Hired a FA

[ERD50]

How do you automate RMD's? Thanks.

I haven’t done it as we aren’t at that age yet. But I looked into it a bit last year and it looked like Fidelity could configure that for you.

OK. I think Fidelity or whomever can calculate the RMD, but wouldn't you still need to say when via phone call or electronic means? Also, need to set any deductions - we pay our income taxes from IRA withdrawals not quarterly payments.

I have set up RMDs for my MIL's account at Fidelity. Easy-Peasy.

First, they calculate the RMD for you, shows right up on the screen, and pre-filled in on the distribution page. Her entire IRA is at Fidelity, so it's the full amount. You accept this amount as the default, or change it if required, and set the distribution date.

Better yet, you can specify the amount to withhold for Fed and State taxes. For MIL, the RMD covers her expected taxes plus a little, so we do not need to send in quarterly tax estimate payments. Withholding like this is treated as being paid across the entire year.

This is literally a couple minutes 'work' if you are slow, and nothing to calculate, it's all done for you. A few clicks. Far easier then setting up Fed and State payments, or mailing 8 checks a year.

I'll be doing this for myself when the time comes.

-ERD50

 

[pb4uski]

How do you automate RMD's? Thanks.

My Mom's tIRA is centralized at Vanguard. I set it up so RMDs are done automatically on her birthday and the net proceeds go into her taxable account. Vanguard does the calculation.
Easy peasy.

 

[pb4uski]

18 pages in 2 days.
I'd say you hit a nerve here Jerry1 !

In the thread display options you can set the number of posts per page... I have mine set to 20 and thus only have 9 pages. If I set it to 100 I would only have 2 pages.

 

[happy2bretired]

Don’t forget the fees are tax deductible. I have been with a FP since 1993. In 2015 we fired the original FP and switched to another group, founded by Rick Ferri, who posts on Bogleheads regularly and follows John Bogle. Yes, they charge by AUM, but their fee is 1/3 what I was paying.

Are the fees still tax deductible? I was under the impression that I will no longer be able to deduct my investment expenses due to the new tax law passed this year.

 

[pb4uski]

^^^^ You are correct.

The Tax Cuts and Jobs Act eliminated the deduction for investment expenses, starting in 2018. Fees for investment costs were deductible as a miscellaneous itemized deduction, to the extent they and other costs exceeded 2 percent of your adjusted gross income.

 

[cathy63]

Don’t forget the fees are tax deductible. I have been with a FP since 1993. In 2015 we fired the original FP and switched to another group, founded by Rick Ferri, who posts on Bogleheads regularly and follows John Bogle. Yes, they charge by AUM, but their fee is 1/3 what I was paying.

Not any more. All the deductions with a 2% floor were wiped out by the "Tax Cuts and Jobs Act", so if you pay an AUM fee there's no place to deduct that in TY2018 and later.

If you pay a commission on each trade than you adjust your cost basis accordingly, so there's a different tax treatment depending on how you purchase an investment, and I have been told that the finance industry is lobbying to get this "fixed" in an update to the tax code. I also think CFPs can't work on commission but I don't know if that's a law or just their professional standard.

 

[audreyh1]

OK. I think Fidelity or whomever can calculate the RMD, but wouldn't you still need to say when via phone call or electronic means? Also, need to set any deductions - we pay our income taxes from IRA withdrawals not quarterly payments.

When I looked into it, and maybe I talked someone who had done this, you could configure all that online including scheduling, had options of where to draw the money from and where to put it, % tax withholding etc. Sorry, I don’t have more specific answers because I haven’t actually done it.

OK - thanks to pb4uski and ER50 for given their experience.

 

[Luck_Club]

You sound like a very into it active trader. Best to you.

Actually the opposite. I wanted to delegate this process. When I said trades I meant opening positions.

 

[HI Bill]

I appreciate this thread- as an FA, at times I have felt unwelcome here. I completely agree that there are bad ones out there- I spent a lot of time yesterday explaining some bad investments (courtesy of their former advisor) to some new clients. There are some great FAs too, who manage to be a great value to clients who don't want to, or don't have time to manage their own investments.

