Need to fire financial planner

[Jeff55]

I am a 57year old orthodontist, successful yet tired of my super stressful job. I have a net worth of over $3M plus a $1M dollar home (paid for). For years, I have turned over the management of our money to a FP, blindly trusting in his decisions. I see now that the returns have been sub-par, and the investment choices from FP always seem to involve heavy fees (i.e. 4.75%) We are invested in more than 30 different vehicles. Want to retire in approx. 2-5 years. Plan is to tell FP that we want to seize control of assets and invest in no more than 5 or 6 Vanguard Funds, to control costs and simplify the accounting. Some FP- planner recommended funds are back loaded and there will also be tax consequences in selling non-IRA assets. The conversion may be costly, but will the benefits outweigh the beauty of controlling our own financial destiny? Also, I would not really know which order to withdraw the funds during retirement. I know to leave tax=deferred funds alone until forced to, but beyond that, does anyone know how to "sequence" the withdrawal? We are used to a comfortable lifestyle and would hope to have $10K per month for life.

 

[Marshac]

The conversion may be costly, but will the benefits outweigh the beauty of controlling our own financial destiny? 

Holy cow- 4.75% fees??!?

 

[Brat]

Below is a link to a financial planner I have recommended to my daughter and her husband. They are young so they aren't at your level, but because of her position are likely to be there soon.

This person will only give you advice for a fee. Frankly, if you live outside of his community his services are worth a trip. He is a character!

http://www.efmoody.com/

 

[Nords]

Welcome to the board, Jeff.  Now that you have the time for it you'll do fine at managing your own retirement portfolio.  You're probably the one who most has your interests at heart, too, although 4.75% must really keep your FP motivated to keep your funds in his account...

You might want to contact veteran poster PatPatoh on M*'s Vanguard Diehard board.  He's also a retired dentist who's managing his own portfolio and keeping an eye on his withdrawal order.

One asset-transfer practice that I've heard of is asking the recipient (Vanguard) to initiate the transfer.  You fill out the paperwork, send it to them, and they contact your advisor to make sure the transfer is done promptly & correctly.  It saves you having to phone your advisor and listen to prolonged whining begging pleading foot-dragging excuses discussions.

 

[Martha]

Your end result sounds like a good plan. The difficulty is to transition to the Vanguard funds with as minimal pain as possible, both tax pain and back end fees. Maybe a plan to transition over time? Can you get rid of the financial advisor and keep the investment vehicles you are in and transition out of them over time?

 

[saluki9]

The number you mentioned (4.75%) happens to be the typical front load on an A share mutual fund. Although its no fun paying that, you don't pay it every year.

Do your own research first to make sure these are funds you want to sell. Although the number is VERY few, there are couple front loaded shares that are worth keeping (hint, they are all American Funds)

I also agree on letting Vanguard do the transfer for you, it's just easier that way.

 

[justin]

Vanguard can probably transfer most or all of what you have with your financial advisor. What's left should be small enough that you can sell it and just pay the fees and/or taxes. Look carefully at the expense ratios charged for each of the funds you own through your FP. And don't give your FP any new money. Start a vanguard account. $1000-$3000 will get you in the door at Vanguard. They also have certain advising they'll do for free or cheap. If I recall correctly, transferring in $3 million will certainly get you some free advice, at least initially.

 

[Patrick]

Also, I would not really know how which order to withdraw the funds during retirement. I would know to leave tax=defered funds alone until forced to, but beyond that, does anyone know how to "sequence" the withdrawal.

Jeff, for a calculator that shows what order to withdraw your funds in, go here: http://www.i-orp.com/

 

[Red_y]

An alternative to going directly to Vanguard would be to work with Merriman Capital Management in Seattle.

http://www.merrimancapital.com/services/buyandhold.html

They can get you into DFA (Dimensional Fund Advisors) funds, which are better at targeting specific asset classes than Vanguard's funds.

The philosophy at MCM is to leverage the DFA funds for their virtues of indexing and low costs, letting the benefits of wide diversification work over time. Their management fees are around .8% per year. They don't really do anything with your money except get it into the DFA funds, which are not open to individual investors.

I had a large part of my retirement portfolio with them for several years and was very pleased with their approach and service. I just got too cheap frugal to pay even the .8% fees and went back to Vanguard.

 

[emilyl]

for accounts over a million at vanguard they take care of everything for you. just call up vanguard and have them transfer the assets over. in transferring you're not actually selling anything. once it's transfered then you can make decisions about what to sell, etc. vanguard surely charges MUCH lower commissions, etc.

you DEFINITELY don't need an advisor.

that vanguard diehards board is awesome!

 

[Brat]

If you do want a FEE ONLY advisor to help you, one who will only advise (will not take custody or control) consider E. F. Moody.  A character, but from all I know is able to take a look at a client's total financial picture and line out a course of action.  He knows the business, the scams.  He can give advise on how best to preserve the value of what you have.  I have recommended him to my daughter and her husband.  http://www.efmoody.com/

I agree with others that Vanguard is the best custodian once you get into the self directed mode.

 

[saluki9]

If you do want a FEE ONLY advisor to help you, one who will only advise (will not take custody or control) consider E. F. Moody. A character, but from all I know is able to take a look at a client's total financial picture and line out a course of action. He knows the business, the scams. He can give advise on how best to preserve the value of what you have. I have recommended him to my daughter and her husband. http://www.efmoody.com/

I agree with others that Vanguard is the best custodian once you get into the self directed mode.

Is he giving you a cut on his fees or something? In 10 posts on this thread, you've plugged him twice.

Vanguard has very good advisors who charge something like $500 for a full plan.

 

[Brat]

I have, nor have I ever had, a personal or financial relationship of any kind with this person.  I recommended him to my daughter, that is all. 

If you want to take exception to the recommendation fine, but do so on the basis of the quality of the recommendation.

The tone of your comment raises a yellow flag to me.  Moody has made comments on his website about the ethics of many financial planners.  Are you a financial planner?

 

[brewer12345]

Brat, in all fairness, seeing a guy recommended twice on a thread is bound to raise some hackles.

Its tough when people ask for advisor recommendations when most of us would simpy answer that it should be DIY.

 

[Brat]

Thanks Brewer. When I respond to such questions in the future I will do it by PM.

 

[haha]

Brat, in all fairness, seeing a guy recommended twice on a thread is bound to raise some hackles.

Its tough when people ask for advisor recommendations when most of us would simpy answer that it should be DIY.

A little over-sensitive I think.

Ha

 

[saluki9]

Thanks Brewer. When I respond to such questions in the future I will do it by PM.

Yeah, don't take it so personally. I'm not a financial planner but I do work in the investment biz.

I just thought that you had made your point the first time and that since he indicated he wanted to invest with Vanguard that vanguard would be a good source for some education / planning if he needed it.