Proposed update to Managing a Windfall wiki page

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
fyre4ce
Posts: 1272
Joined: Sun Aug 06, 2017 11:29 am

Proposed update to Managing a Windfall wiki page

Post by fyre4ce »

I tried rewriting the Managing a Windfall wiki page, and I want to get the forum's opinion on the changes.

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

Proposed: https://www.bogleheads.org/wiki/User:Fy ... a_windfall

The major change is adding a lot of content on the specific sub-topics of windfall planning. I feel like the current one isn't as helpful as it could be, only outlining high level steps that actual readers may not find to be actionable. Most of the new content is just general advice on a Bogheleads-style financial plan, but I wrote it with a bias toward windfall recipients (eg. recommending paying off all debts, and explaining why). I like that it now links to many other good pages in the wiki, where readers can explore more content on any specific topics.

Furthermore, I felt like some of the ordered steps in the current page are out of place. For example, reading recommended books falls under the first step of "Take your time", when getting tax help ("Determine your tax situation") should be a higher priority in my opinion. Another example is how "Monitor the plan..." is a subsection of "Formulate a plan" when it should be a separate step that comes after. I think my revision has a clearer and more logical structure.

Other changes are some minor edits to existing content, and fixing dead links.

Please share any opinions, both on specific points, and the overall expansion of content. Thanks!

Edit: fixed link
Last edited by fyre4ce on Mon Jun 01, 2020 10:56 am, edited 1 time in total.
User avatar
FiveK
Posts: 10975
Joined: Sun Mar 16, 2014 2:43 pm

Re: Proposed update to Managing a Windfall wiki page

Post by FiveK »

User avatar
Sandtrap
Posts: 12782
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona
Contact:

Re: Proposed update to Managing a Windfall wiki page

Post by Sandtrap »

fyre4ce wrote: Sun May 31, 2020 11:18 pm I tried rewriting the Managing a Windfall wiki page, and I want to get the forum's opinion on the changes.

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

Proposed: https://www.bogleheads.org/wiki/User:Fy ... a_windfall

The major change is adding a lot of content on the specific sub-topics of windfall planning. I feel like the current one isn't as helpful as it could be, only outlining high level steps that actual readers may not find to be actionable. Most of the new content is just general advice on a Bogheleads-style financial plan, but I wrote it with a bias toward windfall recipients (eg. recommending paying off all debts, and explaining why). I like that it now links to many other good pages in the wiki, where readers can explore more content on any specific topics.

Furthermore, I felt like some of the ordered steps in the current page are out of place. For example, reading recommended books falls under the first step of "Take your time", when getting tax help ("Determine your tax situation") should be a higher priority in my opinion. Another example is how "Monitor the plan..." is a subsection of "Formulate a plan" when it should be a separate step that comes after. I think my revision has a clearer and more logical structure.

Other changes are some minor edits to existing content, and fixing dead links.

Please share any opinions, both on specific points, and the overall expansion of content. Thanks!
Great job!
I really like the emphasis on more actionable immediate financial and lifestyle concerns.
Behavioral errors are the most harmful immediate things to address in a windfall. Also, the dynamics of the family and social sphere effecting and infecting the windfall recipient.

Thanks for the hard work!
j🌺
Last edited by Sandtrap on Mon Jun 01, 2020 9:10 pm, edited 1 time in total.
Wiki Bogleheads Wiki: Everything You Need to Know
User avatar
CyclingDuo
Posts: 4028
Joined: Fri Jan 06, 2017 9:07 am

Re: Proposed update to Managing a Windfall wiki page

Post by CyclingDuo »

fyre4ce wrote: Sun May 31, 2020 11:18 pm I tried rewriting the Managing a Windfall wiki page, and I want to get the forum's opinion on the changes.

