Which advisory option for spouse surviving me?

[prudent_one]

Probably an oft-told story. I handle the finances, she has little interest in it and no aptitude for it (dyslexic WRT math, it's dangerous). She knows this is true. I know if she trusts someone, she will not question what they say. I need to have a plan in place if I predecease her. For reasons, I believe my realistic planning options are one of these three:

- Get with a local financial planner (CFP). I have had a brief conversation with the planner and as far as I can tell she seems on the ball and specializes in working with widowed/divorced women. Would charge 0.7% AUM fee, uses an outfit called CGN Advisors for investment management, don't know what kinds of funds they use. Only does phone/video appointments, no in-person which isn't ideal. DW likes sitting with someone in person.

- Stick with our (local) Fidelity rep whom she likes. Risk of getting arm-twisted into costly and or inappropriate annuities or investments once I'm not in the picture. The rep knows I am a conservative investor. Risk that advisor may move on and she gets stuck with a bad one. Only pay fees if we go for a managed account or buy products like annuities. No cost currently. I'm not sure she would be on board with answering general personal finance questions as we pay no fees right now.

- Get more deeply connected with our large regional bank. Investment management costs will be high but it would be a one-stop shop for all things financial - banking, investments, tax prep. And very nearby one person to talk to for anything or at least that's what one of the bank reps told me. No idea who would be the contact person as they seem to change frequently and I know they are pressured to bring in fees. They tell you up front that their cash sweep account currently earns a miniscule 0.05%. They recommend load funds but I don't know what the loads are.

No one in either family can help with anything, I am the one they come to with their own questions.

I accept that if I'm not around she is going to have to pay someone. She will need to have a resource she can ask questions of when something shows up in the mail she doesn't understand. And for example when the day comes when she has to buy a car herself, she would benefit from being able to ask someone if 17% APR is OK for a car loan if that's what they try to pull.

Assuming no one tries to put her in something ridiculous like a fund with 2% ERs while they take another 1% for AUM, the costs can be absorbed I believe. She's not a spender by nature.

Currently I'm leaning towards the first option. Someone who's local, works with widows a lot, being paid AUM so I'm assuming would tolerate general personal finance questions. May or may not put up with random questions like the car loan scenario. To me there's no obvious best choice here.

Any thoughts on how to make a choice here? Once we decide I will need to get things in place.

 

[qwerty3656]

I asked a similar question (see link) - didn't get a definitive answer. At the moment our plan is for her to use "Fidelity Go" (which is a cheaper non full service option). All our money is currently at Fidelity

https://www.early-retirement.org/forums/f28/plan-for-if-the-money-partner-dies-first-118061.html

 

[aja8888]

My widowed SIL had no help and was not knowledgeable on their finances when her husband died 5 years ago without warning. She ended up with Edward Jones from a recommendation by her tax guy. Got sold TWO annuities and then lost half of the remainder of their cash in the market. What a mess her son had in getting this under control. She may lose her house eventually.

 

[prudent_one]

My widowed SIL had no help and was not knowledgeable on their finances when her husband died 5 years ago without warning. She ended up with Edward Jones from a recommendation by her tax guy. Got sold TWO annuities and then lost half of the remainder of their cash in the market. What a mess her son had in getting this under control. She may lose her house eventually.

That's tragic. Hope things work out for her. That's the scenario I'm wanting to prevent.

 

[GrayHare]

I'd look to keep it simple. No unusual holdings, perhaps just funds, something that can more or less operate without tending for years. Maybe configure dividends to pay out, cap gains to reinvest? Does Fido offer a way to automatically transfer dividends to a bank account to fund her spending?

 

[CaliKid]

There are hourly CFPs out there. Depending on the values that can be a good option. With phone/email/zoom/etc... the advisor can really be anywhere. They don't need to sit down at the same desk to talk.

