Thoughts on AUM for year one, then Fee-Only thereafter

RamStride

Dryer sheet aficionado
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We are 5-monts until planned FIRE. I am a DIY budget/investor planner. But even after reading a lot on tax planning, Monte Carlo and FIRECalc use I still don't feel savvy or comfortable with post-retirement tax planning bucket strategies. I am planning to call Fee-only advisors in my local area this week. I am thinking it will be good to find someone with a CPA certification as well and pay a the fee for a full and comprehensive financial/tax plan.

However, I am thinking if it will be advantageous to have a AUM advisor for one year so that I have year-round access to ask questions I may have in different areas from investing, taxes, trust, etc. This way I can make the most out of the fee that I am paying for that year.

Will this approach work or will it be a wash even if I pay per consult with a Fee-only advisor?
 
It can be reasonable to have an independent and objective look at your finances on occasion to check for any blind spots you might have. Just make sure that you know how much the services that you are signing up for will cost expressed in dollars not just as a percent of assets and make sure that you feel that you are getting enough value for the cost.

I would never pay an AUM fee but that does not mean that you should not.
 
I also have thought about the option of moving a lesser balance to the AUM account in an effort to reduce the potential fee. And continue the DIY investing on the remaining amount. I can also use that as a gauge what they do in comparison to what I do.
 
I would also want to ascertain exactly what kind of advisor to hire. Wealth manager, financial advisor, tax specialist, estate planner, etc., etc.
Some can do it all, others might be focused more in one area. Be sure you're dealing with a fiduciary (someone who is looking out for your best interests).

Best of luck.
 
We are 5-monts until planned FIRE. I am a DIY budget/investor planner. But even after reading a lot on tax planning, Monte Carlo and FIRECalc use I still don't feel savvy or comfortable with post-retirement tax planning bucket strategies. I am planning to call Fee-only advisors in my local area this week. I am thinking it will be good to find someone with a CPA certification as well and pay a the fee for a full and comprehensive financial/tax plan.

You're probably looking for a CFP, not a CPA. Although the best financial/tax planner I have ever found was a CPA partner in a local highly respected tax firm who was willing to consult on an hourly basis. From a CFP, I would expect to pay low four figures for a one time plan. And I would expect it to be pretty (charts, graphs, conclusions) but not necessarily very good (not accurate, not helpful, not actionable).

It would be wise to understand all of the inputs (including not just your data but also the assumptions they make about things like inflation or market returns or asset allocations) as well as the calculations they made so you can decide what you think of the results it provides.

However, I am thinking if it will be advantageous to have a AUM advisor for one year so that I have year-round access to ask questions I may have in different areas from investing, taxes, trust, etc. This way I can make the most out of the fee that I am paying for that year.

The AUM person will not take as input the one time plan from the CFP.

The AUM person will probably be unable, unwilling, or not very good at answering any of your questions about any of those topics:

1. On investing, they will only be able to tell you how an investment has done historically, and their firm's current recommendations for an AA (which will not be personalized and will almost certainly increase your tax bill.)

2. On taxes, any proper investment advisor should refer you to your tax advisor. At most they should be able to tell you the tax characteristics of an investment. If an investment advisor gives you tax advice, it's probably self-serving, wrong, or both.

3. Trusts are a legal construct for which you should talk with an estate planning attorney, not an AUM advisor.

AUM fees are charged on a daily basis, not a yearly basis. At least AFAIK.

Will this approach work or will it be a wash even if I pay per consult with a Fee-only advisor?

If you want someone to answer your questions, I would rank them in the following order (best to worst):

1. Post your questions here on early-retirement.org and get answers here. (I like the Bogleheads PF forum also.)
2. Ask the CFP. They'll probably include some followup question and answer in their one time plan fee.
3. Ask the AUM.
 
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