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Wealth Mgmt Recommendation

10,931 Views | 72 Replies | Last: 4 yr ago by Self-Made
Burner Username
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I'm looking for recommendations for Wealth Mgmt/financial advisors in the Houston area. I'm fortunate enough to have a business that I'm selling and will have somewhere in the neighborhood of 3MM in investable assets (after taxes) that I need to do something with. Up to this point I've handled all of my investments myself, but this is more money than I'm comfortable managing. I've met with a couple different guys already, but haven't really been blown away by any of them. Anyone have somebody they'd recommend?
clamps
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Couple good buddies of mine (and great Ags) work for UBS here in Houston. Give them a shout at Trenton.Hollas@ubs.com and I know they will take great care of you!!
No Bat Soup For You
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AG
I would spend about 6 hours reading The Simple Path to Wealth by JL collins before I wasted money on a financial advisor.
Boats and Hose
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Shoot me an email
chrisfield
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Sponsor
AG
First of all, huge congrats. Took a lot of sweat and tears to get to where you are, and I hope you can enjoy it.

Second, let me know if you're looking for a non profit doing good work
George08
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AG
Congrats.
I recommend Sam Scheler, you can reach him at 936-760-7600.
Burner Username
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Thanks everybody.
jja79
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AG
Dan Michalk and Robert Dwyer at Waterway Wealth Management are both Aggies, not that that's critical I'm sure. I've worked with a number of their clients in my business and all speak very highly of them. 281 363 0000.
BO297
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Ask for a recommendation from your CPA

Most of their clients have advisors and a CPA sees the good and bad. What you are looking for first is someone ethical. Especially since this will be a major part of your income moving forward.
drewbie08
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I read the description and bought this book today. Will give my comments after reading. Thanks!
irish pete ag06
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AG
hennyj15 said:

I would spend about 6 hours reading The Simple Path to Wealth by JL collins before I wasted money on a financial advisor.
I also bought this book and immediately started reading. Thanks for the recommendation!
2wealfth Man
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AG
I would recommend spreading some of that around to make sure you have your risk spread out. I would say do 2/3's with two advisors and 1/3 yourself. Best if you learn by doing it. Stay on top of the fees; they are major drag on total portfolio return. Also, learn about bonds, they should become a part of your portfolio.
Baby Billy
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2wealfth Man said:

I would recommend spreading some of that around to make sure you have your risk spread out. I would say do 2/3's with two advisors and 1/3 yourself. Best if you learn by doing it. Stay on top of the fees; they are major drag on total portfolio return. Also, learn about bonds, they should become a part of your portfolio.


This is the worst advice I've ever read on here.
Stive
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Now, now... worst you've ever read? There's been some REALLY bad comments on this board through the years.
JBAggie
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I was in a similar spot in 2018 when a company I had a piece of was sold. Some friends recommended a fellow Aggie named JR Koeijmans. He has been absolutely great. Very transparent with strategy and planning and I couldn't be more happy with my decision. He is based in Dallas but he is regularly in Houston visiting clients. I would check him and his group out for sure. I know he has a ton of other Aggie clients as well. http://www.wkwealthmanagement.com/
TWTCKS
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As others have mentioned, I would do some reading and be wary. I'm in the industry and will admit that most advisors/firms extract value rather than create it.

Quick example-a couple of people mentioned UBS. Be very cautious-UBS is a broker. The advisors will be dually registered. This means they are not legally obligated to act in your best interests at all times. In fact, they are obligated to act in the best interests of UBS.

Why does this matter? Them, and most of the other firms mentioned who are also dually registered, have significant conflicts of interest when building your portfolio. They may charge you 1% each year as their advisory fee, but the UBS investment team then puts you into a portfolio that has additional charges (mutual fund or ETF expense ratios-many times .5-1%/year as well). Due to your portfolio size, you'll get a break of some sort. The industry average all-in fee at 3MM is 1.2% (source: Kitces).

1.2% on 3MM is over $30,000. Every year. Oh and they're not filing your tax return (may not even give you any tax advice) or drafting estate planning docs. They're picking a list of funds. Even worse, they might sell you on picking a list of stocks.

Vanguard can do this (at a significantly higher level) for a small fraction of the cost.

