Managing Retirement Portfolio - When to get help

[Dtail]

Managing 60 stocks plus 10 index funds appears to be way too much to me. If there are no large capital gains involved, I would bring it down over time to 3 or so funds.
Not to mention at Fidelity for example, I can still get advice on an individual topic without paying a fee.

 

[brokrken]

Great advice from everyone. General consensus seems to be: 1. Account value shouldn't play into the decision 2. Simplify the portfolio 3. Never pay AUM 4. If needed, pay for specialists (i.e. accountants, tax advisors or estate planning attorneys

 

[Exchme]

You should surely simplify everything that doesn't have a tax cost. For things in taxable that are too painful to take the capital gains on, at least don't re-invest dividends. You could do a lot worse than a Total market fund for stocks, with a small chunk to international stocks and for fixed income a TIPS ladder or just a mix of short and intermediate bond funds. The fixed income belongs preferentially in the traditional IRA, trying to keep stocks in taxable and Roth.

Hiring an advisor is not needed and will cost you more than any mistakes you could possibly make on your own. Advisors typically take 1%, which can add up to 25% or more of all your wealth over a long retirement. They often make your portfolio even more complex and demand that you sell all the taxable holdings to implement their strategy, leaving you with a big tax bill. Their strategy will be data-mined, surely proven to have worked in the past but with no evidence of doing anything good for you in the future.

 

[GrayHare]

I'd consider it if the FA did useful things like keep track of and pay bills, challenge incorrect bills, file taxes, pay attention to RMDs, do tax planning. send me a monthly summary, etc. If the FA merely churns investments, well, I'm stupid enough to do that part on my own.

 

[OldShooter]

@brokrken WADR I suggest that you consider restating your problem. As others have said, the issue is not whether an FA is needed because of the size of the portfolio, it is that a portfolio as complicated as yours is really difficult for an individual to manage. Personally, my eyes would glaze over at the prospect.

The solution is to radically simplify the portfolio. Instead of accepting that " ... we own roughly 60 individual stocks, preferreds, bonds, as well as 10 different index funds/etfs ...." you should begin by ditching all of the tiny positions in the 60 and the 10. I suggest that you find a tax- and investment-savvy CPA who can put together a picture of your positions, gains and losses, and help you develop a tax-efficient simplification plan. Then move forward on the simplification mission.

Re taxes, remember that you will probably end up paying them anyway, so at best you are delaying them, you are not dodging them. The exception is assets that you will give to charity; take this path to the extent you are so inclined. QCDs are a great tool if you are old enough.

As an example, DW and I also hold a very serious 7-figure brokerage portfolio and we are concentrated primarily in one fund (VTWAX) plus two smaller fund positions and in a couple of TIPS issues. That's it. 3 funds, two bonds. Easy to manage, highly diversified, and inflation resistant. Our portfolio asset list fits very comfortably on half a sheet of paper.

Your $5M portfolio value is really not a big deal in the context of individual investors' portfolios and, as others have said, dollar value is not a very useful criterion for making portfolio management decisions. Focus on simplicity, not dollars.

 

[youbet]

I suggest that you find a tax- and investment-savvy CPA who can put together a picture of your positions, gains and losses, and help you develop a tax-efficient simplification plan. Then move forward on the simplification mission.

Very much agree with this. Find one who both supports your goal and is savvy on how to get there. This will be a significant job but once done managing the simplified portfolio will be trivial. And this will be a one time cost.

 

[DrRoy]

You can simplify by ditching most of the individual stocks, and consolidate the funds/etfs.

 

[imjustawarrior]

I'm guessing I would have to go over $500M before I looked for help.

You should start simplifying your portfolio. Turn off dividend reinvestment on things you don't want. If possible, donate things from taxable account that you don't want. First spend the things you don't want. If you have more than you will ever need in your taxable account, leave them for your heirs. They will get a stepped up cost basis, and they can dispose of them tax free. That's a start.

If you have children and gift them money, you can gift them the things you don't want instead of giving cash, especially if they are in a lower tax bracket like the 0% cap gains bracket.

 

[youbet]

You can simplify by ditching most of the individual stocks, and consolidate the funds/etfs.

Depending on OPs CG situation, I think the issue is not one of simply, "simplifying," but in doing so in a tax efficient way.

