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Old 12-23-2010, 03:56 PM   #21
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On the FA friend, you do not want to mix friendship and business. Indeed, if they value your friendship, they should refuse to do business with you.
I agree completely. I had an FA friend who did a free analysis on my situation about 6 years ago and said I was doing great (used the word "Golden"). He reckoned he could probably eek out a little more return but valued our friendship and said he could introduce me to someone in his firm that could do a "boutique portfolio" for me, with annual fees of 0.9%.

That still sounded like too much money for too much risk and I declined the offer. We stayed friends up to the point I moved out of State end of 2007, and I really appreciated that he never tried to sell me on anything - we were just friends that met down the Irish Pub close to our office block now and then.
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Old 12-23-2010, 04:00 PM   #22
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If a friend is planning on putting you in a loaded fund, especially with a high expense ratio, they aren't your "friend". You can create an optimal portfolio just out of vanguard funds, for 1/100th of the cost. A financial adviser, especially one looking at loaded funds, may not even properly address tax efficiency concerns, which is a huge deal at higher incomes.

You can ask on the boglehead forum for some help creating a portfolio, you will have to let them know what taxable and non-taxable accounts you have. Once setup it should require very few changes, at least until your income situation changes, if your income goes down, your portfolio could very likely be made simpler.
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Old 12-23-2010, 04:04 PM   #23
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I agree with you. I can get a "financial plan" from Vanguard for $250. This would be flat fee and not necessarily "portfolio management". Perhaps that is my best bet if I choose not to be full blown CFP'ed?
That's not a bad idea, imo. There have been several of us that have had VG plans done. (they are provided free if you have enough money invested).

have a look at these threads...

My Vanguard Financial Plan Results

Vanguard Financial Plan
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Old 12-23-2010, 04:10 PM   #24
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That's not a bad idea, imo. There have been several of us that have had VG plans done. (they are provided free if you have enough money invested).

have a look at these threads...

My Vanguard Financial Plan Results

Vanguard Financial Plan
Just called Vanguard and they can do everything that my FA friend can do. I didn't realize they would look at outside investments and assets taking them into consideration. I'm taking that route. Thanks so much everyone!

I'll check out the links too.
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Old 12-23-2010, 09:01 PM   #25
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Originally Posted by RockSplat View Post
I agree with you. I can get a "financial plan" from Vanguard for $250. This would be flat fee and not necessarily "portfolio management". Perhaps that is my best bet if I choose not to be full blown CFP'ed?


I don't know if they still have it.... but VG used to have a questionaire that would put you in a certain risk category.... they would then 'recommend' funds for you to match your risk tolerance.... I would suggest you look this up first before paying $250 for something you can get free...


But... if your really feel that you can not do it... go the $250 route instead of hiring a FA and pay fees forever...
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Old 12-23-2010, 10:20 PM   #26
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Thanks... I wish there was a simple mutual fund I could buy into to do the tax efficiency for me. I'm not fit for making those kinds of decisions and setups.
The big issue is establish investment objective before picking a fund. For example, consider a dividend approach, muni bond approach, or a total portfolio approach. Or combine all that to a single fund like Permanent Portfolio. But each of those choices may or may not be right depending on your specific objective and tolerance for risk.

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Thanks! I actually have a friend in mind but have put him off for years since it was simple while attacking the mortgage with non retirement $. Now I don't have anything to attack.

It's mind numbing to compare the cost of Vanguard to a managed wrap account and loaded fund. I guess there are times when it's good and times when it's bad depending on the situation. Please correct me if I'm wrong.

For years I did my own taxes then got a great CPA. He has saved me tons and even restructured my business type. Maybe the right FA is the same way. Maybe I'm much better off in that type of setup.

