Asset Allocations - Percentages vs Dollar Amount

disneysteve said:
Yes and no. There are loopholes to that. A CFP can be a dual registrant which could mean they act as a fiduciary in some instances but not in others. It's important to ask your CFP if they are a fiduciary 100% of the time or if they are a dual registrant.
Click to expand...
They can only be a fiduciary if they are formally acting as a paid advisor. When you are self-directed, they do not act as a fiduciary.
 
RetiredHappy said:
They can only be a fiduciary if they are formally acting as a paid advisor. When you are self-directed, they do not act as a fiduciary.
Click to expand...
Does that mean in your case where you are seeing them for "free" they are not acting as a fiduciary? If so, I wouldn't even waste my time seeing them at all because I wouldn't trust anything they said.
 
disneysteve said:
Does that mean in your case where you are seeing them for "free" they are not acting as a fiduciary? If so, I wouldn't even waste my time seeing them at all because I wouldn't trust anything they said.
Click to expand...
CFPs are fiduciaries, but they are not fiduciaries in an official capacity unless they are paid directly by their clients. This is how it works legally. People see their free FAs all the time. We take whatever people say with a grain of salt anyway, whether they are AUM FAs or not. It is not "my case" or anyone's case. We have always believed that 85% equity allocation is right for us. With the other 15%, they can easily cover the next 10 years of our expenses.
 
Last edited:
RetiredHappy said:
I assume that she only gets clients of decent size of investments since she is the head of that branch and VP, hence her recommendation of 85% in equities. We got assigned to her when we transferred over investments to her. We were asked about portfolio size of the transfer before the FA assignment. It goes back to the size of portfolio to determine how aggressive one can be or not.
Click to expand...
I agree that retired folks with large portfolios, say $5M or more, and low withdrawal rates can do as they please with their investments, from all T-bills to all stocks.

Still, I think 85% stocks is on the high side for a CFP to recommend without knowing a lot about the client's risk tolerance and loss aversion tendencies.

I might set my upper limit recommendation for HNW retirees at 75% stock funds with the caveat that yes, you can go to 90%+ stock funds if you want, but you're not getting that recommendation from me...
 
TheWizard said:
I agree that retired folks with large portfolios, say $5M or more, and low withdrawal rates can do as they please with their investments, from all T-bills to all stocks.

Still, I think 85% stocks is on the high side for a CFP to recommend without knowing a lot about the client's risk tolerance and loss aversion tendencies.

I might set my upper limit recommendation for HNW retirees at 75% stock funds with the caveat that yes, you can go to 90%+ stock funds if you want, but you're not getting that recommendation from me...
Click to expand...
She has known us for 5 years already and we see her twice a year. We are very comfortable with the relationship. She knows that we have never panicked when the stock market drops. In fact that was one of the things she said, that since we don't sell when the market drops, our asset mix is very good.
 
disneysteve said:
The most important thing is if they are a fiduciary at all times. The last thing you want is an advisor who makes money by selling you things that may or may not be appropriate for you.
Click to expand...
I'm not too concerned about that and I don't think you can be a part time fiduciary. The fiduciary credential is highly overrated IMO. I do think it is generally better than being a non-fiduciary, especially for beginners.
 
jazz4cash said:
I'm not too concerned about that and I don't think you can be a part time fiduciary. The fiduciary credential is highly overrated IMO. I do think it is generally better than being a non-fiduciary, especially for beginners.
Click to expand...
And it certainly doesn't guarantee competence. Just that the FA is doing things s/he believes are for your benefit - not his/her benefit.
 
jazz4cash said:
I'm not too concerned about that and I don't think you can be a part time fiduciary.
Click to expand...
As I mentioned, someone can be a dual registrant so they could fill the fiduciary role while doing certain aspects of their job but also sell you commissioned products like insurance and annuities for which they are not fiduciaries.
 
COcheesehead said:
Members talk about allocation percentages all the time on here. What is overlooked in my opinion is the actual value vs a percentage.

If someone has 80% equities with a $3m portfolio = $2.4m in stocks
If someone had 40% equities with $10m = $4m in stocks

I understand percentages will be an indicator of how it might affect an individual portfolio, but dollar value is where the rubber meets the road.


I feel the same way about yield. It’s an indicator of performance, but the cashflow value is of greater importance to me.
A 6% yield on $3m = $180,000
A 12% yield on $1m = $120,000

Who is better off?


