Large Personal Injury Settlement

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shulgin
Posts: 16
Joined: Mon May 14, 2018 9:55 pm

Large Personal Injury Settlement

Post by shulgin » Tue May 15, 2018 10:02 am

Hello! I've just recently discovered this community and I'm very happy with the information and support you guys offer! A little about me - I am a early 20s male who lives in a high COL city in the west coast. I was T-boned by a woman who was careless and lost my leg and had to get pretty extensive surgery on my hip. Now I am out of the weeds on my recovery for the most part and am getting fitted for my prosthetic this week. Luckily the woman the hit me ended up being an older, wealthier woman and they had a 5.25 mill dollar insurance policy. After my healthcare company and my lawyer get their share, I should be left over with about 3 million. I have been interviewing financial advisors, but from the research I have done here, you guys are also experts. What would be your advice on how to split this up and invest it?
My prosthetist has estimated my costs to be about 11k per year for the prosthetic and that will go up with inflation
Also hip replacement 10 years out or so, not too sure about costs associated with that
Rent is about 1k a month and expenses 500-600, been covering that with my savings before the accident
Last edited by shulgin on Tue May 15, 2018 10:58 pm, edited 1 time in total.

RickBoglehead
Posts: 1261
Joined: Wed Feb 14, 2018 9:10 am

Re: Large Personal Injury Settlement

Post by RickBoglehead » Tue May 15, 2018 12:27 pm

Sorry to hear of your situation, but good that it worked out that you have financial protection.

Vanguard PAS (Personal Advisor Services) can give you some help, and if you invest that kind of money you'll be a Flagship customer and entitled to a review annually if you choose to manage the funds yourself, or let them do it for 0.3% annually. Personally, I wouldn't give them $9,000 a year (and climbing as your assets grow) because all they are going to do is rebalance regularly, which you can do. Or have them review the plan annually, for free, and then move things yourself.

At 21 years old, and with your financial needs easily covered by that kind of portfolio (plus future earnings), you can be fairly heavily weighted in stock mutual funds and even go with the 3 fund solution often talked about here.

PVW
Posts: 488
Joined: Mon Dec 29, 2014 11:01 am

Re: Large Personal Injury Settlement

Post by PVW » Tue May 15, 2018 12:29 pm

Windfall questions come up frequently on this forum. There is guidance provided in the Wiki, and it may also be useful to search for other similar posts.

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

To guide your plan for this windfall, the most important thing is to figure out what you want to use the money for. Is this going to fund all of your living expenses? If so, what are your expenses? Or use it as a retirement fund? Or use it to fund a lifestyle upgrade? Funding for new/ modified housing, career (re)training, education? etc. In other words, when will you need to spend this money?

You also need to asses your knowledge and willingness to learn to execute the plan for yourself (many people here are willing to provide help and education). Or you might decide that you would rather have professional help. A professional can help you map out a plan based on your investing goals and risk tolerance. But professional help costs money and the cost can vary widely.

And while $3M is a sizeable amount of money, it is not enough to fund a profligate lifestyle - especially if some of it will be used to pay for increased healthcare costs. When invested in a stock and bond portfolio, you can draw down about 3% per year without eventually depleting the fund. So this windfall is about equivalent to an extra $90K per year. That could provide a comfortable lifestyle, but it won't go very far if you are "helping" friends or buying expensive toys.

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David Jay
Posts: 5795
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Large Personal Injury Settlement

Post by David Jay » Tue May 15, 2018 12:31 pm

Start on the Wiki with "Managing a Windfall", link: https://www.bogleheads.org/wiki/Managing_a_windfall

BTW - welcome to the forum. Nobody here will ever make a penny off of you!
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

DarkHelmetII
Posts: 166
Joined: Mon Jul 24, 2017 12:25 pm

Re: Large Personal Injury Settlement

Post by DarkHelmetII » Tue May 15, 2018 12:49 pm

Find an investment adviser / financial planner contractually bound to the fiduciary standard, not suitability standard. The former must work in your best interest whereas the latter, amazingly, does not have to.

Added: nothing wrong with doing it yourself as others indicated. But IF you decided to get an adviser, keep in mind the above.
Last edited by DarkHelmetII on Tue May 15, 2018 2:25 pm, edited 1 time in total.

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ruralavalon
Posts: 14271
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Location: Illinois

Re: Large Personal Injury Settlement

Post by ruralavalon » Tue May 15, 2018 12:53 pm

Welcome to the forum :) .

It's good to see that you are out of the weeds on recovery for the most part.

shulgin wrote:
Tue May 15, 2018 10:02 am
Hello! I've just recently discovered this community and I'm very happy with the information and support you guys offer! A little about me - I am a 21y old male who lives in a high COL city in Cali. I was T-boned by a woman who was careless and lost my leg and had to get pretty extensive surgery on my hip. Now I am out of the weeds on my recovery for the most part and am getting fitted for my prosthetic this week. Luckily the woman the hit me ended up being an older, wealthier woman and they had a 5.25 mill dollar insurance policy. After my healthcare company and my lawyer get their share, I should be left over with about 3 million. I have been interviewing financial advisors, but from the research I have done here, you guys are also experts. What would be your advice on how to split this up and invest it?
My prosthetist has estimated my costs to be about 11k per year for the prosthetic and that will go up with inflation
Also hip replacement 10 years out or so, not too sure about costs associated with that
Rent is about 1k a month and expenses 500-600, been covering that with my savings before the accident
Here is some more general advice on dealing with a windfall.
1) take your time, there is no rush;
2) temporarily park the money for a short time in a very safe place, such as federally insured savings accounts or federally insured short term CDs. A good resource for comparing rates is http://www.bankrate.com ;
3) educate yourself first. Here is a wiki article you could read to start educating yourself: "Bogleheads® investment philosophy. For a quick overview of investing basics for the new person read Dr. Bernstein's short book, "If You Can". I suggest that reading one or two books on general investing. Wiki article, "Books: recommendations and reviews";
4) beware of anyone (family, friend, neighbor, co-worker, banker, anyone at all) trying to sell anything (real estate, stocks, bonds, insurance, annuity, mutual fund, ETF, anything at all); and
5) make a plan first, then act.
6) $3 million will not support extravagant spending, but do use a small part of that to spend on something nice for yourself like a good vacation, nicer car, something you will enjoy.
Pease see the wiki article, "Managing a Windfall".



You could post all your financial information on this forum for detailed ideas on how to invest. Please see this for format: "Asking Portfolio Questions". You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.

What is your profession or occupation? What is your educational background? What are the prospects of your being able to return to employment?



What type of advisor have you been interviewing? It's very important to have a fee only advisor, who operates on a fiduciary standard in the best interests of the investor. How are they paid (on commission, percentage of assets, hourly, flat fee, etc.)? Do they simply help plan investments? Or do they manage investments? Here is a guide to help in deciding if you want or need an advisor: "Chapter 10 – On Your Own or Hire an Advisor". It lists questions to ask a prospective advisor.



Harry Sit, who sometimes posts here, offers a service thru his blog to help people locate an advisor in their locality. "Advice-Only Search and Screening".



