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Old 09-05-2014, 07:54 PM   #41
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Do you get a dedicated advisor at Vanguard whose office you can walk into or is it over the phone only? I like having a free advisor

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Yes, I have a single guy at Vanguard that is my principal contact for probably 10 years - over the phone but even if he was local I would probably do over the phone anyway. (I have a local insurance agent and have never gone to their offices). I talk to my Vanguard guy a couple times a year when I need to and he coordinates any other Vanguard resources I need for the issue at hand. All for free.
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Old 09-05-2014, 08:03 PM   #42
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Yes, I have a single guy at Vanguard that is my principal contact for probably 10 years - over the phone but even if he was local I would probably do over the phone anyway. (I have a local insurance agent and have never gone to their offices). I talk to my Vanguard guy a couple times a year when I need to and he coordinates any other Vanguard resources I need for the issue at hand. All for free.
I have principal contact in 2 companies. I think once your account crosses 1 million they will assign you guy in local office.

I don't talk to either one of them. It is kind of company telling you thanks you are important customer.

You get there by being your own FA. Nobody cares about YOUR money as much as you do
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Old 09-05-2014, 10:17 PM   #43
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Hesperus, you have gotten a lot of good advise from other members but here's my 2 cents:

1. You father was very wise in creating a portfolio consisting of stocks, bonds, MLP etc.instead of just a portfolio of diversified Index funds which charge you at least 0.25-0.35% (viz. @ Vanguard).

2. In my opinion, the portfolio that your father created will give better returns long term but may be a little more volatile than the portfolio consisting of just Index funds. Volatility may increase if you move funds into small cap growth stocks for example. This will increase potential returns but will also increase your portfolio's risk which may result in you selling at the wrong time in the event you find the ride too bumpy. This is counterproductive to managing a diversified portfolio that you balance periodically.

3. The 0.35-0.5% that you will pay a FA will ensure that you stay invested in such a diversified portfolio at all times. Any trades they make for you will not be based on emotions and IMHO the fees that you pay them is like an insurance policy so that you do not make any mistakes on your own based on emotional buy/sell decisions.

So basically, a diversified portfolio of index funds is not much different in terms of annual expenses compared to a diversified portfolio of individual stocks, bonds, MLP etc that is managed by a FA. In the long term (20+ years) the latter portfolio will most likely give you better returns than the former. Just my opinion of course!

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There is virtually no evidence for any of these three points. And some are flat out wrong. Not open to opinion, just plain factually wrong and or misleading.

1) we have no idea if the portfolio might not be considerably larger if it had been constructed with low cost index funds and the cost for most index funds is much lower than the nonsensical pulled out of thin air 0.25-0.35% ...example the Vanguard Total stock market ETF costs 0.05%. Only off by 500%...

2)no one is suggesting making the index funds more concentrated and less diverse. You can get a diversified low cost mix of index funds and not get taken by one of these crooks charging you by a percentage of YOUR money.

3)You can get a fee only advisor like Evanson who will charge you the equivalent of around 0.075% to start and if your portfolio grows and the fee being flat does not that percentage only goes down..as some one else pointed out - on a $4 Million portfolio, 0.35% FA will be charging you $14,000. If they are worth $150 an hour that is like 90+ hours of work they are charging you for--really?!? 90 hours? More likely they might be spending an hour and a half per month working for you...



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Old 09-06-2014, 10:12 AM   #44
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I want to thank everyone who posted here with suggestions and ideas about my original question about hiring an advisor at this stage of the process. They have been very helpful - Thank you.

A couple of things. It is more difficult in a small mountain town (even if it does have it's share of wealthy retirees) to have a good range of choices in independent FA's. There are two major brokerage branch offices, but limited independent advisors. I think it would be a good idea (as several people suggested) to look outside the area, including discount brokerages like vanguard, schwab, fidelity, etc to see how their advisors would work with me. If I must have a face to face (not as sure now), Denver is only a one hour flight, and has a number of well established and reputable FA's. That would open the playing field.

