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Old 03-12-2021, 08:54 PM   #21
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1% on a million is $10,000 a year. At $100 an hour that is 100 hours or 2 1/2 weeks a year of non stop working only on your account. I manage my own and it takes me about an hour a year to re-balance. Hmmmm.

Like others have said, pay someone by the hour, that way you know what you are paying for. My dream is to round up 20 people with $5 million each to invest and be their investment manager. I'd stick it all in Vanguard Target funds and collect my 1% AUM.
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Old 03-12-2021, 11:29 PM   #22
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It doesnít materially change the argument, but at least an FA will generally decrease the percentage as the portfolio increases. Given the OP is being quoted 1.1%, I suspect the portfolio is under $1M. Generally, over $1M will not pay over 1%. Still, itís a lot of money.
The expenses of 1.1% reflect the advisorís fees plus the estimated underlying expenses of the funds in the portfolio. This advisor does not invest in individual stocks, but uses, mostly, mutual funds. I do agree it is a lot of money, and your response as well as that of others makes me more certain to go with my gut and take a pass on this opportunity. The 1.1% fees doesnít bother me too much....what really bothers me is the 1.1% fee every year. I was not aware their were advisors who charged flat fees for portfolio management....I should probably look more closely at that sort of arrangement.
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Old 03-13-2021, 01:21 AM   #23
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T....what really bothers me is the 1.1% fee every year. I was not aware their were advisors who charged flat fees for portfolio management....I should probably look more closely at that sort of arrangement.
+1 to that idea. Go for a flat fee, or by the hour, advisor.
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Old 03-13-2021, 01:23 AM   #24
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I manage my own, but have the FIDO advisor to run things past when I want to make any major moves....but I don't pay any fee on AUM. When we first met with him, he asked what I wanted from him, and I said "I can select my own investments, but I see your job as keeping me from making big mistakes" Anything "major" I think about doing, I run it past him just to make sure I'm not goofing up. For example, if I was going to increase my AA by a substantial amount, he might say "ok, well be sure to do as much of that as you can in your Roth rather than your TIRA, as growth will not be taxed from the Roth...so you want your growth investments in your Roth".

It seems like you've done ok to this point without an advisor...and I cringe at the thought of paying such a high fee year after year.

one other option would be to do this for one year and pay, but once things are set up the way you like it, move to self-managed.
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Old 03-13-2021, 01:49 AM   #25
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I recently talked to a financial advisor who I liked very much.
I've never met a FA I haven't liked a lot. They're a personable bunch, just like any salesman worth his salt. I suspect an unlikeable FA would soon find a job in another field.

DW isn't interested in dealing with finances, but she's fully capable of maintaining am asset allocation and withdrawing whatever funds are needed to supplement our SS and rental income. And she's fine with dealing with the property management team for the rentals.

There's really not that much involved in being the surviving member of a relatively rich couple. If she pays a few dollars more than I would in taxes (a hobby of mine), no big deal. But she can certainly manage going forward after I pass. And if she sufferers from cognitive degeneration at some point, DD is capable of stepping in. The only way we would consider paying someone 10s of thousands of dollars/year to basically reallocate and withdraw is if there was no one we trusted to help and she (or me) were mentally incapable. This isn't rocket science.
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Old 03-13-2021, 05:42 AM   #26
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The expenses of 1.1% reflect the advisorís fees plus the estimated underlying expenses of the funds in the portfolio. This advisor does not invest in individual stocks, but uses, mostly, mutual funds. I do agree it is a lot of money, and your response as well as that of others makes me more certain to go with my gut and take a pass on this opportunity. The 1.1% fees doesnít bother me too much....what really bothers me is the 1.1% fee every year. I was not aware their were advisors who charged flat fees for portfolio management....I should probably look more closely at that sort of arrangement.
Why not ask him for a history of outperformance of his choice of mutual funds over index funds with all costs included?
No chance I would pay 1.1% in total fees. Underlying fees in index funds can be zero.
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Old 03-13-2021, 05:58 AM   #27
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I looked at doing the same and decided the value wasnít there.
+1. If you have a typical 4% WR and the FA charges 1.1%, then that costs 27.5% of your cash flow. That is outrageous to me. What you did before worked well.
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Old 03-13-2021, 06:55 AM   #28
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You guys are making me feel pretty foolish for even considering this lol. I really donít mean that in a bad way...it is exactly why I come here from time-to-time. Get an unbiased take on my thinking before I make any decisions I may come to regret. Thanks.
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Old 03-13-2021, 06:56 AM   #29
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Iíve managed my and my wifeís investment portfolio for our entire working lives. I suppose ďmanagedĒ is somewhat of a generous characterization of my skill...we just relied on living below our means, dollar cost averaging into low-cost index funds, and a long period of time to accumulate (to us) a decent nest egg that, along with our pensions and social security, should allow us to have sufficient funds to retire.

