Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
How much would you have to have to pay an FA
Old 06-14-2017, 01:01 PM   #1
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,824
How much would you have to have to pay an FA

Is there a size of portfolio that makes it sensible to employ a Financial Adviser? My response was always "NO"......but as I get older and my portfolio increases I can see asking for advice on estate planning....but not investing.
__________________

__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-14-2017, 01:06 PM   #2
Recycles dryer sheets
 
Join Date: Nov 2015
Posts: 271
Yes...when it becomes so large that it takes teams of people to manage. You think Ted Lerner does and keeps track of all of his investments, lol. The largest property owner in washington dc...I think not.

For the rest of us who have $0 to multi millions...we cant even begin to imagine what it takes to keep track of a billionaires investment portfolio.
__________________

__________________
ponyboy is offline   Reply With Quote
Old 06-14-2017, 01:32 PM   #3
gone traveling
 
Join Date: Mar 2017
Location: New York City
Posts: 2,059
I applied for a job once, it paid 105k a year (2007)to work 4 days a week to manage the guys art holdings. Needless to say i did not get the job, they wanted to know if i had a full gun carry permit. Would I be interested in driving the family around when they were in town and the regular chauffeur was unavailable. These are the folks that have teams of people managing their stuff.
__________________
Blue Collar Guy is offline   Reply With Quote
Old 06-14-2017, 01:40 PM   #4
Recycles dryer sheets
 
Join Date: Jul 2013
Posts: 258
I think that the issue becomes managing the whole financial package, not 'what should I invest in'. Estate planning, tax planning, keeping track of assets, and so forth.
__________________
Clone is online now   Reply With Quote
Old 06-14-2017, 01:55 PM   #5
Full time employment: Posting here.
OldShooter's Avatar
 
Join Date: Mar 2017
Location: City
Posts: 531
FAs are not estate planners even if you find one who thinks he/she is. Find an attorney in your state that specializes in estates.

Re portfolio, my impression is that it takes $1m to interest a true Registered Investment Advisor. These guys are legally fiduciaries and that is what you want. I think sticker prices for FAs like this start at 2% for $1M and slide down from there. I just helped select an FA for a nonprofit and at a $4M level, we were quoted prices ranging from 40 to 75bps from the 8 firms we sent RFPs to. Obviously, they knew they were in a competition and came with sharpened pencils.
__________________
OldShooter is offline   Reply With Quote
Old 06-14-2017, 06:37 PM   #6
Recycles dryer sheets
 
Join Date: Aug 2008
Location: The 850
Posts: 211
Quote:
Originally Posted by OldShooter View Post
FAs are not estate planners even if you find one who thinks he/she is. Find an attorney in your state that specializes in estates.

Re portfolio, my impression is that it takes $1m to interest a true Registered Investment Advisor. These guys are legally fiduciaries and that is what you want. I think sticker prices for FAs like this start at 2% for $1M and slide down from there. I just helped select an FA for a nonprofit and at a $4M level, we were quoted prices ranging from 40 to 75bps from the 8 firms we sent RFPs to. Obviously, they knew they were in a competition and came with sharpened pencils.
With less than that, I'm at the upper end of your quotes - think your getting a fair price.
__________________
Stay at home slacker dad since 2015
FlaGator is online now   Reply With Quote
Old 06-15-2017, 06:22 AM   #7
Full time employment: Posting here.
 
Join Date: Jun 2016
Posts: 815
I think it depends more on your interests and personality than the size of your portfolio, unless you're talking about $10M+. If you get peace of mind from professional help and you like not spending time managing your portfolio, an FA could be helpful. Also if you tend to panic in a market downturn, an FA will help prevent you from selling at a low point. I managed our portfolio myself for years but got an FA 3 years before planned ER to help me transition our portfolio from purely growth to partly income-generating. It made me feel better having an FA confirm our ER readiness also.

Still have our FA post-ER, and will probably keep the FA for the first few years of ER. Having too much fun traveling and doing other things that interest me right now to want to take that over. Also would feel better taking it back on myself after we get through the initial years of ER. YMMV
__________________
Scuba is offline   Reply With Quote
Old 06-15-2017, 06:45 AM   #8
Thinks s/he gets paid by the post
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 3,156
If I can't visit a FA on a per "issue" basis and pay by the hour, I'm not interested. The kinds of help I need are NOT things like AA or pulling the trigger on an investment. What I would like is someone who can evaluate MY planned major changes for unforeseen issues like taxes and "gotchas" such as MC limits, etc. IOW, I want someone familiar enough with the "Big Picture" to keep me from making a stupid mistake. YMMV
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Old 06-15-2017, 06:58 AM   #9
Full time employment: Posting here.
exnavynuke's Avatar
 