Two links for finding an advisor:
http://www.napfa.org/consumer/index.asp
http://www.garrettplanningnetwork.com/
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Zero Alpha
Posts: 13
Joined: Fri Feb 23, 2018 1:45 pm

Re: Large Personal Injury Settlement

Post by Zero Alpha » Tue May 15, 2018 1:30 pm

Given your age and net worth, learning to manage your money by yourself could easily save you $millions in fees over your lifetime. I would lean towards a more conservative allocation with more bonds until you have experienced a bear market.

I would park the money in a money market fund (I like VMMXX prime money market at Vanguard), an ultra short term bond fund and/or savings/ short CDs until you have a long term investment plan. Something with very low risk and more than 1.5% yield.

Be wary of too good to be true investment opportunities from friends or relatives.

Gnirk
Posts: 871
Joined: Sun Sep 09, 2012 3:11 am
Location: Western Washington

Re: Large Personal Injury Settlement

Post by Gnirk » Tue May 15, 2018 3:12 pm

And tell no one about your settlement! You won't believe who/what comes out of the woodwork.

staythecourse
Posts: 6219
Joined: Mon Jan 03, 2011 9:40 am

Re: Large Personal Injury Settlement

Post by staythecourse » Tue May 15, 2018 3:31 pm

Doc here. My biggest concern would be healthcare coverage for current and future needs due to the accident. At 21 you will incur A LOT of expenses over your lifetime just due to the injury. What are you doing for healthcare? Is that negotiated in the settlement?

Good luck.

p.s. This may be insensitive, but this a financial forum and I am sure many on here would be interested this type of settlement get covered by person's personal assets or umbrella coverage from their insurance company? If you are not comfortable answering I totally understand.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

ssquared87
Posts: 755
Joined: Tue Apr 02, 2013 9:54 am

Re: Large Personal Injury Settlement

Post by ssquared87 » Tue May 15, 2018 3:37 pm

Sorry to hear about your injuries. I won't comment on the financial aspect, as posters above have given you great advice. Do what your doctors tell you, and search for new doctors if you feel like your doctors are brushing you off or not making you feel comfortable.

Also, use part of that settlement money to buy an extremely safe car. I was injured in an accident by a careless driver as well, and am sure my injuries would have been much worse had I been driving a less safe vehicle. Drivers in CA are unbelievably bad.

I like small, fun cars but given how quickly things can change if someone isn't paying attention, I'm now driving a midsize car with extremely good safety ratings. Look at european brands (BMW,Merc,Audi, Volvo). They use ultra high strength steel in their construction and are designed for autobahn speed collisions.

bltn
Posts: 227
Joined: Mon Feb 20, 2017 9:32 pm

Re: Large Personal Injury Settlement

Post by bltn » Tue May 15, 2018 3:52 pm

Agree with some advice above. Tell nobody else about the size of your settlement.
And do not loan or give money to friends or family. Any loan will probably become a gift with attached resentments on both sides. While that settlement sum seems high now, you ll likely need all of it for security in the future.
Arrange for some sort of medical insurance coverage as a first step for money management. Every dollar spent on insurance premiums will be returned to you several times over in saved medical expenses.
Best of luck. Keep reading these pages and educating youself on finances.

shulgin
Posts: 16
Joined: Mon May 14, 2018 9:55 pm

Re: Large Personal Injury Settlement

Post by shulgin » Tue May 15, 2018 7:50 pm

Thank you to all of you who have chimed in and given advice, I really appreciate it!.
RickBoglehead wrote:
Tue May 15, 2018 12:27 pm

Vanguard PAS (Personal Advisor Services) can give you some help, and if you invest that kind of money you'll be a Flagship customer and entitled to a review annually if you choose to manage the funds yourself, or let them do it for 0.3% annually. Personally, I wouldn't give them $9,000 a year (and climbing as your assets grow) because all they are going to do is rebalance regularly, which you can do. Or have them review the plan annually, for free, and then move things yourself.

At 21 years old, and with your financial needs easily covered by that kind of portfolio (plus future earnings), you can be fairly heavily weighted in stock mutual funds and even go with the 3 fund solution often talked about here.
Thanks for the advice! I have reached out to Vanguard and have already interviewed them about their services. I was going to choose them or a robo advisor for low fees but I ended up finding a fiduciary with a pretty large team of CPAs and portfolio managers that can help me manage the assets for 1/8 of 1 percent. I haven't seen a rate like that at all for all the services they provide so Im leaning heavily toward them.
PVW wrote:
Tue May 15, 2018 12:29 pm
Windfall questions come up frequently on this forum. There is guidance provided in the Wiki, and it may also be useful to search for other similar posts.

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

To guide your plan for this windfall, the most important thing is to figure out what you want to use the money for. Is this going to fund all of your living expenses? If so, what are your expenses? Or use it as a retirement fund? Or use it to fund a lifestyle upgrade? Funding for new/ modified housing, career (re)training, education? etc. In other words, when will you need to spend this money?

You also need to asses your knowledge and willingness to learn to execute the plan for yourself (many people here are willing to provide help and education). Or you might decide that you would rather have professional help. A professional can help you map out a plan based on your investing goals and risk tolerance. But professional help costs money and the cost can vary widely.

And while $3M is a sizeable amount of money, it is not enough to fund a profligate lifestyle - especially if some of it will be used to pay for increased healthcare costs. When invested in a stock and bond portfolio, you can draw down about 3% per year without eventually depleting the fund. So this windfall is about equivalent to an extra $90K per year. That could provide a comfortable lifestyle, but it won't go very far if you are "helping" friends or buying expensive toys.
I'm still deciding how to divy everything up. 3 million isn't a whole lot in today's day and age, but I have a large advantage being so young. I aim to use some of it to start a business, a part to invest in real estate, so I have some consistent income in a down market, and the majority of it in a diversified, global portfolio. I'm not going to use it for living expenses if I can help it, just to create more passive income. A chunk of it will be allocated for my sisters' college (twins just turned 13) and a car for each of them once they are of age. If I choose to continue on with college I will use part of the money for that, but I'm not aiming to go to a super expensive school, I have been going to community currently.

I would say I am at an intermediate level for investing, but I feel like the .125% fee I would be paying for the financial advisors would be outweighed by the assistance they can provide. You make a fair point with the costs I will be incurring in the future. This is why I want to build some consistent income into my portfolio so I never have to worry about being covered. I will be keeping this close to home and only helping very immediate family, or family in my original eastern european country, where a small boost in income would help them survive a lot.
ruralavalon wrote:
Tue May 15, 2018 12:53 pm

Here is some more general advice on dealing with a windfall.
1) take your time, there is no rush;
2) temporarily park the money for a short time in a very safe place, such as federally insured savings accounts or federally insured short term CDs. A good resource for comparing rates is http://www.bankrate.com ;
3) educate yourself first. Here is a wiki article you could read to start educating yourself: "Bogleheads® investment philosophy. For a quick overview of investing basics for the new person read Dr. Bernstein's short book, "If You Can". I suggest that reading one or two books on general investing. Wiki article, "Books: recommendations and reviews";
4) beware of anyone (family, friend, neighbor, co-worker, banker, anyone at all) trying to sell anything (real estate, stocks, bonds, insurance, annuity, mutual fund, ETF, anything at all); and
5) make a plan first, then act.
6) $3 million will not support extravagant spending, but do use a small part of that to spend on something nice for yourself like a good vacation, nicer car, something you will enjoy.


You could post all your financial information on this forum for detailed ideas on how to invest. Please see this for format: "Asking Portfolio Questions". You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.