Welcome! I think part of the reason is that most folks on this forum, who have the ability to be FIRE, have the ability to manage their own resources. There are many, who can't, and shouldn't. For those folks, and for those wanting to have nothing to do with their financial management, hiring a trustworth FA is worthwhile.

My mom was an example of someone who NEEDED a solid FA. Unfortunately, she had front-loaded funds with Oppenh__eimer, which rarely matched market returns, had high annual fees, and cost her dearly. I felt that both she and my dad were ripped off by their FA, who became rich selling mutual funds and annuities to uniformed teachers in CA. The FAs preyed on people's fears to sell them high-cost, low-performance instruments such as annuties. So, many of us don't trust FAs.

I hired a FA once in my life, for a one-time consultation. That was one of the best decisions I ever made, as that person kept me from making a monumental financial blunder that would have trashed my retirement plans and finances (buying into a really nice, $1M house, with two friends)...I would have never been able to get my money out, and would have been tied to the house, even after wanting to move.

So, if you're a principled FA, and treat people fairly, good for you, and welcome!!!

 

[stephenson]

Rust ward,

The list you provided re what the client is supposed to tell an FA seems to presuppose that client knows those things ....

I don’t get it ...


Razor sharp. Funny. Lots of stories from friends and relatives ...

 

[ERD50]

....

My mom was an example of someone who NEEDED a solid FA. .... I felt that both she and my dad were ripped off by their FA, ....

And there lies the paradox. If you haven't learned the basics, you aren't going to be equipped to tell a good FA from a bad one.

I think it is rare that someone couldn't or shouldn't DIY, for most cases it is very simple, and takes almost zero time. But there are a lot of people who have never been shown how easy it can be. It's probably worth repeating again - once you've learned enough to evaluate an FA, you've probably learned enough to DIY. At that point, if someone wants to go with a pro, fine, it's an informed decision.

Welcome! ...

So, if you're a principled FA, and treat people fairly, good for you, and welcome!!!

+1.

-ERD50

 

[The Cosmic Avenger]

OK. I think Fidelity or whomever can calculate the RMD, but wouldn't you still need to say when via phone call or electronic means? Also, need to set any deductions - we pay our income taxes from IRA withdrawals not quarterly payments.

I have inherited IRAs with Fidelity, and they not only calculate the RMD for me every year, I have set up instructions (all online and updatable in my account) when to pay them out, from what funds, where to send the RMDs, and how much in taxes to withhold. It took a little tinkering to figure out how I wanted it set up, but now I don't even have to think about the mechanics, I just wait for my money to roll in!

 

[travelover]

...........So, if you're a principled FA, and treat people fairly, good for you, and welcome!!!

FAs are in a unique position to really rip people off - lots of cash being dealt with and naive or senile clients that can easily be manipulated. It has to be a real temptation not to at least dip a little where it is against the client's best interest. That's not to disparage anyone posting here - just pointing out that the industry is in a unique position.

 

[skipro33]

I just fired my FA. I have a rollover IRA at Fidelity and decided a year ago to let them manage it. My wife also has a rollover IRA that we managed ourselves using index funds for stocks and and for bonds. The one we managed did 5% better than Fidelity managed and that doesn't include their 1% take on my account's value each year taken quarterly. Total; 6% difference! Geez! They STINK at managing my IRA.

 

[RobbieB]

That's how I came up with my guy, gave a chance to 4 other guys and compared results.

No results = no more job.

 

[aja8888]

How do you automate RMD's? Thanks.

There were several answers above, but I have had my RMD's "automated" for 5 years now and I remember spending 5 minutes doing it in 2013.

What is foreign to me is using a FA, CFP, etc to manage a portfolio of which three simple funds or ETF's can be assembled and do a fine job of providing a respectable market return over the long run.

 

[Scuba]

As of 2018, I don't think so.

Agreed, no longer deductible

 

[gerntz]

I have set up RMDs for my MIL's account at Fidelity. Easy-Peasy.

First, they calculate the RMD for you, shows right up on the screen, and pre-filled in on the distribution page. Her entire IRA is at Fidelity, so it's the full amount. You accept this amount as the default, or change it if required, and set the distribution date.

Better yet, you can specify the amount to withhold for Fed and State taxes. For MIL, the RMD covers her expected taxes plus a little, so we do not need to send in quarterly tax estimate payments. Withholding like this is treated as being paid across the entire year.

