Is it time to move on from DIY Investing?

[DawgMan]

I ask myself this question from time to time and then seem to make peace with the fact the same principles that applied to investing $1M when I was younger apply to investing say $10M+. None the less, good fortune has grown my assets quite a bit in the last couple years alone and I find myself asking the same questions again. Are there any real advantages to bringing in a "professional" once your investible assets cross over X (say 8 figures as an example)? Or, do the same DIY boring AA rebalance strategies continue to work just as effectively as they did before? I'm sort of answering my own question, but just curious if any of you made any strategic decisions to move on from DIY investing at some point and why?

 

[LOL!]

I don't see any reason. I know someone who is private-jet wealthy that manages their own investments of index funds. They consulted and paid for an estate plan / trust. Also they only had bad things to say about their past interactions with investment managers.

 

[Dash man]

I think about it because I’m worried I’ll eventually lose some of my mental faculties. I thought of turning it over to my son who has a good grasp of finances, but DW said a big “no” to that. So we may have Schwab eventually take over. I’m slowly moving away from individual stocks to ETFs.
But to answer your question, I’m not changing my investment strategy just because my assets have grown to a certain level. I just want to make things more automatic for life in our senior years.

 

[SnowballCamper]

I started investing with a "professional" and before I got to $100,000 I realized his service wasn't warranted. Now that I got to $1,000,000 without any "professional" service, I see no reason that one could be of help in the future. I'm a simple index investor nowadays. If I got the itch for some more exotic type investment, I think my money would be better spent on education about the investment, rather than advisory services.

 

[DawgMan]

I don't see any reason. I know someone who is private-jet wealthy that manages their own investments of index funds. They consulted and paid for an estate plan / trust. Also they only had bad things to say about their past interactions with investment managers.

I'm a big believer in having a good estate attorney and CPA in the wings when needed and obviously as one's estate grows, there are things to keep an eye on.

 

[DawgMan]

I think about it because I’m worried I’ll eventually lose some of my mental faculties. I thought of turning it over to my son who has a good grasp of finances, but DW said a big “no” to that. So we may have Schwab eventually take over. I’m slowly moving away from individual stocks to ETFs.
But to answer your question, I’m not changing my investment strategy just because my assets have grown to a certain level. I just want to make things more automatic for life in our senior years.

I suppose the hope here is you will see the "decline" coming in time to make any decisions that take the reins out of your hands... before you do anything dumb.

 

[skipro33]

I think an investment advisor/professional is needed less the more money you have. As long as you are investing in an asset allocation you are comfortable with and are in index funds, why let them at a cut of your pie? I read you are not using that investment strategy and want a professional to help you along those lines, but why not just set up the automatic maintenance you desire using index funds? You think they'll get you even more than you are getting now PLUS their taste? Highly unlikely. And even if they could, at what risk to you? No, for ease of managing, go with index funds, an allocation you are comfortable with and once a year rebalance. I bet that rebalancing could even be automated.
Might ask advice about distribution methodologies upon death or while alive for consideration if you fear mental deterioration, but the more I have over my needs, the less I need professional help. Financial professional help that is.

 

[RetireBy90]

I watched mom loose some mental attention and abilities and she had a untrustworthy advisor. She asked me to manage her investments and sister paid her bills and month to month finances.
Worried that I might be in decline at the time I was trying to find a trusted advisor I set up a relationship with an advisor at Fidelity and review our holdings and plan at least once a year with her.
I’m not worried about the amount of money requiring an advisor but do worry that at some point I won’t have the ability or confidence to be relied on to stay with my simple AA and simple plan. I would suggest now is the time to scope out some options and see what you can do for an advisor when age hits you. Perhaps a fee only advisor that you pay by the hour and visit for hour or two once a year ? Couple bucks to get a second opinion ?

 

[Koolau]

I've tried professional management and realized they always made money - even when I lost money. They were no better at predicting the market than I was - which is to say totally unable to predict.

So, I do it myself (not near 8 figures, but I'm very protective of MY money.) I might not make as much as some others (including many DIYs here) but I don't worry too much. The guy who cares MOST about my money IS my manager. He may not be the sharpest nor most informed, BUT he's the most interested in how I come out. Finally, he's in this with me. If I lose money, HE loses money. YMMV

 

[GravitySucks]

I'm a big believer in having a good estate attorney and CPA in the wings when needed and obviously as one's estate grows, there are things to keep an eye on.

