- Joined
- Nov 27, 2014
- Messages
- 9,276
A bit more than a year ago I signed up with an FA. Long thread on that here:
https://www.early-retirement.org/forums/f28/hired-a-fa-94626.html
As I indicated in that thread, I am updating the group on my experience after one year. 2019 was my first complete year so that is the period I’ll be referencing 1/1/2019 - 12/31/2019. The update is twofold. First, the main thing anyone asks - did I do better under an FA. Short answer is that I don’t think I did any better or worse, but of course there’s that 1% fee. Second, how’s the service. In that respect, I’m pretty happy with the service. All told, it has been a good experience, but that fee is hard to get over.
I started the year at just under $1M. I earned 13.67% for an increase of about $135K. The portfolio started out the year at 40/60 but in August I met with the FA and we agreed that 60/40 would be better and that I was comfortable with that. The portfolio went to 60/40 early August and was there at year end. Of course the change midyear makes comparison a little difficult, but I was happy with the outcome. The 13.67% is net of any fees. Any feedback on the financial results is welcome. Since I didn’t track exact balances and exact dates and am not really willing to go back and reconstruct such, some blending and estimating would have to be done and is acceptable.
The service was very good and I’m satisfied with it. Unfortunately, I did not get a Christmas card, but all else was fine. The FA is very professional and our year end budgeting meeting (late 2018) and the midyear meeting were very helpful. There’s no doubt it’s nice to have a knowledgeable professional to discuss financials with. We discussed taxes, which is heavily focused on ROTH conversions, we discussed my spending targets, we continue to evaluate SS since DW is over 62 but we’re not ready to do that yet and we discussed one of my retirement goals which involves a large purchase ($150K) and how to best cash flow that. We’ve also been discussing some level of payment for future educational expenses for the three grandchildren. His responses are always well thought out and well supported and presented very professionally. Bottom line is that the FA is part of a higher end team and there’s not much to be critical about - except. The one thing I do not like is that they operate through Raymond James. Everything is held by RJ. When FA does something (makes a trade), I get notified directly from RJ. That separation is a good thing. But I’d rather they used Fidelity. Pet peeve of the moment is that I still don’t have my 1099-R for the ROTH conversions. It’s a highly subjective thing, but I just don’t like RJ. I feel like Fidelity is more my style (almost blue collar) whereas RJ tries to be something else. Subjective.
My conclusion is that I’ll be giving the FA another year, but I do not see me sticking around for much longer. I’m happy enough with the experience and will miss it at some point, but the fee is just too much to get over. So in case you didn’t calculate it already, the fee for 2019 was $10K. In a good year like we had for 2019, it’s possible to stomach it. Especially since I’m early on in this retirement thing and it’s nice to have a crutch. In a bad year, that $10K would still come out and unless the FA did a lot better than the market, I’d be upset. It’s kind of a one sided situation with me. I’m fine with taking less on the upside but I’d be more satisfied to lose less in the bad years. Not that I want a bad year to come, but a bad year would be very helpful in evaluating the FA’s performance.
So there it is. Nothing earth shattering and nothing that hasn’t already been discussed on this board. I guess my year confirms that it’s probably nothing one couldn’t do for themselves but to do so would take a good deal of self educating. This board is a great resource for the feedback loop that is needed however; I would highly recommend a trip to a good FA early on in the process. The idea of a fee only initial evaluation and recommendation probably makes the most sense but one would have to find a good one (get a personal recommendation). Even with this board as a support group, you don’t know what you don’t know and therefore, you may not ask the questions that you need answered. Everyone’s situation is different and it’s hard to share that over the internet. Not impossible, but more difficult.
The one thing I’ll struggle with without an FA is making sure everything is set up so that if I pass or if me and DW become unable to manage our finances there is someone to rely on. It was nice as we finished up our will and TRUST documents to be able to tell our children that if anything happens, call Matt (the FA). That’s kind of another topic, but it is a factor that many cite as reason for using professional services.