Just thoughts on a Saturday morning that somehow feels like a Sunday morning. Ah, retirement is good.
Click to expand...
You can do all kinds of things with asset allocation. Especially when it comes to conversations about whether you should have a mortgage car payments and other sorts of random debt. I don't owe anybody a penny in interest my monthly costs are ridiculously low 3 or 4,000. And I sit around 80/20 stocks and bonds or cash equivalents and always keep two or three years of that three to $4,000 spending needs. Some years when the market was s*** I didn't cash anything out and cut the spending down significantly. Eating more at home traveling less buying less stuff making do with what I already had. That strategy flew all the way through the Great recession without a hitch. I figured that's going to be the worst thing I ever experienced in my whole life financially.

However if you're not spending a whole lot of money and you have a ton of money you could just park it in something like Wellesley at vanguard or the ETF dvy. Those would throw off plenty of interest and or dividends and you wouldn't have to touch the principle at all. It used to be that at 20 million and above it almost didn't matter what the f*** you did. It's probably 25 or 30 million now at this point. All I have to do is look at the price of steak at the local supermarket to remind me that inflation is way freaking higher than 2%
 
disneysteve said:
As I mentioned, someone can be a dual registrant so they could fill the fiduciary role while doing certain aspects of their job but also sell you commissioned products like insurance and annuities for which they are not fiduciaries.
Click to expand...
That reinforces my belief that the credential is overated. I have no problem with a commissioned salesperson if the product fits my needs and the cost is competitive. Disclosure and transparency are key.
 
RetiredHappy said:
They can only be a fiduciary if they are formally acting as a paid advisor. When you are self-directed, they do not act as a fiduciary.
Click to expand...
Why most/all FA can't put your interest first, even if they are 100% on your side.

Problem 1: Catch 22: If your investment knowledge is below average, you will not know if your FA (financial adviser) is good. If your investment knowledge is above average, you will not need one.
Problem 2: A FA is jack of all trades and a master of none. Anytime you need a real complicated advice, he/she can't answer it. Anything that related to taxes, you need to see a CPA, anything that relates to trusts, you must see an attorney.
Problem 3: A FA can't promise you any future performance or even risk-adjusted performance.
Problem 4: The highest commission vehicles for a FA are annuities or a guarantee of something. These are usually bad for the clients.

You probably heard a typical FA claim that they are fiduciaries. It is correct that fiduciary is better than not, but it doesn't guarantee much.
In theory, a FA puts their client interests first. In reality, it doesn't work that well.
This is how it should work for a typical person in typical situations. You seek a FA advice, a good FA should collect all your information, analyze it, and come up with exactly what to do in about 2-3 hours. They should charge you maybe $1000-1500. You can implement the plan for years to come, unless you have a major change. This means, you don't need the FA for years to come. In the event you have a major change and need advice, one hour of consultation should be enough; maybe another $300 fee.
Remember, any time your FA wants you to stay with them for years and collect his/her fee as a % of your portfolio, it is a bad choice. You should only pay them by the hour. You can find good fee only FA at www.garrettplanningnetwork.com/

If a FA followed the above, they would starve. This is why it would be very difficult to find a great, reliable, honest, low-fee FA that puts their client's interests first.

The best idea is to learn and get better. You spent at least 12 years in school; why can you not spend just 100 hours learning the basics?
Most people need to handle and manage their money for decades, why not educate yourself? It's not a brain surgery.

Just for fun and to satisfy my curiosity, I interviewed about 30 financial advisors over the years.
In my opinion, none of them truly put my interests first. I also wasn't particularly impressed with their knowledge, and I was even less impressed with their investment results and understanding of risk-adjusted returns.
Many seemed focused on gathering assets and following standard industry practices rather than demonstrating a deep understanding of portfolio construction, risk management, and long-term performance.
 
We don't need a FA in case you are wonrdering. Our FA asks to meet us every 3 months, so we go in every 6 months to listen to what their backend office is telling them wrt to the market. We can also get the same through their webinar. But she is very nice so it is usually a pleasant conversation about her family and pet.

BTW, if we add in my 2 term fixed income deferred annuities, our equities drop to about 75%. But since they are money out the door, we cannot include them in our investable assets anymore. I bought them, not through a FA, but directly through immediateannuities ten years ago.
 