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

Proposed: https://www.bogleheads.org/wiki/User:Fy ... a_windfall

The major change is adding a lot of content on the specific sub-topics of windfall planning. I feel like the current one isn't as helpful as it could be, only outlining high level steps that actual readers may not find to be actionable. Most of the new content is just general advice on a Bogheleads-style financial plan, but I wrote it with a bias toward windfall recipients (eg. recommending paying off all debts, and explaining why). I like that it now links to many other good pages in the wiki, where readers can explore more content on any specific topics.

Furthermore, I felt like some of the ordered steps in the current page are out of place. For example, reading recommended books falls under the first step of "Take your time", when getting tax help ("Determine your tax situation") should be a higher priority in my opinion. Another example is how "Monitor the plan..." is a subsection of "Formulate a plan" when it should be a separate step that comes after. I think my revision has a clearer and more logical structure.

Other changes are some minor edits to existing content, and fixing dead links.

Please share any opinions, both on specific points, and the overall expansion of content. Thanks!
Personally, I like the expanded content and thorough representation of the thought process. Well done!

We remember accessing the original page back in 2016 due to some inheritances through the death of our parents (three of them died all within a short time span of each other). At the time, I felt the original page didn't answer all of our questions and required asking questions on the forums to get additional information, as well as utilizing more links to reading related subjects. Since there are so many posts on the forums, not everyone's questions get answered by a representative amount of people that have been through a windfall. So having more information and suggested thought processes all combined on one page is - in our opinion - a well organized upgrade to the windfall page.

:sharebeer

Your proposed changes actually help address and update many things in a very nicely organized format that is easy to navigate, digest and reflect upon for those who receive a windfall in the future.

Although there is a link to Inheriting an IRA under the See Also section near the bottom of the page, there is no mention earlier on in the windfall page regarding one of the most common windfalls - a non-spousal inherited IRA BDA - and perhaps providing a direct link higher up on the page at that time as well to the see also inheriting an IRA due to the rule changes and timeline. Since it is probably the most common type of inheritance we all receive, maybe it is just our opinion, but since there are an awful lot of questions on the forums about the IRA BDA and the recent rule changes - our suggestion would be to have a bit more information higher up on the page to get those investors pointed in the right direction to be thinking about the amount of years they have compared to the former stretch IRA rules.

Great job overall!

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel
User avatar
arcticpineapplecorp.
Posts: 7531
Joined: Tue Mar 06, 2012 9:22 pm

Re: Proposed update to Managing a Windfall wiki page

Post by arcticpineapplecorp. »

very nice. thorough. If I may make one suggestion:

under the secion "Take your time" when you encourage hiring a CFP:
If you have more complex finance issues that should not wait at least 6-12 months, look for a CFP with a Professional Finance Specialist (PFS)
I think it should be noted that you should make sure you're working with a planner who will sign the fiduciary pledge:

http://www.thefiduciarystandard.org/wp- ... vidual.pdf

Otherwise, you could think you're doing great hiring a financial planner but you could still lose money in high fees, commissions, etc. if you don't understand how the advisor is compensated, etc.

Google only says this about a planner with the Personal Finance Specialist designation:
A Personal Financial Specialist is specialty credential for CPAs who are expert at helping individuals with all aspects of wealth management. ... Individuals pursue the PFS credential because they want to display their expertise and knowledge as it relates to all aspects of financial planning.
source: https://www.google.com/search?client=fi ... CAs&uact=5
so, unless I'm wrong, you could pick an advisor who is NOT a fiduciary ALL the time. They may say they're a Fiduciary, but only do so PART of the time.

I think it's critical to only hire a Fiduciary who will be so ALL of the time.


Too many conflict of interests out there. You list many people (could even be family and friends) who try to separate you from your windfall. Why not include financial advisors in that group as well?

A very small percentage of financial planners are fiduciaries (I believe a prior marketwatch article estimated 5% or less). That's a dangerously low number for someone who's trying to protect/preserve/grow their windfall.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
User avatar
FiveK
Posts: 10975
Joined: Sun Mar 16, 2014 2:43 pm

Re: Proposed update to Managing a Windfall wiki page

Post by FiveK »

arcticpineapplecorp. wrote: Mon Jun 01, 2020 11:37 am Too many conflict of interests out there. You list many people (could even be family and friends) who try to separate you from your windfall. Why not include financial advisors in that group as well?