Thanks for reading. Comments welcome, questions attempted to be answered.
https://www.early-retirement.org/forums/f28/hired-a-fa-94626.html
As I indicated in that thread, I am updating the group on my experience after one year. 2019 was my first complete year so that is the period I’ll be referencing 1/1/2019 - 12/31/2019. The update is twofold. First, the main thing anyone asks - did I do better under an FA. Short answer is that I don’t think I did any better or worse, but of course there’s that 1% fee. Second, how’s the service. In that respect, I’m pretty happy with the service. All told, it has been a good experience, but that fee is hard to get over.
I started the year at just under $1M. I earned 13.67% for an increase of about $135K. The portfolio started out the year at 40/60 but in August I met with the FA and we agreed that 60/40 would be better and that I was comfortable with that. The portfolio went to 60/40 early August and was there at year end. Of course the change midyear makes comparison a little difficult, but I was happy with the outcome. The 13.67% is net of any fees. Any feedback on the financial results is welcome. Since I didn’t track exact balances and exact dates and am not really willing to go back and reconstruct such, some blending and estimating would have to be done and is acceptable.
The service was very good and I’m satisfied with it. Unfortunately, I did not get a Christmas card, but all else was fine. The FA is very professional and our year end budgeting meeting (late 2018) and the midyear meeting were very helpful. There’s no doubt it’s nice to have a knowledgeable professional to discuss financials with. We discussed taxes, which is heavily focused on ROTH conversions, we discussed my spending targets, we continue to evaluate SS since DW is over 62 but we’re not ready to do that yet and we discussed one of my retirement goals which involves a large purchase ($150K) and how to best cash flow that. We’ve also been discussing some level of payment for future educational expenses for the three grandchildren. His responses are always well thought out and well supported and presented very professionally. Bottom line is that the FA is part of a higher end team and there’s not much to be critical about - except. The one thing I do not like is that they operate through Raymond James. Everything is held by RJ. When FA does something (makes a trade), I get notified directly from RJ. That separation is a good thing. But I’d rather they used Fidelity. Pet peeve of the moment is that I still don’t have my 1099-R for the ROTH conversions. It’s a highly subjective thing, but I just don’t like RJ. I feel like Fidelity is more my style (almost blue collar) whereas RJ tries to be something else. Subjective.
My conclusion is that I’ll be giving the FA another year, but I do not see me sticking around for much longer. I’m happy enough with the experience and will miss it at some point, but the fee is just too much to get over. So in case you didn’t calculate it already, the fee for 2019 was $10K. In a good year like we had for 2019, it’s possible to stomach it. Especially since I’m early on in this retirement thing and it’s nice to have a crutch. In a bad year, that $10K would still come out and unless the FA did a lot better than the market, I’d be upset. It’s kind of a one sided situation with me. I’m fine with taking less on the upside but I’d be more satisfied to lose less in the bad years. Not that I want a bad year to come, but a bad year would be very helpful in evaluating the FA’s performance.
So there it is. Nothing earth shattering and nothing that hasn’t already been discussed on this board. I guess my year confirms that it’s probably nothing one couldn’t do for themselves but to do so would take a good deal of self educating. This board is a great resource for the feedback loop that is needed however; I would highly recommend a trip to a good FA early on in the process. The idea of a fee only initial evaluation and recommendation probably makes the most sense but one would have to find a good one (get a personal recommendation). Even with this board as a support group, you don’t know what you don’t know and therefore, you may not ask the questions that you need answered. Everyone’s situation is different and it’s hard to share that over the internet. Not impossible, but more difficult.
The one thing I’ll struggle with without an FA is making sure everything is set up so that if I pass or if me and DW become unable to manage our finances there is someone to rely on. It was nice as we finished up our will and TRUST documents to be able to tell our children that if anything happens, call Matt (the FA). That’s kind of another topic, but it is a factor that many cite as reason for using professional services.
Thanks for reading. Comments welcome, questions attempted to be answered.