 

[Love This Community]

Hi all,
As our nest egg grows and nears $5M, I'm beginning to wonder at what point do you all think it makes sense to actually pay someone to manage your money, rather than doing it yourself with index funds, individual stocks and bonds, etc? I looked at our accounts and noticed that we own roughly 60 individual stocks, preferreds, bonds, as well as 10 different index funds/etfs. I wonder if I am doing myself a disservice by trying to manage all of this myself, and could someone that does this for a living do better. Very interested to hear everyone's perspective on this. At some point it makes sense for anyone to get help, but that number will be different for everyone. Is it $5M, $10M, never?

brokrken,

Though I am not at the $5MM NW mark, I knew at some point I will be and also was going your route of adding individual equity positions in my brokerage account. At one point, I had about 40 different equities (I guess I was building my own diversified portfolio with selective stocks, multiple 401K accounts (didn't move accounts when I switched 3 employers and probably was not being very tax efficient. Some really good advice above regarding a good CPA and not going the route of AUM. What benefited me was, having a portfolio second opinion (fixed fee - reasonable). I don't think I am allowed to share the name but he is a regular speaker at Bogleheads annual conferences. He's leading a Track 2: Bogleheads 501: Advanced session on Oct 17th if you wanna look him up on 2025 bogleheads annual conf website. Will be happy to share the name if I'm allowed to.

Second opinion gave me a plan to consolidate my accounts and also put any NEW after tax money into index funds vs. individual positions. I know this all sounds logical and common sense here on ER however, I needed that guidance to SIMPLIFY. Just don't rush. Good luck to you!

LTC

 

[youbet]

If you have children and gift them money, you can gift them the things you don't want instead of giving cash, especially if they are in a lower tax bracket like the 0% cap gains bracket.

Is it correct that if I gift a grandkid some shares of a fund, my basis follows those shares? I've been gifting them cash to their accounts but I do have some long held equities with large CG's I'd like to move out of my portfolio without paying 20% LTCG tax.

They could sell them at 0% LTCG tax rate?

 

[imjustawarrior]

Is it correct that if I gift a grandkid some shares of a fund, my basis follows those shares? I've been gifting them cash to their accounts but I do have some long held equities with large CG's I'd like to move out of my portfolio without paying 20% LTCG tax.

They could sell them at 0% LTCG tax rate?

I'm not a tax expert in this area or any area. I'm not sure what happens if you gift grandchildren. Are the grandchildren dependents? There is the kiddie tax to consider.

 

[planuntilthefisthits]

OP, a good question. If I had hired an AUM FA when I retired, I would have paid way more than $1M in fees by now. If I had hired an AUM investor for the years before I retired, maybe I wouldn't have had that $1M to pay his fees. I'm pretty certain that whatever my rate of return is, it is good enough by that metric.

At this time in my life, I need tax advice, and my CPA offers that. Which IRA bucket to tap, what is the best way to finance X.

Sometime in the not-too-distant future, we will put guardrails up that will event-trigger moving our investments to be under management. This is not for financial advice, but to keep our future-declining minds from making bad decisions.

Good luck!

 

[jollystomper]

As others has said, the size of your assets is not the issue, the complexity is.

$5m in a few funds or a few ETFs - simple do-it-yourself
$5M in 60+ individual stocks - not only complex, but consider that someone who manages it will likely make it even more complex and charge a fee for doing so.

My distant analogy: Back in the dotcom boom days, I got into individual stocks. It reached a point where, though I was doing well - which in those days a trained animal throwing darts at the WSJ stock pages to select stocks was doing well - the time and effort was getting to me. And continuing down this road just meant more time and effort, or paying someone to manage that time and effort (or to throw the darts) and make things more complex. I wisely learned about the boglehead philosophy and got out of many stocks and into index funds, which has made things much simpler, and still provided me with growth that keeps me happy .

 

[pjigar]

I wonder if I am doing myself a disservice by trying to manage all of this myself, and could someone that does this for a living do better. Very interested to hear everyone's perspective on this. At some point it makes sense for anyone to get help, but that number will be different for everyone. Is it $5M, $10M, never?

If you got here by yourself then you can probably keep going forever without any help. Compare yourself with index performance. You can simplify your holdings over time but I doubt "professionals" can do a better job. In fact, all imperial evidence suggests that most money managers can't beat market for a long periods of time. Simple investing is better but Wall Street only makes money if it can prove to an unsuspecting investor that investing is hard.

 

[Marc]

Most of you are way more complicated than me. I have 100 shares of two stocks for cruise benefits, two ETFs, one total bond fund, four stock index funds, and one money market fund. All at Fidelity with some in tax exempt, tax deferred, and taxable; mostly domestic but about 7% of total accounts foreign. I get Fidelity statements monthly and then annually, It takes ten minutes to calculate my taxes.