What is your profession or occupation? What is your educational background? What are the prospects of your being able to return to employment?


What type of advisor have you been interviewing? It's very important to have a fee only advisor, who operates on a fiduciary standard in the best interests of the investor. How are they paid (on commission, percentage of assets, hourly, flat fee, etc.)? Do they simply help plan investments? Or do they manage investments? Here is a guide to help in deciding if you want or need an advisor: "Chapter 10 – On Your Own or Hire an Advisor". It lists questions to ask a prospective advisor.


Harry Sit, who sometimes posts here, offers a service thru his blog to help people locate an advisor in their locality. "Advice-Only Search and Screening".


Two links for finding an advisor:
http://www.napfa.org/consumer/index.asp
http://www.garrettplanningnetwork.com/
I found a fiduciary on NAFTA that is fee only, .125% of my portfolio a year.
Thanks for the list of tips, I've been plugging away at #5 pretty heavily

As for the financial information, sorry for not following format, I don't really have a lot of assets
About 35k in crytpo and 5k or so cash

My occupation before was construction, but I was only in that to learn how to manage my future properties ;)
I am getting a business degree and am already running a couple side business online with a buddy of mine. Not very profitable but I'm mostly doing it for the experience. I am on the last quarter of my AA. My prosthetic will be completed next week, so I am thinking about going back to work part time.
staythecourse wrote:
Tue May 15, 2018 3:31 pm
Doc here. My biggest concern would be healthcare coverage for current and future needs due to the accident. At 21 you will incur A LOT of expenses over your lifetime just due to the injury. What are you doing for healthcare? Is that negotiated in the settlement?

Good luck.

p.s. This may be insensitive, but this a financial forum and I am sure many on here would be interested this type of settlement get covered by person's personal assets or umbrella coverage from their insurance company? If you are not comfortable answering I totally understand.


Hey Doc! How ya doing?
The woman had an umbrella policy that covered her for personal liability and Statefarm for her car. My lawyer has been going through state farm so I don't know if they also gave her that umbrella policy or if its through someone else. Right now I am covered by my mom for medical, but I have a nice check to write Kaiser for my medical care since they get reimbursed. The settlement is just cash, no medical terms, I am lucky to have insurance until 26 if the current system stands. My stepdad just retired last week, so I should have to start paying copays.
ssquared87 wrote:
Tue May 15, 2018 3:37 pm
Sorry to hear about your injuries. I won't comment on the financial aspect, as posters above have given you great advice. Do what your doctors tell you, and search for new doctors if you feel like your doctors are brushing you off or not making you feel comfortable.

Also, use part of that settlement money to buy an extremely safe car. I was injured in an accident by a careless driver as well, and am sure my injuries would have been much worse had I been driving a less safe vehicle. Drivers in CA are unbelievably bad.

I like small, fun cars but given how quickly things can change if someone isn't paying attention, I'm now driving a midsize car with extremely good safety ratings. Look at european brands (BMW,Merc,Audi, Volvo). They use ultra high strength steel in their construction and are designed for autobahn speed collisions.
Sorry you were injured as well! I got hit on my motorcycle unfortunately, so I didn't have a cage around me. Now I'm driving a slow 4-banger hybrid SUV, but it's a Ford, so I'm not sure if it has the same quAlity of construction.
Last edited by shulgin on Tue May 15, 2018 10:59 pm, edited 1 time in total.

mortfree
Posts: 1323
Joined: Mon Sep 12, 2016 7:06 pm

Re: Large Personal Injury Settlement

Post by mortfree » Tue May 15, 2018 7:59 pm

1/8 of 1 percent... BUT

What are the expenses for the funds they will put you in.

Front loaded? 12b-1 fees?

Seems too good to be true??

Sorry about your accident.

shulgin
Posts: 16
Joined: Mon May 14, 2018 9:55 pm

Re: Large Personal Injury Settlement

Post by shulgin » Tue May 15, 2018 8:09 pm

mortfree wrote:
Tue May 15, 2018 7:59 pm
1/8 of 1 percent... BUT

What are the expenses for the funds they will put you in.

Seems to good to be true??

Sorry about your accident.
Their core portfolio is all the lowest cost options at Schwab, but I have only met and talked with them for 2 hours, so I haven't had them draft up the entire financial plan. I told them low cost was a huge factor to me, and they said they always use the industry's lowest fee options. I will be meeting with them again this week to hash everything out and get a clearer picture. Are there any questions you recommend I ask?
I thought it was too good to be true as well, but they are on NAPFA
https://www.napfa.org/firm/39119/22568

I should add that .125% is on 3 million and they are waiving a few other fees for me

What are 12b1 fees?

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Sasquatch
Posts: 252
Joined: Mon Apr 09, 2018 12:44 pm

Re: Large Personal Injury Settlement

Post by Sasquatch » Tue May 15, 2018 8:13 pm

Sage advise here.

Slow and steady wins the race. Compounding is on your side at your young age.

Is the .125% advisory cover everything or are expense ratios and trading fees on top of the .125%. That is a crazy low number. If it sounds to good to be true.....................

mortfree
Posts: 1323
Joined: Mon Sep 12, 2016 7:06 pm

Re: Large Personal Injury Settlement

Post by mortfree » Tue May 15, 2018 8:14 pm

shulgin wrote:
Tue May 15, 2018 8:09 pm
mortfree wrote:
Tue May 15, 2018 7:59 pm
1/8 of 1 percent... BUT

What are the expenses for the funds they will put you in.

Seems to good to be true??

Sorry about your accident.
Their core portfolio is all the lowest cost options at Schwab, but I have only met and talked with them for 2 hours, so I haven't had them draft up the entire financial plan. I told them low cost was a huge factor to me, and they said they always use the industry's lowest fee options. I will be meeting with them again this week to hash everything out and get a clearer picture. Are there any questions you recommend I ask?
I thought it was too good to be true as well, but they are on NAPFA
https://www.napfa.org/firm/39119/22568

I should add that .125% is on 3 million and they are waving a few other fees for me
I had edited my post with two.

Front loaded fees or 12b-1 fees?

Do you have the rights to trade within the account or will they have full access to do the trading without your consent?

How many funds will they put you in? Red flag if they are going to put you in a lot of funds/stocks.

Termination fees?

There was an example on here where someone was going to sell $100,000 in stocks and the fees were pushing $6000 to do so.

mortfree
Posts: 1323
Joined: Mon Sep 12, 2016 7:06 pm

Re: Large Personal Injury Settlement

Post by mortfree » Tue May 15, 2018 8:16 pm

A 12b-1 fee is an annual marketing or distribution fee on a mutual fund. The 12b-1 fee is considered to be an operational expense and, as such, is included in a fund's expense ratio. It is generally between 0.25 and 1% (the maximum allowed) of a fund's net assets.

Investopedia source.
Last edited by mortfree on Tue May 15, 2018 8:17 pm, edited 1 time in total.

shulgin
Posts: 16
Joined: Mon May 14, 2018 9:55 pm

Re: Large Personal Injury Settlement

Post by shulgin » Tue May 15, 2018 8:17 pm

Sasquatch wrote:
Tue May 15, 2018 8:13 pm
Sage advise here.

Slow and steady wins the race. Compounding is on your side at your young age.