If you hire an advisor, I would stick strictly to fee-only CFP professionals (fee-only means they cannot earn a commission of any kind. You can find one at feeonlynetwork.com) I would also never sign up for the standard 1% asset-based fee. If you have >2M+, it's insane to pay $30-50,000/year for someone to pick mutual funds.

Two firms with extensive experience I know of in Houston that do this:
The Sum
Brownlee Wealth Management

Otherwise, I'm serious. Vanguard can build a world-class portfolio (better than every broker listed) for $25,000 less every single year.
Baby Billy
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AG
I'm sorry, and this has been beaten like a dead horse on this board, but if you have 3mm and your advisor is doing nothing but picking mutual funds, you got the wrong guy. The above post is a little ridiculous, mostly false, and seems to be coming from someone that has it out for the "other" side of the business that charges a management fee.

A 1% management fee is not a net cost to the client. It's the purchase price of a much larger benefit.

Most who charge a fee for advice or for a written plan still do a great job. But they assume that the client can stick to that plan or follow-through with that advice. The average person simply cannot do that (this has been proven over and over again).

I can pull up different research articles and stuff like that to prove my point, but I'll leave that to whoever wants to. A prime example would be the "Time to Unwind" thread on this board. Mistakes like that are in our nature as humans and will completely destroy a plan or return over time. Completely normal and unavoidable for the average investor.

Again, a 1% fee is the purchase price of a much larger benefit over the course of the clients life, not a net cost coming from their pocket book.
gigemhilo
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"Quick example-a couple of people mentioned UBS. Be very cautious-UBS is a broker. The advisors will be dually registered. This means they are not legally obligated to act in your best interests at all times. In fact, they are obligated to act in the best interests of UBS."

This is completely ridiculous. Investment advisors are one of the most regulated businesses in the US, and they ARE legally obligated to act in the best interest of the client! So is the broker! Are there bad apples out there - yes. But they are still legally obligated to operate in your best interest.

A fee - whether through a management fee or through commissions - is a payment of service. A good advisor will do their best to structure it in a way that meets your risk and time-table. In fact, they are legally obligated to do that.

Don't listen to the anti-advisor hype... if you see value in paying someone to help you manage your assets, then by all means seek out a good firm to work with.
drewbie08
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For those who have hired an adviser to manage your $, how do you objectively measure their performance on an annual basis? I've met with a few advisers and asked this question, but wasn't satisfied with their answer enough to justify hiring them.
Frok
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I would like a recommendation on how to become like the OP and be in his/her situation

TWTCKS
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Ed, I agree with you on almost all points. You are right, I was probably too negative in my post. I do think most people should hire an advisor and are better off with one. When picking an advisor, I think there are three important points:

1. Do they have general expertise (CFP for example)? Going deeper, do they have experience relevant to my situation? For example, an Exxon or Chevron retiree should hire someone with extensive NUA/tax planning experience. The OP should hire someone who works with others in a similar boat (i.e. obviously don't hire an advisor that's never handled an account over 500k)
2. Are they fee-only? Are they a fiduciary at all times? I think this is a pretty reasonable requisite.
3. If my asset level is above 2MM, what will my annual fee be in real dollars? Being in the industry, I know firms do not spend any more time on a 3M portfolio compared to a $300,000 portfolio. It's probably ok under ~1M. My main point is to be cognizant of your actual fee in dollars. I'm wary of paying >20k per year.

I am pretty adamant about 1 and 2. I can't think of a reason why a family should work and save for decades and then hand all of their money to someone who is not willing to forfeit their brokerage licenses. Having experience and being fee-only is a very reasonable requirement. I think the Wall Street Journal and Jason Zweig have written enough on this topic. (actually, he's absolutely drilled #3 as well...)

#3 is debatable. I think paying Creative Planning (one of the top RIA's in the country) 1% on 3M is so much better than doing it on your own and making a mistake-either a critical planning mistake or a behavioral one like timing the market. But even their CEO was just on Bloomberg last month saying the 1% fee is coming down. And if you are paying $30,000/year, it should include significant estate and tax advice. (you should get that at 15k/year too.)

All that to say-you are right, I was probably too negative. And I do agree-the heavy majority of folks should hire an advisor.
gigemhilo
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drewbie08 said:

For those who have hired an adviser to manage your $, how do you objectively measure their performance on an annual basis? I've met with a few advisers and asked this question, but wasn't satisfied with their answer enough to justify hiring them.
I think that depends on what you are looking for. If you are high-risk you would look at it differently than you would if you were risk-adverse. Part of the job of the advisor is to help you determine what your goals are and allocate your portfolio based on your risk tolerance. That is the true measure of the success of an advisor -how well they meet your goals - not just the return or how little fees they charged you.

