Wanting to move away from NWM managed investments...any advice?

[daybreak6740]

I regrettably have been invested with Northwestern Mutual and paying fees for far too long. I would love some advice on how to do this and recommendations on where to move the money.

A little context:
My husband and I are in our late 30s and both still work full time. I own my own business with some better years than others. We have 2 young kids and own a home. We feel good about our emergency fund and how we contribute to retirement, HSAs, and 529s. The financial advisor we've been working with has helped us make some good moves with our money, but I'm confident that it's not worth continuing to pay a percentage based fee!

What I'm interested in pulling from NWM is:
~$450,000 in an investment account - roughly 40% domestic stocks, 20% international stocks, 20% bonds, 20% real estate and commodities
~$600,000 in retirement across Roth IRAs, IRAs, and 401ks - roughly 52% domestic stocks, 35% international, 13% bonds (we have a few other retirement accounts outside of NWM that will probably stay where they are)

I've talked to Fidelity (where I have a business account and 529s) and Schwab about opening accounts there, but they both pushed me towards similar managed accounts with a percentage based fee. I don't have the time to learn a ton about investing or actively manage it right now, but I don't think I need what they are pushing me towards either.

Why I need help:
I've drafted up an Investment Policy Statement, but am having a bit of a confidence gap to go about all this on my own and would appreciate this community's kind feedback! I've been reading the blog and forum for years, but I've largely focused on living a low-cost lifestyle (something I'm way more comfortable focusing on!) rather than learning how to invest.

Do you have recent thoughts to share on Vanguard? Betterment? Are there others to consider? Should I do a trial round with a small amount or just rip off the bandaid and pull everything? Any reason to keep the money in more than one company or consolidate as much as possible?

[FLBiker]

Your instincts are good.  Investing doesn't need to be complicated -- most of the value is squeezed out of a relatively simple approach.  You've got a reasonable asset allocation, and you're right in thinking that lowering fees is a good idea.

For the investment account, if you want to keep the same percentages at Vanguard, you could just do:
40% Vanguard Total Stock Market Index Fund (VTSAX)
20% Vanguard Total International Stock Index Fund (VTIAX)
20% Vanguard Total Bond Market Fund (VBTLX)
20% Vanguard Real Estate Index Fund (VGSLX)

You could do this at Fidelity or Schwab as well (without management fees), with similar funds (or ETFs).  I've never used Betterment, but I think they're going to want to manage your account for a fee.

One wrinkle is taxes -- for the investment account, if NWM is invested in funds /  ETFs that you want to get out of, then selling these will be a taxable event.  If the holdings are OK and it's just the account that's the problem (in terms of fees), then you can transfer the holdings in kind to another brokerage and it won't be taxable.  More details about what's in the investment account would help here.

[MDM]

I've talked to Fidelity (where I have a business account and 529s) and Schwab about opening accounts there, but they both pushed me towards similar managed accounts with a percentage based fee.

Of course they will (as would Vanguard) but any of those three will also happily help you transfer your investments to them if you ask for that.  And any of those three can be quite satisfactory for a DIY investor.  E.g., see Three-fund portfolio - Bogleheads.

I don't have the time to learn a ton about investing...

A few hours, starting with Getting started - Bogleheads and reading some of those links, would probably tell you the vast majority of what you need to know.  The hourly rate you save from this time investment would likely outstrip what either you or your husband earn at your day jobs.

...or actively manage it right now, but I don't think I need what they are pushing me towards either.

Correct, you don't need to manage actively. 

Why I need help:
I've drafted up an Investment Policy Statement, but am having a bit of a confidence gap to go about all this on my own and would appreciate this community's kind feedback!

If you reply with what your Asset allocation would be as a DIY investor, you will get good feedback.

Do you have recent thoughts to share on Vanguard? Betterment? Are there others to consider? Should I do a trial round with a small amount or just rip off the bandaid and pull everything? Any reason to keep the money in more than one company or consolidate as much as possible?

No particular need to go beyond Fidelity/Schwab/Vanguard.  Having your other investments at Fidelity might tip the scales toward them (unless you aren't happy, in which case the scales would tilt away).

[MustacheAndaHalf]

You don't need to call up Schwab or Fidelity to open an account - you can do that online.  Both accounts allow you to buy/sell every ETF at $0/trade.  You can buy Vanguard ETFs at Schwab, if you like.  I think what happened is you called up someone who earns money from opening managed accounts, so they steered you into something that is in their best interest - not yours.

In my opinion, reading is a good way to overcome the confidence gap.  There's the original book on indexing, "A Random Walk Down Wall Street", which runs a bit long.  But I've seen it over and over in public libraries.  "Boglehead's Guide to Investing" talks about a simple 3 fund portfolio and why it works (U.S. stocks, international stocks, bonds).

All 3 main brokerages offer the same $0/trade for stocks and ETFs.  In my opinion, Schwab's interface is far better than Vanguard's.  Their customer service has been much better, too.  Fidelity doesn't allow expats to open accounts, so I lack experience with them.

[reeshau]

Just to say, NWM won't help you address your lack of confidence because *they rely on it to keep you paying high fees.*  Understand that they will not just not help,  but will actively message that "investing is hard."  Without intimidated investors, they would go out of business.

You can do it.  It's easy.  (It is as easy or as hard as you want to make it)  The first step is the hard part.

If you need someone to hold your hand through it, try a fee-only Certified Financial Planner, at an hourly or flat rate.  Some will do it for you, but that's not what you want.  What you want is someone to tell you what to do, and let you do it.  Gain confidence by seeing that you can.  Look at the Garrett Planning Network (some are hourly / flat rate, but not all) or the XY Planning Neteork (monthly retainer).

[lhamo]

Another low-cost way to get a little bit of extra support with your investments is to go with something like what Planvision offers -- I'm thinking about signing up with them to verify some of my short- and longer-term plans, but haven't bit the bullet yet.  IIRC @Sandi_k has been using them and may have some feedback. 

https://www.planvisionmn.com/get-started/

In terms of where to move the money, I really like the extra planning tools and ease of use of Fidelity.  I've also had very good returns with their no-fee total market fund (FZROX).  I have a small amount of my retirement funds + a decent sized brokerage account there.  Another big chunk of retirement at Vanguard.  And a smaller brokerage account at Schwab. 

[Sandi_k]

Yep, we are PlanVision members. $249 for an initial year, and $8 per month thereafter.

They have a tool that is based on eMoney (Fidelity uses eMoney, too), which can help with forecasting cash flow, income, taxes, etc.

I spent about 4 hours doing all of the initial data entry, and we had a good meeting with Mark Zoril once all that was done. He produced a report for us, and we've updated the figures a few times since then. He emails replies, and sometimes does video shorts where he films his updates to the plan or dictates an answer.

I have a few specific quibbles, but nothing major. It's been very reassuring to have another set of eyes on the plan, and who can answer questions for us on cash flow, taxes, Roth conversions, etc.

[roomtempmayo]

I'm confident that it's not worth continuing to pay a percentage based fee!

The best and cheapest options are also a percentage, they're just a lower percentage than active management.

For example, Vanguard's total stock market fund (VTSAX) charges 0.04%, and it's kind of the gold standard for indexes.  It's on the cheaper end.  On the more expensive end of good funds, I'd put Fidelity's Growth Fund (FDGRX) that charges 0.68%.  They're all percentage fees, though.

It might be helpful to know what fees you're paying now to help you decide if they're high.