CFP practitioner for over 15 years would like to give back to Aggies in need of general, anonymous financial planning guidance.

The Rules - one question per post (be concise), consult your tax/legal/financial advisor prior to implementing any strategy, no solicitations, no hurt feelings and I reserve the right to drag my feet or refuse service to anyone who doesn't play nicely. All CFP/CPA/Financial types welcome to jump in to help our fellow Ags.

And go!

Stagecoach this is a cool concept but I'm afraid it may not turn out well. Hard to avoid crossing lines and still give specific advice.

It'd be great if it could work

What is a reasonable fee for a managed portfolio of $750k

Is it against the law to choke out your CFP if they don't meet the numbers?

If I created an account, deposited $200k after tax cash, hired Fidelity to manage it in a tax advantaged portfolio to give them a shot, then their website makes it look like I am loosing 4%, but it sums up to look like I am down $18k. (sorry for the run on) would that be a good investment?

Do you care more about actually making me money or earning your fee?

what is the best way to save money and evade taxes at the same time?

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What is a reasonable fee for a managed portfolio of $750k

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pretty much the highest fee you're going to encounter generally is 2%, so lower than that

Net risk-adjusted return is really all that should matter. You should be willing to pay more for better results.

If you have experience with military TSP, do you recommend the life cycle funds, the index funds (managed by BlackRock I think), or the G fund managed by the federal reserve? I'm in my late 20's and not sure how long I'll be in the military?

A little info on the funds if you're not familiar: https://www.tsp.gov/investmentfunds/fundsoverview/fundManagement.shtml

Also, in regards to TSP, should the priority be towards maxing my regular investment Roth IRA first, or my putting that money into my TSP Roth IRA (cap of 17,500 or something like that)?

Thanks

At what point is it reasonable to get a CFP? I feel like I'm still too small a fish. Low 6 figs invested in the stock market + some real estate.

How small of questions would a CFP help you with? Not sure if some of my questions are better suited for a CFP or a CPA. For instance, what source of money should I use to fund repairs on a rental house? Cash reserves, sell stock that is at +30%, sell stock that is at a loss?

Garland:

It sounds like you're just an individual investor? If so, you don't need to worry about getting a CFP. Unless you're wanting to get into the business. In which case, you need 3 years of experience before receiving a CFP.

CFP is going to be all about financial planning. Generally, you're going to want to have a capable CPA and CFP. The CFP should know a lot about taxes, but most likely is short of being an expert.

I think the main value of a CFP is identifying opportunities in saving taxes by utilizing retirement plans and then of course helping you set up goals and staying on track. Managing emotions in difficult market conditions. And then if you need it...estate planning and wealth transfer.

Funny thing is that, performance is a very small part (10-20%) of the value of using a CFP. The reason I say this is that no one can possibly control what the market does, which index/fund will be best. We can only manage the investments based on a persons tolerance for risk.

Correct, what I meant is at what point do most people go from managing their own portfolio to using a CFP? It stands for Certified Financial Planner, right?

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Correct, what I meant is at what point do most people go from managing their own portfolio to using a CFP? It stands for Certified Financial Planner, right?

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This is relevant to my interests. I've been wondering the exact same thing.

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Correct, what I meant is at what point do most people go from managing their own portfolio to using a CFP? It stands for Certified Financial Planner, right?

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This is relevant to my interests. I've been wondering the exact same thing.

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It's hard to say definitively. If a person has 1M in a 401K, but little else, the likelihood of them needing paid for professional advice is small. On the flip side, a person with a small business, a solo 401K with 50K in it, 25K in a brokerage, and a couple of ROTH's, might find a CFP useful since there are multiple balls in the air and he/she is likely focused on his/her business and not on his investment accounts.


Another approach I've used on this board in the past, is: if you enjoy mowing your own yard, carving out time on a Saturday to handle your own trimming, hedging, raking, etc., then there's probably not a need/advantage for paying someone to do it. On the flip side, if you're like me, and detest the idea of waking up on a Saturday and staring 3-4 hours of yard work in the face, it's worth every dime (in my eyes) of what it costs to pay a professional crew to do it in an hour or two.

