Hi, been awhile since I've dropped in here but always value the perspective . By most standards I'm good to retire.
I went rather conservative in my allocation rather early when I lost confidence in markets after the '2008-'09 crash and wound up staying at about 38-40% equity allocation pretty much ever since.
My risk tolerance has actually gotten better with age. My port. is moderate-conservative. With input from an hourly 'as-needed' FA, the total asset value hit just over 2M prior to this year's crash; dipped to 1.6M, and climbed back to about 1.9M as of the last month. The portfolio value basically doubled in ten years, from 2009 to 2019. That could've been a much larger gain but not complaining; it was throttled by my own risk aversion and I accept that.
I'm 62 and feel confident of retirement needs being met, having modest spending habits, no debt, own a home in low COLA midwest/great lakes area. As a Sole proprietor, I've been working much less, mostly by choice, since I've done what i do for 40 years. Dividend income is now abt. 55-60k/year.
That's some long-winded background. My FA has worked with me on an hourly-rate basis which is not the 'norm' in the advisory game. It has, arguably saved me thousands of dollars a year. That said, at the outset of the COVID crisis, I made a rather impulsive decision to switch this arrangement to an AUM basis with him, at a negotiated/discount rate of .055%/year. This was somewhat out of convenience because things were looking extraordinarily scary again (like, worse than '08) and i felt i might need more 'hands on' oversight, particularly at this stage. I'm already kinda regretting that decision.
The bottom line for me is, will the FA get me at least the same or better annual return 'AFTER' fees? I'm often told I could've gotten as good or better results the past ten years using a handful of good funds. Probably true.
I'm questioning the value of the AUM arrangement because i don't suspect he's going to do anything radically different than in the past - when we would review things a few times a year. Only difference now is, I can call and chat about things whenever I have a question or want on an unlimited basis.
There's also some added value in things such as tax loss harvesting and rebalancing - tho he doesn't include tax preparation/advice per se.
I like the guy, but I don't know that he'll want to return to the hourly fee model if I tell him i want to switch back. If not, I do feel more confident in the idea of going it alone, but would need some guidance to downsize and revamp the portfolio for a simpler mix of fewer funds to at least match or better the FA's performance (roughly 5-6%) and make any wholesale changes in the most tax-efficient way possible. Vanguard comes to mind, with a good balanced fund like VWELX as a core holding, and building around that; although I've gotten pretty comfortable with the Schwab interface over the years and feel it's way more user-friendly than VG -unless things have changed there.
In any event, thanks for any thoughts. Appreciate you taking the time to read through all of this and wish everyone all the best!
Mike in Mich
I went rather conservative in my allocation rather early when I lost confidence in markets after the '2008-'09 crash and wound up staying at about 38-40% equity allocation pretty much ever since.
My risk tolerance has actually gotten better with age. My port. is moderate-conservative. With input from an hourly 'as-needed' FA, the total asset value hit just over 2M prior to this year's crash; dipped to 1.6M, and climbed back to about 1.9M as of the last month. The portfolio value basically doubled in ten years, from 2009 to 2019. That could've been a much larger gain but not complaining; it was throttled by my own risk aversion and I accept that.
I'm 62 and feel confident of retirement needs being met, having modest spending habits, no debt, own a home in low COLA midwest/great lakes area. As a Sole proprietor, I've been working much less, mostly by choice, since I've done what i do for 40 years. Dividend income is now abt. 55-60k/year.
That's some long-winded background. My FA has worked with me on an hourly-rate basis which is not the 'norm' in the advisory game. It has, arguably saved me thousands of dollars a year. That said, at the outset of the COVID crisis, I made a rather impulsive decision to switch this arrangement to an AUM basis with him, at a negotiated/discount rate of .055%/year. This was somewhat out of convenience because things were looking extraordinarily scary again (like, worse than '08) and i felt i might need more 'hands on' oversight, particularly at this stage. I'm already kinda regretting that decision.
The bottom line for me is, will the FA get me at least the same or better annual return 'AFTER' fees? I'm often told I could've gotten as good or better results the past ten years using a handful of good funds. Probably true.
I'm questioning the value of the AUM arrangement because i don't suspect he's going to do anything radically different than in the past - when we would review things a few times a year. Only difference now is, I can call and chat about things whenever I have a question or want on an unlimited basis.
There's also some added value in things such as tax loss harvesting and rebalancing - tho he doesn't include tax preparation/advice per se.
I like the guy, but I don't know that he'll want to return to the hourly fee model if I tell him i want to switch back. If not, I do feel more confident in the idea of going it alone, but would need some guidance to downsize and revamp the portfolio for a simpler mix of fewer funds to at least match or better the FA's performance (roughly 5-6%) and make any wholesale changes in the most tax-efficient way possible. Vanguard comes to mind, with a good balanced fund like VWELX as a core holding, and building around that; although I've gotten pretty comfortable with the Schwab interface over the years and feel it's way more user-friendly than VG -unless things have changed there.
In any event, thanks for any thoughts. Appreciate you taking the time to read through all of this and wish everyone all the best!
Mike in Mich