 

[CRLLS]

I am in a similar situation. DW has full confidence in my abilities and leaves that up to me, right or wrong. We have tried to simplify our holdings. I often tell her what our investments have earned on a given day. Maybe we earned $10,000 one day, or lost $12,000 another, just to keep her informed, but mostly for her to become accustomed to daily fluctuations. I periodically tell her what our total is, and follow that with it could drop 20-30% in a downturn. Expect it.

She was contacted by a Fido person as her new advisor. We met together last year and had a good discussion. He clearly understood our self-management. We did talk about what could Fido offer if I were no longer able to manage and she were lost, just to have DW familiar with the options. Fast forward 5 months and he is now gone. So much for having DW familiar with her advisor! Now to start over again. Oh well, having her familiar with any part of the finance is time well spent.

Tomorrow I will be calling Fido for an appointment with a new advisor and start the process all over again.

 

[Jenna]

I would simplyfy your finances as much as possible. I've drilled it into my spouses head. Don;t spend more than 3% and it will last forever. We talk about it often. I also have lots of CDs that pay a "paycheck". And I have the quarterly divedends deposited into our account. Building as many drip paychecks is key and talking about it often.

 

[Exchme]

Mark Zoril at PlanVision is around $300/year. You get a subscription to e-Money and you initially set up your accounts, assets, goals, etc. They perform things like Roth Conversion studies using the advisor level access in e-Money. My recollection is e-Money has an electronic "vault" where you can put copies of important papers, which may also be useful as a "death book". They use a simple index fund approach. Should be pretty much auto-pilot once set up. As others have noted, make everything as simple as possible, but it might be worth it to have a second set of eyes in the event you pass and your spouse needs some advice. (They can only make a living at that super-low cost by not doing a lot of hand-holding, so you would want to discuss with them if they think your needs are a good fit)

 

[ivinsfan]

She has little interest in it? Well that's kind of being lazy. She doesn't have to handle the numbers but if she knows nothing about the basics or mechanics of it...she can't be fully protected.

Have the 2 of you actually talked about this?

 

[teej1985]

Mark Zoril at PlanVision is around $300/year. You get a subscription to e-Money and you initially set up your accounts, assets, goals, etc. They perform things like Roth Conversion studies using the advisor level access in e-Money. My recollection is e-Money has an electronic "vault" where you can put copies of important papers, which may also be useful as a "death book". They use a simple index fund approach. Should be pretty much auto-pilot once set up. As others have noted, make everything as simple as possible, but it might be worth it to have a second set of eyes in the event you pass and your spouse needs some advice. (They can only make a living at that super-low cost by not doing a lot of hand-holding, so you would want to discuss with them if they think your needs are a good fit)

I was always told that PlanVision does not do a lot of handholding and that they are more for DIYers.

 

[mystang52]

I can't find it now, but recently there was a thread that discussed the main money decision-maker creating a written document detailing where all of the money is, in the event (s)he predeceases the spouse. I think that would be a good and important first step for the OP. I did this for DW a few years ago, and periodically update it. DW is aware of it (we keep it in our house safe).
In addition, as others suggested I'd recommend simplifying the investments to a small number, and as much as possible in only a few financial institutions. For example, we currently have all of our money in 5 institutions, and that will be down to 3 by May 2024.
I leave it to others to respond to OP's immediate question, but I suggest my recommendations also be factored in.

 

[jollystomper]

While DW is math challenged, and does not want to deal with finances, her interest in knowing our finances increased years ago after several of her friends had their husband die or divorce them, and all of these friends in less than a year had to sell their homes and move in with relatives due to financial issues. So the first step was for her to sit with me as I went through the bills every month.

In addition to the things mentioned earlier in the thread (reducing financial institutions, documenting where the accounts are and how to access them), I keep several years of expenses in cash. I have advised DW that there is no reason to rush to do anything to our investments, with the cash you have time to figure things out. With our low WR and AA she does not have to make any changes, and can choose to learn at her own pace.

I suspect any "professional" advisorp who would want to advise her would try to scare her into thinking she need to do something, I have assured her that she does not. Between my pension survivor benefits, and SS survivor benefits, she might would not have a need to touch the cash other than for travel.