Is the .125% advisory cover everything or are expense ratios and trading fees on top of the .125%. That is a crazy low number. If it sounds to good to be true.....................
The fee is excluding the indexes. I will make sure to get all that hashed out on my next meeting. I agree that the number is crazy low. Difference of 30,000 and 3,750 is HUGE for me. With much I would be spending on a traditional advisor, I can spend 1.5k per month on my lifestyle expenses if I want and still come out ahead.

shulgin
Posts: 16
Joined: Mon May 14, 2018 9:55 pm

Re: Large Personal Injury Settlement

Post by shulgin » Tue May 15, 2018 8:22 pm

mortfree wrote:
Tue May 15, 2018 8:14 pm

I had edited my post with two.

Front loaded fees or 12b-1 fees?

Do you have the rights to trade within the account or will they have full access to do the trading without your consent?

How many funds will they put you in? Red flag if they are going to put you in a lot of funds/stocks.

Termination fees?

There was an example on here where someone was going to sell $100,000 in stocks and the fees were pushing $6000 to do so.
Those are great questions to ask! I was using this meeting to give them a lot of info on myself bc their lead partner was out on business and he was the one I talked to on the phone originally about the fees, so this gives me some questions to bring next time. I believe they custodian at Shwab and ask my permission before they change my core portfolio,but clients usually give them some percentage to allow them to find opportunities in the market. I did not address termination fees, great point to bring up.

averagedude
Posts: 368
Joined: Sun May 13, 2018 3:41 pm

Re: Large Personal Injury Settlement

Post by averagedude » Tue May 15, 2018 8:28 pm

I am a newbie on this forum and i must say there is a lot of great advice on this website and on this particular thread. Ruralavalon was spot on. Reread 1,4, and 6 of his post several times. Sound advice.

Silverado
Posts: 195
Joined: Fri Oct 18, 2013 6:07 pm

Re: Large Personal Injury Settlement

Post by Silverado » Tue May 15, 2018 8:43 pm

shulgin wrote:
Tue May 15, 2018 8:22 pm
mortfree wrote:
Tue May 15, 2018 8:14 pm

I had edited my post with two.

Front loaded fees or 12b-1 fees?

Do you have the rights to trade within the account or will they have full access to do the trading without your consent?

How many funds will they put you in? Red flag if they are going to put you in a lot of funds/stocks.

Termination fees?

There was an example on here where someone was going to sell $100,000 in stocks and the fees were pushing $6000 to do so.
Those are great questions to ask! I was using this meeting to give them a lot of info on myself bc their lead partner was out on business and he was the one I talked to on the phone originally about the fees, so this gives me some questions to bring next time. I believe they custodian at Shwab and ask my permission before they change my core portfolio,but clients usually give them some percentage to allow them to find opportunities in the market. I did not address termination fees, great point to bring up.
I am hearing some alarm bells. Please be careful. They will get theirs (aka was yours).

shulgin
Posts: 16
Joined: Mon May 14, 2018 9:55 pm

Re: Large Personal Injury Settlement

Post by shulgin » Tue May 15, 2018 8:47 pm

Silverado wrote:
Tue May 15, 2018 8:43 pm
shulgin wrote:
Tue May 15, 2018 8:22 pm
mortfree wrote:
Tue May 15, 2018 8:14 pm

I had edited my post with two.

Front loaded fees or 12b-1 fees?

Do you have the rights to trade within the account or will they have full access to do the trading without your consent?

How many funds will they put you in? Red flag if they are going to put you in a lot of funds/stocks.

Termination fees?

There was an example on here where someone was going to sell $100,000 in stocks and the fees were pushing $6000 to do so.
Those are great questions to ask! I was using this meeting to give them a lot of info on myself bc their lead partner was out on business and he was the one I talked to on the phone originally about the fees, so this gives me some questions to bring next time. I believe they custodian at Shwab and ask my permission before they change my core portfolio,but clients usually give them some percentage to allow them to find opportunities in the market. I did not address termination fees, great point to bring up.
I am hearing some alarm bells. Please be careful. They will get theirs (aka was yours).
How can I mitigate the risk? I understand too good to be true, but wouldn't it be prudent for me to follow through and and address the concerns?

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Watty
Posts: 14622
Joined: Wed Oct 10, 2007 3:55 pm

Re: Large Personal Injury Settlement

Post by Watty » Tue May 15, 2018 8:52 pm

A couple of suggestions that I have not seen mentioned yet.

1) You should make sure that you have ample car insurance and a large umbrella policy since you are more likely to be sued now that you have more assets.

2) As someone else said be sure to get a very safe car and get any of the adaptive equipment that you might need like hand controls. This does not mean a super expensive car but

3) Be sure to get a will and the related paperwork set up. When a will is done there are a handful of other documents that are usually done like power of attorneys and medical directives to let people make decisions for you if you are incapacitated.
Sasquatch wrote:
Tue May 15, 2018 8:13 pm
Is the .125% advisory cover everything or are expense ratios and trading fees on top of the .125%. That is a crazy low number. If it sounds to good to be true.....................
+1

Along with all the other ways they can add on fees there is a non-zero chance that there is some sort of fraud involved which is more common than you might think.

Bernie Madoff made the headlines because his fraud was so big but there are lots of other smaller operations you never hear about.

https://en.wikipedia.org/wiki/Bernard_Madoff

https://www.investor.gov/protect-your-i ... ypes-fraud

shulgin
Posts: 16
Joined: Mon May 14, 2018 9:55 pm

Re: Large Personal Injury Settlement

Post by shulgin » Tue May 15, 2018 8:56 pm

Watty wrote:
Tue May 15, 2018 8:52 pm
A couple of suggestions that I have not seen mentioned yet.

1) You should make sure that you have ample car insurance and a large umbrella policy since you are more likely to be sued now that you have more assets.

2) As someone else said be sure to get a very safe car and get any of the adaptive equipment that you might need like hand controls. This does not mean a super expensive car but

3) Be sure to get a will and the related paperwork set up. When a will is done there are a handful of other documents that are usually done like power of attorneys and medical directives to let people make decisions for you if you are incapacitated.
Sasquatch wrote:
Tue May 15, 2018 8:13 pm
Is the .125% advisory cover everything or are expense ratios and trading fees on top of the .125%. That is a crazy low number. If it sounds to good to be true.....................
+1

Along with all the other ways they can add on fees there is a non-zero chance that there is some sort of fraud involved which is more common than you might think.

Bernie Madoff made the headlines because his fraud was so big but there are lots of other smaller operations you never hear about.

https://en.wikipedia.org/wiki/Bernard_Madoff

https://www.investor.gov/protect-your-i ... ypes-fraud
Thanks for the advice! I am def planning on boosting insurance and getting an umbrella policy. I have yet to contact an estate attorney, but its on the to- do list for sure. Thanks for bringing up the last point, I know I will have custody of the money, but you bring up a fair point to make sure everything is run by me and for me to understand if there are any hidden fees.

