day to be alive - Travis Tritt
unbiased
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Re: Requesting advice for financial planning

Post by unbiased »

Great replies here so far. I'm a DIY'er too a few years out from retirement. Honestly I thought I could just switch to your #1 suggestion and "figure it out." But PHEW retirement planning is wayyy more complicated than the accumulation phase. It's just hard for retail investors to get access to the sophisticated software and models that financial planners use to estimate your drawdown under multiple scenarios. Especially since the other pieces you mention with estate planning, etc., is truly complex and the risks of making a mistake get costly.

I explored #2. My understanding is that this is a robo-adviser service with some "extra" handholding--but still based on that. I believe Morningstar recently did a review on robo-advisers and found them...wanting. I don't think the AI is there yet, and certainly probably not worth the fees.

I went with a friend who was a financial planner and had him review my plan, give me worksheets to fill out to estimate expenses, and got a very comprehensive report. I think this was worth it, even if just for a second opinion and to have me think about questions I hadn't considered. Fee-only is probably the way to go, but you'll really need to shop carefully as that same Morningstar report found some issues with fee-only advisors. I wish I could find it now but I find the search feature on their website atrocious.
Topic Author
kaspa
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Joined: Fri Aug 14, 2020 9:00 pm

Re: Requesting advice for financial planning

Post by kaspa »

A huge thank you to all who responded. It helps a lot to clarify my thinking. Based on your input, my plan is
1. Engage a CFP - already have two good hourly fee options from Garrett Network based on my first calls.
Will use this CFP for an initial financial plan, mainly focused on retirement planning, review of my portfolio, suggestions on adjustment, better understanding of retirement needs/resources/choices. Both had reasonale fees of about $250-280/hour and this initial review is expected to cost about $2500-3500. Of the the CFP is also a CPA and does taxes, but will focus on CFP expertise for now.

2. Use a tax professional for focused tax planning as needed
3. Get more educated on inheritance/estate planning through suggested resources and then approach an attorney to review my current trust and adjust if needed
4. Use CFP for review as needed - yearly or if there are significant life changes
5. Implement recommendations on my own - no AUM to anyone.
6. Use Schwab's free services as another datapoint - they just did some options analysis for me for free.
7. May bother the good folks here for any second opinions if any advice I receive appears suspect.

If anyone is interested, they can check with me in a few months/years how things worked out with the CFPs.
Topic Author
kaspa
Posts: 4
Joined: Fri Aug 14, 2020 9:00 pm

Re: Requesting advice for financial planning

Post by kaspa »

As the board was so helpful, I am providing an update for whoever is interested.

Before and after my post, I interviewed five financial planners -- all were CFPs and a couple were CPAs in addition.
I had already rejected a couple more planners who charged 0.8-1.2% (or more) of Assets Under Management (AUM).

For others, the fees seem to cluster around
1. Hourly planners with fees of $250-280/h, total around $3000-4500 for first planning session
2. Retainer-based planner (Facet Wealth) which for my case was around $2500-3000/year with unlimited access to CFP
3. PlanVision founded by Mark Zoril $150/year, $8/month after first year if you continue.

For #1, a couple of them appeared knowledgeable, with no upsells and would have likely gone to one of them if some of the cheaper alternatives offering very similar service were not available.

For #2, I had several discussions and could have gone with them. CFP seemed knowledgeable, investment philosophy aligned and it was cost-effective vs. #1.

Ran into the 3rd option during further research on BH forum and also checked out other sites -- essentially all reviews were highly positive. The fees look like an outlier, so was hesitant at first, but decided to take the plunge. Already had multiple conversations (video calls) with Mark and Jason (a CPA) and the interaction has been highly useful getting some good no nonsense advice. They keep their prices low, by minimizing time wastage. They provide access to Emoney for a year and you connect (or just manually enter) your accounts, your goals, current saving rate, etc. They do not have in-person meetings (even before Covid), video calls are kept short and very focused. Even his responses to email questions are in the form of directed videos which are quick 2-3 min and very informative. They provided very good advice (in my view) clarifying some of my muddled thinking. He believes in simplicity which is easier to understand, manage and stay on path. With all the assumptions we did scenario analysis in Emoney (which you can also do yourself on the side with Emoney as unlike many advisors who just provide reports). He is very conservative in his assumptions which helps you with understanding worse case scenarios. Overall, very happy so far with the choice!
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