Of course some goals are not as quantifiable than others. Also, investors expectations can often be unrealistic (ie. zero risk but crazy awesome returns).

drill4oil78
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Don't put it all with one manager. Use 2. Don't pay more than 1% and you should be able to get .5% in yearly fees. These fees are no longer tax deductible. I use 2 and manage part myself and to be honest I am beating the so called professionals.
TWTCKS
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Gigem, Respectfully, this is not accurate. Brokers and Hybrids are notoriously under-regulated. That's why the fiduciary law got so much attention (it was killed btw).

Just to be clear, a broker has absolutely no legal obligation to act in your best interests. If you were to try and take legal action against a broker, they are governed under a suitability standard-a bar that is drastically lower than the fiduciary standard.

Now specifically with dual-registered hybrid advisors (like UBS and others)-see this Wall Street Journal post. It's an actual example of how large hybrid firms receive kickbacks from other fund companies for putting clients in more expensive portfolios. This is entirely legal. So, yes, it does matter. Your UBS (or morgan stanley or merrill etc.) broker is incentivized to put you in more expensive products.

This is not surprising, but there is clear evidence that dual-registered advisors charge more and underperform. Finance Professor Nicole Boyson's current research can be found in summary form here.
Burner Username
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Thanks for everybody's suggestions.

As a wise man once told me "know what you don't know", and while I'm sure I could learn what to do with this money, there are undoubtedly professionals who would do a better job than I would. If we were talking about a 1% mgmt fee it might make sense to do it myself, but most of the guys I've talked to are about half of that.

I'm in my early 30's and just completely burned out from busting my ass and would like to take a couple years off before starting a new venture and would like to be able to live off the investment income that this money provides in the meantime. A professional should be able to structure a portfolio to accomplish that goal much better than I could. What is everyone's opinion on the difference between a wealth mgmt group with a larger firm (think Morgan Stanley, etc), vs a smaller boutique operation? I've always heard there are investment opportunities with the larger guys (such as private equity, etc) that you're probably not going to have access to with the smaller guys, but don't know how true that is.
Baby Billy
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Quote:

If we were talking about a 1% mgmt fee it might make sense to do it myself, but most of the guys I've talked to are about half of that.


It wouldn't make sense to do it yourself. You'll cost yourself far greater than 1% per year if you do it yourself. Again, this has been proven over and over, but go ahead and try.
ChoppinDs40
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Merrill's private wealth group Has a network and ability of directly investing in PE deals.
TWTCKS
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Quote:

What is everyone's opinion on the difference between a wealth mgmt group with a larger firm (think Morgan Stanley, etc), vs a smaller boutique operation? I've always heard there are investment opportunities with the larger guys (such as private equity, etc) that you're probably not going to have access to with the smaller guys, but don't know how true that is.

Love that question. Private Equity (or any alts) is definitely different from mainstream investing.

There's debate on this. A lot of people say you need to have more than 5M before looking at alts/PE. I think the proper academic answer for who is the right investor (and how much should they invest) for alts/PE is a combination of these two things:

1. Total amount of investable assets
2. Amount of assets that absolutely will not be needed in the next 10 years.

PE is different than the stock and bond markets in two ways. First, the liquidity is VERY different (you may not have access to the money for 8-10 years). Second, PE is not an efficient market IMO.

What do I mean? The stock market is really efficient. That's why so many mutual funds underperform their benchmarks. The information age has made it to where a 20-year-old in Malaysia has access to the same information as an analyst on Wall Street. So, when investing in the stock market, low-cost funds/ETF's with broad market exposure are hard to beat.

This is not true with PE. There is actual value to be had with a better manager. It makes sense-you're buying, operating, and then selling an actual company. So, Bain Capital is really really good at it. A random startup PE fund in Dallas is probably not as good as Bain. What's the problem? Well, a lot of firms like Bain have 1M or 500k minimums.

