I need guidance

[Foghorn Leghorn]

Hypothetical , I have 1 million dollars under management and Im paying 1.5% a year for that service

Hypothetical, Im going to live 20 more years.

Reality, I cant stand the idea of paying 300,000 dollars to anyone for management in the 20 years discussed above.

If you were me ( in simple terms, Im an expert at oil refineries, not investing ) what would you do ?

Please be gentle and go...

 

[pb4uski]

Two or three fund portfolio using ETF, like VTI and BND or VTI, VXUS and BND.

Or if you want really simple, just select a target retirement date fund with an asset allocation that meets your risk tolerance. For example, Vanguard Target Retirement 2025 Fund (VTTVX) is ~60% stocks and 40% bonds. This works particularly well if almost all of your nestegg is in tax-deferred accounts like a traditional IRA or 401k.

 

[RxMan]

I would find a mutual fund family such as Vanguard that offers lots of index fund options and make the switch. You will save a ton on management fees. If you still need guidance you can hire a fee only advisor for yearly checkups to make sure you’ve got a solid plan.

I certainly understand your hesitation to keep paying that management fee. Think of it this way: if you averaged a 7.5% return on your money a full 20% of those gains is going out the door for fees.

Should you still want an active advisor I’d still recommend a company like Vanguard. They offer advisor services for 0.30% fees with a minimum of only $50000. You could even transfer a small percentage of your account to them as a test to see if you like their service and switch more money over later if you are happy. Even switching over a percentage of your money will lower your overall fees going forward.

 

[Toocold]

1.5% is high. The general belief is that you can safely withdraw 4% over 30 years without running out of money. That means that you are essentially giving away ~1/3 of your safe withdrawal to your advisor.

If I were you, I'd DIY at Vanguard or Fidelity. Pb4uski's advice is a good one in that it's the simplest 1 purchase strategy with a vanguard target fund. On the 3 fund strategy, here's a wiki on it.

https://www.bogleheads.org/wiki/Three-fund_portfolio

The biggest value a FA can help is not to overreact when the markets are in turmoil. If you are going to sell when the stock market drops sharply, it's better to stay with a FA.

Now the transition to what you have to this new allocation will be based on your current investments and tax situation. If you have whole life insurance or some vehicles like that, you have to see read the details. But if it is a normal account, in general anything a pre-tax account (e.g. 401k, 403b, IRA) will be easy to shift over. For after tax non-retirement accounts, you have to be careful of taxes.

 

[mrfeh]

Hypothetical , I have 1 million dollars under management and Im paying 1.5% a year for that service

Hypothetical, Im going to live 20 more years.

Reality, I cant stand the idea of paying 300,000 dollars to anyone for management in the 20 years discussed above.

If you were me ( in simple terms, Im an expert at oil refineries, not investing ) what would you do ?

Please be gentle and go...

https://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit

 

[FANOFJESUS]

Hypothetical , I have 1 million dollars under management and Im paying 1.5% a year for that service

Hypothetical, Im going to live 20 more years.

Reality, I cant stand the idea of paying 300,000 dollars to anyone for management in the 20 years discussed above.

If you were me ( in simple terms, Im an expert at oil refineries, not investing ) what would you do ?

Please be gentle and go...

I would figure what asset allocation they have you in. Once that is done I would buy the closest Vanguard LifeStrategy fund. That is the simplest answer. Vanguard will do all the work from there. You might have to do it over several years because of taxes. Just remember you are giving these folks about 15k a year in fees. Chances are a Vanguard LifeStrategy fund of 60/40 or 40/60 will suit your needs.

 

[RxMan]

1.5% is high. The general belief is that you can safely withdraw 4% over 30 years without running out of money. That means that you are essentially giving away ~1/3 of your safe withdrawal to your advisor.