The biggest challenge I think she will face is RMDs, so though those are not due for another 7 years I have documented for her what she would need to do.

Two of my brothers are also good with finances, I trust them, and she knows she can turn to them. Also our sons are fierce in looking our for mom, and I would trust them to make sure she is okay and that no one is trying to take advantage of her.

My biggest concern with her is actually the number of her relatives and a few friends who would come of out the woodwork after I am gone, to get her to gift her money in some way, shape or fashion. They do not both her now as they have learned not to mess with me , but I suspect some are biding their time and hoping to outlive me . Because she has always had the choice to work, and they perceive our home and location to be "rich", I can see them coming up with reasons why she should help them out. A couple have even hinted to her along the lines of "your house has plenty of room for other people, especially since your nest is empty" .

 

[ivinsfan]

Jolly... your post is exactly what I'm referring too when I say some self education is really required for complete safety.



I person MUST know the basic details of how much they have, and the preferred places to put it. The mechanics of how to disburse can be left to a pro if that works out better.


Not having any kids or siblings to confide in or ask questions is tough. As far as you saying saying your DW can work some of these details out after you are gone, that's a tough one. Math challenged,doesn't want to deal with finances, similar to the OP this is not a road to go down if you have any choice in the matter.


BTW I am female so not female bashing just saying this isn't a good plan...

 

[target2019]

I asked a similar question (see link) - didn't get a definitive answer. At the moment our plan is for her to use "Fidelity Go" (which is a cheaper non full service option). All our money is currently at Fidelity

https://www.early-retirement.org/forums/f28/plan-for-if-the-money-partner-dies-first-118061.html

I would discuss the Fidelity Go program with the current Fidelity representative. https://www.fidelity.com/managed-accounts/fidelity-go/overview

What exactly are the choices, and what effect will it have on all of the current investments? Maybe some cap gains?

#1 - Local CFP charges .7%. Also review the funds and investments for additional expense. Plan on 1.5% overall.

#2 - Stick with current Fidelity situation. It seems you have fears about arm-twisting, etc. You may be able to place restrictions on the accounts. Or involve another person who is capable of reviewing each quarter, to make sure things are still in compliance with your AA and so on.

#3 - Get more connected with regional bank. You could interview them, and see what they would do, and what it would cost. I think it ends up like #1, in that you pay an advisor fee and internal expenses of their select funds.

For our situation my plan is to look into total consolidation at Schwab or Fidelity. In the family we have daughter and CFA. They will oversee the future, and try to keep my wishes on the correct path.

It helps to have an investment plan, and explanations of what you are doing right now. I've been keeping up with yearly review of a document that does that. It explains the income inputs, the accounts, and the expenses.

 

[Closet_Gamer]

Strikes me as a balance is needed.

To a few other's points, having her lean into the basic of the structure and rationale is important. Otherwise someone else will do it whether they mean well or not.

This seems like maybe a good place for an income annuity and/or a trust. You could select/hire a trustee and put it all in your will. If you die, the trust springs into existance and the first thing the trustee does is secure an immediate income annuity that delivers $x in income...ideally enough to cover all the essential expenses plus some.

The lifetime income annuity will take a lot of the decision making out of the mix. Money shows up, bills get paid, repeat. An income annuity, by definition and design, protects the beneficiary for life...unless the person gets snookered into selling the annuity to someone for cash.

That's where the trustee comes in. The trustee's job is run the trust within strict guard rails as to investment allocation, asset placement, and distributions. That person must have zero financial interest other than a modest, annual fee. Perhaps require the trust to be audited/reviewed annually by a one-time fee CFP who an also advise the trustee. The CFP can also help keep an eye on things like inflation and work with the trustee to generate more income if needed.

If her dyslexia is bad enough that paying bills is itself a risk, perhaps you need a simple, part-time accountant.

In the end, someone must have decision rights as to the money and those rights will by necessity get larger over time as DW herself ages. Choosing the trustee who does this will be the single most important decision.

Best of luck!