Join Date: Sep 2016
Location: Acworth
Posts: 804
Assuming an investment portfolio of stocks/bonds etc only, I don't think there is any point in which a FA would be worth their cost to me. If I had won that $435M jackpot, however, I'd likely utilize a team (including lawyer, CPA, and probably investment personnel) to manage the estate as I'd likely diversify investments into other areas including multiple real estate holdings, possibly some venture capital investments, etc. Then I'd probably want help managing all the various investments instead of doing it on my own.
__________________
exnavynuke is offline   Reply With Quote
Old 06-15-2017, 08:04 AM   #10
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 2,702
Quote:
Originally Posted by Clone View Post
I think that the issue becomes managing the whole financial package, not 'what should I invest in'. Estate planning, tax planning, keeping track of assets, and so forth.


Great point that is seldom mentioned. Most threads go down the active/passive investment rathole and ignore all these other highly significant factors.
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
jazz4cash is offline   Reply With Quote
Old 06-15-2017, 08:10 AM   #11
Thinks s/he gets paid by the post
Fedup's Avatar
 
Join Date: Mar 2014
Location: Southern Cal
Posts: 2,930
I'm thinking of $20 million, that's what I was quoted from Barclays Bank in LA a few year ago.
__________________
Fedup is offline   Reply With Quote
Old 06-15-2017, 08:19 AM   #12
Full time employment: Posting here.
Sojourner's Avatar
 
Join Date: Jan 2012
Posts: 608
Quote:
Originally Posted by Koolau View Post
If I can't visit a FA on a per "issue" basis and pay by the hour, I'm not interested.
+1

To answer the specific question, I would start thinking about retaining an FA if my net worth were to approach the $10-12 million mark. That's the point at which I'd have so much money to burn, I might as well outsource things like portfolio management to free up the 2-3 hours per month I would otherwise be spending to do it myself.
__________________
Sojourner is online now   Reply With Quote
Old 06-15-2017, 08:28 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 12,756
Wow.... some people seem pretty low to me.... I can manage $10 to $20 mill on my own... not a lot more work than I do now (and I am not close)...


BUT, if I won one of those super lotteries and had over $100 mill I would than hire some people... but not pay a % of NAV unless it was really low... like 25 to 50 BPs..... that is still $250 to $500K to them.... I should be able to get a lot of service for that kind of scratch.... but since you should be making anywhere between $5 and $10 mill a year in profits it becomes a minor expense to you...
__________________
Texas Proud is offline   Reply With Quote
Old 06-15-2017, 08:48 AM   #14
Full time employment: Posting here.
Sojourner's Avatar
 
Join Date: Jan 2012
Posts: 608
Quote:
Originally Posted by Texas Proud View Post
Wow.... some people seem pretty low to me.... I can manage $10 to $20 mill on my own... not a lot more work than I do now (and I am not close)...
Well, I could manage $10-$20MM (or more) on my own, too, but when the nest egg gets to be that large, it becomes a simple matter of freeing up more of your time. When your passive income gets to be so high (say, $35,000/month from a $12 million portfolio) that you have, essentially, unlimited discretionary money to spend on whatever you want, wouldn't it make sense to pay someone to manage your money and free up some of the time and "brain space" being devoted to personal financial management? IOW, you use a little bit of something you have an excessive amount of (money) to free up a little bit of something you have a very limited amount of (time).

Using the exact same reasoning, if I had a $12 million net worth, I would hire a maid to come in and clean my house, wash my clothes, do the dishes, etc. several times a week instead of spending time doing those kinds of drudgeries myself.
__________________
Sojourner is online now   Reply With Quote
Old 06-15-2017, 09:05 AM   #15
Thinks s/he gets paid by the post
 
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 2,850
I would think around $100 million. But not sure. I don't see any problem managing up to $25-50million myself. I'm an unusual case though since I am better qualified and interested than most to self manage (MBA, CPA, CFA). I enjoy managing my portfolio. The thought of paying some guy $500,000-$1,000,000 every year kind of puts me off. But everybody is different.
__________________
Danmar is offline   Reply With Quote
Old 06-15-2017, 09:11 AM   #16
Thinks s/he gets paid by the post
Fedup's Avatar
 
Join Date: Mar 2014
Location: Southern Cal
Posts: 2,930
Quote:
Originally Posted by Sojourner View Post
Well, I could manage $10-$20MM (or more) on my own, too, but when the nest egg gets to be that large, it becomes a simple matter of freeing up more of your time. When your passive income gets to be so high (say, $35,000/month from a $12 million portfolio) that you have, essentially, unlimited discretionary money to spend on whatever you want, wouldn't it make sense to pay someone to manage your money and free up some of the time and "brain space" being devoted to personal financial management? IOW, you use a little bit of something you have an excessive amount of (money) to free up a little bit of something you have a very limited amount of (time).

