Financial Advisor For My Parents

[LifeHappens]

Situation: My parents are 66 (mom) and 69 (dad). Dad has been retired since he turned 62, mom is still working. They are both intelligent people, but totally mystified by anything to do with money. They are pretty frugal, live in a paid off home and have modest desires. Their health is not great. As much as I would like to have them around for many decades, realistically, I expect they'll both be gone in 20 years.

Issue: Mom is trying to prep for retirement. In an attempt to be responsible, she and dad went to see a financial advisor. They did choose an independent advisor, but their conversation threw up a bunch of red flags. This guy was talking about setting up trusts, giving them advice on medical insurance without asking about their current situation, and in general sounds like he wants to sell them a bunch of high priced products they don't need. I'm glad mom chose to tell me about this and I'm trying to steer them in a better direction.

Current finances: We are not a family that really talks about money. I don't know how much my parents have saved, but I do know they each have one 401K account and nothing else. My dad's account is invested in... something. My mom's is invested in the money market option and she is NOT open to investing in stocks at all. I might be able to broach the subject of bonds. Maybe. The main takeaway is their finances are simple and they are of modest means.

What they want: Mom and dad need A Person Who Isn't Me to speak with about their retirement finances. They are overwhelmed by the idea of doing things like a rollover IRA. In speaking with mom yesterday, she didn't even understand why this might be a good thing. Dad's 401K is still in his company's plan. The are Afraid of Taxes, even though I suspect they pay very little in taxes. They don't know anything about RMDs or how to sell off assets and take distributions. They need A Person.

Obviously I want to send my parents to a trustworthy resource and would like to avoid a big management fee if possible. I personally would love to see them get a Vanguard Personal Advisor, but it's possible they would feel more comfortable with a storefront they can go to. Fidelity comes to mind for that and there is a Fidelity branch within a reasonable drive of their rural house. Are there other companies I'm missing?

My other admittedly selfish motive is to keep their finances as simple as possible. I'm executor of their will. Getting things set up properly now will save me a lot of pain sometime in the future.

What does the forum suggest?

[reeshau]

It does seem like they could benefit from some help.  I don't know exactly where you are, but you could check out the Garrett Planning Network for fee-only financial planners.  The issue with this, though, is that a flat- or hourly-fee planner will generally tell you what you should do, but won't do it for you.  Perhaps that could work well in tandem with Fidelity: the planner could give your parents instructions to give Fidelity.  The network members who do manage do charge a percentage--still fee-only (no commission) but not what you are looking for.

[MsPeacock]

Vanguard has a planning service that is a step-up from their basic DIY services. There are fees, but they are pretty minimal. There is a required investment of 50K or so. They will do a lot of hand-holding for things like transferring funds, etc. It is called Vanguard Personal Advisor Services.

[LifeHappens]

Vanguard has a planning service that is a step-up from their basic DIY services. There are fees, but they are pretty minimal. There is a required investment of 50K or so. They will do a lot of hand-holding for things like transferring funds, etc. It is called Vanguard Personal Advisor Services.

Isn't this all over the phone?

[LifeHappens]

It does seem like they could benefit from some help.  I don't know exactly where you are, but you could check out the Garrett Planning Network for fee-only financial planners.  The issue with this, though, is that a flat- or hourly-fee planner will generally tell you what you should do, but won't do it for you.  Perhaps that could work well in tandem with Fidelity: the planner could give your parents instructions to give Fidelity.  The network members who do manage do charge a percentage--still fee-only (no commission) but not what you are looking for.

Thanks for this. They are in the Upper Midwest. Rural, but a reasonable drive to a couple mid-sized cities, so accessing services is usually decent. There is a person relatively near them that looks like a possibility.

[MsPeacock]

Vanguard has a planning service that is a step-up from their basic DIY services. There are fees, but they are pretty minimal. There is a required investment of 50K or so. They will do a lot of hand-holding for things like transferring funds, etc. It is called Vanguard Personal Advisor Services.

Isn't this all over the phone?

Yes - it is over the phone. I missed that you mentioned a store-front set-up.

[Sibley]

Bigger picture though, it would be good if you could become a Family That Talks About Money. Because otherwise, there is going to be a crash landing at some point, on some one. If something happens and you have to help manage the bills, you're going to be totally lost in a crisis situation.