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Sasquatch
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Re: Large Personal Injury Settlement

Post by Sasquatch » Tue May 15, 2018 8:59 pm

shulgin wrote:
Tue May 15, 2018 8:17 pm
Difference of 30,000 and 3,750 is HUGE for me. With much I would be spending on a traditional advisor, I can spend 1.5k per month on my lifestyle expenses if I want and still come out ahead.
Exactly!

shulgin
Posts: 16
Joined: Mon May 14, 2018 9:55 pm

Re: Large Personal Injury Settlement

Post by shulgin » Tue May 15, 2018 9:08 pm

mortfree wrote:
Tue May 15, 2018 8:14 pm
shulgin wrote:
Tue May 15, 2018 8:09 pm
mortfree wrote:
Tue May 15, 2018 7:59 pm
1/8 of 1 percent... BUT

What are the expenses for the funds they will put you in.

Seems to good to be true??

Sorry about your accident.
Their core portfolio is all the lowest cost options at Schwab, but I have only met and talked with them for 2 hours, so I haven't had them draft up the entire financial plan. I told them low cost was a huge factor to me, and they said they always use the industry's lowest fee options. I will be meeting with them again this week to hash everything out and get a clearer picture. Are there any questions you recommend I ask?
I thought it was too good to be true as well, but they are on NAPFA
https://www.napfa.org/firm/39119/22568

I should add that .125% is on 3 million and they are waving a few other fees for me
I had edited my post with two.

Front loaded fees or 12b-1 fees?

Do you have the rights to trade within the account or will they have full access to do the trading without your consent?

How many funds will they put you in? Red flag if they are going to put you in a lot of funds/stocks.

Termination fees?

There was an example on here where someone was going to sell $100,000 in stocks and the fees were pushing $6000 to do so.
Thanks a ton Mortfree
Just fired off this email
"Hey Robert,
I just had a few questions regarding fees I didn't touch on in the initial meeting. Tracy mentioned .125% advisory fee on an investment 3 million and up. I wanted to confirm this and see if there were any other fees on top of this.
Do any of the funds you use have front-loaded or back-loaded fees?
Are the funds you use no-load funds?
Are there any termination fees?
I understand any active trading done will incur taxes and capital gains. Do you have any data on how much of your typical clients account is actively managed by you guys and how much is the "core portfolio" Tracy mentioned

I also would like to understand how the Charles Schwab custodianship will go. Are things done automatically or is everything run by me?

Thanks, just wanted to wrap my head around some things.
-Jay"

Deus
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Re: Large Personal Injury Settlement

Post by Deus » Tue May 15, 2018 9:48 pm

Long time listener but first time poster because this thread really struck a chord with me and my dealings with financial managers.

Let me tell you there is no magic to investing. The biggest problems you are going to face with a windfall are the relationship struggles and dealing with people who want money or to manage it. It sounds like you have the fundamentals down so the Boglehead info is really all you need along with a good CPA to make sure you don't make dumb mistakes. The value a money manager adds is mostly mysticism as any real question you are going to have is going to be answered with salesman fluff or a recommendation out to a CPA or estate planner/lawyer.

Reading your posts, you already have all the ammo you need to start down this path yourself. Go with one of the big low cost fund providers, build your back stop with bonds and invest the remainder in a diversified growth portfolio. If you want someone to double check your work, go to an hourly certified financial planner with YOUR plan. It'll cost you a few hundred bucks but will verify you know what you are doing and give you the comfort you need in pressing forward.

Follow through with the other posts regarding umbrella insurance and find a financial planner to work on estates and wills. Only bring in the estate attorneys for attorney work.

shulgin
Posts: 16
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Re: Large Personal Injury Settlement

Post by shulgin » Tue May 15, 2018 10:16 pm

Deus wrote:
Tue May 15, 2018 9:48 pm
Long time listener but first time poster because this thread really struck a chord with me and my dealings with financial managers.

Let me tell you there is no magic to investing. The biggest problems you are going to face with a windfall are the relationship struggles and dealing with people who want money or to manage it. It sounds like you have the fundamentals down so the Boglehead info is really all you need along with a good CPA to make sure you don't make dumb mistakes. The value a money manager adds is mostly mysticism as any real question you are going to have is going to be answered with salesman fluff or a recommendation out to a CPA or estate planner/lawyer.

Reading your posts, you already have all the ammo you need to start down this path yourself. Go with one of the big low cost fund providers, build your back stop with bonds and invest the remainder in a diversified growth portfolio. If you want someone to double check your work, go to an hourly certified financial planner with YOUR plan. It'll cost you a few hundred bucks but will verify you know what you are doing and give you the comfort you need in pressing forward.

Follow through with the other posts regarding umbrella insurance and find a financial planner to work on estates and wills. Only bring in the estate attorneys for attorney work.
Thanks for the advice, I appreciate it.

Lafder
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Re: Large Personal Injury Settlement

Post by Lafder » Tue May 15, 2018 10:52 pm

Welcome here and I am sorry for your accident!

These posts are publicly searchable.

I would go back and edit out your state or change it, make your age more vague such as early 20's, and take out the specific nature of your injury or change it :). Otherwise some snoopy person might play with some google searches and find your post and your finances.

And be sure your user ID has nothing to do with your name.

lafder

shulgin
Posts: 16
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Re: Large Personal Injury Settlement

Post by shulgin » Tue May 15, 2018 10:57 pm

Lafder wrote:
Tue May 15, 2018 10:52 pm
Welcome here and I am sorry for your accident!

These posts are publicly searchable.

I would go back and edit out your state or change it, make your age more vague such as early 20's, and take out the specific nature of your injury or change it :). Otherwise some snoopy person might play with some google searches and find your post and your finances.

And be sure your user ID has nothing to do with your name.

lafder
Thanks for the advice, I will make things more vague

suemarkp
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Re: Large Personal Injury Settlement

Post by suemarkp » Tue May 15, 2018 11:22 pm

Regarding the fee, make sure they aren't pulling an Edward Jones...They have tiered rates, and when you get over a few million the percentage is less. But that low percent is not on the whole balance, only the money above the threshold. The first million is still a 1.25% fee, then it is like .6% for the next million, and so on.
Mark | Kent, WA

joeblow
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Re: Large Personal Injury Settlement

Post by joeblow » Tue May 15, 2018 11:33 pm

You joined yesterday and posted today. That $3M, that sounds like you haven't even received, is not going anywhere fast. Unless of course you connect with an unscrupulous advisor or blow it on unscrupulous behavior. ;) I suggest you take a deep breath and spend some time reviewing some of the links posted above and take the next 6 months to a year to figure out if/how you want to spend/invest it. You have a long runway, don't rush the takeoff.

pkcrafter
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Contact:

Re: Large Personal Injury Settlement

Post by pkcrafter » Tue May 15, 2018 11:40 pm

shulgin, check the firms ADV-II form.

https://obliviousinvestor.com/form-adv-part-ii/


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.

shulgin
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Re: Large Personal Injury Settlement

Post by shulgin » Wed May 16, 2018 2:42 am

pkcrafter wrote:
Tue May 15, 2018 11:40 pm
shulgin, check the firms ADV-II form.

https://obliviousinvestor.com/form-adv-part-ii/


Paul

Hey Paul,
Great advice, I appreciate it. This will come in really handy.

J295
Posts: 1760
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Re: Large Personal Injury Settlement

Post by J295 » Wed May 16, 2018 5:34 am

This is a more nuanced observation, but you may wish to check your state law to see if the personal injury settlement proceeds are exempt from execution.

In our state, they are completely exempt from execution. So, it may be prudent here for a large settlement to be kept completely separate from other assets. That is, not combining exempt PI proceeds in an account with any other income sources. Commmingling otherwise exempt assets with non exempt assets can cause the entire asset pool to become non-exempt.