If I were you, I'd DIY at Vanguard or Fidelity. Pb4uski's advice is a good one in that it's the simplest 1 purchase strategy with a vanguard target fund. On the 3 fund strategy, here's a wiki on it.

https://www.bogleheads.org/wiki/Three-fund_portfolio

The biggest value a FA can help is not to overreact when the markets are in turmoil. If you are going to sell when the stock market drops sharply, it's better to stay with a FA.

Now the transition to what you have to this new allocation will be based on your current investments and tax situation. If you have whole life insurance or some vehicles like that, you have to see read the details. But if it is a normal account, in general anything a pre-tax account (e.g. 401k, 403b, IRA) will be easy to shift over. For after tax non-retirement accounts, you have to be careful of taxes.

This is a good point. My response was under the assumption the OP was referring to tax advantaged accounts that can easily be switched with no tax implications. If you have money in taxable accounts or some other investment products it might be a little more complicated with the tax considerations of moving your money.

 

[steveark]

I am an oil refinery guy too, spent decades doing that, still consult a little in that space. I have my retirement portfolio split up between Betterment, Vanguard managed investments and Personal Capital. Fees range from 0.14% to 0.79% and they all tax loss harvest and rebalance periodically. I could DIY but I don't like doing that with my money, I'm willng to pay a fee for convenience. Also there is some diversification in philosophy between PC and the others, PC is not cap weighted and includes some commodities and alternatives. But they also charge the highest fees.

 

[Dtail]

Listen I say boy.....
Low cost index funds with 2 funds with one for stocks and one for bonds, or if you want some international stocks, add one international stock fund.
There are many DIY investors on this forum. Ask away until you feel comfortable.

 

[Bryan Barnfellow]

What is your annual average return on your portfolio? How risky are the investments? Do you sleep well at night with the level of risk/return? How near retirement is the advisor? Can you leave the investments where they are and just jettison the advisor? How much time are you willing to spend becoming knowledgeable so that you don't have to pay someone who has the knowledge?

Generally speaking an index fund portfolio that you manage is preferable; but we are missing a lot of information.

-BB

 

[Sunset]

OP - Normally when you get charged 1.5% , they invest your money in 20->25 different stocks/funds/etf's (some are even vanguard ones). This is to make it look complex.

Vanguard charges zero fees to have an account you manage yourself, and low fees for them to manage it.

Phone Vanguard, and they will help you set up your accounts and move them over.
The IRA/ROTH accounts can be moved, sell what is needed in them and buy the suggested ones by pb4uski or a target date fund.

Vanguard can also move over the taxable account "IN KIND", so that nothing has to be sold, so no sudden tax bill. This works for most investments, in rare circumstances the FA has you invested in something so weird nobody else carries it, and that has to be sold and the cash moved.

 

[OldShooter]

... Please be gentle and go...

Here is both gentle and wise: "The Coffee House Investor" by Bill Schultheis https://www.coffeehouseinvestor.com/ Schultheis will help you sort through the recommendations you are getting here.

If you like Bill's book, which I'm sure you will, then: "The Bogleheads Guide to Investing" by Taylor Larimore et al https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0470067365 will substantially complete your necessary education.

Re 1.5% management fee @ $1M you are getting ripped off. I fear you might be in the clutches of someone like Fast Eddie (Jones). Get out of there.

Another thing that happens here all the time is that the role of "Investment Advisor" gets conflated with the role of "Financial Advisor." Hardly anyone needs investment advice, as the impassioned posts here will emphasize. Investing is pretty easy. Financial advice, however, is much broader and includes estate planning, tax planning, insurance planning, cash flow planning for larger expenses, and (importantly) coaching. The best way to get this, IMO (and in the opinion of many here), is to hire someone on an hourly or project basis, possibly planning on an annual review and plan update.

If, after getting your mind buffeted here and in those two books, you still want to hire an investment advisor on a percentage of assets basis, do NOT pay more than 1% and try to negotiate to 0.7%. Your best negotiation tactic is to make it clear to the FA that you will not be a high maintenance customer, calling every time the market hiccups or you feel lonely.

Start with the books, then study the advice here.