[LifeHappens]

Bigger picture though, it would be good if you could become a Family That Talks About Money. Because otherwise, there is going to be a crash landing at some point, on some one. If something happens and you have to help manage the bills, you're going to be totally lost in a crisis situation.

I hear you, but that is highly unlikely to happen until it has to happen. My parents are from immigrant cultures where you just don't talk about money. Actually, you just don't talk about a lot of things, but that's not the focus of this thread :)

[Catbert]

Talk to Fidelity to see what they would provide to your parents and what they would charge as a percentage.  This will be partly dependent on how much money they can move to Fidelity.

I'm your parents age and currently manage my own portfolio so I pay no fees beyond what the various mutual funds charge.  My "nice young man at Fidelity" (AKA Senior Account Executive/Vice President of something) contacts me at least twice a year to try and set up an appointment to go over (generally) my portfolio, ensure I have beneficiaries designated,  that RMDs are set up, and that I understand how aggressive my portfolio is.  He also pitches moving my TSP to them.  He ever set up a free phone conversation with their staff estate attorney to discuss general info and answer questions.  Attorney even reviewed my existing trust to see if it needed updating (it didn't) and ensure that it said what I thought it did (it did).  Fidelity has $2M+ of my money so I know I get more than most people.  My plan is to turn over managing my portfolio to Fidelity to manage when I turn 75.   

Edit to add:  It's important to note that this free portfolio review looks at asset allocation  and does not involve recommending individual funds.  The estate attorney would not have  updated our trust if it had been needed. 

[LifeHappens]

Edit to add:  It's important to note that this free portfolio review looks at asset allocation  and does not involve recommending individual funds.  The estate attorney would not have  updated our trust if it had been needed.

If you don't mind sharing, why do you have a trust? I don't know much about them aside from as a way to support a disabled dependent or minor child after you pass. I'm quite sure my parents have waaaay less than $2 mil and they are quite simple when it comes to finances, but I don't want them to miss out if there are products that can genuinely help them as they age.

[MoseyingAlong]

Edit to add:  It's important to note that this free portfolio review looks at asset allocation  and does not involve recommending individual funds.  The estate attorney would not have  updated our trust if it had been needed.

If you don't mind sharing, why do you have a trust? I don't know much about them aside from as a way to support a disabled dependent or minor child after you pass. I'm quite sure my parents have waaaay less than $2 mil and they are quite simple when it comes to finances, but I don't want them to miss out if there are products that can genuinely help them as they age.

There are many advantages to trusts and many types of trust.
While you are alive, a basic living trust can be helpful in providing a straight forward way for someone else to manage your finances if you are incapacitated. I think it's easier to take over as a trustee than file POAs with every financial institution you have to deal with.
After you die, a trust can provide some privacy and may be settled easier than everything going thru probate.

[Catbert]

Edit to add:  It's important to note that this free portfolio review looks at asset allocation  and does not involve recommending individual funds.  The estate attorney would not have  updated our trust if it had been needed.

If you don't mind sharing, why do you have a trust? I don't know much about them aside from as a way to support a disabled dependent or minor child after you pass. I'm quite sure my parents have waaaay less than $2 mil and they are quite simple when it comes to finances, but I don't want them to miss out if there are products that can genuinely help them a I tas they age.

A trust can make it easier to transfer assets after you die.  Interestingly, the Fidelity attorney I talked to confirmed my suspicion that I didn't really need a trust to accomplish my inheritance goals. (I already had one so have left it alone.)  I have beneficiaries and transfer on death designees on all major assets.   If I die first it all goes to my DH.  When the second one goes all assets in the trust go to his children.  It goes without any handcuffs from the grave.  I'm not concerned if my step-children have to jump through hoops (probate) to get remaining assets. 

I know that Fidelity has a "manage your portfolio" option at a yearly cost (1%?).  That might be a good one for your parents. 

[BeanCounter]

Fidelity. If they have enough assets they can get into their private client group. Then they have access to an advisor with no additional fee. This was perfect for my mom. She got her face to face meetings and they always recommend index funds. They will also bring in free attorneys and tax folks for consultation if you need them.

