Author Topic: Save a Noob from a Financial Wealth Planner (1.65%)!  (Read 4928 times)

MojoHusker

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Save a Noob from a Financial Wealth Planner (1.65%)!
« on: March 28, 2017, 12:20:49 PM »
Trying to find my way to organize my family's portfolio and get our money moving in the right direction!  This has led us to a CFP through a friend who has helped them out.  He wants to only manage my Rollover IRA of about $50k for a fee-only acct with a 1.65% charge on that money.  In turn, he will advise us on estate planning, beneficiaries, child education funds, etc.... He will also look over and consult us on my current 401k, which has the bulk of our retirement savings.  But 1.65% sounds like a lot! 

My other ideas are to roll over this money with Fidelity or Vanguard, or maybe an online adviser such as FutureAdvisor.  We currently have no taxable accounts.  I feel like we need some counsel with our finances and estate, and there is so much information out there that we don't know what to do!  Please help us make this first important decision to be a good one, and Thank you all in advance!

aceyou

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #1 on: March 28, 2017, 12:40:48 PM »
You have to do what works best for you and your family. 

But if it were myself and my family, I'd run the other way and put all of it into Vanguard low cost index funds, with VTSAX being my choice.  Then, when I want/need advice regarding estates because I can't get it on this site or other credible source regarding beneficiaries, child education funds, etc, I'd pay a CFP or other relevant person for that advice.  1.65% of 50k is over $800 in year one, and your fee will increase every year as your portfolio rises (albiet slower than it should due to the drag in fees).  You can buy a lot of great professional advice for that kind of money. 

This is my bias coming out here, but I'd consider avoiding this CFP...the first advice he's given you is to put your money into something with exorbitant fees.  So O for 1 in the advice column so far IMO, that's not something I'd pay money to receive. 

I like your suggestion in your second paragraph much better. 

plog

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #2 on: March 28, 2017, 01:29:20 PM »
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Please help us make this first important decision to be a good one,

Here's what you absolutely should do first--breath.  This does not require immediate action, leave your options open for now while you get up to speed on the subject.

First, you absolutely can learn to do all that stuff yourself.  Second, you may not want to.  I just paid $45 for an oil change.  If I were to go to a do-it-yourself auto forum and ask if that was a good deal, I would rightfully be ridiculed.   But the truth is, it was a good deal for me.  No matter how simple changing your own oil is--I have neither the desire to learn how nor to actually do it.  But here's the thing--I researched what it took to change my own oil and made an informed decision.  And so should you.

Spend some time on this and other financial forums and see if managing your money is worth it to you.  It might not be and his fee might be a bargain for you.  Again, with all that said--you absolutely can learn to do all that stuff yourself.

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MojoHusker

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #4 on: March 29, 2017, 08:59:22 AM »
Quote
Please help us make this first important decision to be a good one,

Here's what you absolutely should do first--breath.  This does not require immediate action, leave your options open for now while you get up to speed on the subject.

Hey Plog, sorry I didn't mean for that to come out quite as desperate as that lol.  I guess I've been on research overload for a while, and I am actually meeting the Fidelity guy today before I decide on my options.  You are absolutely right, there is no need to do anything now.  Sometimes when it comes to money, me and the wife have came down with paralysis by analysis which leads us to do nothing.  We want to be efficient and smart with our financial future, and this is why we are trying to formulate a plan and turn it into action.  I guess my request for info was to get some insight before today's Fidelity meeting, but I am not going to sign over the cash today to Fidelity or Mr. 1.65% no matter what he says.  So yes, I'll give myself some time before making this decision but we are beyond ready to figure something out. 

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #5 on: March 29, 2017, 09:14:13 AM »
Trying to find my way to organize my family's portfolio and get our money moving in the right direction!  This has led us to a CFP through a friend who has helped them out.  He wants to only manage my Rollover IRA of about $50k for a fee-only acct with a 1.65% charge on that money.  In turn, he will advise us on estate planning, beneficiaries, child education funds, etc.... He will also look over and consult us on my current 401k, which has the bulk of our retirement savings.  But 1.65% sounds like a lot! 

My other ideas are to roll over this money with Fidelity or Vanguard, or maybe an online adviser such as FutureAdvisor.  We currently have no taxable accounts.  I feel like we need some counsel with our finances and estate, and there is so much information out there that we don't know what to do!  Please help us make this first important decision to be a good one, and Thank you all in advance!

Some thoughts on the bolded above.  I would find out more on the advising he will give you.  How much will he do for you as far as estate planning and would he require you to name him as the trustee or custodian if you are leaving money to a trust or to minors?  Yes the 1.65% does seem like a lot for just the $50k, but what is that $825 (year 1 @ $50k) as a percentage of your overall portfolio? Really dig into the services he can provide you and then compare that to the cost of comparable services somewhere else. 

Maybe also see if he provides consultation services where you could just give him your account statements annually and then meet to go over them and discuss allocation strategy and only pay a fee for the consultation?

Laura33

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #6 on: March 29, 2017, 11:42:53 AM »
"Fee-only" has become the most overused term in the financial world.  Now that people are paying attention to commissions, the advice is to go to a "fee-only" planner.  But a fee-only planner who charges you huge percentages on an ongoing basis to manage your money can be just as -- or more -- damaging than paying a one-time up-front commission!

What you need is a financial planner who charges by the hour.  You don't need someone to actually manage your money for you; you need someone to take a look at the big picture, force you to think about things you might not be thinking about (e.g., insurance, wills), make sure you're on track for your goals, and suggest course corrections where you may be veering off-track.  There are any number of planners who do this kind of work, and who can set you up with basic (cheap!) portfolio suggestions for your investments.

So, yes to a financial planner if you think it would give you more confidence that you are on the right track.  No to any "planner" or "adviser" who wants to charge well over 1% of your earnings every year for the privilege.

MojoHusker

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #7 on: March 29, 2017, 12:22:50 PM »

So, yes to a financial planner if you think it would give you more confidence that you are on the right track.  No to any "planner" or "adviser" who wants to charge well over 1% of your earnings every year for the privilege.

This ^^^^.  This makes sense to me.  Thank you Laura33, I appreciate the advice to backup the hesitation I'm experiencing with this situation

Laserjet3051

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #8 on: March 29, 2017, 06:50:28 PM »
Why pay ridiculous sums of hard earned money for advice that can be gotten for free, either here or at bogleheads? You think that certification gives them special secret knowledge none of us have? Hardly. Join the club, take it one step at a time, and stop giving these financial firms any more than they deserve.

MojoHusker

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #9 on: March 30, 2017, 07:34:28 AM »

So I went to the Fidelity guy yesterday after work in the name of research and education.  They would take around 1% of my assets under management, which is less but I'm not sure if I'd get the same guidance for my main retirement acct (401k from current employer). 

Since this old 401k is already with Fidelity, I could still roll it over to them for free and manage it myself for free.  He gave me a basic structure of how they advise I manage my acct, and it sounds like I could call their "guidance" team for general advice from time to time.  So far, he gave me an overview and explained that they recommend finding a strategic balance and then re-allocating weekly (or monthly at a minimum).  Since I am only in mutual funds now, he said their plan for me would be to not just "set it and forget it", but rather to continually adjust everything so that I am more hedged for a risk management plan. 

Some of what he says makes sense to me.  I think I'm going to attempt to get it set up myself, with Fido or VGuard, and if I feel like I'm still in over my head regarding ALL of my accounts, and that I still need help with other family financial questions (529s, estate planning, taxes, etc), then I may ask Mr 1.65% how much he'd charge me for an hourly fee to get my Plan rolling.  Then maybe I'll be able to find my strategy of adjusting as we go forward......

