Hi All..Need help with a big decision

[Overworked in SoCal]

Hi All,

I was turned on to this site from my brother and have enjoyed it immensely.

I need some opinions regarding a big monetary fork in the road I find myself at.

I'm receiving an inheritance that will be in the form of a well picked stock portfolio with an approximate 3% current dividend stream. The opportunity to change the portfolio, partially or completely, exists due to the stepped up basis it comes to me with offering little or no capitol gains tax currently.

The two options I'm weighing currently:

1) Sign on with a well respected and vetted financial planner who will charge an annual .8% fee for services.

2) Transfer the current portfolio to Schwab or Vangard and handle this myself.

Though I am confident in my ability to DIY and have a good deal of financial savvy, the thought of option #1 seems inviting but the fee structure is really gnawing at me..

Thoughts?
 

[dandarc]

I vote option 2.  Dealing with a million dollar portfolio is not functionally much different than a 100K or 10K portfolio, but that 0.8% fee will cost a lot more on the $1M than on $10K.

[Cheddar Stacker]

#2 hands down. Low cost index funds at Vanguard will provide enough income to live comfortably anywhere except SoCal.

[gimp]

Eight thousand dollars a year seems steep for the same shit you get elsewhere for free.

[Bicycle_B]

I vote option 2.  Dealing with a million dollar portfolio is not functionally much different than a 100K or 10K portfolio, but that 0.8% fee will cost a lot more on the $1M than on $10K.

Yep.

Also:  Someone not on these forums once commented that the problem with trust fund kids is all they know is how to cash checks.  Obviously you are farther along than that, but this is your chance to prove them wrong.

[Coleman50000]

It depends on how comfortable you are with worrying about the portfolio and managing the investments yourself. 0.8% for a portfolio that size is actually pretty cheap compared to most full-service advisors (I work in the industry as an analyst so I know a lot about pricing on this side). Most people here won't agree because they enjoy the "challenge," of managing your own money and don't want/need a human advisor with experience.

Some people don't have the patience to track the market to truly manage it themselves or want to deal with the uncertainty of making investment decisions on their own. Some people get really stressed out when their portfolio is down 10-20% or more and there's no one to talk to about it. In those situations many people freak out and sell at the absolute worst time. That can be truly expensive! As I said before, some people may think it's dumb to worry about that, but I see it all the time. If you feel like you're worried about this, you should consider signing on with the advisor.

If you're determined to manage it yourself one day then learn as much as you can on your own and from the advisor. Then when you feel confident about your asset allocation and strategy you can manage it yourself. Or not :)

Managing money less than $1M, $1M-$10M, and $10M+ are more different than most would believe in practice. Losing 10% of $100k kinda sucks, but losing 10% on 10M can make some people act crazy. There is a reason why the rich get richer. I usually don't post on here, but I think this is an important thing that most overlook.

But the choice is yours!

[Glenstache]

The DIY theme here at MMM is strong, and the math is pretty compelling that the 0.8% will come out of your returns and adds up a lot over time. There is a middle path in which you pay a financial advisor on a set rate/hourly for advice. It is also important that the person you talk to has a fiduciary responsibility to give you good advice. Some firms have internal incentives to push certain products that may or may not be good for you, even though they are called financial advisors. This has been discussed at length elsewhere, but worth considering if you go the FA route.

Also remember that you don't likely have to make the decision instantly, and you can take some time to read up a bit and be able to make a more informed decision. Bogleheads can be a great resource for you as well.

[Kris]

I had a similar situation about seven years ago.  I picked sort-of option 1.  Looking back on it now, I wish I had picked option 2.

[Bajadoc]

Option #2 is best. The fact you are here asking the question shows that you can manage your own portfolio. Managing a portfolio such as yours is dead simple with minimal effort. Low cost high quality mutual funds (Vanguard) are a no brainer. The hard part for a lot of people is not spending the money! Hang on to the dough and make it grow. It's more fun than a new clown car.

[surfhb]

Reading the Boglehead wiki and the J collins sites were all I needed to confidentially assure myself I knew just as much or more then 100% of investors on the planet.

[Cheddar Stacker]

Reading the Boglehead wiki and the J collins sites were all I needed to confidentially assure myself I knew just as much or more then 100% of investors on the planet.

More than 100%? That is confidence, or hubris, not sure. I like it though.

+1 to those 2 recommendations, but be prepared for an intense learning experience.

[rocdoc]

If you really want to learn investing, check out financialmentor.com. But, I will warn you it's not for everyone and is an extensive educational process. However, it will totally change your thoughts, outcomes and expectations as it pertains to the crazy world of investing and will probably set you free quicker than you can imagine.