A very small percentage of financial planners are fiduciaries (I believe a prior marketwatch article estimated 5% or less). That's a dangerously low number for someone who's trying to protect/preserve/grow their windfall.
+1

It's difficult to balance "help someone might need dealing with unfamiliar financial issues" vs. "many 'financial advisors' will not put the client's interest first" in a generic article. Maybe some suggestions about paying a flat fee, and/or using a benchmark such as Vanguard's 0.3% as a guideline for reasonable AUM fees?
Fallible
Posts: 7699
Joined: Fri Nov 27, 2009 4:44 pm
Contact:

Re: Proposed update to Managing a Windfall wiki page

Post by Fallible »

fyre4ce wrote: Sun May 31, 2020 11:18 pm I tried rewriting the Managing a Windfall wiki page, and I want to get the forum's opinion on the changes.

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

Proposed: https://www.bogleheads.org/wiki/User:Fy ... a_windfall
The major change is adding a lot of content on the specific sub-topics of windfall planning. I feel like the current one isn't as helpful as it could be, only outlining high level steps that actual readers may not find to be actionable. Most of the new content is just general advice on a Bogheleads-style financial plan, but I wrote it with a bias toward windfall recipients (eg. recommending paying off all debts, and explaining why). I like that it now links to many other good pages in the wiki, where readers can explore more content on any specific topics.

Furthermore, I felt like some of the ordered steps in the current page are out of place. For example, reading recommended books falls under the first step of "Take your time", when getting tax help ("Determine your tax situation") should be a higher priority in my opinion. Another example is how "Monitor the plan..." is a subsection of "Formulate a plan" when it should be a separate step that comes after. I think my revision has a clearer and more logical structure.
Nice work! I think you've added important, specific detail and reorganization. Two examples I see are noting how windfall sizes vary dramatically and that the page focuses on windfalls that are relatively large.

Some windfall threads on the forum have dealt with relatively small amounts under, say, $100k (for whom many people is large and can even be life-changing). When I and others have directed them to the wiki's page, it doesn't always apply to these amounts and sometimes the OP has come back to note this. I don't know where the OP goes after that.

Do you think it's important to provide examples of "large" and "small" in your paragraph below and perhaps to let readers with smaller amounts know how it applies to them?:

"This wiki page will intends to provide guidance for windfalls that are relatively large compared to one's income and assets, and entail significant lifestyle changes and the need for additional planning. The guidance presented is intended to apply to a wide variety of windfall types, sources, and absolute sizes. Readers are encouraged to consider the guidance that applies to their individual situation."
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
Topic Author
fyre4ce
Posts: 1272
Joined: Sun Aug 06, 2017 11:29 am

Re: Proposed update to Managing a Windfall wiki page

Post by fyre4ce »

arcticpineapplecorp. wrote: Mon Jun 01, 2020 11:37 am very nice. thorough. If I may make one suggestion:

under the secion "Take your time" when you encourage hiring a CFP:
If you have more complex finance issues that should not wait at least 6-12 months, look for a CFP with a Professional Finance Specialist (PFS)
I think it should be noted that you should make sure you're working with a planner who will sign the fiduciary pledge:

http://www.thefiduciarystandard.org/wp- ... vidual.pdf

Otherwise, you could think you're doing great hiring a financial planner but you could still lose money in high fees, commissions, etc. if you don't understand how the advisor is compensated, etc.

Google only says this about a planner with the Personal Finance Specialist designation:
A Personal Financial Specialist is specialty credential for CPAs who are expert at helping individuals with all aspects of wealth management. ... Individuals pursue the PFS credential because they want to display their expertise and knowledge as it relates to all aspects of financial planning.
source: https://www.google.com/search?client=fi ... CAs&uact=5
so, unless I'm wrong, you could pick an advisor who is NOT a fiduciary ALL the time. They may say they're a Fiduciary, but only do so PART of the time.