Further, from an asset protection standpoint, you want to make sure you have adequate insurance coverage generally speaking

User avatar
djpeteski
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Re: Large Personal Injury Settlement

Post by djpeteski » Wed May 16, 2018 5:44 am

Do you plan on returning to work? At your age you have to have something that fills your life.

ponyboy
Posts: 612
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Re: Large Personal Injury Settlement

Post by ponyboy » Wed May 16, 2018 6:45 am

Im not sure how it works but will you be on disability for the rest of your life? Meaning you'll be receiving a monthly check?

Either way...3 million at your age should set you up for life if you are responsible. And like others said...do not tell anyone about your settlement. Definitely reach out to vanguard.

Even sticking your money in a savings account with an interest rate of 1.5%...that will kick out $45,000/year...every year unless the interest rate changes. Not saying you should do this but there is no reason to be too aggressive with that much money. (also...if I did the savings account route I would only put in the FDIC insured amount...and space that money out with a bunch of accounts.)

bloom2708
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Re: Large Personal Injury Settlement

Post by bloom2708 » Wed May 16, 2018 6:46 am

Go slower. Reading your replies, you are going too fast.

I would stop meeting with the advisor. Do nothing but read and learn for 6 months. Really.

As you spend more time here a plan will form. Involving advisors is not in your long term best interest. Even if low fee, they will take control.

$3 million can go fast with real estate deals and college payments and cars. I agree I see some red flags.

Go slower. The money can’t grow and work for you if you spend it.

Are you able to work and do you have health insurance?
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

PhilosophyAndrew
Posts: 456
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Re: Large Personal Injury Settlement

Post by PhilosophyAndrew » Wed May 16, 2018 7:33 am

OP, I’m glad you are healing. Please continue to take good care of your health.

I would plan to do nothing with the settlement money for six months to a year and would use that time to learn as much as you can about the Boglehead style of DIY Investing. There is much information here — in the forum and wiki — and in Boglehead-recommended investing books, and that information can help prevent type making mistakes that could be extremely costly throughout your life.

If you decide that Boglejead investing is right for you, this will save you many costs and allow you to establish a simple investing plan that you can execute for the rest of your life. If, however, you decide that you need to pay to receive someone else’s advice, please know that these costs are significant in the best case and can be exorbitant. The advice you pay so much to receive can also be also be bad advice — some advisors will seek to bedazzle and confise you with complexity designed to lead you to make decisions that are on their best financial interests, not yours.

The point of the 6–12 month cooling off period is to lead. enough to determine if you woah to DIY a la the Borhead investing philosophy. If you decide that you do not wish to do this, Vanguard’s PAS service will place you on a Boglehead-style (low-fee, highly diversified) portfolio of index funds for a significant-but-not-exhorbant fee. If you decide to pay a full-service advisor, you could be on the hook for 10X the fees of that choice, which would make a material difference about the significance of your settlement money over the rest of your life!

Please ask questions here — this is a knowledgeable, supportive group. Learning what questions to ask is a big achievement whether you decide to DIY or pay someone to advise you.

Good luck with the prosthesis fitting.

Andy.
Last edited by PhilosophyAndrew on Wed May 16, 2018 8:03 am, edited 1 time in total.

RickBoglehead
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Re: Large Personal Injury Settlement

Post by RickBoglehead » Wed May 16, 2018 7:44 am

bloom2708 wrote:
Wed May 16, 2018 6:46 am
Go slower. Reading your replies, you are going too fast.

I would stop meeting with the advisor. Do nothing but read and learn for 6 months. Really.

As you spend more time here a plan will form. Involving advisors is not in your long term best interest. Even if low fee, they will take control.

$3 million can go fast with real estate deals and college payments and cars. I agree I see some red flags.

Go slower. The money can’t grow and work for you if you spend it.

Are you able to work and do you have health insurance?
This ^^^^

Slow down. Park the funds for now while you learn. Slow down.

Grt2bOutdoors
Posts: 19531
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Large Personal Injury Settlement

Post by Grt2bOutdoors » Wed May 16, 2018 8:04 am

shulgin wrote:
Tue May 15, 2018 8:17 pm
Sasquatch wrote:
Tue May 15, 2018 8:13 pm
Sage advise here.

Slow and steady wins the race. Compounding is on your side at your young age.

Is the .125% advisory cover everything or are expense ratios and trading fees on top of the .125%. That is a crazy low number. If it sounds to good to be true.....................
The fee is excluding the indexes. I will make sure to get all that hashed out on my next meeting. I agree that the number is crazy low. Difference of 30,000 and 3,750 is HUGE for me. With much I would be spending on a traditional advisor, I can spend 1.5k per month on my lifestyle expenses if I want and still come out ahead.
Don't sign anything yet!!! Ask them to provide you with a sample portfolio of a typical customer with same needs as you. Ask them how much in assets they have under management? They will need to be managing billions to support a full team of wealth management specialists. If they are not providing you with a statement of financial condition - RUN!!!! Something doesn't compute here. Where is this firm located? Look at the office building, how are they paying the rent? What is the general appearance of the staff in the firm? Flashy, conservative? My fear is they are going to charge you .125% and then use Schwab's Thomas Partners to devise a portfolio for you, their cost is 90bps or stick you in a variable annuity or another form of annuity or a fund with 12-b1 fees or worse, front-end loads or funds with deferred sales charges (typically sold as Class B or Class C shares or another part of the alphabet). You are going to be paying ALOT more than you believe, depending on how much turnover is in your account, they will want to do your "taxes". When you add it all up, you are going to "pay" one way or another. No one, even the most reputable firms out there, is doing it for 12.5bps, and certainly not for a small account of $3MM. Typically, the more assets under management the lower the fees. A $3MM account in wealth management circles is really the entry level and will not be paying the lowest fees.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

shulgin
Posts: 16
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Re: Large Personal Injury Settlement

Post by shulgin » Wed May 16, 2018 9:49 am

J295 wrote:
Wed May 16, 2018 5:34 am
This is a more nuanced observation, but you may wish to check your state law to see if the personal injury settlement proceeds are exempt from execution.

In our state, they are completely exempt from execution. So, it may be prudent here for a large settlement to be kept completely separate from other assets. That is, not combining exempt PI proceeds in an account with any other income sources. Commmingling otherwise exempt assets with non exempt assets can cause the entire asset pool to become non-exempt.

Further, from an asset protection standpoint, you want to make sure you have adequate insurance coverage generally speaking
Thanks for the advice. In my state, it is all exempt as well. I was planning to park the money at a Shwab money market account for the time being as I figure things out. I will def take care of my insurance needs as soon as possible
djpeteski wrote:
Wed May 16, 2018 5:44 am
Do you plan on returning to work? At your age you have to have something that fills your life.
Yes, I am planning on continuing to create income. I have been out of work for more than 6 months now, and I'm itching to be able to get out of the house and start doing normal things again. Life gets too boring without some goals, achievements, and growth.
ponyboy wrote:
Wed May 16, 2018 6:45 am


Im not sure how it works but will you be on disability for the rest of your life? Meaning you'll be receiving a monthly check?

Either way...3 million at your age should set you up for life if you are responsible. And like others said...do not tell anyone about your settlement. Definitely reach out to vanguard.