It will get a little more complicated in 2030 when I turn 73 and need to worry about RMD and then in 2031 we need to start withdrawals from my wife's IRAs (one of which has non-deductible contributions). I can't imagine trying to track 80 separate investments. The only time I sell is when I liquidate some of my IRA selling either S&P Index or Extended Index. At some point we will have a real bear market and I will liquidate some of my Total Bond Fund.

As our expenses are very lumpy I am hands on when I transfer from MM in IRA to CMA account. I need to figure out how to get that more routine for when my wife needs to take over. Will she need a FA? Probably not but she will need a CPA.

 

[TheWizard]

I'm not a tax expert in this area or any area. I'm not sure what happens if you gift grandchildren. Are the grandchildren dependents? There is the kiddie tax to consider.

This is a good question for Cathy63...

 

[rk911]

We managed our portfolio for roughly 23-years taking it to the low 7-figures. In 2021 it functionally doubled due to an inheritance. At that point we decided turn over mgmt to a pro. We selected and interviewed three firms and hired JPM. It was a wise decision and we're very happy with the firm, the results and the manager himself.

 

[youbet]

I'm not a tax expert in this area or any area. I'm not sure what happens if you gift grandchildren. Are the grandchildren dependents? There is the kiddie tax to consider.

Obviously I'm no "expert" either. Sounds like it's time to pose the question to the CPA who does my taxes.

 

[mrfeh]

Hi all,
As our nest egg grows and nears $5M, I'm beginning to wonder at what point do you all think it makes sense to actually pay someone to manage your money, rather than doing it yourself with index funds, individual stocks and bonds, etc? I looked at our accounts and noticed that we own roughly 60 individual stocks, preferreds, bonds, as well as 10 different index funds/etfs. I wonder if I am doing myself a disservice by trying to manage all of this myself, and could someone that does this for a living do better. Very interested to hear everyone's perspective on this. At some point it makes sense for anyone to get help, but that number will be different for everyone. Is it $5M, $10M, never?

It doesn't need to be complicated. Simplify your portfolio.

Bogleheads® investing start-up kit - Bogleheads

 

[pjigar]

Is it correct that if I gift a grandkid some shares of a fund, my basis follows those shares? I've been gifting them cash to their accounts but I do have some long held equities with large CG's I'd like to move out of my portfolio without paying 20% LTCG tax.

They could sell them at 0% LTCG tax rate?

Yes. When gifting stock, the recipient assumes your cost basis and holding period. But I don't think you can gift shares from any pre-tax accounts without causing a tax event. If the recipient is a minor then parents can open a custodial brokerage account for them. The gift exemption will still apply on the fair value of stocks on the day of gifting.

Example: If you bought some stocks at $100/share a few years back. Stocks have appreciated to $200/share today. If you gift 100 shares then the tax basis would be $10,000 for the recipient but the fair gift value for your reporting purpose would be $20,000. Annual gift exclusion amount is $19,000 per individual in 2025. So in this example, you would go over the gift exclusion amount so you will need to file IRS form 709. The extra $1000 over the annual gift exclusion amount will count towards your lifetime gift and estate exemption.

PS: Be sure to initiate transfer of stocks "in kind" when gifting. Otherwise brokerage may just sell the stocks during transfer.

 

[Midpack]

It doesn't need to be complicated. Simplify your portfolio.

Bogleheads® investing start-up kit - Bogleheads

Taxes probably make it way more complicated than that. I’d like go from 8 funds to 4 in my taxable account but it doesn’t make any sense tax wise. The OP undoubtedly has a tougher tax situation.

 

[VanWinkle]

More money doesn't need to be invested in a more complicated manner. Simple investing works with 100.00 and 10,000,000 dollars. What may become more complicated is estate planning, but a qualified estate attorney can help with that. Taxes more complicated, address with a CPA. The investing part can be the easiest part of retirement, if you choose a simple path. If not, that's on you.

 

[Murdock75]

Maybe for peace of mind have an advisor manage 500K and see how it turns out after a year or two. In 2022 I had an account managed in a bond fund since I had never ventured there in 40 yrs of investing. It started out fine, but after a couple of months they sold the bonds that had gains and started to buy weapons of mass destruction Mortgage Backed Securities and everything they bought went negative. One such position was down over 7% in one month. I know this was a bad year for some bonds but this was ridiculous. When I questioned why they were buying these I was told "we were hoping interest rates would be going down". Well HOPE is not an investment strategy. I had everything sold and transferred back to my control.