I think it's critical to only hire a Fiduciary who will be so ALL of the time.


Too many conflict of interests out there. You list many people (could even be family and friends) who try to separate you from your windfall. Why not include financial advisors in that group as well?

A very small percentage of financial planners are fiduciaries (I believe a prior marketwatch article estimated 5% or less). That's a dangerously low number for someone who's trying to protect/preserve/grow their windfall.
This is a good point. I'm 100% in favor of the fiduciary standard. There are a few reasons why the article is written the way it is:

1) The PFS recommendation is a carry-over from the current article.
2) In that context, financial advice is limited to making a few high-priority decisions, rather than diving into investing, so the stakes are lower.

That said, I know there are CFP/CFA fiduciary advisors who charge a reasonable hourly rate who would be great for an early consultation on any of those high-priority issues I mentioned. Because PFS doesn't have anything to do with a fiduciary standard, maybe it's best to take out the PFS recommendation completely and just say something like, "If you have one of these high-priority financial issues, skip ahead and consult with a CFP/CFA fiduciary advisor on a per-hour basis to resolve the issue immediately."
Topic Author
fyre4ce
Posts: 1272
Joined: Sun Aug 06, 2017 11:29 am

Re: Proposed update to Managing a Windfall wiki page

Post by fyre4ce »

Fallible wrote: Mon Jun 01, 2020 6:21 pm
fyre4ce wrote: Sun May 31, 2020 11:18 pm I tried rewriting the Managing a Windfall wiki page, and I want to get the forum's opinion on the changes.

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

Proposed: https://www.bogleheads.org/wiki/User:Fy ... a_windfall
The major change is adding a lot of content on the specific sub-topics of windfall planning. I feel like the current one isn't as helpful as it could be, only outlining high level steps that actual readers may not find to be actionable. Most of the new content is just general advice on a Bogheleads-style financial plan, but I wrote it with a bias toward windfall recipients (eg. recommending paying off all debts, and explaining why). I like that it now links to many other good pages in the wiki, where readers can explore more content on any specific topics.

Furthermore, I felt like some of the ordered steps in the current page are out of place. For example, reading recommended books falls under the first step of "Take your time", when getting tax help ("Determine your tax situation") should be a higher priority in my opinion. Another example is how "Monitor the plan..." is a subsection of "Formulate a plan" when it should be a separate step that comes after. I think my revision has a clearer and more logical structure.
Nice work! I think you've added important, specific detail and reorganization. Two examples I see are noting how windfall sizes vary dramatically and that the page focuses on windfalls that are relatively large.

Some windfall threads on the forum have dealt with relatively small amounts under, say, $100k (for whom many people is large and can even be life-changing). When I and others have directed them to the wiki's page, it doesn't always apply to these amounts and sometimes the OP has come back to note this. I don't know where the OP goes after that.

Do you think it's important to provide examples of "large" and "small" in your paragraph below and perhaps to let readers with smaller amounts know how it applies to them?:

"This wiki page will intends to provide guidance for windfalls that are relatively large compared to one's income and assets, and entail significant lifestyle changes and the need for additional planning. The guidance presented is intended to apply to a wide variety of windfall types, sources, and absolute sizes. Readers are encouraged to consider the guidance that applies to their individual situation."
The advice is intended to apply to windfalls of any absolute size, although large enough compared to one's income to require additional planning. I'd suggest something like a rough categorization of windfall size like this:

>2X annual income: very small, fold into existing financial plan by priority of investments
2-20X annual income: small windfall, enough to make new goals possible
20-50X annual income: medium windfall, enough to make you financially independent
50X+ annual income: large windfall, financially independent plus major upgrade in lifestyle

This is rough because it ignores current assets and debts. Someone with 3x annual income in debt might only get back to 0 net worth with a "small windfall" of 3X annual income.

