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Fee only financial advisor question.
Old 06-20-2020, 11:57 AM   #1
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Fee only financial advisor question.

My husband and I are at the point that we have questions only a qualified person can answer. We cannot do this on our own. Questions such as

1. How to figure out if converting tIRA makes financial sense in our particular situation.

2. By waiting for SS until 70 for DH (his is significantly more than mine) will we put ourselves in the next tax bracket when considering RMDs? It could be close

Bottom line, we don’t want to leave money on the table...we want to be informed to make the best decision.

Took me a year to find a fee only NAPFA financial advisor. We’re meeting via Zoom to have a consult. He stated he is only a fee only advisor. Rates average $1500-$2200 for what we will probably need.

I called advisors within a 2 hour drive in different directions and not one was fee only. They all wanted to manage our money. We don’t want that. This advisor stated he still will give advise on our investment strategy but doesn’t manage it.

I know most of you can figure these financial situations out yourselves. Many of us are smart enough to know we can’t.

Is there anything I should be looking out for? Any questions I should be asking of him? First consult is free. Only pay I’d we hire him. Unfortunately no one we know has used a FA so can’t get their feedback and/or recommendations. Many use a very well liked FA that manages their money for 1%.

Thank you!
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Old 06-20-2020, 12:15 PM   #2
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Another source might be a CPA with a specialty in personal financial planning... aka a PFS (Personal Financial Specialist)... see this link to see if there are any near you.

https://account.aicpa.org/eWeb/dynam...erralwebsearch

That said, your questions are pretty common.

On the first one, typically there is a period of time from when you first retire until when you start SS that you are in a low tax bracket and it is beneficial to do Roth conversons to the top of the tax bracket that you expect to be in once SS starts.

On the second question, it is pretty easy to estimate the tax bracket that you will be in when SS starts and the tax bracke that you will be in with RMDs added in.

Do you do you own taxes? If not, your tax preparer might be able to give you some input on your questions unless there are some complicating factors we are not aware of.
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Old 06-20-2020, 12:26 PM   #3
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Thank you so much. When I asked our accountant he gave us the name of a financial advisor. He was great to speak to but said he doesn’t do fee only.

My question #2 has me questioning if we should start SS for my husband next year at age 68. I have a feeling that the added 8% a year will push us over the edge. I’ve used the last few years interest/cap gains and its pretty close. I don’t want to wait only to “punished”.

I will check out your list. Again, thank you
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Old 06-20-2020, 02:20 PM   #4
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I called advisors within a 2 hour drive in different directions and not one was fee only. They all wanted to manage our money.
Carol, fee-only advisors usually do manage money. "Fee-only' just means that they're paid by their clients, rather than by commissions from vendors or other third parties.

The terminology in this industry is confusing. It sounds like what you were looking for was an advisor who bills hourly, rather than on assets under management.
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Old 06-20-2020, 02:31 PM   #5
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The terminology in this industry is confusing. It sounds like what you were looking for was an advisor who bills hourly, rather than on assets under management.
Boy, isn't that the truth!
"Fee only" has at least a dozen different interpretations, and many of them are pretty close to "X% of assets". It's very important to check that out carefully so you know what you're buying.
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Old 06-20-2020, 02:34 PM   #6
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On question #2, when to start SS, this is a great place to start.... https://opensocialsecurity.com/

Check the Advanced Options box at the top of the page. The tool will return an "optimal" solution based on the information that you provide and the mortality tables. You can also looks at alternative claiming strategies towards the bottom after you get the optimal strategy.

We'll probably do DW at FRA (66/2) and me at 70 since I was the higher earner.
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Old 06-20-2020, 02:35 PM   #7
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I highly recommend these folks. Fee only and extremely competent and no-nonsense.

http://https://www.evansonasset.com/
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Old 06-20-2020, 02:36 PM   #8
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"Flat fee only advisor" makes more sense.
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Old 06-20-2020, 02:45 PM   #9
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Rick Ferri, I don't have experience with him but very popular on another investment site.

https://rickferri.com/
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Fee only financial advisor question.
Old 06-20-2020, 02:53 PM   #10
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Fee only financial advisor question.

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Old 06-20-2020, 03:33 PM   #11
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Originally Posted by Carol1862 View Post
Thank you so much. When I asked our accountant he gave us the name of a financial advisor. He was great to speak to but said he doesn’t do fee only.

My question #2 has me questioning if we should start SS for my husband next year at age 68. I have a feeling that the added 8% a year will push us over the edge. I’ve used the last few years interest/cap gains and its pretty close. I don’t want to wait only to “punished”.

..
Since you are in the 22% tax bracket, getting pushed into the next higher one is only 2% more.

So not much of an extra amount on any money over the edge (does not add 2% to your total bill)
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Old 06-20-2020, 03:49 PM   #12
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Where did OP say that they were in the 22% bracket?
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Old 06-20-2020, 04:45 PM   #13
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The terminology in this industry is confusing.
And the funny (sad?) thing is that, in financial industry parlance, the opposite of "fee-only" is "fee-based."

Got it?
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Old 06-20-2020, 10:32 PM   #14
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Where did OP say that they were in the 22% bracket?
I got from an earlier posting by OP on another thread:

https://www.early-retirement.org/for...ml#post2391482
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Old 06-21-2020, 05:12 AM   #15
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I got from an earlier posting by OP on another thread:

https://www.early-retirement.org/for...ml#post2391482
Wow, good catch. But COVID 19 came along and there went the job. I’m in the 12% now this year.
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Old 06-21-2020, 05:45 AM   #16
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Since you are in the 22% tax bracket, getting pushed into the next higher one is only 2% more.

So not much of an extra amount on any money over the edge (does not add 2% to your total bill)
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Wow, good catch. But COVID 19 came along and there went the job. I’m in the 12% now this year.
That's important to know, along with how much head room you have in the 12% Fed tax bracket.

Ideally you'd want to pay the tax due on a conversion from your available cash. But don't want to drawdown available cash if it makes you stress...

I understand an earlier statement you made that explains why you want to pay someone to do the analyses. But how do you know they correctly model all of your factors?

So, last year you were in the 22%, and this year are projecting staying in the 12%. And what would be the impact this year of Roth conversion and/or a SS check? Ok, got it.

I'm really surprised that your tax accountant is not interested in this analysis. Maybe get another one.

Also, if possible, use some online calculators to get an idea of what inputs you'd use when estimating results. I don't have a link handy, but others will.
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Old 06-21-2020, 05:59 AM   #17
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Another thing to keep in mind is you can only plan based with the current tax laws\rates, cause you never know what the knuckleheads in office will want to change.
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Old 06-21-2020, 09:22 AM   #18
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Bottom line, we don’t want to leave money on the table...we want to be informed to make the best decision.
I am going to nit-pick the part about not wanting to leave any money on the table.

That's an impossible goal unless you both know when you are going to die.

Rather than worry about leaving any money on the table, I suggest you make make the best decision you can, and let it play out from there. Spend you time enjoying your life and your loved ones.

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Old 06-21-2020, 09:36 AM   #19
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And the funny (sad?) thing is that, in financial industry parlance, the opposite of "fee-only" is "fee-based."

Got it?
I had a flat fee "fee-only" planner that I hired when I FIRE'd to bounce ideas off of and do some planning. Overall, the process was worth the cost. But later on, the planner moved to subscription based fee only. So, I thanked the planner and said my finances aren't that complicated and don't need that much attention .
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Old 06-21-2020, 05:07 PM   #20
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ms gamboolgal and I have used Rick Feri and we do recommend him for a consultation.
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