 

[Badger]

I have worried about this for quite a while for the same reasons. It also includes her 2 grown children who are beneficiaries when she passes. Everyone has their own method of handling their nest egg. Here is mine.

I started a few years ago to simplify our nest egg. So far the best I can do is one MF (Wellinton and Wellsley) in each of our tIRA with dividends going to cash used for automatic RMD withdraw, Roth IRAs with one MF in each (same), individual stocks (not to be sold but for inheritance) with dividends swept to cash, CDs that go to cash when mature, Cash accounts for living expenses. It may not be the best plan and not the most efficient but the intent is to keep it as simple as I possibly can.

I have a spread sheet with all the accounts organized and updated quarterly with their location and contact phone numbers and written instructions in the order in which to withdraw. I doubt she will need to use any of it other than cash accounts.

Once she is gone the grown children will get a large inheritance. I hope they appreciate what we have done and respect what they receive. Combined with what they have for their retirement it should be enough for them to live a modest retirement if they don't give in to friends wanting a loan/gift or waste it on expensive toys, etc.

 

[Sue J]

In our case DH avoids anything having to do with money except for the cash in his pocket. He gets itchy and queasy and looks for any distraction so he can leave the room if I discuss finances.

Since he retired with a pension in 2010 he knows that there is enough income to cover the outgo and that the monthly stuff all happens automatically.

I do the thinking and very conservative investing to optimize and look toward the future. I have tried to include him in an overview of this and he told me that if I die first he's moving everything into one bank account. Things in IRAs and HSAs and invested in mutual funds is too complicated for him. Yikes!

For me, who is in touch with every penny, I would never pay anyone else to handle money for me. But for people like the OPs spouse and my DH it might make sense. Hard to trust anyone who makes money off of the advice.

For DH's safety I showed our older son (39) the big picture at Vanguard and filled him in on how I run things. Yes, I'm far too detailed but I felt better knowing that someone will be there to help DH if I'm gone first.

 

[djsander]

My wife and I had a good meeting with a Fido advisor back in mid December. He initiated the call and I thought it would be a sales pitch for AUM or annuities. I accepted it so the wife would have a better understanding of them, simplify our portfolio and her to have a contact point. She’s knowledgeable enough to stay away from annuities and AUM set ups. The Fido rep wasn’t pushy and made some very good recommendations which is where we were leaning anyway. All in all I think it will work well. The biggest issue is getting her to have a basic understanding so as not to fall in overpriced traps and somebody that will at least answer questions.

 

[RetireBy90]

Two of my brothers are also good with finances, I trust them, and she knows she can turn to them. Also our sons are fierce in looking our for mom, and I would trust them to make sure she is okay and that no one is trying to take advantage of her.

This is my plan. Not brother but we have 2 friends that she know she can trust. One has told his DW to get her advice from me and ive done the same.
I also have met with FPs and found a Fido rep that will advise her and she is comfortable with. Third point of my “plan” is a detailed living document to detail our investing plan, which funds to draw money from, what accounts we have and even who to file death cert with. I’m sure there will be tasks that need to be done if I go first but as I come up with issues I add them to our “What my family should know” file.
I guess my thinking is to have many people she can go to and to document as much as I can. It helps I did this for mom when she passed and so know who needs a certificate. We also go over the document each year after taxes are done. It is a reminder to us.

 

[Gumby]

I can't find it now, but recently there was a thread that discussed the main money decision-maker creating a written document detailing where all of the money is, in the event (s)he predeceases the spouse. I think that would be a good and important first step for the OP. I did this for DW a few years ago, and periodically update it. DW is aware of it (we keep it in our house safe).
In addition, as others suggested I'd recommend simplifying the investments to a small number, and as much as possible in only a few financial institutions. For example, we currently have all of our money in 5 institutions, and that will be down to 3 by May 2024.
I leave it to others to respond to OP's immediate question, but I suggest my recommendations also be factored in.