Last edited:
Koolau said:
How about Drams per Fortnight?
Click to expand...
Not for me, but if it works for your needs, go for it! (which was the point of my post to begin with...that my strategy may result in a different conclusion than the using $$ for AA because $$ is "where the rubber meets the road," and that's ok) 🙂
 
If I get a free CFP to accept $1 per year, are they then a fiduciary 100% of the time ;)
 
sengsational said:
If I get a free CFP to accept $1 per year, are they then a fiduciary 100% of the time ;)
Click to expand...
I guess they are a fiduciary if the paperw*rk you sign with them says they are. If FIDO or Vanguard provides them for free (or for a dollar), their "agreement" should state whether, in fact, they will act as a fiduciary. Never having "accepted" the free advice, I can't confirm.
 
My AA has one more component if I'm making adjustments. We went from 95%+ equities to currently about 65% equities and moved it into high-end real estate (forever home) but at a significant cost because of LTCG over 32% in our bracket in California. So, we depleted investable assets to illiquid asset (real estate) in the process but the payback is we actually get to enjoy that illiquid asset in a tangible and real way when we move in. Technically, it is not a spend down because what we spent it on has some residual value (vs a vacation, a depreciating car, etc.). Real estate in this zip code does not depreciate over the long run (decades) because of the desirability of the area so it is safer than moving to a less desirable area.

That said, it is not clear how to factor in LTCG into these calculations as it is significant if you don't die and get step-up and live to count your assets. LTCG was significant in my case. I'm OK with that because I enjoyed great compounding growth while deferring taxes (ditto for retirement accounts).
 
Route246 said:
Technically, it is not a spend down because what we spent it on has some residual value (vs a vacation, a depreciating car, etc.). Real estate in this zip code does not depreciate over the long run (decades) because of the desirability of the area so it is safer than moving to a less desirable area.
Click to expand...
As someone who spent many years in apartments renting while having over a million dollars in investable assets, it has always seemed dumb to me that people wouldn't include their home as an asset in determining their overall assets. Yes, they can say you have to live somewhere, but if I'm renting and have 5 Million, and buy a 1 million dollar home with cash, has my net worth really dropped?
Not in my opinion.
However, I follow the "norms" and don't include my home in relevant posts, unless I mention it.
 
^ Although I don't include my house in my asset allocation calculations, when I set the targets, I had the house in that analysis. And of course the house goes into the all-years financial plan. People that ignore the equity in their house have more asset diversity than what they calculate. People that do this kind of thinking often, it seems to me, adding too many belts and too many suspenders and end up leaving more than necessary on the table.
 
COcheesehead said:
Members talk about allocation percentages all the time on here. What is overlooked in my opinion is the actual value vs a percentage.

If someone has 80% equities with a $3m portfolio = $2.4m in stocks
If someone had 40% equities with $10m = $4m in stocks

I understand percentages will be an indicator of how it might affect an individual portfolio, but dollar value is where the rubber meets the road.


I feel the same way about yield. It’s an indicator of performance, but the cashflow value is of greater importance to me.
A 6% yield on $3m = $180,000
A 12% yield on $1m = $120,000

Who is better off?


Just thoughts on a Saturday morning that somehow feels like a Sunday morning. Ah, retirement is good.
Click to expand...
I agree. Dollars and percentages matter. When I am helping a young person with a $20K portfolio, or someone with a $250K portfolio, they don't get the same advice. I'm 95% equities and like it that way. I rarely focus on dollars when making decisions, but that is because I don't need to given the size of our portfolio and the income that comes from dividends and options.
2026-07-07_YTD-Income-OptionsDividends.jpg

The following image includes UTMA accounts for five grandchildren and an account I manage for my brother-in-law. The total is greater than the number shown above.
2026-07-07_YTD-Performance.jpg
 
I hate that Performance view at Fidelity, especially since the recent update that eliminated the Analysis view.
 
You must log in or register to reply here.

Similar threads

D
Asset Allocation with Tax Location Review
pb4uski
pb4uski
FD1000
Are emergency savings necessary in retirement?
2 3
FD1000
FD1000
mh
musing on my asset(s) ( allocation )
ncbill
ncbill
H
Ideas for tracking investments that gives asset allocation
2 3
FlyingCircus
FlyingCircus
H
Signing back in after years
kgtest
K

Latest posts

Back
Top Bottom