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #10 on: March 30, 2017, 07:54:24 AM »
You do not need to pay for management. Do a bit more homework, then figure out what you want to hold, and ask any further questions on here or at the Bogleheads site.

I knew NOTHING around 4 years ago. NOTHING. I was actually pretty freaked out and figured I'd always need professional management.

But then I took a bit of time figuring out how the market works (Jim Collins' site with his stock series - now in book form but still available on his site for free) was invaluable for this. I decided I wanted to stick with Fidelity (already had my 401k with them) because I liked their customer service, ease of use, and other perks (Vanguard is the gold standard, but Fido is perfectly fine if you stay away from paying for professional management or buying any of their managed funds with high expense ratios).

Once I decided how, and where, I decided what - my asset allocation. After that, it has been a cakewalk. I manage my own very, very substantial portfolio (which contains 3 index funds across 7 accounts), and took over management of my mother's accounts as well.

https://www.bogleheads.org/wiki/Fidelity
^the funds to focus on for index investing.

I am 100% with Fido in my portfolio. I do it all myself, and you don't need to pay to call them up and ask them to do something or clarify things sometimes. Their general reps are very helpful and charge nothing.

Since I knew nothing when I started, I went with their professional management (inherited several accounts from my dad's passing, so left it set up as he had it while I figured out how and what to do). You will not be gaining anything from paying them to manage, other than a very confusing portfolio (they had me in 33 different funds!!!) and a quarterly payment to them. Not worth it at all considering how laughably easy it is to do index investing for yourself.

I have an assigned rep not paid by commission due to the size of my total portfolio. He was not contingent on paid management either, but I don't care any more - I just call up the regular number if I have a question. They don't care either. If the person I get doesn't know, they'll get me to someone who can help me. That's definitely been my experience anyway.

None of them will help with taxes or estate planning, but honestly you can ask that stuff HERE and get way better information than paying for a canned answer with a rep that wants to make money off of your ignorance. ;)

MojoHusker

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #11 on: March 30, 2017, 08:39:58 AM »


Once I decided how, and where, I decided what - my asset allocation. After that, it has been a cakewalk. I manage my own very, very substantial portfolio (which contains 3 index funds across 7 accounts), and took over management of my mother's accounts as well.



Great stuff Miss FG!  I totally believe you and I think right now it just boils down to getting it set up right and making the first move.  So, regarding Fidelity and their recommended "management style", do you understand and agree with what they're telling me to do?  They say they would re-allocate daily for me, but if I do it myself, they'd recommend that I do it at least weekly.  They say that when one portion of my portfolio is doing great for that week, I should re-allocate it back to my original balance by trading for more of the lower performers and selling off the higher performers in order to stay ahead of the curve. 

caracarn

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #12 on: March 30, 2017, 08:57:44 AM »


Once I decided how, and where, I decided what - my asset allocation. After that, it has been a cakewalk. I manage my own very, very substantial portfolio (which contains 3 index funds across 7 accounts), and took over management of my mother's accounts as well.



Great stuff Miss FG!  I totally believe you and I think right now it just boils down to getting it set up right and making the first move.  So, regarding Fidelity and their recommended "management style", do you understand and agree with what they're telling me to do?  They say they would re-allocate daily for me, but if I do it myself, they'd recommend that I do it at least weekly.  They say that when one portion of my portfolio is doing great for that week, I should re-allocate it back to my original balance by trading for more of the lower performers and selling off the higher performers in order to stay ahead of the curve.

I tried not to fall off my chair laughing.  They would reallocate DAILY and they suggest you do it WEEKLY?!!

Do some more research.  Go with index funds (and I'd suggest Vanguard because they will cost you less) and you will reallocate at most once a YEAR, and most likely once every 5-10 YEARS because you will maintain your balance between your 2-3 funds with you incoming deposits.  If you a drifting a bit you just put all or most of you next deposit in the fund that needs its percentage boosted. 

Fidelity still needs to make money on churn, so of course they want you to re-allocate.  Buy VTSAX and VBTLX and that's all you need at base.  It's not hard to keep balanced with two funds.   I've been doing my own investment management since I was 16 (now 46) and never had or paid a financial advisor and I have done better than all my friends who paid advisors.  That's mainly because they kept "re-allocating" their portfolio (i.e. market timing) and dragged down their earnings.

Follow the advice you've been given here.  Learn enough on your own (J Collins series is a good start), and then do it yourself for 0%.

ETA:  Also be aware that the difference between an 80/20 portfolio and one that is 79/21 or 81/19 is not even worth talking about.  Even with my experiment with Betterment that was all computerized and could easily have done things more often, they only re-allocated if the drift was more than 5%  They charge a flat management fee now at 0.25%, so any trading costs would be theirs to bear.  When a firm does not trade when they are paying I'm not sure how much clearer evidence you need that when it's THEIR money and not YOURS, they do not reallocate.  Respectfully the Fidelity guy you met with is full of excrement telling you to stay ahead of the curve you need to move things daily from one to the other.  I am assuming they would get commission on every trade (another nice thing about Vaguard is none of their funds have trading fees with an account with them).  That is money pulled away from you every day.  At a minimum the amount of transactions and added mess you have at tax season for all the worthless trades would be enough for me to go jump off a bridge.  Point being, if you are not regularly adding to your account, you wait until your portfolio drifts enough to matter (5-10%) like 75/25 or 70/30 and the reallocate one time and then do not worry about for another few years.  If you are adding things weekly like I am, and if you want to be precise about it you could change your deposit to do what Fidelity person suggests, but I just have auto deposit at 80/20 and worry about it once every 5 years if it gets bad enough.  In the last 20 years I've re-allocated a total of 0 times as it never got that far off.  If you want to have some fun, see if the Fidelity guy will agree to re-allocate your portfolio for you daily for a flat fee of 0.10%  My guess is the answer will be no.
« Last Edit: March 30, 2017, 09:07:12 AM by caracarn »

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #13 on: March 30, 2017, 09:10:26 AM »


Once I decided how, and where, I decided what - my asset allocation. After that, it has been a cakewalk. I manage my own very, very substantial portfolio (which contains 3 index funds across 7 accounts), and took over management of my mother's accounts as well.



Great stuff Miss FG!  I totally believe you and I think right now it just boils down to getting it set up right and making the first move.  So, regarding Fidelity and their recommended "management style", do you understand and agree with what they're telling me to do?  They say they would re-allocate daily for me, but if I do it myself, they'd recommend that I do it at least weekly.  They say that when one portion of my portfolio is doing great for that week, I should re-allocate it back to my original balance by trading for more of the lower performers and selling off the higher performers in order to stay ahead of the curve.

No, absolutely do not agree with daily reallocation. That is a huge waste of time and a nice little siphon of fees to their pocket. Rebalancing is pretty much a once or twice a year event usually, but I do it on a "as needed" basis which means I may not touch anything in well over a year. My personal trigger is if I am more than 5% out of balance, I'll buy/sell stuff to rebalance it back to my asset allocation. It's not worth it to bother with otherwise. To do so daily... I am just shocked that someone would tell you to do this daily or even weekly.

The adviser that suggested this is one to be laughed at and then dumped completely and no further advice taken from them; there is absolutely no possible reason that this would be a benefit to you or your portfolio - it is only a benefit to them for the fees they can make off you.