Was just going to bring up Atyornies and CPAs.

As for an FA, you grew the money 10 fold. I'd stick to that plan any day.

 

[Jerry1]

To each their own. IMHO, it's not much different than any other DIY project. As you made more money, did you continue to work on your car? Some people love to work on their car no matter how much money they have. Few can do major work better than professionals. Same with a house. Do you do your home repairs as you make more money? Again, some do. Some love it. On the other hand, some don't like it and feel good when the day comes that they can farm it out.

Investing has a interesting component in that it can be argued that you can do it just as well as the professionals. Few people can say that they can do major car or home repairs better than a professional.

So the question is not so much should/could you farm out your investments and do better as you gain more wealth, but is it something you want to continue to do? Beyond performance, there are other pros and cons. As was mentioned, it may provide some protection from diminished faculties on your part. Or, protection for a partner - the one that doesn't do the investing. There's no right answer but I would suspect that the more you have, the more potential exists that you need to up your support team - Lawyer and CPA.

 

[Sunset]

I've seen the 2% some FA's charge old folks and then slap them into various funds, which charge .35% -> .75%. And usually pick about 30 funds as it looks complex, and covers their butt in case some fail.
They also take the opportunity to sell an 85 yr old a 10 yr Annuity !! And we are NOT talking about a rich fellow, having his money locked up at 2% interest for the past 8 yrs

While I worry that in old age, I could make investing mistakes, I'm slowly evolving my holdings to index etf/funds or similar things rather than individual stock holdings.
My plan is to have 5 or 7 index type funds (including Wellington) and some CD's. No individual stock, no rentals, no option trading.
Basically nothing to do except take out the cash and RMD each year.

My biggest worry is being old and handing the keys to the kingdom to some FA firm, where they enrich themselves at my expense and I'm too feeble to realize.

 

[WhenIsItTime]

I do invest a portion of funds in individual stocks. My plan for aging is to simplify holdings, adjust AA, and update estate plans where necessary.

In my experience and the more I learn about FA’s, the more I realize they are sales people. Yes, they probably have a bigger tool box and good contacts in the firm but I keep coming to conclusion that doesn’t offset risk of goal misalignment and fees.

 

[steelyman]

There’s a series of commercials in which an advisor assures a potential client who asks if they get commissions, “We don’t work that way. When you do better we do better.” Something like that.

The good thing about DIY is that when I do better, I do better.

 

[jimbee]

Nope, investing is easy. Taxes can be complicated.

 

[Jerry1]

Nope, investing is easy. Taxes can be complicated.

It can’t really be that way. Since there are tax consequences to investment decisions, it’s a common loop where they interact with each other. Therefore, they’re closer to being equally complicated/hard.

 

[flyingaway]

If I had $10M (I don't), I would hire my son to manage my portfolio for the annual fees of 1%, that is an annual salary of $100k, which is not bad.

I would write a statement about the lazy index fund investment and ask him to read the boglehead, etc. Since he will get all the remaining money when I am gone, he should be interested in such a location-independent, easy job.

 

[Bamaman]

My best friend has a MBA from Wharton in Finance, and is also a CFA. In his earlier years, he had a trusted stockbroker that worked his money without direction--and he did very well. Later in life, one of his fraternity brokers and good friends guides his stock portfolios--again with little feedback. My friend is a venture capitalist and keeps his ownership in the venture portfolio separate of his personal funds. In other words, he trusts people in the industry that he's had a 30+ personal relationship with.

My sister used to have a financial advisor that charged her a bunch of $ to put out a short and long term fancy booklet on her investment portfolio. Her returns were okay, but nothing to brag about. My nephew's best friend has lived and breathed the stock market since age 18. He works at a large regional investment firm and they've never experienced returns like he's produced. Again, they raised the kid and trust him completely.

I know these are rare personal relationships. But it's nice having someone truly watching out for you.

Other extremely wealthy families I've done business with have their 45ish year old children running essentially intrafamily venture operations. It's nice to have kids that can take over the family businesses, but two of the kids are flying Challenger jets seating 22 people. I sometimes wonder about priorities of the upcoming generations.

 

[jimbee]

It can’t really be that way. Since there are tax consequences to investment decisions, it’s a common loop where they interact with each other. Therefore, they’re closer to being equally complicated/hard.

I disagree that investing can't be easy, although I do see a lot of people who make it complicated.