...... One big plus is that assuming I leave planet earth before DW, I would feel confident that this advisor would serve her well...my DW is much brighter than I am, but just never had an interest in managing our money. Sheís met with the advisor as well, and said if I were not around, she would be comfortable working with him.

The big issue for me is cost...he charges about 1.1% of AUM...way, way, way more than I have ever paid. I ran firecalc adjusting for the higher expenses in figuring out the impact on my spending. The reality is that even with the higher expenses, we would still be unlikely to spend what firecalc says we can.

Has anybody done something similar? Any thoughts on taking this approach? Any advantages to using an advisor I may not be considering? My gut is telling me this is not a very good use of money...not because I donít think he wonít do a decent job, but just because the value isnít there.

Appreciate any perspective you might want to share.
Majority here, including me, would counsel against an FA. Take another look at your own words, here. You've done perfectly well so far, and based on FireCalc you're set for life. So why get an FA now? As to concern for your DW if you predecease her, you can leave her the link to this site, or bogleheads, for any general advice. Or, just move everything to Vanguard, or Fidelity, or similar with a conservative mix of just a couple of Index funds.
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Old 03-13-2021, 06:58 AM   #30
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You guys are making me feel pretty foolish for even considering this lol. I really donít mean that in a bad way...it is exactly why I come here from time-to-time. Get an unbiased take on my thinking before I make any decisions I may come to regret. Thanks.
Thereís no need to feel foolish. This forum is heavily weighted to the diy group but there are also many here who use an advisor. Itís a journey with many different paths. Take your time and figure out which one works best for you.
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Old 03-13-2021, 07:03 AM   #31
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Thereís no need to feel foolish. This forum is heavily weighted to the diy group but there are also many here who use an advisor. Itís a journey with many different paths. Take your time and figure out which one works best for you.

Thanks. And ďfoolishĒ was probably the wrong word. I think, for the most part, people are just reinforcing what I already know, and directing me on a path that I am already inclined to take.
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Old 03-13-2021, 07:05 AM   #32
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We have a full service advisor at 0.37% AUM. I could probably manage on my own, but not as well. DH couldn't manage the portfolio at all. It's worth it to me, does not impact my lifestyle, and probably impacts what DS will eventually inherit a little. And I sleep at night.
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Old 03-13-2021, 07:19 AM   #33
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We have a full service advisor at 0.37% AUM. I could probably manage on my own, but not as well. DH couldn't manage the portfolio at all. It's worth it to me, does not impact my lifestyle, and probably impacts what DS will eventually inherit a little. And I sleep at night.
I think if I were being quoted a rate of 0.37% Iíd be far more inclined to take your path. Like I said earlier, I need to look around a bit more at other options.
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Old 03-13-2021, 08:57 AM   #34
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The big issue for me is cost...he charges about 1.1% of AUM...way, way, way more than I have ever paid. I ran firecalc adjusting for the higher expenses in figuring out the impact on my spending. The reality is that even with the higher expenses, we would still be unlikely to spend what firecalc says we can.

Has anybody done something similar? Any thoughts on taking this approach? Any advantages to using an advisor I may not be considering? My gut is telling me this is not a very good use of money...not because I donít think he wonít do a decent job, but just because the value isnít there.
If you want somebody to discuss options/strategy with, find somebody that charges hourly.