The big thing to check is what funds they're telling you to hold. I do Fido's index funds:

Fidelity Total Market Index Fund (FSTVX)
Fidelity Real Estate Index Fund (FSRVX)
Fidelity U.S. Bond Index Fund (FSITX)

None of these trigger any transaction fees to buy or sell. BUT if you rebalanced daily or even monthly, you would possibly be triggering transaction fees for doing so on short turnarounds. Fido funds generally are "NO TRANSACTION FEE" but have the caveat: the fund may charge a short-term trading or redemption fee to protect the interests of long-term shareholders of the fund, which means frequent trading is stupid. The beauty of index investing is that you buy and hold "forever" and don't need to fuss around with funds dancing in and out of that one or this one... which is what they're trying to sell you on.

And if any of the funds they want to put you in actually have a transaction fee, then daily/weekly/monthly buying and selling is even more asinine to suggest, since you'd be chipping away $6-$15 a pop every time - that could be hundreds and thousands of dollars a year nibbled out of your portfolio for zero reason since trying to keep a portfolio's asset allocation in balance daily/weekly/monthly is stupid waste of time - unless the adviser is trying to get you to churn to provide them with more fees. This is actually called churning and is frowned upon in financial circles since it is basically them playing a shell game with your money in order to bilk you out of fees in the name of chasing better returns - it don't work and costs you lots.

Index funds are boring. You buy a few of them, and then let them sit there and chug away matching the market. They're not going to earn you crazy highs over what the market does - they just plod along and keep pace.

The advisers that told you to rebalance daily are going to be like a magician that is using misdirection to make you think magical things are happening and hope you're too dumb to catch what they're doing ~over here~ while they distract you ~over there~ with all the dozens of shiny funds they suggest to you. The more funds, the more moves suggested, the more you need to stay away.



I like Fido for my funds only because I don't let them try to "guide" me or manage anything. I had them do so for around 6 months while I got my head straight, but after that, I looked at what they'd done and saw dozens of buy/sell transactions. To the non-finanical person, this looks like they were furiously working hard at getting me into better funds and out of funds that were underperforming... but actually all they were doing was stealing fees from me with my permission while my portfolio performed very, very modestly (and would have been doing WAAAAAY better just sitting in a few index funds without churning all that time).

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #14 on: March 30, 2017, 09:24:23 AM »
Quote
recommend finding a strategic balance and then re-allocating weekly (or monthly at a minimum).  Since I am only in mutual funds now, he said their plan for me would be to not just "set it and forget it", but rather to continually adjust everything so that I am more hedged for a risk management plan. 

What others said: this is appalling advice. There is absolutely no reason to rebalance so frequently other than to create churn in your account and generate fees for your "advisor". Pick an asset allocation that fits your risk, goals, and timeline, and then set it and forget it. I don't have the link at my fingertips, but one 401(k) provider did a study recently and found that the accounts that got the best performance were those belonging to dead people. Set it and forget it with low-cost index funds absolutely works.

Laserjet3051

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #15 on: March 30, 2017, 10:51:58 AM »

So I went to the Fidelity guy yesterday after work in the name of research and education.  They would take around 1% of my assets under management, which is less but I'm not sure if I'd get the same guidance for my main retirement acct (401k from current employer). 

Since this old 401k is already with Fidelity, I could still roll it over to them for free and manage it myself for free.  He gave me a basic structure of how they advise I manage my acct, and it sounds like I could call their "guidance" team for general advice from time to time.  So far, he gave me an overview and explained that they recommend finding a strategic balance and then re-allocating weekly (or monthly at a minimum).  Since I am only in mutual funds now, he said their plan for me would be to not just "set it and forget it", but rather to continually adjust everything so that I am more hedged for a risk management plan. 

Some of what he says makes sense to me.  I think I'm going to attempt to get it set up myself, with Fido or VGuard, and if I feel like I'm still in over my head regarding ALL of my accounts, and that I still need help with other family financial questions (529s, estate planning, taxes, etc), then I may ask Mr 1.65% how much he'd charge me for an hourly fee to get my Plan rolling.  Then maybe I'll be able to find my strategy of adjusting as we go forward......

Given the enormous sums of money we can pay in taxes each year, paying a tax professional (CPA) some money to help you with tax PLANNING can be a very good investment with a very high ROI. Of course, I am too frugal to pay, so I spend a lot of my time reading the federal and state tax code of regulations, reading tax court cases, and studying tax planning strategies....all for free. But I can understand that someone may not want to sink so much time into tax planning and would rather pay a  GOOD CPA for such strategy.

Laura33

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #16 on: March 30, 2017, 12:00:05 PM »
The adviser that suggested this is one to be laughed at and then dumped completely and no further advice taken from them; there is absolutely no possible reason that this would be a benefit to you or your portfolio - it is only a benefit to them for the fees they can make off you.

. . . .

The advisers that told you to rebalance daily are going to be like a magician that is using misdirection to make you think magical things are happening and hope you're too dumb to catch what they're doing ~over here~ while they distract you ~over there~ with all the dozens of shiny funds they suggest to you. The more funds, the more moves suggested, the more you need to stay away.

This.  *Daily* rebalancing?  Are you fucking kidding me?  Run, do not walk, from this guy -- he either honestly believes that micromanaging a portfolio to this extent is helpful (in which case he is a total idiot and doesn't deserve your money), or he is trying to persuade you to trade frequently because Fidelity gets to charge a fee for completing each trade and so he will make more money off you (in which case he is an evil asshole and doesn't deserve your money). 

OMFG.  That takes the cake.  You can do so much better.

MojoHusker

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #17 on: March 30, 2017, 02:01:51 PM »

I am assuming they would get commission on every trade (another nice thing about Vaguard is none of their funds have trading fees with an account with them).  That is money pulled away from you every day. 

Point being, if you are not regularly adding to your account, you wait until your portfolio drifts enough to matter (5-10%) like 75/25 or 70/30 and the reallocate one time and then do not worry about for another few years. 

Let me clarify a bit.  The fidelity guy I talked to said that they would look at my accounts every day, and make adjustments whenever my account percentages changed from the set allocation.  He showed me a graph with a couple lines to demonstrate that a "set it and forget it" fund would not adapt quickly enough to the market but would still do decent over a long period of time.  The account that was rebalanced continually would frequently sell high and buy low (according to Mr Fido), because every time one portion was getting bigger they would trade it for the portion that was getting smaller to maintain the strategic balance, and that this was what made Fidelity different. 

I asked about the commissions and fees, and was basically told there wouldn't be any if I did them on my own (which I was skeptical about). 
« Last Edit: March 30, 2017, 02:26:01 PM by MojoHusker »

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #18 on: March 30, 2017, 02:24:48 PM »
We should talk with vanguard about putting a big button that says "invest your stach here'

There will be 5 choices. From 100% VTSAX to 60% VTSAX and 40% bond index. A very simple multi choice set of questions would assign them wrt risk tolerance and size ofcstach, time to FIRE.

A 0.05% fee for MMM financial should be able to be directed to getting out the word.

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #19 on: March 30, 2017, 02:44:36 PM »
Quote
The account that was rebalanced continually would frequently sell high and buy low (according to Mr Fido), because every time one portion was getting bigger they would trade it for the portion that was getting smaller to maintain the strategic balance, and that this was what made Fidelity differen

The thing with rebalancing is it is all about getting you back to what your favorite asset allocation is. There is nothing in it that guarantees you that your target asset allocation is The Best Thing Ever and will get you the best returns ever. No one can know that in advance. You might ignore your portfolio for 10 years and have it drift into an asset allocation that could perform better than your target AA (or vice versa). Mr. Fido doesn't have a crystal ball to tell you which way the market will go.

https://personal.vanguard.com/pdf/ISGPORE.pdf Full white paper on best practices rebalancing. To quote from the abstract:
Quote
Vanguard research has found that there is no optimal frequency or threshold for rebalancing, since risk-adjusted returns do not differ meaningfully from one rebalancing strategy to another.