Using the exact same reasoning, if I had a $12 million net worth, I would hire a maid to come in and clean my house, wash my clothes, do the dishes, etc. several times a week instead of spending time doing those kinds of drudgeries myself.
Exactly the same thinking for me. I guess if we put 50% in stocks and 50% in bonds, we should be ok.
__________________
Fedup is offline   Reply With Quote
Old 06-15-2017, 09:14 AM   #17
Thinks s/he gets paid by the post
 
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 2,850
Quote:
Originally Posted by Sojourner View Post
Well, I could manage $10-$20MM (or more) on my own, too, but when the nest egg gets to be that large, it becomes a simple matter of freeing up more of your time. When your passive income gets to be so high (say, $35,000/month from a $12 million portfolio) that you have, essentially, unlimited discretionary money to spend on whatever you want, wouldn't it make sense to pay someone to manage your money and free up some of the time and "brain space" being devoted to personal financial management? IOW, you use a little bit of something you have an excessive amount of (money) to free up a little bit of something you have a very limited amount of (time).

Using the exact same reasoning, if I had a $12 million net worth, I would hire a maid to come in and clean my house, wash my clothes, do the dishes, etc. several times a week instead of spending time doing those kinds of drudgeries myself.
$35,000 per month provides for unlimited discretionary spending? Don't think so.

Hiring a maid, gardener, pool guy, is a little different than hiring an asset manager in my view. Have hired all those services and more but not an asset manager. A lot more expensive for the asset manager too. I enjoy managing my portfolio (not drudgery) and would be constantly second guessing any manager. Agree that my education and experience makes this a little unusual. Doesn't take much time the way I do it (buy & hold, spend divs).
__________________
Danmar is offline   Reply With Quote
Old 06-15-2017, 10:50 AM   #18
Full time employment: Posting here.
Sojourner's Avatar
 
Join Date: Jan 2012
Posts: 608
Quote:
Originally Posted by Danmar View Post
$35,000 per month provides for unlimited discretionary spending? Don't think so.
Hahaha... I had a feeling someone would quibble with that statement and take it more literally than I intended. Note that I wrote "essentially unlimited", which I was hoping would imply that, clearly, $35K/month is not literally unlimited. But I think for most on this board, that amount would feel pretty close to unlimited. Of course, it's all relative. I imagine $35K/month would feel like abject poverty to someone like LeBron James.
__________________
Sojourner is online now   Reply With Quote
Old 06-15-2017, 11:38 AM   #19
Full time employment: Posting here.
gcgang's Avatar
 
Join Date: Sep 2012
Posts: 861
I could say I like to do it myself, which I do, but down and dirty, I guess I'm too cheap.

Even at $5mm, paying 1% is $50,000. Per year. It's hard to imagine receiving $50k of value. Every year. Not going to get it in higher returns or asset allocations.

Estate and other issues are nice to have help with. Paying someone to make sure they're in order is worthwhile. That might cost $5-10k, at most. Once every several years, perhaps. Not every year.

But $50,000 worth? Every year?
__________________
What a long, strange trip it's been.
gcgang is offline   Reply With Quote
Old 06-15-2017, 12:21 PM   #20
Full time employment: Posting here.
exnavynuke's Avatar
 
Join Date: Sep 2016
Location: Acworth
Posts: 804
If anyone is facing such a problem, I'll be happy to invest your money in 3 low cost funds and distribute an annual 3.5% of your money to you at regular intervals of your choosing (broken down to as little as weekly, possibly daily distributions if you'd like) for a low fee of only $500k/year. In fact, I'd even be willing to guarantee that I'd do it for that low fee (adjusted for inflation) until one of us died (for only effectively a few hours of work per year, I'd keep "working" until I died at such an income for the amount of work).
__________________

__________________
exnavynuke is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
How much would you pay for a first/business class upgrade? soupcxan Travel Information 103 05-06-2015 06:23 AM
What would you do - pay off student loan or pay down mortgage? bank5 FIRE and Money 27 07-27-2009 05:30 PM
How much tax are you expected to pay at retirement? moonshadow576 Other topics 1 09-25-2007 11:35 AM
FIRE, How much do you pay for Health Insurance zcung FIRE and Money 32 06-13-2006 09:24 PM

 

 
All times are GMT -6. The time now is 09:06 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.