I do trust the guy but the price is what hurts. Maybe FAs truly do meet the value..
If you are looking at portfolio performance only, the probability an advisor helps you (with performance) will be low. An advisor can talk you out of selling at the bottom (for example). In general if you are considering an advisor it is because you want advice from someone continously and want it faster than internet forums can give you, or be more specific to your situation than any of us here would be able to do.
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Old 12-23-2010, 10:25 PM   #27
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... In general if you are considering an advisor it is because you want advice from someone continously and want it faster than internet forums can give you, or be more specific to your situation than any of us here would be able to do.
I would suggest that bogleheads can be extremely specific to your situation and faster than an advisor since the folks there respond at all hours and on holidays. I think they also would be better than a Vanguard plan. It costs nothing to try them. That is, the free trial is really free and unlimited. Furthermore, you get more than one perspective on your individual situation, so it's like have several financial advisors each competing for your business without paying them.
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Old 12-25-2010, 11:45 AM   #28
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When I'm stuck on things I read books. Since posting this I was reminded of a few things like how important it is to be on the other side of the tax fence.

I finally started using a CPA and have saved thousands since making that choice. I am considering a financial advisor however I drank the Bogle Kool Aid. When looking at Vanguard at .20% fees vs the typical expenses of a standard mutual fund (A shares, C shares) it seems much cheaper.

Then considering the 1.5% Wrap account fee the difference in cost is pretty significant when there are large sums there.

I'm open minded and nothing at all against advisors. I am starting to wonder if I'm in a position now where a financial advisor can help me from a business side as well.

My situation is getting more complicated than it used to be. I keep asking questions like where to put this extra money based on wanting income and early retirement/semiretirement from it, why use a 529 for my kids when I can use an SEP IRA for the same non penalty withdrawals, tax strategies with the investments.

Also I wonder if a FA can help me make really good tax decisions. For instance I know it's better to buy real estate under a PLC since it's only taxed 15% max or so. Maybe the trick for me is to keep this $ in the S-Corp LLC and buy investments or real estate with "before tax" dollars.

Like I said thousands have been saved by me using a CPA. Should I accept the fact that FA's are expensive however very well worth it? Perhaps this may be a similar success story like thousands earned with a FA rather than Vanguarding it with target funds?

I'd want to have advice like how to purchase investments to play well with the tax system.

On the other hand I could keep it simple and simply max out all tax deferred accounts like SEP ($40k or so). With that however I feel that I would just be locking up money for when I'm older. I really want to take this income and make it bring income now unless that's unrealistic.

I'd rather spend my time focusing on income than investing. Unless of course investing was simple - like the Target 2030 or something similar where I just have transfers set up.

I've found that there are some strong opinions and appreciate your advice on the direction to take.

I have 3 options:
- vanguard advisor services (only $250 one time flat fee) provide a financial plan.
- Possibly a financial advisor at my CPA firm - hopefully they work hand in hand, not sure.
- Financial advisor from somewhere like wellsfargo (I have someone in mind if took this route)

Thanks so much for your advice! Merry Christmas everyone.
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Old 12-25-2010, 12:09 PM   #29
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I'm trying to figure out how your CPA saved you thousands in taxes. Our income is similar to yours, but we pay about 10% of it in Federal income taxes. Some folks on this forum pay even less. If we started to save thousands, we would be getting money back after paying nothing.
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Old 12-26-2010, 12:06 AM   #30
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I'm trying to figure out how your CPA saved you thousands in taxes. Our income is similar to yours, but we pay about 10% of it in Federal income taxes. Some folks on this forum pay even less. If we started to save thousands, we would be getting money back after paying nothing.
How can you make over 200K in income and pay 10% federal tax

We make just shy of 200K and pay about 26% after a lot of deductions.
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Old 12-26-2010, 12:35 AM   #31
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How can you make over 200K in income and pay 10% federal tax

We make just shy of 200K and pay about 26% after a lot of deductions.
Try this from Taxcaster (http://turbotax.intuit.com/tax-tools...s/taxcaster/):
+$216K income from wages and $24K qualified dividends
-$44K contributions to 401(k) plans
-$04.5K group health insurance
-$01.5K FSA
-$03K capital loss from previous years
-$14.6K exemptions (2 adults, 2 kids)
-$20K Schedule A (charity, mortgage interest, prop taxes, sales taxes)
=====
$128.4K taxable income
Taxes are: $22.6K (w/ qualified dividends taxed @15%)
Credits: $1K foreign tax credit, $1.6K tuition credit
Federal income tax: $20,000

I left off MakeWorkPayCredit. Anyways $20K on $216K is about 9%.

Now your turn. Show how you pay 26% or $52,000 on a $200K income. Unbelievable.
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