Furthermore:
Quote
we conclude that for most broadly diversified stock and bond fund portfolios
(assuming reasonable expectations regarding return patterns, average returns, and risk),
annual or semiannual monitoring, with rebalancing at 5% thresholds, is likely to produce a
reasonable balance between risk control and cost minimization for most investors. Annual
rebalancing is likely to be preferred when taxes or substantial time/costs are involved

marty998

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #20 on: March 30, 2017, 02:47:22 PM »

Let me clarify a bit.  The fidelity guy I talked to said that they would look at my accounts every day, and make adjustments whenever my account percentages changed from the set allocation.  He showed me a graph with a couple lines to demonstrate that a "set it and forget it" fund would not adapt quickly enough to the market but would still do decent over a long period of time.  The account that was rebalanced continually would frequently sell high and buy low (according to Mr Fido), because every time one portion was getting bigger they would trade it for the portion that was getting smaller to maintain the strategic balance, and that this was what made Fidelity different. 

I get the argument about mean reversion and what not.

But it really just sounds like selling good performing funds and topping up crap performing funds.

caracarn

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #21 on: March 30, 2017, 03:09:29 PM »

I am assuming they would get commission on every trade (another nice thing about Vaguard is none of their funds have trading fees with an account with them).  That is money pulled away from you every day. 

Point being, if you are not regularly adding to your account, you wait until your portfolio drifts enough to matter (5-10%) like 75/25 or 70/30 and the reallocate one time and then do not worry about for another few years. 

Let me clarify a bit.  The fidelity guy I talked to said that they would look at my accounts every day, and make adjustments whenever my account percentages changed from the set allocation.  He showed me a graph with a couple lines to demonstrate that a "set it and forget it" fund would not adapt quickly enough to the market but would still do decent over a long period of time.  The account that was rebalanced continually would frequently sell high and buy low (according to Mr Fido), because every time one portion was getting bigger they would trade it for the portion that was getting smaller to maintain the strategic balance, and that this was what made Fidelity different. 

I asked about the commissions and fees, and was basically told there wouldn't be any if I did them on my own (which I was skeptical about).

Mojo, snake oil salesman are very enticing.

You have multiple people telling you to run, not walk, away from this guy.  He's either incompetent or a con man.  Neither is going to help you.  Do the research yourself on how indexing performs versus active management (which is what this guy is basically proposing).  At the end of the day he's making a claim that he can time the market and know when to sell high and buy low.  This is where everyone on this forum cries BS.  Take this Warren Buffet quote and digest it : "The Dow started the last century at 66 and ended at 11,400. How could you lose money during a period like that? A lot of people did because they tried to dance in and out.  What this guy is proposing is taking you to the biggest dance of your life and only he stands to win.  As Scar said in the Lion King:  "Run away!  Run away and never return!"

ETA:  I've dealt with guys like this.  I like to shut them down by proposing that I will pay them this way.  "I will use a stock index fund as a benchmark.  I will only pay your fee if you beat the market as your pretty graph promises me you will, otherwise you services are free."  If they are confident they'll agree after all, they are going to get their money.  Guess what, they never agree, because they know they can't deliver long term. 
« Last Edit: March 30, 2017, 03:13:26 PM by caracarn »

lhamo

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #22 on: March 30, 2017, 04:25:28 PM »
Agree strongly with the advice above that you should run, not walk, away from both Mr. 1.65% AND Mr. Rebalance Daily.    They are looking out for THEIR finanicial interests, not yours.

Though I've never paid much attention to actively rebalancing, if you are continuing to invest the easiest way to do it is just to tweak the weighting of your regular purchases so that new money going into your accounts goes primarily into the underperforming asset.   So if you started with 100k split 60/40 between VTSAX and a bond index, and the stock index portion gradually rose to 120k while the bond portion only went up to 50k, that would put you at roughly a 70/30 split, so to get it balanced out you'd focus on buying more of the bond investment until you got the amounts to 120k for stocks and 80k for the bonds, or whatever the numbers work out to based on the continued rising or falling of the stock portion.   

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #23 on: March 30, 2017, 04:43:27 PM »
Quote
tweak the weighting of your regular purchases so that new money going into your accounts goes primarily into the under-performing asset.

This is the technique we are using to get to our desired asset allocation in our taxable account, since rebalancing would have tax implications. It is a different story in a tax-advantaged account like a 401(k) where there are no penalties for rebalancing; still, it doesn't make sense to do it more than once a year or so.

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #24 on: March 30, 2017, 04:55:55 PM »
I also recently met with a Fidelity rep, and he showed me the graph, which was for 2016 and maybe 2017. The graph was a comparison of quarterly rebalancing with their market timing strategic rebalancing, and showed where they had in fact done rebalancing during 2016.

I asked about the target date funds, and he mentioned that they rebalance quarterly, not strategically. Since I'm in the target date funds with a few IRAs, I'm considering moving that money over to their market timing strategy, for about 1% all-in, no transaction fees. 1% is a lot of cash, but the target funds are costing me 0.65% now. Another option is to move money out of the target funds into Vanguard funds, keeping the funds in the Fidelity IRAs. I don't think there is a fee for that, but I will check it before doing that.

Regarding managing money that is not at Fidelity, no they would not do that, although they obviously take the allocation of that money into account when advising.

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #25 on: March 30, 2017, 05:05:24 PM »
I also recently met with a Fidelity rep, and he showed me the graph, which was for 2016 and maybe 2017. The graph was a comparison of quarterly rebalancing with their market timing strategic rebalancing, and showed where they had in fact done rebalancing during 2016.

I asked about the target date funds, and he mentioned that they rebalance quarterly, not strategically. Since I'm in the target date funds with a few IRAs, I'm considering moving that money over to their market timing strategy, for about 1% all-in, no transaction fees. 1% is a lot of cash, but the target funds are costing me 0.65% now. Another option is to move money out of the target funds into Vanguard funds, keeping the funds in the Fidelity IRAs. I don't think there is a fee for that, but I will check it before doing that.

Regarding managing money that is not at Fidelity, no they would not do that, although they obviously take the allocation of that money into account when advising.

If you're leaving the accounts at Fido, then use Fido index funds not Vanguard. They'll charge you a transaction fee on top of Vanguard's expense ratio fees if you use non-Fido funds. Using their family of index funds (which are as cheap if not cheaper than Vanguard in most cases) you'll have virtually the same choices: https://www.bogleheads.org/wiki/Fidelity

And for dog's sake, don't let them professional manage. They can call it "strategic" whatever-the-hell... it's stupid and pointless and will not benefit you most years. Index funds are boring, but they're going to track the market and are low cost and over the long haul they perform better than even the best active fund managers.

MojoHusker

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #26 on: March 31, 2017, 06:50:15 AM »

the easiest way to do it is just to tweak the weighting of your regular purchases so that new money going into your accounts goes primarily into the underperforming asset.   


Very simple, and very much what makes sense for me as I continue on. 

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #27 on: March 31, 2017, 07:51:24 AM »
I'd say things are coming in focus for us now, but pulling the trigger is always the hardest part.  I definitely know 2 things now....

1.  1.65% is unacceptable for my portfolio for our family, and for our future.  It's not going to happen.  He was my wife's best friend's adviser, but like I told her, this is a business decision for our family's best interests. 

2.  I'm not going to pay Fidelity to manage my finances.  1% is better, but I don't believe in the guy's sales pitch and I think I'll be fine without their "team of professionals". 