This is literally a couple minutes 'work' if you are slow, and nothing to calculate, it's all done for you. A few clicks. Far easier then setting up Fed and State payments, or mailing 8 checks a year.

I'll be doing this for myself when the time comes.

-ERD50

I agree that's easy & is for us. But it's not automatic as I see it.

 

[Rustward]

I don’t think Midpack’s statement was sarcasm. I wasn’t so sure about Rustward’s.

I don't think Midpack was "just" being sarcastic either.

Because you wrote that you were not sure, I will clear it up for anyone who is reading. I was dead serious with my comment.

Slightly drifting here: There are different ways of doing things. We all make our own decisions. I will not criticize anyone else's decision (with some rare exceptions). In return, I don't want anybody else to criticize my decisions.

I don't need to be "saved".

. . . and I think the comments about the Christmas and birthday cards are very childish, as are the many insults directed to financial professionals -- just childish.

 

[Bir48die]

In the thread display options you can set the number of posts per page... I have mine set to 20 and thus only have 9 pages. If I set it to 100 I would only have 2 pages.

This kind of stuff just cracks me up

 

[Rustward]

Rust ward,

The list you provided re what the client is supposed to tell an FA seems to presuppose that client knows those things ....

I don’t get it ...


Razor sharp. Funny. Lots of stories from friends and relatives ...

stephenson,

It sounds like you think this is funny. If you cannot provide the details, then all you have are "stories" -- untold "stories".

We live in a "buyer beware" world, and this is unfortunate. There are people in just about any profession who will rip you off if you allow it. This is unfortunate, and it is true. It happens all over and that is not limited to financial services.

If you expect to get a financial person who will always keep your best interest in mind, good luck. This is also true for just about anybody else you do business with.

Everybody is responsible for themselves. This is also unfortunate for people who do not have the capability to look out for themselves. There are always some (in just about any profession you could name) willing to take unfair advantage.

 

[audreyh1]

What is foreign to me is using a FA, CFP, etc to manage a portfolio of which three simple funds or ETF's can be assembled and do a fine job of providing a respectable market return over the long run.

For me as I age, that’s what I am approaching. Simplification so that it becomes easier and easier to manage.

At some point (when old enough) I may even quit rebalancing in my taxable count and just issue instructions to sell x% proportionally from each of my few funds annually and transfer to my cash account.

 

[Rustward]

I can.
For example, more than 10 years ago, in-laws asked for my help in getting rid of the Frick and Frack team that one daughter brought to the house. Yeah, there was churning. A state investigator later came to speak with in-laws, and as I recall, they were not an isolated case.
In addition, I posted a link above (I think) wherein you can search for specific firm and find out about any judgments about them. Specifically, I typed in the name of an FA we had met with, for purpose of hearing the shpiel and reporting back to AARP. I found out this week that his record had more than a few blemishes, with different fines and judgments paid out before year 2000. Has he cleaned up his act? I don't know, but I would guess so, since we met with him just a few years ago.
I am very sure there are many others with horror stories, and other ways to find specifics.

I don't doubt that some have had bad experiences.

You failed to provide details. What was bought and sold, on what dates, and in what types of accounts. All you have is a "story". Until you give the details all you have is FUD.

I am not saying that all FA's are good. Sure, some of them are pure scumbags. So are some car dealers, plumbers . . . you name it.

The buyer (or investor, in this case) must be aware of the practices with whom they are dealing.

Would you buy a car merely by just going to a dealership and asking "what is the price of this car?", then blindly writing a check for that amount?

 

[travelover]

.. . . and I think the comments about the Christmas and birthday cards are very childish, as are the many insults directed to financial professionals -- just childish.

I've watched elderly relatives be ripped off by FAs and there is nothing childish about my contempt for those individuals that stoop to stealing from the elderly and the unknowledgeable by using tricks like birthday cards and church affiliations to disguise their true intentions. And while many, maybe most, FAs are honest, their trade organizations as a whole fight tooth and nail against oversight and requirements for accountability and fiduciary responsibility. Thank God for people like Bogle that have given us an alternative to the thieving ways that the financial industry would have us submit to, given their way.

 

[RobbieB]

Thank God for Bogle?

I'll have a beer instead thanks.