Advice

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backdoorRoth
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Advice

Post by backdoorRoth » Tue Jan 14, 2020 2:06 pm

[Redacted] My parents don't share a lot of details with me, but they have confirmed that part of his fee comes from one of the vehicles he convinced them to place some of their money in. (Not all of it.) So I don't think he's a fiduciary or hourly/fee-only advisor.

I know there are a lot of wikis and pages about the Bogle strategy, DIY investing, etc. Do you have recommendations on a few simple resources I could point them to?
Last edited by backdoorRoth on Mon Jan 20, 2020 1:07 pm, edited 2 times in total.

Jablean
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Re: Advice for parents - financial advisor

Post by Jablean » Tue Jan 14, 2020 2:53 pm

My mom had her advisor with Waddell and Reed. She was happy and never would have changed, often tried to convince me that I needed to go with him too. She was fine, not everyone has to go Bogle but she had great state retirement.

Most people just want to see their investments go up and paying someone to talk with them is worth fees they never see.

But yes, if they let you go over some things they can evaluate his suggestions perhaps with a more open eye and keep things simple instead of complex.

Topic Author
backdoorRoth
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Re: Advice for parents - financial advisor

Post by backdoorRoth » Tue Jan 14, 2020 2:53 pm

[Redacted]
Last edited by backdoorRoth on Sun Jan 19, 2020 8:00 pm, edited 1 time in total.

NotWhoYouThink
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Re: Advice for parents - financial advisor

Post by NotWhoYouThink » Tue Jan 14, 2020 4:07 pm

Their advisor is probably not doing them as much good as a Vanguard PAS advisor would, but he is probably doing them significantly more good than they would do if left to their own devices. They trust him and have hired him to manage their finances, and he is getting paid, probably well-paid, for doing that.

People make a mess of their finances if left to their own devices. Sounds like your parents have found a way to make less of a mess.

Two things you can do.
One, look their guy up, see who he works for and check for any obvious signs that he may be committing fraud and just hasn't been caught yet. Is he living in a huge house, driving a fleet of Ferraris, and jetting around the globe? If not, let it go.
Two, you can bore them with details of what you are doing and why. Tell them what you have learned about costs and diversification and whatever else you have learned. But they probably will still think that having a "guy", who, by the way is a professional expert on "these things", is superior to whatever do-it-yourself mumbo jumbo you are advocating.

If you ever have to take over their finances you can do things your way. For now, enjoy their company and bite your tongue.

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Wiggums
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Re: Advice for parents - financial advisor

Post by Wiggums » Tue Jan 14, 2020 4:20 pm

backdoorRoth wrote:
Tue Jan 14, 2020 2:53 pm
Forgot to mention: They also have whole life insurance for my father - I think a whole life annuity.
If they are happy with the person and the fees are not wreck less, I think you just need to site in the sidelines for now. My in-laws have very specific wishes for how their money is handled and nothing will change their mind. I Share your frustration.

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celia
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Re: Advice for parents - financial advisor

Post by celia » Tue Jan 14, 2020 4:27 pm

backdoorRoth wrote:
Tue Jan 14, 2020 2:06 pm
Do you have recommendations on a few simple resources I could point them to? My goal is to pique their interest and not scare them away. In all likelihood they won't listen to me anyway, because they trust this advisor and see him as the expert -- and I'm certainly not an expert.
If you are comfortable with your own assets and how they are invested, you could start a conversation with them regarding YOUR assets and how they suggest you continue to prepare for the future. Indirectly, ask them to use their life experiences as a lesson for you: How much money do they think you would need to retire? Do they think SS will be there for you? How much do you know about the current "workings" of Medicare? Do they think you need to do estate planning?

By talking about YOU, they will be more open as they care about you and your future. Somewhere along the way, they may open up about their plans. But that doesn't make your plans or theirs superior to the other.
But I'll feel terrible if I learn later that things could have gone much better for them and I never spoke up.
It's their money and they are free to manage it (or not) how they wish. You are lucky, however, that they have the assets they have. We've had many examples here of parents with no savings in retirement. The greatest gift parents can give their kids is to not be a financial burden in the parents' final years.