Getting this far feels good and right, but I know I'm still not out of the woods yet.  Right now I'm looking at these final options.....

1.  Rolling 401k over with Fidelity and manage on my own.  Despite the salesman, leaving funds there could be easy and I'd be able to utilize their phone service to ask questions for advice as I begin to balance my portfolio. 

2.  Roll it over to Vanguard.  I feel like this may happen, as I believe in Vanguard just a little more than Fido now.  I know I'd still be able to call them for some guidance, and I believe their funds are about as good and cheap as any I'll find. 

3.  Go back to Mr 1.65% with a proposal......What is your hourly fee, and could we get set up for a financial plan (complete with overall account balance and allocation plan, estate plan, 529 and children's education plan, budget overview, debt management, and risk management plan).  If he can give us all of this for $500 or less, I'd be willing to hear him out just to get us started.  Although I do know that I can find out most of this stuff on my own in time, it is still a good feeling to talk out all of the fine details of OUR particular financial situation with a professional while we're getting started.  If he does not want to do this, I will walk away. 

4.  Maybe I'd consider roboadviser (futureadvisor or betterment?), but the only problem is I couldn't even talk with them about my current 401k so I'd have to figure out how their advice would apply in proportion to all accounts. 

Regarding #1 and #2, I still have to decide ultimately which funds to choose and what my allocation is going to be.  This really is a deeper question to me, because although I believe that I should be safe in the long run with my choice there are lots of factors to consider.  I could do it like some have suggested, and KISS (keep it simple stupid) - do the mix of 70/30 Total Stocks/Total Bonds (the Fido and VG options are very simple).  Or I could get a little fancy with the knowledge I'm gaining to diversify a little more regarding Small, Mid-cap, Large, US stock/Foreign, different bond/Real estate options.  Diving into these options, I could research the better Morningstar rated funds for performance and cost and choose the ones that look best to me now. 

If I can figure this out well enough to really feel good about it, then I can make this work.  Going forward, I'll make sure to divvy up the percentages I have from all of my accounts, while contributing proportionately to our Roth IRAs to maintain some kind of balance within 5% of my plan with a possible annual rebalancing of allocations.  I should be able to set up a nice little spreadsheet to help me look at things better and track them regarding percentages of overall portfolio and contributions. 

I know I'm still searching for the gusto to just do this, and I do think I'm getting closer so thank you to everyone for the great advice and help!
« Last Edit: March 31, 2017, 08:05:33 AM by MojoHusker »

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #28 on: March 31, 2017, 08:00:24 AM »
We are with Fidelity and love them. Their fees on index funds are comparable to Vanguard and they have the same funds. If your 401k is already with them, I highly recommend just putting it all there. The website is great and it's nice to have it all in one place.
When your portfolio value is lower you can just use the free services like the "robo" allocation option on the web (I have had an account that I used this for and it's done VERY well) or you can call the 800 number for free and ask any question you want any time and they are very knowledgeable. I have several friends that work there and they are all well educated and trained.
Once you get to a certain portfolio value they will GIVE you and advisor who will give you a personal plan evaluation and meeting once a year. I love ours. He gives great advice that I can take and make the changes online myself or I can leave it and do what I think is best.
They do also have a full managed portfolio option that I believe includes estate and tax planning. They charge 1% for that. I've never felt the need to use it.
I know everyone on MMM loves Vanguard and I agree they are good. But I believe that Fidelity's customer service is superior. If your 401k is already there, it's a no brainer to me.

caracarn

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #29 on: March 31, 2017, 08:48:56 AM »
I'd say things are coming in focus for us now, but pulling the trigger is always the hardest part.  I definitely know 2 things now....

1.  1.65% is unacceptable for my portfolio for our family, and for our future.  It's not going to happen.  He was my wife's best friend's adviser, but like I told her, this is a business decision for our family's best interests. 

2.  I'm not going to pay Fidelity to manage my finances.  1% is better, but I don't believe in the guy's sales pitch and I think I'll be fine without their "team of professionals". 

Getting this far feels good and right, but I know I'm still not out of the woods yet.  Right now I'm looking at these final options.....

1.  Rolling 401k over with Fidelity and manage on my own.  Despite the salesman, leaving funds there could be easy and I'd be able to utilize their phone service to ask questions for advice as I begin to balance my portfolio. 

2.  Roll it over to Vanguard.  I feel like this may happen, as I believe in Vanguard just a little more than Fido now.  I know I'd still be able to call them for some guidance, and I believe their funds are about as good and cheap as any I'll find. 

3.  Go back to Mr 1.65% with a proposal......What is your hourly fee, and could we get set up for a financial plan (complete with overall account balance and allocation plan, estate plan, 529 and children's education plan, budget overview, debt management, and risk management plan).  If he can give us all of this for $500 or less, I'd be willing to hear him out just to get us started.  Although I do know that I can find out most of this stuff on my own in time, it is still a good feeling to talk out all of the fine details of OUR particular financial situation with a professional while we're getting started.  If he does not want to do this, I will walk away. 

4.  Maybe I'd consider roboadviser (futureadvisor or betterment?), but the only problem is I couldn't even talk with them about my current 401k so I'd have to figure out how their advice would apply in proportion to all accounts. 

Regarding #1 and #2, I still have to decide ultimately which funds to choose and what my allocation is going to be.  This really is a deeper question to me, because although I believe that I should be safe in the long run with my choice there are lots of factors to consider.  I could do it like some have suggested, and KISS (keep it simple stupid) - do the mix of 70/30 Total Stocks/Total Bonds (the Fido and VG options are very simple).  Or I could get a little fancy with the knowledge I'm gaining to diversify a little more regarding Small, Mid-cap, Large, US stock/Foreign, different bond/Real estate options.  Diving into these options, I could research the better Morningstar rated funds for performance and cost and choose the ones that look best to me now. 

If I can figure this out well enough to really feel good about it, then I can make this work.  Going forward, I'll make sure to divvy up the percentages I have from all of my accounts, while contributing proportionately to our Roth IRAs to maintain some kind of balance within 5% of my plan with a possible annual rebalancing of allocations.  I should be able to set up a nice little spreadsheet to help me look at things better and track them regarding percentages of overall portfolio and contributions. 

I know I'm still searching for the gusto to just do this, and I do think I'm getting closer so thank you to everyone for the great advice and help!

You do understand that with Total Stocks and Total Bonds you are as diversified as you can possibly be, right?  You in effect own EVERYTHING.  "Getting a little fancy" as you call it is in fact going to do nothing for diversification.  Please make sure you understand this. 

Look at these articles:
http://jlcollinsnh.com/2012/06/06/why-i-dont-like-investment-advisors/
http://jlcollinsnh.com/2013/02/05/stocks-part-xv-index-funds-are-really-just-for-lazy-people-right/
http://jlcollinsnh.com/2012/04/25/stocks-part-iii-most-people-lose-money-in-the-market/
http://jlcollinsnh.com/2014/06/10/stocks-part-xxiii-selecting-your-asset-allocation/

These will address a lot of the things you are trying to figure out.  You are young and I feel you are being way to conservative with the 70/30 target.  I'm 46 and I run at 90/10, but everyone needs to be able to sleep at night.  You'll see here (and also read in the last article above) that more stock turns into higher returns.  https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations

It just seems like you are trying to make this more complicated than it is, perhaps because everyone you've spoken to has made you believe that it is supposed to be complicated.  Unlike healthcare, which everyone knew was complicated (well maybe one key person did not), investing does not need to be.  Can you make it complicated?  Oh my goodness yes!  But do you need to to be successful.  No way.  I get that we are all in essence a bunch of internet strangers, but Mr 1.65% and Mr. Fidelity are strangers as well, just ones you've met in person and have something to gain by getting you under their spell.  I and other on this board are not asking for your money in any way.  Our advice carries no reward to us.  I'd think that would make it a little more obvious that we have nothing to gain by what we suggest, that we are truly each offering the advice that we feel is best for you, and honestly for almost anyone.  You have not provided anything that shows a simple two index fund portfolio of stocks and bonds weighted in any way that makes you comfortable and held with anyone whose fees you are OK with will not be awesome for you. Until you raise a situation in your case that changes that, you'll get the same recommendation.  Fidelity or Vanguard realistically make no difference.  I've used both and I'd say their customer service is the same, but I will say Fidelity is more pushy to get you to perform trades and therefore I lean to Vanguard.  In the end the numbers are all you need to focus on.  Find the lowest fees you can at either Fidelity or Vanguard.