My goal is to self manage, and I won't waiver on that goal. Getting there is what this thread was about. One poster warned about being a 'gold mine' for an FA. This is one of my greatest concerns as I move forward. Even independent fiduciaries may have an ulterior motive to keep a large account generating income. I can't ever ignore that possibility as I move toward DIY. Someone who understands that goal and works within that framework is essential to me.

Although I do need to get going on reallocation, I also have some time, and do not need to rush in to start making trades. Although there is some inherent interest rate risk in this portfolio, there are also some very solid holdings, and it is generating very good monthly income. There is also the capital gains issue, as many have addressed. I went in to my brokerage accounts yesterday, and found there are total unrealized gains of approx $750K that I have to factor in. I don't want to rush into that tax hit.

I will keep posting as I move forward with these changes. Your advice has been helpful in gathering information and ideas from people who have experience with this, and want to be smart with their money, as I certainly do. Once again, thank you!
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Old 09-06-2014, 11:09 AM   #45
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........ I went in to my brokerage accounts yesterday, and found there are total unrealized gains of approx $750K that I have to factor in. I don't want to rush into that tax hit. .............
I would think that this is your biggest obstacle - unwinding current holdings without getting killed on taxes. If you had no CG at this point, you could just stick it into a lazy portfolio or Wellesley and call it a day.
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Old 09-06-2014, 03:21 PM   #46
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Originally Posted by hesperus View Post
I want to thank everyone who posted here with suggestions and ideas about my original question about hiring an advisor at this stage of the process. They have been very helpful - Thank you.

A couple of things. It is more difficult in a small mountain town (even if it does have it's share of wealthy retirees) to have a good range of choices in independent FA's. There are two major brokerage branch offices, but limited independent advisors. I think it would be a good idea (as several people suggested) to look outside the area, including discount brokerages like vanguard, schwab, fidelity, etc to see how their advisors would work with me. If I must have a face to face (not as sure now), Denver is only a one hour flight, and has a number of well established and reputable FA's. That would open the playing field.

My goal is to self manage, and I won't waiver on that goal. Getting there is what this thread was about. One poster warned about being a 'gold mine' for an FA. This is one of my greatest concerns as I move forward. Even independent fiduciaries may have an ulterior motive to keep a large account generating income. I can't ever ignore that possibility as I move toward DIY. Someone who understands that goal and works within that framework is essential to me.

Although I do need to get going on reallocation, I also have some time, and do not need to rush in to start making trades. Although there is some inherent interest rate risk in this portfolio, there are also some very solid holdings, and it is generating very good monthly income. There is also the capital gains issue, as many have addressed. I went in to my brokerage accounts yesterday, and found there are total unrealized gains of approx $750K that I have to factor in. I don't want to rush into that tax hit.

I will keep posting as I move forward with these changes. Your advice has been helpful in gathering information and ideas from people who have experience with this, and want to be smart with their money, as I certainly do. Once again, thank you!
This is a very interesting thread because you got a lot of diverse opinions and I think did a great job of synthesizing the advice into a plan that will work for you. I second the motion that you spend a good solid day reading up on investment management options, etc. (sites mentioned above). Also start a master list of questions you have when you interview an FA. If you go the Denver route (makes sense) then I would screen with a phone interview before going to the time and expense of meeting with them. Also ask them what information you should bring to the first meeting - they should ask for a fair amount of detail about your current holdings and objectives even in an initial meeting. I would be wary if they don't.

I'll also second the recommendation for using Vanguard Flagship services once you get everything arranged and are comfortable. There is no charge (as long as you have $1M in Vanguard funds) and like another poster above, we have had the same advisor for many years (I think we've been Flagship since 2000 and we've only ever had 2 advisors). Our current advisor is in Phoenix and I can schedule a phone appointment with him either same day or next day nearly always.
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Old 09-06-2014, 04:53 PM   #47
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I have a question that may seem obvious....

Did your dad manage it all himself, or did he have a FA or CPA to advise him. If so, can you continue with his management team? They appear to have done a good job.
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Old 09-06-2014, 07:11 PM   #48
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If Brewer is reading this thread, he might know of a few firms in that area to give you a direction for seeking counsel on this. He's a CFA charter holder.
Other than that, look on the NAPFA website and see where that leads you.