Topic Author
backdoorRoth
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Re: Advice for parents - financial advisor

Post by backdoorRoth » Tue Jan 14, 2020 4:44 pm

Thank you all. I really appreciate it. I'm feeling less worked up over the situation.
Last edited by backdoorRoth on Sun Jan 19, 2020 8:00 pm, edited 1 time in total.

Topic Author
backdoorRoth
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Re: Advice for parents - financial advisor

Post by backdoorRoth » Tue Jan 14, 2020 6:15 pm

[Redacted]
Last edited by backdoorRoth on Sun Jan 19, 2020 7:59 pm, edited 1 time in total.

Jablean
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Re: Advice for parents - financial advisor

Post by Jablean » Tue Jan 14, 2020 10:57 pm

No comment on the whole life, but my mom's adviser got her into annuities with the goal to provide income in case she had to go into long-term care after something like a stroke. They were not single premiums but still invested in single life style accounts I think and crazily some were inside of her IRA's. It was a bit interesting to untangle when she passed.

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arcticpineapplecorp.
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Re: Advice for parents - financial advisor

Post by arcticpineapplecorp. » Tue Jan 14, 2020 11:04 pm

backdoorRoth wrote:
Tue Jan 14, 2020 2:53 pm
Forgot to mention: They also have whole life insurance for my father - I think a whole life annuity.
whole life insurance and annuities are two different things.

he likely sold them:
1. whole life insurance :oops:
and
2. indexed annuity :moneybag :twisted:

is this "guy" by chance with either Ed Jones or one of Dave Ramsey's Endorsed Local Providers?

Did this "guy" do the wills or did a lawyer write up the wills?
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

Topic Author
backdoorRoth
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Re: Advice for parents - financial advisor

Post by backdoorRoth » Tue Jan 14, 2020 11:09 pm

Thanks.
Last edited by backdoorRoth on Sun Jan 19, 2020 7:58 pm, edited 1 time in total.

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Watty
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Re: Advice for parents - financial advisor

Post by Watty » Tue Jan 14, 2020 11:51 pm

There are a lot of assumptions and qualifications but academic studies have show that in the past someone that is 65 and planing on a 30 year retirement they start out with around a 4% safe withdrawal rate and not have a lot of risk of running out of money. Since they are older their percentage would be a bit higher and might be more like 5% depending on just how old they are. If they are paying him a 1% fee then that would come out of their 5% spendable money for the year so they would be paying him 20% of their money each year. When you add in expense ratios and hidden fees that is often a lot more than 1% in costs each year.

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

Another thing that your parents should consider is that this advisor will not always be around. Eventually he will retire, die, or change jobs. They may be happy with him now and he may even be doing a good job for them but when an advisor leaves for one reason or another the accounts that he or she had will be assigned to some other advisor that they may not be as happy with, or who may be more focused on making money from them.

One other risk is that my mom had an advisor that she used for years to manage part of her investments. I don't know what she was paying him but when she died when she was 80 we had to deal with him some to get the estate settled. It turned out that he was probably older than she was and had never retired. He was not exactly senile but he was obviously long past his mental prime and had a hard time getting the needed paperwork from him. Part of the problem was that he only had a few clients left and would only go into the office maybe one random afternoon a week so it was difficult to get in touch with him.

If they are older then they may not be able to stay on top of the advisor, or their replacement, and handle any problems that might come up.

When you choose to use an advisor you really need to have a succession plan too.

Financologist
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Re: Advice for parents - financial advisor

Post by Financologist » Wed Jan 15, 2020 12:19 am

Will your parents allow you to attend a meeting with the advisor? If yes, suggest you tag along. Afterwards you'll be able to decide whether an intervention is needed. Also, the advisor might "appreciate" your participation.

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BL
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Re: Advice for parents - financial advisor

Post by BL » Wed Jan 15, 2020 12:33 am

Perhaps they would rather read about investment and personal finance from a long-time author that gives common sense suggestions for retirees. Taylor's Gems:
viewtopic.php?t=193452
has excerpts from this book, How to Make Your Money Last
by Jane Bryant Quinn, who has also contributed to AARP magazine and other magazines and books in the past.
I have this book and the Boglehead's one, and both are different but good. Jane's book might be easier for a non-Boglehead to read, especially in using like a reference for certain topics.

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