Please stop trying to talk yourself out of what can be a very easy thing for you that you can start today.



Regarding #3, be aware he will always operate with his interests in mind.  Read the first J Collins article and understand he USED TO BE one of these people.  You just seem very prone to suggestion and someone sitting in front of you who can gain your confidence can probably convince you to spend more with them.  Just go in with eyes wide open.  I'll venture to bet you'll not get anything you could not get form a little research of asking questions here and then verifying on your own, but you will be $500 poorer.

Regarding #4, I used Betterment for two years to see if they offered a "better mousetrap".  They do not.  You can accomplish the same thing without the 0.25% overhead with a simple two or three fund portfolio.  They will put your portfolio is almost all Vanguard funds and the fees are the same.  I'd suggest you not pursue this.
« Last Edit: March 31, 2017, 08:57:12 AM by caracarn »

Laura33

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #30 on: March 31, 2017, 10:11:10 AM »
. . . .

You do understand that with Total Stocks and Total Bonds you are as diversified as you can possibly be, right?  You in effect own EVERYTHING.  "Getting a little fancy" as you call it is in fact going to do nothing for diversification.  Please make sure you understand this. 

Look at these articles:
http://jlcollinsnh.com/2012/06/06/why-i-dont-like-investment-advisors/
http://jlcollinsnh.com/2013/02/05/stocks-part-xv-index-funds-are-really-just-for-lazy-people-right/
http://jlcollinsnh.com/2012/04/25/stocks-part-iii-most-people-lose-money-in-the-market/
http://jlcollinsnh.com/2014/06/10/stocks-part-xxiii-selecting-your-asset-allocation/

These will address a lot of the things you are trying to figure out.  You are young and I feel you are being way to conservative with the 70/30 target.  I'm 46 and I run at 90/10, but everyone needs to be able to sleep at night.  You'll see here (and also read in the last article above) that more stock turns into higher returns.  https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations

It just seems like you are trying to make this more complicated than it is, perhaps because everyone you've spoken to has made you believe that it is supposed to be complicated.  Unlike healthcare, which everyone knew was complicated (well maybe one key person did not), investing does not need to be.  Can you make it complicated?  Oh my goodness yes!  But do you need to to be successful.  No way.  I get that we are all in essence a bunch of internet strangers, but Mr 1.65% and Mr. Fidelity are strangers as well, just ones you've met in person and have something to gain by getting you under their spell.  I and other on this board are not asking for your money in any way.  Our advice carries no reward to us.  I'd think that would make it a little more obvious that we have nothing to gain by what we suggest, that we are truly each offering the advice that we feel is best for you, and honestly for almost anyone.  You have not provided anything that shows a simple two index fund portfolio of stocks and bonds weighted in any way that makes you comfortable and held with anyone whose fees you are OK with will not be awesome for you. Until you raise a situation in your case that changes that, you'll get the same recommendation.  Fidelity or Vanguard realistically make no difference.  I've used both and I'd say their customer service is the same, but I will say Fidelity is more pushy to get you to perform trades and therefore I lean to Vanguard.  In the end the numbers are all you need to focus on.  Find the lowest fees you can at either Fidelity or Vanguard.

Please stop trying to talk yourself out of what can be a very easy thing for you that you can start today.



Regarding #3, be aware he will always operate with his interests in mind.  Read the first J Collins article and understand he USED TO BE one of these people.  You just seem very prone to suggestion and someone sitting in front of you who can gain your confidence can probably convince you to spend more with them.  Just go in with eyes wide open.  I'll venture to bet you'll not get anything you could not get form a little research of asking questions here and then verifying on your own, but you will be $500 poorer.

Regarding #4, I used Betterment for two years to see if they offered a "better mousetrap".  They do not.  You can accomplish the same thing without the 0.25% overhead with a simple two or three fund portfolio.  They will put your portfolio is almost all Vanguard funds and the fees are the same.  I'd suggest you not pursue this.

This.  Do not let the perfect be the enemy of the good; do not believe you have to have everything figured out perfectly before you even start.  My proposed action plan:

1.  Mandatory actions -- do it now: 

a.  Roll over your 401(k) to either Fidelity or Vanguard, your choice.  Put that rollover money into some combination of Total Stock Market Index and Total Bond Market Index that allows you to sleep at night (I am also in the "70/30 split seems too conservative" camp, but this is your money, and if that is what you need to sleep at night for now, go for it).

b.  Pop open refreshing beverage of your choice and chill.

2.  Optional actions -- do as you have time/energy:

a.  Meet with planner to discuss asset allocation, savings rate, insurance, wills, all that other "planning" stuff.  Note: The only requirement here is that this cannot be a planner who offers "money management" services.  You are going to someone who only makes their money by giving people plans, not by managing their money in any way, shape, or form.

b.  Read everything you can to educate yourself on all of this. 

     i.  Note that if you do this first, you may find Step 2(a) to be unnecessary. 

     i.  Note also that this is entirely compatible with Step 1(b).

3.  Log on to Vanguard/Fidelity/call 800-number, tweak asset allocation and savings rate as appropriate in light of 2(a) and (b).  Repeat Step 1(b).

ysette9

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #31 on: March 31, 2017, 10:30:21 AM »
To the OP, I think you can absolutely do this by yourself as do the other people on this thread. That said, DIY is not for everyone and I think it is okay to acknowledge that you either don't feel you have the capability or interest in certain subjects. People like my aunt for example, need hand-holding because she is very emotional, personal finance stuff makes her stressed, and is prone to make panicked decisions against her best interest. For them, I advise (and they got into) the Vanguard Personal Advisor service. Yes, it costs 0.3% of your portfolio that you would otherwise keep by doing it yourself, but it is a heck of a lot less than the 1.02% industry average fee (as reported on their website) or the criminal 1.65% that this wealth transfer advisor* is pushing.

If the plans above in this thread don't totally sit well with you, I'd advise moving everything to Vanguard, engaging their personal advisors to set up a good plan, and then spend a year or two under their care while you self-educate to the point of being comfortable doing it yourself.

Please keep leaning on this forum. As someone else said, we have zero vested interest in your situation, will charge you nothing for advice, and are here merely because we share a passion for personal finance and enjoy seeing others succeed. If you'd like a second opinion, you could cross post on the bogleheads forum. They will give more sober, conservative advise than this forum (MMM people are uncannily optimistic), but will essentially tell you the same advice.

*i.e. someone adept at transferring your wealth to his/her pockets

https://investor.vanguard.com/advice/personal-advisor

MojoHusker

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #32 on: March 31, 2017, 01:49:02 PM »

Please stop trying to talk yourself out of what can be a very easy thing for you that you can start today.