 

[Freedom56]

I ask myself this question from time to time and then seem to make peace with the fact the same principles that applied to investing $1M when I was younger apply to investing say $10M+. None the less, good fortune has grown my assets quite a bit in the last couple years alone and I find myself asking the same questions again. Are there any real advantages to bringing in a "professional" once your investible assets cross over X (say 8 figures as an example)? Or, do the same DIY boring AA rebalance strategies continue to work just as effectively as they did before? I'm sort of answering my own question, but just curious if any of you made any strategic decisions to move on from DIY investing at some point and why?

When you cross the eight figure mark you should focus on capital preservation through extremely conservative investment vehicles (individual corporate bonds, CDs, money market, etc...). You really don't need an investment adviser/wealth manager eating into those margins. Also why would you take advice from an adviser who has less assets than you? Most of them are sales people that work on a fee and commission basis.

 

[rkser]

I also face the same question, thanks to the market & compound interest our 5 vanguard (4 Index) mutual fund portfolio has grown considerably.

1) I recently moved some of our investments to Fidelity & Schwab, still owning the same Vanguard Funds. I have CFPs as my Reps at both the Brokers which have Offices in town. Each provided me complimentary detailed Financial Plan & I call the CFPs when I have any questions...etc. Further additions will have to be in respective Vanguard ETFs as they have a fee to buy Vanguard Funds.
When I pass this arrangement will be easier for DW to deal with in person as she is still learning about investing. This way I added another pair of eyes to look over my portfolio if I need to make any major changes. I do not trade often, have been a buy & hold Indexer with Vanguard for almost 30 yrs. We will start our retirement withdrawals this year.

2) Our Estate Plan was drafted & is maintained by a local Attorney, who makes changes as needed.
We each gift $15k to each of our 2 kids so about $60k/yr in total, fund 529s for 2 grand kids + donate to charities. This way we gradually reduce the size of the Estate.

My Vanguard Flagship Select Rep. was bugging me to get started with PAS(0.3%). As I have always managed my portfolio I felt uncomfortable giving full control to a computer + CFP, on top of parting with 0.3% which came to many thousands every year. This was too expensive for this neo rich Boglehead who has had humble beginnings.

 

[Mo Money]

My Schwab portfolio analyzer tells me I've annually returned well over 14% since inception (which for me is 2009 with their platform).

The FA who handled my retirement plan while I was w*rking has had its flagship mutual fund return about 9% -- with a 1.25% fee. They are a decent-sized outfit with many billions in AUM.

I am glad I promptly rolled over my 401K within months of ER'ing into index funds I manage. I have put my old FA's performance to shame.

Index, diversify, rebalance. And have a decent tax accountant and a good estate lawyer -- the latter with eldercare experience if at all possible. No need for more than that, even when I hit eight figures, which is not too far down the road....

 

[tb001]

It’s an interesting question. I lean toward the continued DIY approach. I posed this question to DH and he echoed what others have said. Maybe upgrade our cpa and estate atty, but he wouldn’t want to start paying a full advisor. We have considered the vanguard cfp route. We’ve had great experiences over the yrs with their flagship svc. But the larger the portfolio the more $ out the door and it just feels excessive for something we can do ourselves. Especially when our fundamental strategy is to do as little as possible.

I think it’s a little different than other DIY things like home or auto repairs.if you have an honest handyman or contractor, replacing a switch costs about the same from person to person. So saving $35-50 in exchange for 30 min of time may be totally worth it when you’re living on 20k, but not if you’re living on 200k. The percent of assets model is a very different bird.

If the question is more along the lines of looking at alternative investment options like hedge funds, PE, etc, having worked in the space, there are definitely *individuals* I would trust to outperform the market for years on end, but it’s hard to invest in individuals and they don’t tend to scale well.

 

[VanWinkle]

I disagree that investing can't be easy, although I do see a lot of people who make it complicated.

As Jack Bogle would say, "investing is simple, but not easy"

VW

 

[CRLLS]

Managing my investments can be a daunting challenge, especially when I am making decisions and moves that exceed any one year's gross income. It make me pause. My brain keeps asking me to rethink each decision. It is such a large dollar amount. It is almost scary. It helps me to put the amounts into a percentage rather than dollar amount. I have to keep reminding myself that years of DIY investing is what brought me to this level of NW. I've got this. So do you. You don't need a FA just because the size of your NW.