Surprisingly, my parents opened the books this weekend for the first time ever. Specifically, they asked me to have a look at their IRAs held at Edward Jones (managed by an adviser there). I did a quick scan this weekend and thought I'd get some feedback from the smart people here. I'm a novice myself, holder of a Vanguard lazy 3-fund portfolio, so not too sophisticated. :)
Backstory: My parents are 75 & 79, and are actively enjoying retirement. They own their home outright ($500k-ish), have $100k coming in between SS and PERS pension (that will transfer 85% to the surviving spouse) and great healthcare. The only debt they have is $10k @ 1.9% on a car. They hold about $300k in IRAs and another $60k in cash. So I'm happy to say that they're doing well.
I asked them what their goal was for the IRAs and they stated that they'd like some accumulation and "as much as possible" for my sister and I for an inheritance. This is when I told them that I thought this should be their emergency fund, first and foremost. They did agree that they would use it for this of course, but are really set on some level of growth.
Over the last few years, the adviser worked with my parents to establish this big bucket target distribution based on their goals (which is re-balanced twice a year):
Growth 8%
Growth and Income 16%
International Equity 11%
Income 63%
Cash and Money Market 2%
Fund breakdown attached.
A few things. It seems to me that they're taking too high of a risk with what I'm branding, their Emergency Fund. I haven't spent much time looking at ideal portfolio distributions for retirees, but shouldn't this be north of 85% in bonds and income funds?
Also, this portfolio seems unnecessarily complicated. While the fees aren't over the top, seems like this could be set up much more efficiently in Vanguard...probably even more efficient within Edward Jones if they want to stay there.
Last, I'd love for them to move this to Vanguard with just a few funds in play. Dump the adviser. Has anyone had any experience to share in helping their parents transition adviser? Caveat is that this will depend on their comfort level and some discovery of what the adviser is costing them. If they're not comfortable with this step, I'm certainly not going to push it. I'd rather they pay a bit more in fees than be constantly worried about this. We'll see.
Any thoughts for optimization would be great. While this isn't an emergency by any means, I think there's some room for improvement. Thanks