When you read down the list of specific points in the wiki page, some points will apply to small, medium, and large windfalls, while others will apply to large only. But I'm not convinced it would make the page better to, for example, indicate next to each point ("S, M, L" or "L") just because of the uncertainty involved. Aside from maybe adding a table like what I gave, do you have suggestions for changes you'd like to see?
Fallible
Posts: 7699
Joined: Fri Nov 27, 2009 4:44 pm
Contact:

Re: Proposed update to Managing a Windfall wiki page

Post by Fallible »

fyre4ce wrote: Wed Jun 03, 2020 12:00 pm
Fallible wrote: Mon Jun 01, 2020 6:21 pm
fyre4ce wrote: Sun May 31, 2020 11:18 pm I tried rewriting the Managing a Windfall wiki page, and I want to get the forum's opinion on the changes.

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

Proposed: https://www.bogleheads.org/wiki/User:Fy ... a_windfall
The major change is adding a lot of content on the specific sub-topics of windfall planning. I feel like the current one isn't as helpful as it could be, only outlining high level steps that actual readers may not find to be actionable. Most of the new content is just general advice on a Bogheleads-style financial plan, but I wrote it with a bias toward windfall recipients (eg. recommending paying off all debts, and explaining why). I like that it now links to many other good pages in the wiki, where readers can explore more content on any specific topics.

Furthermore, I felt like some of the ordered steps in the current page are out of place. For example, reading recommended books falls under the first step of "Take your time", when getting tax help ("Determine your tax situation") should be a higher priority in my opinion. Another example is how "Monitor the plan..." is a subsection of "Formulate a plan" when it should be a separate step that comes after. I think my revision has a clearer and more logical structure.
Nice work! I think you've added important, specific detail and reorganization. Two examples I see are noting how windfall sizes vary dramatically and that the page focuses on windfalls that are relatively large.

Some windfall threads on the forum have dealt with relatively small amounts under, say, $100k (for whom many people is large and can even be life-changing). When I and others have directed them to the wiki's page, it doesn't always apply to these amounts and sometimes the OP has come back to note this. I don't know where the OP goes after that.

Do you think it's important to provide examples of "large" and "small" in your paragraph below and perhaps to let readers with smaller amounts know how it applies to them?:

"This wiki page will intends to provide guidance for windfalls that are relatively large compared to one's income and assets, and entail significant lifestyle changes and the need for additional planning. The guidance presented is intended to apply to a wide variety of windfall types, sources, and absolute sizes. Readers are encouraged to consider the guidance that applies to their individual situation."
The advice is intended to apply to windfalls of any absolute size, although large enough compared to one's income to require additional planning. I'd suggest something like a rough categorization of windfall size like this:

>2X annual income: very small, fold into existing financial plan by priority of investments
2-20X annual income: small windfall, enough to make new goals possible
20-50X annual income: medium windfall, enough to make you financially independent
50X+ annual income: large windfall, financially independent plus major upgrade in lifestyle

This is rough because it ignores current assets and debts. Someone with 3x annual income in debt might only get back to 0 net worth with a "small windfall" of 3X annual income.

When you read down the list of specific points in the wiki page, some points will apply to small, medium, and large windfalls, while others will apply to large only. But I'm not convinced it would make the page better to, for example, indicate next to each point ("S, M, L" or "L") just because of the uncertainty involved. Aside from maybe adding a table like what I gave, do you have suggestions for changes you'd like to see?
I think such categorization could help, but I'm not sure about the exact numbers. Perhaps others can weigh in on it.

The main question I have is what does the recipient of a smaller windfall need to know and do that’s different from, or similar to, one receiving a larger windfall? And how soon does he need to know it on the page? For example, the lead mentions “small” but emphasizes “large” and references to large continue in following paragraphs:
Windfalls can range in magnitude from small additions to an individual's wealth to a significant increase in fortune. Since a large windfall almost invariably means huge changes in a recipient's life, psychological and emotional factors[note 1] are often the most important factors determining outcomes.
Is there a way to add a reference to smaller windfalls and their changes, which also could be a different kind of “huge” to this recipient, including psychological and emotional factors? Without that reference, the reader could conclude that this is only for windfalls much bigger than his/hers (this is what sometimes happens on the forum). It would be a premature conclusion because there is much below that does pertain to smaller amounts, but not knowing this upfront, the reader could be lost.