Caracarn, thank you for the candor and I mean that with absolutely zero sarcasm.  Throughout this, my first ever MMM post, I have been teetering on the ledge of what initially seemed like a very big cliff to dive off of......  But the water sure does look nice down there!

MojoHusker

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #33 on: March 31, 2017, 02:07:45 PM »

Do not let the perfect be the enemy of the good; do not believe you have to have everything figured out perfectly before you even start.  My proposed action plan:

1.  Mandatory actions -- do it now: 

a.  Roll over your 401(k) to either Fidelity or Vanguard, your choice.  Put that rollover money into some combination of Total Stock Market Index and Total Bond Market Index that allows you to sleep at night (I am also in the "70/30 split seems too conservative" camp, but this is your money, and if that is what you need to sleep at night for now, go for it).

b.  Pop open refreshing beverage of your choice and chill.

2.  Optional actions -- do as you have time/energy:

a.  Meet with planner to discuss asset allocation, savings rate, insurance, wills, all that other "planning" stuff.  Note: The only requirement here is that this cannot be a planner who offers "money management" services.  You are going to someone who only makes their money by giving people plans, not by managing their money in any way, shape, or form.

b.  Read everything you can to educate yourself on all of this. 

     i.  Note that if you do this first, you may find Step 2(a) to be unnecessary. 

     i.  Note also that this is entirely compatible with Step 1(b).

3.  Log on to Vanguard/Fidelity/call 800-number, tweak asset allocation and savings rate as appropriate in light of 2(a) and (b).  Repeat Step 1(b).

Miss Laura, I love your plan!  You and Caracarn and everyone else here helped push me where I wanted and needed to go!  I just now completed most of Step 1.  The old 401k has been rolled into an IRA at Fidelity (I had many reasons to try them out for the first year.  This might get transferred to VG next year, but right now the Fido Total Stock Fund seems comparable enough to try out their platform and resources while I educate myself further). 

As for the funds, that'll have to wait until Monday as they aren't available right now.  I will go 100% stock with this acct, as I have some bond exposure in my current 401k with a portion of that account invested in the 2035 target fund.   I will need to keep reading, researching, and asking questions so that I can wrap my head around all of my retirement accts in proportion to my 90/10 plan.  I know this part of it isn't rocket science, but it will be another big step in the Great Unknown for me in this journey.  I'll also need to find out more on my other family financial planning stuff, but for right now I have no planner, no fees, and all of my money is working for me alone!  And that feels pretty good ;-)  Thanks again to everyone for all the insight and guidance!

ysette9

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #34 on: March 31, 2017, 02:13:40 PM »
Nicely done! I hope you didn't ignore step 1.b. :)

caracarn

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #35 on: March 31, 2017, 02:54:36 PM »
Glad to offer whatever advice you need.  I think a lot of us have hit much of what you talked about.  I for one have had to save for college with 529s in multiple state programs, build a budget (use YNAB, but used Quicken, Mint and many others before), wills and trusts, divorce split (hope no one needs that but I can chime in if you do), educating kiddos on money, time shares and why high deductible health insurance almost always beats other plans.  What I do not dabble in is landlording, exotic investments like options and futures.  So ask away in other posts and we'll help where we can.

Laura33

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #36 on: March 31, 2017, 06:31:41 PM »
Huzzah!  Congratulations!  Well done!  I do believe I will have myself a refreshing beverage in your honor.

dess1313

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #37 on: March 31, 2017, 07:10:57 PM »
Nicely done on the rollover!
A couple books to be recommended, if they havent been already is the boglehead guide to investing and the boglehead guide to retirement.  i have ebook copies if you're interested.  lots of good information in there

lhamo

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #38 on: March 31, 2017, 07:44:55 PM »
I kept part of my old retirement account at Fidelity primarily so I can use their online retirement planning tool -- it is really useful and user friendly.   You can manually enter all your other account information in there, too, and it will include those accounts when it does its analysis of your asset allocation, etc.   You just enter the number of shares and the ticker symbol, and then it is easy to use the edit function to have it automatically update to the latest date totals.

Goldielocks

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #39 on: April 02, 2017, 12:52:40 AM »
"Fee-only" has become the most overused term in the financial world.  Now that people are paying attention to commissions, the advice is to go to a "fee-only" planner.  But a fee-only planner who charges you huge percentages on an ongoing basis to manage your money can be just as -- or more -- damaging than paying a one-time up-front commission!

What you need is a financial planner who charges by the hour.  You don't need someone to actually manage your money for you; you need someone to take a look at the big picture, force you to think about things you might not be thinking about (e.g., insurance, wills), make sure you're on track for your goals, and suggest course corrections where you may be veering off-track.  There are any number of planners who do this kind of work, and who can set you up with basic (cheap!) portfolio suggestions for your investments.

So, yes to a financial planner if you think it would give you more confidence that you are on the right track.  No to any "planner" or "adviser" who wants to charge well over 1% of your earnings every year for the privilege.

I think a fee only by the hour charging planner, would charge you more than 1.5% (the difference between a low cost account and this offer) x $50k = $750 for the first year.   That's about 3 hours of technical advising from a fee/ hourly only advisor, so this is quite a steal, if the 1.65% planner is equally qualified.   He is probably looking to grow with you over the next 5-10 years, as it will be a couple of years before he makes money.

Laura33

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #40 on: April 02, 2017, 07:13:16 AM »
"Fee-only" has become the most overused term in the financial world.  Now that people are paying attention to commissions, the advice is to go to a "fee-only" planner.  But a fee-only planner who charges you huge percentages on an ongoing basis to manage your money can be just as -- or more -- damaging than paying a one-time up-front commission!

What you need is a financial planner who charges by the hour.  You don't need someone to actually manage your money for you; you need someone to take a look at the big picture, force you to think about things you might not be thinking about (e.g., insurance, wills), make sure you're on track for your goals, and suggest course corrections where you may be veering off-track.  There are any number of planners who do this kind of work, and who can set you up with basic (cheap!) portfolio suggestions for your investments.

So, yes to a financial planner if you think it would give you more confidence that you are on the right track.  No to any "planner" or "adviser" who wants to charge well over 1% of your earnings every year for the privilege.

I think a fee only by the hour charging planner, would charge you more than 1.5% (the difference between a low cost account and this offer) x $50k = $750 for the first year.   That's about 3 hours of technical advising from a fee/ hourly only advisor, so this is quite a steal, if the 1.65% planner is equally qualified.   He is probably looking to grow with you over the next 5-10 years, as it will be a couple of years before he makes money.

I agree, you will likely pay more out of pocket for a fee-only planner in the first year.  But (a) once you are established with an "advisor," it is harder to move the money elsewhere, and there may be tax implications (e.g. if you are investing in non-tax-deferred vehicles) from moving your money.  And you know the 1.65% advisor is counting on these sorts of mental and financial barriers -- he sucks you in now, when it doesn't "cost" much, and then it's a pain/expensive to move, so you just stay put and end up paying a lot more over time.  Plus (b) I fundamentally distrust advice from anyone who has a financial interest in my final decision.  Maybe the 1.65% guy offers the best funds for you, maybe not.  But how will you ever know?  Because you know which ones his "plan" will be limited to.  So how can you even be confident that the plan that he provides is in fact the best one for you?

IMO, going with an investment advisor vs. a fee-only planner because it costs less year 1 is penny-wise, pound-foolish.  Either you know enough to do it yourself, in which case you don't need to pay someone for advice; or you lack confidence/knowledge to DIY, in which case you need completely unbiased advice from someone who doesn't have any kind of stake in your final choice.  I would argue that you're better off reading/learning until you feel confident that you can do it yourself.  But if that's not you, don't choose the advice-giver based on who provides the cheapest up-front cost, because they will always get back the difference somehow (and then some).