Fwiw, we encourage DIY a lot in my firm, and often have counseled clients to remove money from management for things like paying off their mortgages. But not everyone sees fiduciary responsibility through that filter.
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Old 09-06-2014, 07:27 PM   #49
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....It is more difficult in a small mountain town (even if it does have it's share of wealthy retirees) to have a good range of choices in independent FA's. There are two major brokerage branch offices, but limited independent advisors. I think it would be a good idea (as several people suggested) to look outside the area, including discount brokerages like vanguard, schwab, fidelity, etc to see how their advisors would work with me. If I must have a face to face (not as sure now), Denver is only a one hour flight, and has a number of well established and reputable FA's. That would open the playing field.....

There is also the capital gains issue, as many have addressed. I went in to my brokerage accounts yesterday, and found there are total unrealized gains of approx $750K that I have to factor in. I don't want to rush into that tax hit.
.....
I live in a very rural area as well and have had accounts with Vanguard for over 20 years including at least two financial planning sessions and never a face-to-face meting. I also telecommuted for work for 13 years. With today's technology, there should be no need for a face-to-face meeting (they probably could do video but I have never pursued it).

Unless you are or think you will at some point be in the 15% tax bracket and be eligible for 0% LTCG, the tax bite on LTCG will be 15% whether you do it now or do it later (assuming no change in the tax laws) so I'm not sure if I would feel handcuffed by capital gains taxes. OTOH, if you are currently or sometime soon will be in 0% LTCG then it makes sense to do a little at a time and save the 15% ($113k).
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Old 09-06-2014, 08:39 PM   #50
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I question whether you need to rush to change. You say you're worried what would happen if rates go up, but very few things will do well if that happens. You'd probably hold up better than a more aggressive total stock index.

I'd start by getting a good understanding of what you want/need the investments to do for you. Determine your objectives first, then your risk tolerance and investments can follow.

The portfolio that you currently have could be a sufficiently diversified, more tax efficient, less expensive way of investing than using even the lowest cost indexes.

Morningstar has a great portfolio analyzer that someone else mentioned. That would be a good place to start to understand your holdings.

Then, if you could find a smart, honest, hourly planner to help understand what you have, how it fits with what you want/need, perhaps you'd then have a good idea of how to compliment your current portfolio when/if you invest the cash or how to make the most efficient changes.


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Old 09-06-2014, 09:40 PM   #51
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I'm trying to get my mom out of a big old brokerage managed account and into Fidelity. We're in a bit of a rush in order to avoid the quarterly management fees. So if the OP can avoid quarterly fees by acting with some alacrity it might be worth while.
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Is this a case where an investment advisor is a good idea?
Old 09-06-2014, 10:37 PM   #52
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Is this a case where an investment advisor is a good idea?

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I have a question that may seem obvious....

Did your dad manage it all himself, or did he have a FA or CPA to advise him. If so, can you continue with his management team? They appear to have done a good job.
Again, we have no idea if the dad's account was well managed...it managed well enough, but if the Advisor was skimming 1%+ for years it could be hundreds of thousands lower than it might have been - no matter how big it is, we just do not know enough here to encourage anyone to stick with an expensive advisor. Hedge funds make a lot of money for their clients as well, but the cost is unnecessarily high.


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Old 09-07-2014, 08:59 AM   #53
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I have a question that may seem obvious....

Did your dad manage it all himself, or did he have a FA or CPA to advise him. If so, can you continue with his management team? They appear to have done a good job.
From my understanding, and from talking to him, he built it over the years by doing it himself, while working with his broker(s) in choosing positions. His brokers were mainly old style stock pickers. In other words, a commission based style. I don't think he ever had it under a wrap fee. He wouldn't go for that expense.
I couldn't say how a passive index style would have worked, since there really weren't many at that time for him to work with, and his trading slowed in his last few years. He liked good quality stocks, with dividends, and MLP's, which is why the portfolio is pretty heavy with large caps and energy right now. He was always in the market, reading, talking, watching the market shows. I know he did pretty well, given the other half of the estate went to my brother, and of course a hefty percentage to the IRS.
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Old 09-12-2014, 05:44 PM   #54
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He was a smart guy.


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