Financial planning, in many ways, is the same way. In most cases, you can do most anything they do if you've got the time to research it, the willingness and diligence to implement what you've learned, and the discipline to stay on top of it (mowing every week or two.....addressing your plan regularly and adjusting as needed). The planners/CFPs streamline your process, take some of that time that you would have spent, googling/Texaging/Bogleheading, and give it back to you.

For that service, they charge money and get paid. If your time is worth money, then it can be worthwhile.

I think we'd all agree it's really just a matter of opinion.

There would be some who feel that just having their funds in vanguard etc and just leave it alone is just fine.

If you are interested in having a comprehensive plan and have ongoing discussions about everything from insurance planning, retirement planning, tax savings ideas, etc then having an FA help you could be quite valuable to you.

Simply a matter of whether you want to do it yourself or not.

People harp on fees all day long, but it's overdone. If you're paying a CFP 1-1.5% per year that isn't going to make the difference in your long term success.

It is worth noting I suppose that the more assets you have, the cheaper the cost will be % wise. Example: a $50k account will pay about 1.35% vs a 1MM account will pay me about .9%. A 5MM account will pay about .6%

Yes, it stands for Certified Financial Planner

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Correct, what I meant is at what point do most people go from managing their own portfolio to using a CFP? It stands for Certified Financial Planner, right?

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This is relevant to my interests. I've been wondering the exact same thing.

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Same

Should I go Roth 401k or regular 401k, I will retire in about 20 years.

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Should I go Roth 401k or regular 401k, I will retire in about 20 years.

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That would depend on current income and expected income at retirement among other things. Personally, I went with Roth now because I'd rather pay taxes now as I fully expect to be at much higher tax brackets when I can start pulling money out. I plan to retire in around 30 years for what it's worth.

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If you have experience with military TSP, do you recommend the life cycle funds, the index funds (managed by BlackRock I think), or the G fund managed by the federal reserve? I'm in my late 20's and not sure how long I'll be in the military?

A little info on the funds if you're not familiar: https://www.tsp.gov/investmentfunds/fundsoverview/fundManagement.shtml

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Sorry, no experience with military TSP. However, for the most part life cycle funds have been shown to be inefficient risk/return vehicles and I do not recommend them.

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Also, in regards to TSP, should the priority be towards maxing my regular investment Roth IRA first, or my putting that money into my TSP Roth IRA (cap of 17,500 or something like that)?

Thanks

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At least max the matching contribution level, which appears to be dollar-for-dollar on the first 3%, and $0.50 per dollar on the next 2% (up to $18,000 for 2015). There are other factors to consider as to whether or not you may want to fund a regular ROTH IRA outside of that, such as investment flexibility and fee environment.

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At what point is it reasonable to get a CFP? I feel like I'm still too small a fish. Low 6 figs invested in the stock market + some real estate.

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Lots of factors...age, income, family status, aptitude and willingness to manage your own finances and wealth trajectory more so than net worth come to mind. I can't speak for fee only CFPs so I won't. But fee-based "advisory" CFPs will probably compete for your business once you have at least $250m or if you are on a path to have that sort of portfolio within a couple years. It's sort of like a dating game...you'll probably want one way before they want you in return.

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Correct, what I meant is at what point do most people go from managing their own portfolio to using a CFP? It stands for Certified Financial Planner, right?

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This is relevant to my interests. I've been wondering the exact same thing.

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see previous answer

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Should I go Roth 401k or regular 401k, I will retire in about 20 years.

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That would depend on current income and expected income at retirement among other things. Personally, I went with Roth now because I'd rather pay taxes now as I fully expect to be at much higher tax brackets when I can start pulling money out. I plan to retire in around 30 years for what it's worth.

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pretty sound example

Any analysis must assume future income and tax rates so it is an educated guess at best. Stay nimble as best you can.

I max regular 401K ($18k) and all other qualified funds are in ROTH. I also have deferred comp, so that when I look at it holistically I have a nice blend of qualified pre-tax, qualified tax-free and non-qualified tax deferred. At least I'll have some flexibility as to when and where I draw retirement income as the tax laws change in the future.

The wife and myself have been thinking about visiting a CFP or FA here in the BCS area. Do you have any recommendations on some good ones? Our main focus would be on planning for our retirement within just a few years, Maybe sooner if it is feasible. Thanks.