The young wife is quite capable of managing our finances. She did it all when I was under water for extended periods of time. But they were simpler then and she really has had no interest since the day I came ashore for good. So, I have been slowly consolidating and simplifying our investments. I am very organized and she could easily find all our money by looking in my filing cabinet, although I really do need to get hopping on the "After I Croak" instruction book.

 

[Dash man]

You might consider a Trust with someone as Schwab Trust Company as Trustee that has reasonable fees. You can have an estate attorney as a Trust Protector who can fire the Trustee if your wife has a problem. Your wife of course is the beneficiary of the Trust.
It might be worth giving them a call. We use them.

 

[OddGuy]

While Fidelity has a good reputation, I'm leery of them based on a single experience...once my holdings passed a certain threshold, a Fidelity advisor from my city's office called me to begin a discussion. I told him I'd be happy to listen. He started telling me I could do better by moving money around in my primary Fidelity IRA.

That IRA is currently in a 72t plan, which was setup by Fidelity. I was shocked he wasn't aware they had done that at my request.

If I listened to him and rebalanced the fund, I would be subject to penalty plus interest for every year I had the 72t in place.

Of OP's three options, I would say if #1 or #3 are guaranteed to operate in a fiduciary capacity, then that is the way to go.

 

[Beldar]

I can't find it now, but recently there was a thread that discussed the main money decision-maker creating a written document detailing where all of the money is, in the event (s)he predeceases the spouse. I think that would be a good and important first step for the OP. I did this for DW a few years ago, and periodically update it. DW is aware of it (we keep it in our house safe). .

Yes, is this not a basic pillar of any estate plan? In combination with a retained estate attorney who understands the desires of either party as described in the various wills, etc, and could assist in their fiduciary requirements? We're still refining our estate desires year to year.

_B

 

[ncbill]

Probably an oft-told story. I handle the finances, she has little interest in it and no aptitude for it (dyslexic WRT math, it's dangerous). She knows this is true. I know if she trusts someone, she will not question what they say. I need to have a plan in place if I predecease her. For reasons, I believe my realistic planning options are one of these three:

- Get with a local financial planner (CFP). I have had a brief conversation with the planner and as far as I can tell she seems on the ball and specializes in working with widowed/divorced women. Would charge 0.7% AUM fee, uses an outfit called CGN Advisors for investment management, don't know what kinds of funds they use. Only does phone/video appointments, no in-person which isn't ideal. DW likes sitting with someone in person.

- Stick with our (local) Fidelity rep whom she likes. Risk of getting arm-twisted into costly and or inappropriate annuities or investments once I'm not in the picture. The rep knows I am a conservative investor. Risk that advisor may move on and she gets stuck with a bad one. Only pay fees if we go for a managed account or buy products like annuities. No cost currently. I'm not sure she would be on board with answering general personal finance questions as we pay no fees right now.

- Get more deeply connected with our large regional bank. Investment management costs will be high but it would be a one-stop shop for all things financial - banking, investments, tax prep. And very nearby one person to talk to for anything or at least that's what one of the bank reps told me. No idea who would be the contact person as they seem to change frequently and I know they are pressured to bring in fees. They tell you up front that their cash sweep account currently earns a miniscule 0.05%. They recommend load funds but I don't know what the loads are.

No one in either family can help with anything, I am the one they come to with their own questions.

I accept that if I'm not around she is going to have to pay someone. She will need to have a resource she can ask questions of when something shows up in the mail she doesn't understand. And for example when the day comes when she has to buy a car herself, she would benefit from being able to ask someone if 17% APR is OK for a car loan if that's what they try to pull.

Assuming no one tries to put her in something ridiculous like a fund with 2% ERs while they take another 1% for AUM, the costs can be absorbed I believe. She's not a spender by nature.

Currently I'm leaning towards the first option. Someone who's local, works with widows a lot, being paid AUM so I'm assuming would tolerate general personal finance questions. May or may not put up with random questions like the car loan scenario. To me there's no obvious best choice here.

Any thoughts on how to make a choice here? Once we decide I will need to get things in place.

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