[BeanCounter]

Edit to add:  It's important to note that this free portfolio review looks at asset allocation  and does not involve recommending individual funds.  The estate attorney would not have  updated our trust if it had been needed.

If you don't mind sharing, why do you have a trust? I don't know much about them aside from as a way to support a disabled dependent or minor child after you pass. I'm quite sure my parents have waaaay less than $2 mil and they are quite simple when it comes to finances, but I don't want them to miss out if there are products that can genuinely help them as they age.

There are many advantages to trusts and many types of trust.
While you are alive, a basic living trust can be helpful in providing a straight forward way for someone else to manage your finances if you are incapacitated. I think it's easier to take over as a trustee than file POAs with every financial institution you have to deal with.
After you die, a trust can provide some privacy and may be settled easier than everything going thru probate.

You can settle even large estates without probate if you do the right planning.
Trusts are good for situations involving minors, the disabled or other situations where you may want or need to control your assets from the grave. Otherwise they are just bullshit that keeps lawyers fed.

Note- they used to be integral in estate planning to help mitigate taxes, but now that the estate limit is $11.4M it’s less likely you need one for that reason.

[BeanCounter]

Talk to Fidelity to see what they would provide to your parents and what they would charge as a percentage.  This will be partly dependent on how much money they can move to Fidelity.

I'm your parents age and currently manage my own portfolio so I pay no fees beyond what the various mutual funds charge.  My "nice young man at Fidelity" (AKA Senior Account Executive/Vice President of something) contacts me at least twice a year to try and set up an appointment to go over (generally) my portfolio, ensure I have beneficiaries designated,  that RMDs are set up, and that I understand how aggressive my portfolio is.  He also pitches moving my TSP to them.  He ever set up a free phone conversation with their staff estate attorney to discuss general info and answer questions.  Attorney even reviewed my existing trust to see if it needed updating (it didn't) and ensure that it said what I thought it did (it did).  Fidelity has $2M+ of my money so I know I get more than most people.  My plan is to turn over managing my portfolio to Fidelity to manage when I turn 75.   

Edit to add:  It's important to note that this free portfolio review looks at asset allocation  and does not involve recommending individual funds.  The estate attorney would not have  updated our trust if it had been needed.

This is the private client group. It’s worked well for us.

[LifeHappens]

You can settle even large estates without probate if you do the right planning.
Trusts are good for situations involving minors, the disabled or other situations where you may want or need to control your assets from the grave. Otherwise they are just bullshit that keeps lawyers fed.

Note- they used to be integral in estate planning to help mitigate taxes, but now that the estate limit is $11.4M it’s less likely you need one for that reason.

That's kind of what I thought. I honestly don't expect my parents to die with any assets aside from maybe a residence, so avoiding probate is not exactly top of mind.

Thanks for the Fidelity recommendation. I'll have to see what their minimum asset amount is for private client services.

[BeanCounter]

You can settle even large estates without probate if you do the right planning.
Trusts are good for situations involving minors, the disabled or other situations where you may want or need to control your assets from the grave. Otherwise they are just bullshit that keeps lawyers fed.

Note- they used to be integral in estate planning to help mitigate taxes, but now that the estate limit is $11.4M it’s less likely you need one for that reason.

That's kind of what I thought. I honestly don't expect my parents to die with any assets aside from maybe a residence, so avoiding probate is not exactly top of mind.

Thanks for the Fidelity recommendation. I'll have to see what their minimum asset amount is for private client services.

Just remember, you only avoid probate if EVERYTHING is POD/TOD. You need to set up the properties, cars, accounts to all transfer on death. Otherwise off to probate you go to claim anything that is remaining.

[Indexer]

I know you said you prefer store front, but I still think Vanguard is worth looking into. They can talk to the planner for free, get a financial plan for free, and if they want ongoing management it's only 0.3%. Plus they use Vanguard's low cost index funds so all in costs should be under 0.4%. You are going to be hard pressed to get an ongoing relationship with a CFP for less than that.

Yes, it's over the phone. However, they can also use video conference so your parents can see the advisor and go over documents as if they were sitting across a table. I've used it to go over the free plan with them. They send you a link on the Vanguard website that opens a video meeting room.

I would at least try Vanguard first. If they don't like it then look at more expensive options. If it was my parents this is the option I would recommend.