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The wife and myself have been thinking about visiting a CFP or FA here in the BCS area. Do you have any recommendations on some good ones? Our main focus would be on planning for our retirement within just a few years, Maybe sooner if it is feasible. Thanks.

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Find a CFP

following the no soliciting rule in the original post I will refrain from recommending for or against any practitioner or firm on this thread

The best idea always is a personal referral. Good luck!

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Correct, what I meant is at what point do most people go from managing their own portfolio to using a CFP? It stands for Certified Financial Planner, right?

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This is relevant to my interests. I've been wondering the exact same thing.

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see previous answer

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Thanks for the information, Stagecoach. It would appear that I'm getting into the $$ range where some folks start switching over. I have a willingness to learn and a decent aptitude for the subject, as I haven't really lost money yet. But I tend to think that a professional could do better with my money than simply me dabbling around.

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Also, in regards to TSP, should the priority be towards maxing my regular investment Roth IRA first, or my putting that money into my TSP Roth IRA (cap of 17,500 or something like that)?

Thanks

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At least max the matching contribution level, which appears to be dollar-for-dollar on the first 3%, and $0.50 per dollar on the next 2% (up to $18,000 for 2015). There are other factors to consider as to whether or not you may want to fund a regular ROTH IRA outside of that, such as investment flexibility and fee environment.

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Civilian federal employees get the matching contributions, not military unfortunately.

But thanks for the info above about life cycle funds

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Civilian federal employees get the matching contributions, not military unfortunately.

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That's bullcrap!

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Also, in regards to TSP, should the priority be towards maxing my regular investment Roth IRA first, or my putting that money into my TSP Roth IRA (cap of 17,500 or something like that)?

Thanks

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At least max the matching contribution level, which appears to be dollar-for-dollar on the first 3%, and $0.50 per dollar on the next 2% (up to $18,000 for 2015). There are other factors to consider as to whether or not you may want to fund a regular ROTH IRA outside of that, such as investment flexibility and fee environment.

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Civilian federal employees get the matching contributions, not military unfortunately.

But thanks for the info above about life cycle funds

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bigtruck guy, I'd like to lend another perspective as a practicing CFP professional and also a career Army officer (7 years active, the rest in the Reserve).

You are correct there is currently no matching for military, though reforms to the whole military retirement system are currently working their way through committees in Congress and may apply if you have less than 12 years of service by the time they are enacted. Specifically, they are proposing a matching system and also a 'cash-out' bonus if you leave the service to help compensate for the fact that most military members don't make it to 20 yrs.

Also, I'd like to disagree with stagecoach on the funds available within the Thrift Savings Plan. The TSP funds cover the majority of the market at an incredibly low expense ratio. Yes, they are index funds and thus not very sexy but those who know don't try to time/beat the market. Specifically, do some reading on the potential advantages of the G-fund, as it is unlike anything else and may be a good thing for you in retirement. The TSP does lack exposure to emerging markets, REIT's etc. but you can buy those in your Roth IRA. Also, the whole point of lifecycle funds is to help set an appropriate level of risk. You have the option within TSP to set your own allocation if you don't like theirs. EVERY fund family has a lifecycle type fund for this reason: to make investing easy (and less intimidating) to the average person. Every investment has some degree of risk.

Last, you are on the right track with the Roth contributions. Between the TSP and a Roth IRA I'd encourage you to contribute absolutely as much as possible while serving. As you know BAH and some other entitlements are not taxable, meaning you are probably at an artificially low tax bracket when compared to your total income. All this to say that the Roth option makes even more sense in your situation. Keep in mind that a Roth IRA provides more flexibility should you ever need to take early withdrawals (penalty free on the contributions) for something like a home purchase or school. Once funds are in the TSP it's not very easy to get them out, for good reason.

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However, for the most part life cycle funds have been shown to be inefficient risk/return vehicles and I do not recommend them.

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Are you referring to the typical "Fund that is diversified across domestic/international markets and adjusts stock/bonds percentages based on proximity to retirement"? An example would be "Fidelity Freedom 2035" or "Vanguard Retirement 2040" funds. If so, then I'd be very interested to see any sort of backup for this statement.