BeanCounter

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #41 on: April 03, 2017, 07:35:08 AM »
I don't know if this helps you at all, but I went to see our Fidelity guy on Friday. (we are eligible for free services with Fidelity because of the value of our account) This is what he is STILL recommending-

85/15 allocation (85% stocks, 15% bonds) In the following-

70% FSTVX- Fidelity Total Market Fund (same as VTSMX)
15% FIENX- Fidelity Enhanced International Index
15% FTBFX- Fidelity Total Bond Fund

One other option he gave was to peel off 20% of the total stock market fund and put that in FEQTX which is a dividend focused fund.
And in our taxable account I'm doing municipal bonds for my state to have some additional tax efficiency.
All of these funds are low fee- FSTVX is .045%. Our planner said that anything else or more would just be "overthinking it".
He is basically advising a three fund portfolio allocation approach which is very simple to do on your own. You can google it and find tons of information.
You don't need an advisor.

BeanCounter

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #42 on: April 03, 2017, 07:44:47 AM »


Once I decided how, and where, I decided what - my asset allocation. After that, it has been a cakewalk. I manage my own very, very substantial portfolio (which contains 3 index funds across 7 accounts), and took over management of my mother's accounts as well.


[/quote

Great stuff Miss FG!  I totally believe you and I think right now it just boils down to getting it set up right and making the first move.  So, regarding Fidelity and their recommended "management style", do you understand and agree with what they're telling me to do?  They say they would re-allocate daily for me, but if I do it myself, they'd recommend that I do it at least weekly.  They say that when one portion of my portfolio is doing great for that week, I should re-allocate it back to my original balance by trading for more of the lower performers and selling off the higher performers in order to stay ahead of the curve.

I just read this and I AM SHOCKED that Fidelity told you this. Especially on a $50k portfolio. That guy should be fired. Our assets are >$800k and our Fidelity guy told us again on Friday that we should only be rebalancing ONCE A YEAR, maybe twice if the market is wild.
The guy you spoke to sounds like he is trying to advocate that you can beat the market by "staying ahead of the curve". It might work out a couple years here and there, but by and large using index funds will get you the same result over 10 years or more with less work and less fees.

MojoHusker

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #43 on: April 03, 2017, 08:13:45 AM »

I just read this and I AM SHOCKED that Fidelity told you this.

The guy you spoke to sounds like he is trying to advocate that you can beat the market by "staying ahead of the curve". It might work out a couple years here and there, but by and large using index funds will get you the same result over 10 years or more with less work and less fees.

Yeah, I was floored too.  I had to ask him to repeat what he told me so that I could understand what he was saying.  He's a salesman, and he made his sales pitch that I chose not to take.  He told me his nickname was "Cash" too, which made me want to throat punch him just a little bit
« Last Edit: April 03, 2017, 08:17:11 AM by MojoHusker »

BeanCounter

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #44 on: April 03, 2017, 08:19:55 AM »

I just read this and I AM SHOCKED that Fidelity told you this.

The guy you spoke to sounds like he is trying to advocate that you can beat the market by "staying ahead of the curve". It might work out a couple years here and there, but by and large using index funds will get you the same result over 10 years or more with less work and less fees.

Yeah, I was floored too.  I had to ask him to repeat what he told me so that I could understand what he was saying.  He's a salesman, and he made his sales pitch that I chose not to take.  He told me his nickname was "Cash" too, which made me want to throat punch him just a little bit
ewww. Just ewww. I'm so disappointed. I still think Fidelity is awesome, just run away from that.

MojoHusker

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #45 on: April 03, 2017, 08:48:32 AM »
So, I'm all set up now and the funds are available to do with as I please.  I am sold on easy index funds between FSTVX / Bonds / and maybe something else (REITs or International?). 

Thing is, I have other accounts that I will need to take into consideration.  My main retirement account with Transamerica has the majority of my savings in it, and it is allocated currently with the options I had available to me (attached file snap shot). 

Here's the summary of it........

63% is all stocks - 40% in Large Cap, 40% in small cap, and 20% in international stocks.  The remaining 37% of total is in a VG 2035 Target fund that was set up when I started this job.  So.....I don't have VTSAX or any other total stock or bond fund available for this account.  This leads me to think I'll use my outside accounts (fidelity, vanguard) for those total stocks / total bond funds.  However, this only adds up to 20% of my total portfolio.  So I'll have to figure out how much stock/bond/REIT mix for this 20% when I compare it to what I can invest in my Transamerica portfolio.....


ysette9

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #46 on: April 03, 2017, 01:43:01 PM »
What is your target asst allocation? You need to figure that out first.

It makes no sense to have some money in a target date fund and some in other funds. TDF are meant to be a one-stop shopping. I think you should decide if you want to be all in or all out. You likely have duplicates between that fund and the other stock funds which makes it harder for you to assess your overall allocation.

Finally, I was suspended in my own 401(k) how there were some great index fund options with super low fees sitting next to target date funds with surprisingly high fees. I now have a DIY target date using the low-cost fund choices.

MojoHusker

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #47 on: April 04, 2017, 08:48:01 AM »
What is your target asst allocation? You need to figure that out first.

It makes no sense to have some money in a target date fund and some in other funds. TDF are meant to be a one-stop shopping. I think you should decide if you want to be all in or all out. You likely have duplicates between that fund and the other stock funds which makes it harder for you to assess your overall allocation.

Finally, I was suspended in my own 401(k) how there were some great index fund options with super low fees sitting next to target date funds with surprisingly high fees. I now have a DIY target date using the low-cost fund choices.

I was looking for about a 90/10 split ysette.  After allocating my new Rollover IRA with Fido, I am now calculating that I am roughly 89/11 so pretty much what I wanted.  I am 39 years old with a brand new young family, I'm saving 16% in my 401k, and I'm maxing out mine and my wife's Roth options.  I'll continue to do that while I figure out this FIRE thing that everyone here keeps on talking about ;-)

As for the Target Fund, that is my next decision on how to split that up to keep my portfolio on the better and more efficient path....  The target fund costs 0.1%, so it's not terrible.  And some of the other options may be a bit better, but the bond funds are a bit pricey (Intermediate Pioneer Bond @ 0.6 and Aggressive Blackrock bond @ 0.8).  Maybe my bond purchases should come with my Fidelity or VG accounts who have Total Bond options at a rock bottom price

ysette9

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #48 on: April 04, 2017, 09:38:26 AM »
If your target date fund is at 0.1% fees, then that sounds like a nice choice. In your shoes I'd look into the guts of the TDF choices and select the one that is closest to that 90/10 split you are looking for, then put all my money there. Simple & cheap usually is a winning pick.

MojoHusker

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Re: Save a Noob from a Financial Wealth Planner (1.65%)!
« Reply #49 on: April 04, 2017, 10:17:32 AM »
Like I said, the only problem with my overall allocation is the fact that most of my money is going towards my 401k which has decent stock options but pricier bond options.  So for me to keep this thing close to 90/10, I almost feel like I'll have to buy bonds from my 2 choices (0.6% fees on intermediate or 0.8% on aggresive).  Or maybe I can make this work by putting my Roth IRA money into the Fidelity Total Bond option.  That may be enough to keep it balanced each year, but then I feel like I'm missing the opportunity to put money in my 2 Total Stock options (VG and Fido)

In the end, I guess that overall allocation is the end goal, and if I can do this with the cheapest fee options then I should be heading in the right direction