Even sticking your money in a savings account with an interest rate of 1.5%...that will kick out $45,000/year...every year unless the interest rate changes. Not saying you should do this but there is no reason to be too aggressive with that much money. (also...if I did the savings account route I would only put in the FDIC insured amount...and space that money out with a bunch of accounts.)
Tbh, Im not even getting disability now, but I wish I did. I didn't pay into it last year, so I don't qualify for any benefits.
bloom2708 wrote:
Wed May 16, 2018 6:46 am
Go slower. Reading your replies, you are going too fast.

I would stop meeting with the advisor. Do nothing but read and learn for 6 months. Really.

As you spend more time here a plan will form. Involving advisors is not in your long term best interest. Even if low fee, they will take control.

$3 million can go fast with real estate deals and college payments and cars. I agree I see some red flags.

Go slower. The money can’t grow and work for you if you spend it.

Are you able to work and do you have health insurance?
I think you guys are right. I wanted to squeeze out some more returns before the tides of the market change, but it makes sense to take things slow. I basically have everything figured out with what I want to do, just still tweaking the percentages on the funds I want to use. I have decided to self manage with all the advise listed here. I don't think its worth paying for that level of advice when the community here is so good and helpful. I am covered under my mother until age 26. The insurance isn't as good now as my step father retired, but it should still save me considerable money. There is a law in my state my health insurance provider has to allow me to buy similar insurance to the one I was receiving before when my moms runs out for a few months at least, so I have the expenses planned out until 26 and a half or so.
PhilosophyAndrew wrote:
Wed May 16, 2018 7:33 am
OP, I’m glad you are healing. Please continue to take good care of your health.

I would plan to do nothing with the settlement money for six months to a year and would use that time to learn as much as you can about the Boglehead style of DIY Investing. There is much information here — in the forum and wiki — and in Boglehead-recommended investing books, and that information can help prevent type making mistakes that could be extremely costly throughout your life.

If you decide that Boglejead investing is right for you, this will save you many costs and allow you to establish a simple investing plan that you can execute for the rest of your life. If, however, you decide that you need to pay to receive someone else’s advice, please know that these costs are significant in the best case and can be exorbitant. The advice you pay so much to receive can also be also be bad advice — some advisors will seek to bedazzle and confise you with complexity designed to lead you to make decisions that are on their best financial interests, not yours.

The point of the 6–12 month cooling off period is to lead. enough to determine if you woah to DIY a la the Borhead investing philosophy. If you decide that you do not wish to do this, Vanguard’s PAS service will place you on a Boglehead-style (low-fee, highly diversified) portfolio of index funds for a significant-but-not-exhorbant fee. If you decide to pay a full-service advisor, you could be on the hook for 10X the fees of that choice, which would make a material difference about the significance of your settlement money over the rest of your life!

Please ask questions here — this is a knowledgeable, supportive group. Learning what questions to ask is a big achievement whether you decide to DIY or pay someone to advise you.

Good luck with the prosthesis fitting.

Andy.
Thanks a lot for the advice! I have decided to self manage, saving about roughly 25k a year. just in advisory fees. I can easily justify putting hours into this as a "part time job" and receiving income that is almost tax free (qualified dividends, no cap gains til I sell the fund)

Grt2bOutdoors wrote:
Wed May 16, 2018 8:04 am
shulgin wrote:
Tue May 15, 2018 8:17 pm
Sasquatch wrote:
Tue May 15, 2018 8:13 pm
Sage advise here.

Slow and steady wins the race. Compounding is on your side at your young age.

Is the .125% advisory cover everything or are expense ratios and trading fees on top of the .125%. That is a crazy low number. If it sounds to good to be true.....................
The fee is excluding the indexes. I will make sure to get all that hashed out on my next meeting. I agree that the number is crazy low. Difference of 30,000 and 3,750 is HUGE for me. With much I would be spending on a traditional advisor, I can spend 1.5k per month on my lifestyle expenses if I want and still come out ahead.
Don't sign anything yet!!! Ask them to provide you with a sample portfolio of a typical customer with same needs as you. Ask them how much in assets they have under management? They will need to be managing billions to support a full team of wealth management specialists. If they are not providing you with a statement of financial condition - RUN!!!! Something doesn't compute here. Where is this firm located? Look at the office building, how are they paying the rent? What is the general appearance of the staff in the firm? Flashy, conservative? My fear is they are going to charge you .125% and then use Schwab's Thomas Partners to devise a portfolio for you, their cost is 90bps or stick you in a variable annuity or another form of annuity or a fund with 12-b1 fees or worse, front-end loads or funds with deferred sales charges (typically sold as Class B or Class C shares or another part of the alphabet). You are going to be paying ALOT more than you believe, depending on how much turnover is in your account, they will want to do your "taxes". When you add it all up, you are going to "pay" one way or another. No one, even the most reputable firms out there, is doing it for 12.5bps, and certainly not for a small account of $3MM. Typically, the more assets under management the lower the fees. A $3MM account in wealth management circles is really the entry level and will not be paying the lowest fees.
Thanks a lot for your guys' analysis. I read the firms ADV part 2 form and I was wrong about their fee. I must have misunderstood on the phone and heard 1/8 of as percentage instead of .8%. How embarrassing. When I went into athe meeting with the advisors, I think I brought the number up a couple times and they had the chance to correct me. They must have misunderstood as well. This brings the yearly fees up to about 25k, which is a LOT more than I am comfortable paying. This is easily my prosthetic plus a decent chunk on health insurance - which is ultimately what this portfolio is for - And everything else will just be free and clear returns I don't have to dip into. Principle 1 - Pay Yourself. I apologize for making the mistake with the fee rate, I know I had a conversation with a few people about it. It becomes a bit more competitive with .8% but I don't see how I couldn't manage the money just as well. I wanted an advisor who can help me take advantage of down markets, but they are not wizards. I can keep my core portfolio locked in and have a couple percent be play money to try my hand at value investing, but the more I read the more it's a crapshoot. For me, I don't need a large amount of risk to start compounding a very large amount after a short time. The firm has no other fees or commissions, uses No-load funds.

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ruralavalon
Posts: 14271
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Location: Illinois

Re: Large Personal Injury Settlement

Post by ruralavalon » Wed May 16, 2018 9:59 am

RickBoglehead wrote:
Wed May 16, 2018 7:44 am
bloom2708 wrote:
Wed May 16, 2018 6:46 am
Go slower. Reading your replies, you are going too fast.

I would stop meeting with the advisor. Do nothing but read and learn for 6 months. Really.

As you spend more time here a plan will form. Involving advisors is not in your long term best interest. Even if low fee, they will take control.

$3 million can go fast with real estate deals and college payments and cars. I agree I see some red flags.

Go slower. The money can’t grow and work for you if you spend it.

Are you able to work and do you have health insurance?
This ^^^^

Slow down. Park the funds for now while you learn. Slow down.
I agree.

Go slow, there is no rush.

Read one or two of the general investing books on the list I linked in my first post.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

shulgin
Posts: 16
Joined: Mon May 14, 2018 9:55 pm

Re: Large Personal Injury Settlement

Post by shulgin » Wed May 16, 2018 10:02 am

ruralavalon wrote:
Wed May 16, 2018 9:59 am
RickBoglehead wrote:
Wed May 16, 2018 7:44 am
bloom2708 wrote:
Wed May 16, 2018 6:46 am
Go slower. Reading your replies, you are going too fast.