 

[MRG]

Vanguard has their PAS option for .3 just call them.

 

[Retireby45ish]

I agree with almost everyone, it’s not worth paying 1.5%. Post #2 by pb4 is very simple and what I would recommend. Saving you 15k a year for a few hours of work to set up (mostly closing down what you currently have with the managed portfolio).

 

[Foghorn Leghorn]

Thanks guys

I got a covid shove into retirement in April and Im feeling my way around. Lm like so many others at points in their life when " I thought I had more time"

Im ok but I cant afford to get 300k worth of advice. I like to think Im smart enough to study up and muddle through

 

[pb4uski]

You are definitely smart enough to study up and muddle through... in fact, do much better than muddle through. Where is your nestegg now? Vanguard? Fidelity? Former employer 401k?

 

[tmitchell]

Definitely check out Vanguard Advisory service. .3%

 

[mrfeh]

Thanks guys

I got a covid shove into retirement in April and Im feeling my way around. Lm like so many others at points in their life when " I thought I had more time"

Im ok but I cant afford to get 300k worth of advice. I like to think Im smart enough to study up and muddle through

You are definitely smart enough to study up and muddle through... in fact, do much better than muddle through.

+1

OP - lots of good advice here, but even more people over on bogleheads.org if you have questions.

 

[Foghorn Leghorn]

You are definitely smart enough to study up and muddle through... in fact, do much better than muddle through. Where is your nestegg now? Vanguard? Fidelity? Former employer 401k?

A private financial advisor firm

 

[DrRoy]

If your WR is 4%, and the FA gets 1.5%, the FA takes 37.5% of your spendable $.
DIY.

 

[Foghorn Leghorn]

If your WR is 4%, and the FA gets 1.5%, the FA takes 37.5% of your spendable $.
DIY.

I get it. Thats why Im here

 

[pb4uski]

A private financial advisor firm

I guess that explains the 1.5%. How have the returns of your portfolio over the last 1, 3 and 5 years compared to a benchmark with a similar asset allocation? IOW, is the private financial advisor firm earning their keep or just doing what you could easily do for nothing but charging you 1.5%?

 

[Foghorn Leghorn]

I guess that explains the 1.5%. How have the returns of your portfolio over the last 1, 3 and 5 years compared to a benchmark with a similar asset allocation? IOW, is the private financial advisor firm earning their keep or just doing what you could easily do for nothing but charging you 1.5%?

My guess is I could have done as well on my own . It looks like they send my money to TD Ameritrade and some group there actually makes the moves. Im not angry at the guys I gave the money to ( hell the guy is a lifelong friend of mine and he manages my parents money too) I just dont think I can afford his service

 

[Badger]

My guess is I could have done as well on my own . It looks like they send my money to TD Ameritrade and some group there actually makes the moves. Im not angry at the guys I gave the money to ( hell the guy is a lifelong friend of mine and he manages my parents money too) I just dont think I can afford his service

Lots of good advice on this website. I would suggest you take some time reading past posts and focus on those contributors that have a track record for at least a few thousand posts. I would start with any of the moderators since they have been around giving good advice for a long time .
On a side issue, it's nice to have lifelong friends but in this case they are taking you for an expensive ride. Why not just give him $15k so you don't eventually begrudge him and lose him as a friend. Then you can manage your money yourself. It isn't "rocket surgery" and you don't have to understand the real technical calculations that are sometimes discussed here. Those are fun discussions for some of those who enjoy numbers.



Check out/buy a copy of "The New Coffeehouse Investor", "The Millionaire Next Door", The Four Pillars of Investing, and "The Millionaire Teacher". Also check books written by people like Larry Swedroe, Taylor Larimore, and John Bogle.



There, I just saved you $300k. You're welcome.



Cheers!

 

[Toocold]

I would also hop over to the bogleheads forum and get their advice too. There is obvious overlap in content (and likely people who contribute) with this forum but that's their focus.

A great place to start is the investing wiki.