I think a bit more reference to smaller windfalls could be made in the opening, along with briefly letting this reader know that information can be found below. A suggestion:

“Windfalls can range in magnitude from small additions to an individual's wealth to a significant increase in fortune. Since small and large windfalls, both of which are addressed below, can mean huge changes in a recipient's life, psychological and emotional factors[note 1] are often the most important factors determining outcomes.”
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
Topic Author
fyre4ce
Posts: 1272
Joined: Sun Aug 06, 2017 11:29 am

Re: Proposed update to Managing a Windfall wiki page

Post by fyre4ce »

Fallible wrote: Wed Jun 03, 2020 6:09 pm *snip*

I think a bit more reference to smaller windfalls could be made in the opening, along with briefly letting this reader know that information can be found below. A suggestion:

“Windfalls can range in magnitude from small additions to an individual's wealth to a significant increase in fortune. Since small and large windfalls, both of which are addressed below, can mean huge changes in a recipient's life, psychological and emotional factors[note 1] are often the most important factors determining outcomes.”
Thanks. Good suggestion; I added the text you suggested.

I also decided to just delete the reference to the PFS designation. There are plenty of great fee-only CFA/CFP advisors that will consult by the hour, and these should be more reliable than a CPA/PFS.

Any other suggestions?
Fallible
Posts: 7699
Joined: Fri Nov 27, 2009 4:44 pm
Contact:

Re: Proposed update to Managing a Windfall wiki page

Post by Fallible »

fyre4ce wrote: Thu Jun 11, 2020 3:29 pm
Fallible wrote: Wed Jun 03, 2020 6:09 pm *snip*

I think a bit more reference to smaller windfalls could be made in the opening, along with briefly letting this reader know that information can be found below. A suggestion:

“Windfalls can range in magnitude from small additions to an individual's wealth to a significant increase in fortune. Since small and large windfalls, both of which are addressed below, can mean huge changes in a recipient's life, psychological and emotional factors[note 1] are often the most important factors determining outcomes.”
Thanks. Good suggestion; I added the text you suggested.

I also decided to just delete the reference to the PFS designation. There are plenty of great fee-only CFA/CFP advisors that will consult by the hour, and these should be more reliable than a CPA/PFS.

Any other suggestions?
Sounds good and I agree about the more reliable CFA/CFP.

No other suggestions.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
Topic Author
fyre4ce
Posts: 1272
Joined: Sun Aug 06, 2017 11:29 am

Re: Proposed update to Managing a Windfall wiki page

Post by fyre4ce »

Any other comments from the forums?
Topic Author
fyre4ce
Posts: 1272
Joined: Sun Aug 06, 2017 11:29 am

Re: Proposed update to Managing a Windfall wiki page

Post by fyre4ce »

*bump*
User avatar
FiveK
Posts: 10975
Joined: Sun Mar 16, 2014 2:43 pm

Re: Proposed update to Managing a Windfall wiki page

Post by FiveK »

Added a few sentences to the "Get help" section, regarding considerations for longer term use of an advisor.

Just tweaking now - don't see any reason not to move the draft to the main site.
Topic Author
fyre4ce
Posts: 1272
Joined: Sun Aug 06, 2017 11:29 am

Re: Proposed update to Managing a Windfall wiki page

Post by fyre4ce »

I added a few bits of content on giving and lending to family and friends, because this is a common situation windfall recipients face. I'll give it another day for any last comments, on recent edits or overall, and then move it over to the live wiki.
Topic Author
fyre4ce
Posts: 1272
Joined: Sun Aug 06, 2017 11:29 am

Re: Proposed update to Managing a Windfall wiki page

Post by fyre4ce »

Draft page has been moved live. Thanks to all those who participated!
Post Reply