I would stop meeting with the advisor. Do nothing but read and learn for 6 months. Really.

As you spend more time here a plan will form. Involving advisors is not in your long term best interest. Even if low fee, they will take control.

$3 million can go fast with real estate deals and college payments and cars. I agree I see some red flags.

Go slower. The money can’t grow and work for you if you spend it.

Are you able to work and do you have health insurance?
This ^^^^

Slow down. Park the funds for now while you learn. Slow down.
I agree.

Go slow, there is no rush.

Read one or two of the general investing books on the list I linked in my first post.
Half way done with the Bogleheads Investing book and part way through Intelligent Asset Allocator! I will devour whatever else you throw at me!

FoolMeOnce
Posts: 354
Joined: Mon Apr 24, 2017 11:16 am

Re: Large Personal Injury Settlement

Post by FoolMeOnce » Wed May 16, 2018 10:17 am

shulgin wrote:
Tue May 15, 2018 7:50 pm
A chunk of it will be allocated for my sisters' college (twins just turned 13)
Good for you.

Also, you edited your first post for more anonymity, but one of your later posts (copying and pasting the email you sent to the advisory firm) includes what I presume is your first name. Might want to go edit that, too.

infotrader
Posts: 149
Joined: Tue Feb 28, 2017 2:39 pm

Re: Large Personal Injury Settlement

Post by infotrader » Wed May 16, 2018 10:54 am

bloom2708 wrote:
Wed May 16, 2018 6:46 am
Go slower. Reading your replies, you are going too fast.

I would stop meeting with the advisor. Do nothing but read and learn for 6 months. Really.

As you spend more time here a plan will form. Involving advisors is not in your long term best interest. Even if low fee, they will take control.

$3 million can go fast with real estate deals and college payments and cars. I agree I see some red flags.

Go slower. The money can’t grow and work for you if you spend it.

Are you able to work and do you have health insurance?
I totally agree with you, and I can see the red flags in his approach.
The OP can easily turn the investment of 3m into his own career, and it can save/make millions in the long run.

Grt2bOutdoors
Posts: 19531
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Large Personal Injury Settlement

Post by Grt2bOutdoors » Wed May 16, 2018 12:06 pm

shulgin wrote:
Wed May 16, 2018 10:02 am
ruralavalon wrote:
Wed May 16, 2018 9:59 am
RickBoglehead wrote:
Wed May 16, 2018 7:44 am
bloom2708 wrote:
Wed May 16, 2018 6:46 am
Go slower. Reading your replies, you are going too fast.

I would stop meeting with the advisor. Do nothing but read and learn for 6 months. Really.

As you spend more time here a plan will form. Involving advisors is not in your long term best interest. Even if low fee, they will take control.

$3 million can go fast with real estate deals and college payments and cars. I agree I see some red flags.

Go slower. The money can’t grow and work for you if you spend it.

Are you able to work and do you have health insurance?
This ^^^^

Slow down. Park the funds for now while you learn. Slow down.
I agree.

Go slow, there is no rush.

Read one or two of the general investing books on the list I linked in my first post.
Half way done with the Bogleheads Investing book and part way through Intelligent Asset Allocator! I will devour whatever else you throw at me!
Read it AGAIN! Absorb it, understand it, investing isn't rocket science, but if you make a mistake or series of them compounding it, the losses can be REAL and may not be recoverable. The Only Guide to a Winning Investment Strategy You'll Ever Need, Larry Swedroe. Read All About Asset Allocation - Rick Ferri. Winning the Loser's Game.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

staythecourse
Posts: 6219
Joined: Mon Jan 03, 2011 9:40 am

Re: Large Personal Injury Settlement

Post by staythecourse » Wed May 16, 2018 12:21 pm

shulgin wrote:
Tue May 15, 2018 7:50 pm

staythecourse wrote:
Tue May 15, 2018 3:31 pm
Doc here. My biggest concern would be healthcare coverage for current and future needs due to the accident. At 21 you will incur A LOT of expenses over your lifetime just due to the injury. What are you doing for healthcare? Is that negotiated in the settlement?

Good luck.

p.s. This may be insensitive, but this a financial forum and I am sure many on here would be interested this type of settlement get covered by person's personal assets or umbrella coverage from their insurance company? If you are not comfortable answering I totally understand.


Hey Doc! How ya doing?
The woman had an umbrella policy that covered her for personal liability and Statefarm for her car. My lawyer has been going through state farm so I don't know if they also gave her that umbrella policy or if its through someone else. Right now I am covered by my mom for medical, but I have a nice check to write Kaiser for my medical care since they get reimbursed. The settlement is just cash, no medical terms, I am lucky to have insurance until 26 if the current system stands. My stepdad just retired last week, so I should have to start paying copays.

Much thanks to answering the question. As you can imagine many of us on here have umbrella coverage, but not have seen it in "action" so to speak. I would say the most important is getting a good FA. Your situation is definitely complex. Not so much on the investing side, but on the medical care that may or may not be needed going forward. The settlement, of course, will cover whatever premiums to get you good insurance.

The most important as I am sure that has been mentioned is do NOT tell anyone how much the settlement was AND do not invest in anybody/ friends business ideas. With 3 million there is no reason you should not be set for life IF you invest properly for the next 20+ years. Then, of course, there are MANY (athletes, entertainers, lottery winners, other PI victims) that have lost much more then you got so just be careful.

Good luck.

p.s. Not that it matters to the topic, but you seem to have an excellent attitude even after this tragedy. Kudos to you.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

Dottie57
Posts: 4821
Joined: Thu May 19, 2016 5:43 pm

Re: Large Personal Injury Settlement

Post by Dottie57 » Wed May 16, 2018 4:28 pm

RickBoglehead wrote:
Wed May 16, 2018 7:44 am
bloom2708 wrote:
Wed May 16, 2018 6:46 am
Go slower. Reading your replies, you are going too fast.

I would stop meeting with the advisor. Do nothing but read and learn for 6 months. Really.

As you spend more time here a plan will form. Involving advisors is not in your long term best interest. Even if low fee, they will take control.

$3 million can go fast with real estate deals and college payments and cars. I agree I see some red flags.

Go slower. The money can’t grow and work for you if you spend it.

Are you able to work and do you have health insurance?
This ^^^^

Slow down. Park the funds for now while you learn. Slow down.
This. Please listen.

Don’t jump into a new business, or spend more money past your current bills. As someone said up-thread, know what the goal of the money you now have.

If I were you, I would invest the money, get training / education to support yourself. By the time you hit 50, you may have enough to retire in real style. Take a really nice vacation every year you make money in your investments.

That is just me.

cautious
Posts: 19
Joined: Fri Feb 10, 2017 1:56 pm

Re: Large Personal Injury Settlement

Post by cautious » Wed May 16, 2018 5:47 pm

Gnirk wrote:
Tue May 15, 2018 3:12 pm
And tell no one about your settlement! You won't believe who/what comes out of the woodwork.
And if you told them, let it be known that professionals are in charge of everything except your immediate living and medical expenses. They need to understand the money is invested for your long term needs. You will probably have to repeat this several times until they stop asking for, or hinting for a loan.

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