L
Lance Covington
Guest
Hi all. I have been perusing these forums for quite a while and absorbing all kinds of useful info and tips. Now, I am about to retire at age 56 and have some specific questions.
My wife and I have about $1,000,000 in various 401Ks, IRAs, a Roth IRA and misc. stocks. Our friends have recommended a financial planner who they have used for 15+ years. After meeting with him a couple of times, he has recommended a portfolio of mutual funds which he says will provide the proper asset allocation as well as an income for us. Sounds very nice but after reading a few books on the subject and reading these forums, I have two questions:
1. The planner's fee for his service is 1.5% of our assets per year. I'm guessing he also gets a commission on all the funds he is recommending. He says "he only makes money if we make money". What is the current wisdom of the group regarding this type of planner and his value to us?
2. As part of his plan for us, he is recommending a variable annuity inside my wife's IRA. I have always read that annuities are questionable at best and there is never a justification for one inside an IRA. I questioned him about this and he justifies it by saying that this annuity has a "SmartSecurity" feature that ratchets up our guaranteed investment every year, thus protecting us from a market downturn. The cost of this extra protection is pretty high; given a hypothetical return of 6%, our net return would only be 3.25%. After reading the prospectus and quizzing the planner, I could never get a fix on the total cost. What is the group's opinion of this use of an annuity?
It is probably apparent that I am a little leery of this whole thing but I want to be open minded if any of you see value in this approach to investing. Thanks in advance.
My wife and I have about $1,000,000 in various 401Ks, IRAs, a Roth IRA and misc. stocks. Our friends have recommended a financial planner who they have used for 15+ years. After meeting with him a couple of times, he has recommended a portfolio of mutual funds which he says will provide the proper asset allocation as well as an income for us. Sounds very nice but after reading a few books on the subject and reading these forums, I have two questions:
1. The planner's fee for his service is 1.5% of our assets per year. I'm guessing he also gets a commission on all the funds he is recommending. He says "he only makes money if we make money". What is the current wisdom of the group regarding this type of planner and his value to us?
2. As part of his plan for us, he is recommending a variable annuity inside my wife's IRA. I have always read that annuities are questionable at best and there is never a justification for one inside an IRA. I questioned him about this and he justifies it by saying that this annuity has a "SmartSecurity" feature that ratchets up our guaranteed investment every year, thus protecting us from a market downturn. The cost of this extra protection is pretty high; given a hypothetical return of 6%, our net return would only be 3.25%. After reading the prospectus and quizzing the planner, I could never get a fix on the total cost. What is the group's opinion of this use of an annuity?
It is probably apparent that I am a little leery of this whole thing but I want to be open minded if any of you see value in this approach to investing. Thanks in advance.