If you have 3M, that's pretty tough to allocate to a PE/alt investment. Let's say 500k is devoted to your next few years (i.e. you're definitely spending 500k in the next 5 years). That leaves 2.5. Would I feel comfortable as a fiduciary having you put 500k or 1M into a PE fund? Probably not. 20-40% in an illiquid investment is a lot.

As for your question, you can probably tell I am a bit biased for fee-only firms. So, I would stay away from Morgan Stanley. They are dual-registered and sell their own products. Plus, brokers love selling you on the idea of "alts" and its really a non-traded REIT that makes them a lot and is hard to get out of. If you have to be at a big firm and you really want the option of access to PE, look at Creative Planning. Technically, a small RIA can still help you access PE if it is in your best interests. Small RIA's can be fantastic, just make sure they don't custody their own assets (i.e. they should custody at TD Ameritrade, Schwab, or Fidelity)

I worry that in your situation, no firm will recommend PE, but a dual registered firm will appease you by selling you non-traded REITS.
03_Aggie
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TWTCKS said:



I worry that in your situation, no firm will recommend PE, but a dual registered firm will appease you by selling you non-traded REITS.


Help me understand how a dual registered firm would not be subject to the same requirements as a firm that is just registered as an adviser?
ChoppinDs40
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AG
fair comments on the PE take.

One thing though, and it can be hard to do, and somewhat impossible unless you know people in the space, is getting in with an investment group that's partaking in PE deals.

There are lots of "fund to fund" PE investors out there.

Hell, me and 3 other guys invested along side 20 other groups and just made 3.15x MOIC in 3 years on a software SaaS business - not bad. How much did I have in it? $5k Wish I had put 350k like one guy did.

Gotta start somewhere.
TWTCKS
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Quote:

Help me understand how a dual registered firm would not be subject to the same requirements as a firm that is just registered as an adviser?
Good question-the dual-registered advisor has the ability to take the "fiduciary hat" off at any point with a client and sell them a high-commission product (could be life insurance/annuity or investment) and receive the commission for it. They do not have to tell the client when they're acting as a fiduciary and when they're not.

Another way to describe that dynamic is fee-based vs. fee-only. Fee-based is when firms/advisors largely operate out of their RIA (i.e. most of their business is ongoing investment management as a fiduciary) but still have the ability to sell a product and receive a commission.

Fee-only means the advisor is not selling any products for a commission of any kind. feeonlynetwork.com is a pretty good resource.

Lastly, research is showing that dual-registered firms typically have higher fees and, as a result, underperform.

Quick caveat: There are certainly some excellent people and advisors in the dual-registered space. I don't want to paint a broad brush that unfairly categorizes them as commission-hungry evildoers.

But I also believe that if I'm finding an advisor for someone I love-I want them to have some base level of study (CFP for example), expertise handling situations similar to theirs, and I want them to be a fiduciary that does not earn commissions of any kind.
Midwestern transplant learning the way of the Aggies.
2wealfth Man
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WTF...:maybe I didn't explain my thesis well for your liking but reason to be a jerk. Too much of that on premium now.
Baby Billy
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2wealfth Man said:

WTF...:

You read it right
2wealfth Man
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You win whatever
03_Aggie
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TWTCKS said:

Quote:

Help me understand how a dual registered firm would not be subject to the same requirements as a firm that is just registered as an adviser?
Good question-the dual-registered advisor has the ability to take the "fiduciary hat" off at any point with a client and sell them a high-commission product (could be life insurance/annuity or investment) and receive the commission for it. They do not have to tell the client when they're acting as a fiduciary and when they're not.

Another way to describe that dynamic is fee-based vs. fee-only. Fee-based is when firms/advisors largely operate out of their RIA (i.e. most of their business is ongoing investment management as a fiduciary) but still have the ability to sell a product and receive a commission.

Fee-only means the advisor is not selling any products for a commission of any kind. feeonlynetwork.com is a pretty good resource.

Lastly, research is showing that dual-registered firms typically have higher fees and, as a result, underperform.

Quick caveat: There are certainly some excellent people and advisors in the dual-registered space. I don't want to paint a broad brush that unfairly categorizes them as commission-hungry evildoers.

But I also believe that if I'm finding an advisor for someone I love-I want them to have some base level of study (CFP for example), expertise handling situations similar to theirs, and I want them to be a fiduciary that does not earn commissions of any kind.


From a regulatory standpoint you are either subject to fiduciary standards or suitability. There is no switching back and forth.
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