Paying somebody 4 or 5 figures, every year, to do something you can do? Absolutely not.
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Old 03-13-2021, 09:51 AM   #35
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OP: It's pretty common here and seems to be happening in this thread: Conflating "investment Advisor" with "Financial Advisor." A true financial advisor has a much broader scope than a mere investment advisor: tax strategies, social security strategies, savings and withdrawal strategies, best ways to pay for college, badgering you to have an estate plan, health care and durable powers of attorney, etc. This is all hard stuff and the tax landscape in particular is constantly changing. You may not need an Investment Advisor, in fact you probably don't, but getting occasional consultations on all that other stuff is probably not DIY.

I'll concur though with the advice that you pay your Financial Advisor by the hour or by the job. I don't have any direct experience, but people around here have recommended the Garrett Planning Network, www.xyplanningnetwork.com, and napfa.org. Be aware, too, that "fee only" just means that the advisor doesn't get paid commissions on the products he recommends. Thus "fee only" includes AUM-paid advisors. So you have to ask the question carefully.
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Old 03-13-2021, 10:15 AM   #36
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I have worked with several advisors, and been mostly disappointed. One of 'em was a true borderline shyster (silver tongue and only out for his own gain). That toad suckered me into lining his pockets more than my own (and I thought I was well-educated and understood the business enough to be immune to that!). While I am sure there are some great FAs that are not CFPs, I have concluded they are few and far between. And unfortunately, if you choose to live in a lot of places where you can stay away from the great unwashed masses, there just ain't no CFPs around even if you want to pay for one. Of course, the phone removes all distances, but I cannot stand to do anything important over the phone.

My solution - I remain invested almost totally in a portfolio of Mutual Funds, where I get the diversity of each fund along with the added diversity of my choices of fund allocation percentages, and I do all of this now through one of the main management firms where my $1M+ investments give me a total break form all front-end and back-end fees while still giving me access to some basic levels of FA and account management. When I want to do something outside of the families of funds that I use, I do that on my own through a $0 fee broker such as Ally Invest.
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Old 03-13-2021, 10:32 AM   #37
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What I don't like about a FA that charges a % is the more money you have the more you pay for the same info. His investment advice isn't going to change much if at all from a guy who has $1 million to invest and a guy who has $1.5 million yet the fee is $5K more a year, assuming 1% fee.
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Old 03-13-2021, 10:38 AM   #38
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Just a comment on CFPs: I think a CFP is a basic qualification for an FA, but they are somewhat overrated. The CFP is a certificate issued by a private company to someone who has run through a series of classes and exams. The guy that runs the CFP Board makes north of $1M/year, drawn from the fees that CFPs pay. So there is a moral hazard there; more CFPs mean more money, but getting more CFPs is limited if the standards are too high. That's just logic, not to impugn the CFP Board or the CFPs.

A critical thing is that CFPs are not governed by any government or quasi-government body and, despite what some will tell you, a person holding the certificate is NOT automatically a fiduciary. They have their own code of conduct which was tightened up in October of 2019 to look like fiduciary rules, but all the CFP board can do is to revoke a certificate. The code also says: “ … the Rules are not designed to be a basis for legal liability to any third party. “ IOW, "good luck suing us."

https://brokercheck.finra.org/ is the place to get the real scoop on a rep. Most FAs will show passing Series 65 or Series 66 tests and will be fiduciaries by virtue of being Registered Investment Advisors or RIA Representatives. CFP has nothing to do with any of this. I run a brokercheck any time a rep name comes up. Most are clean, but I checked one of the "free dinner" guys once and he had 21 customer disputes -- most settled in favor of the customer and many in six figures.
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Old 03-13-2021, 10:56 AM   #39
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OP mentioned upthread that the 1.1% fee includes fund expenses. This is not the norm (IME) & I would drill down into that pretty aggressively & see if the fee is hidden somewhere else. My MIL pays 1.3% plus fund fees (Fast Eddie Jones)
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Old 03-13-2021, 11:35 AM   #40
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You guys are making me feel pretty foolish for even considering this lol. I really donít mean that in a bad way...it is exactly why I come here from time-to-time. Get an unbiased take on my thinking before I make any decisions I may come to regret. Thanks.
Hahaha! Yeah, we're unbiased.
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