...versus visiting a financial planner every couple of years? I am hesitant because of the fees charged by wealth managers...

I'm very happy with our financial advisor. Not sure what your definition of wealth manager vs financial advisor is. We switched to him after using Vanguard in our own. We have quarterly meetings, and re-assess progress/ goals at each one. I'm happy with the switch. We wanted more advice And active management than what Vanguard was willing to give.

I don't think so. Was told a long time ago that nobody will ever care more about my money than me. I think if you don't want to mess with it then certainly get an advisor but a fee based one vs. a percentage of assets one. I also think over your lifetime it's more important how much money you invest and for how long you invest vs. a particular fund or manager.

We've used one for last 3 years. I'm 46 and have solely managed our wealth up until then. The only reason I do is because our situation got complicated enough that I no longer had the wherewithal to manage it myself.

Definitely fee based.

If you are giving money to someone who is just sticking it in index funds and charging a percentage fee, then no, it's definitely not worth it.

Thank you.

If your wealth manager is guiding you through tax benefits, I'd say yes.

Use a guy at Fidelity. Been very happy. Good online tools. Portfolio is making money. I like that he forecasted how much our money will last and draw down rate using a below average market performance.
I did it all until my wife retired. Did well but turned it over when we rolled over lump sum pension and 401K.

IMO, depends on how much you like to manage it. I like making the money, not managing investing, etc. So, I value mine. But, if you like doing it yourself, you'll prob be disappointed using one.

I struggle with the AUM fee in an environment where bonds are generating roughly equivalent. I think tax advise/estate planning has a lot of value if you can designate some level of passive equity/bond mix.

I found a good estate planning attorney that also does real estate and has people in the firm that can handle a few other services I may need. Through that relationship was referred to a good accountant that can handle my personal vs. other interests.

I can QB my stuff for now but fully aware I will need one in the future but not sure I need to pay the fee now.

Tax management is the biggest benefit I get out of my wealth management account on Fidelity. The other benefit is helping me risk manage around scheduled draws for other investments. If left to my devices I go balls deep in options. That's fine for my allotted portion but is no bueno for the whole portfolio.

Advisors are for suckers. Do you really think someone will do a better job and take a cut less of a cut than your gains? All you have to do is read boglehead wiki a few times and make your moves.

Depends. Are they CFA or CIMA?

Do they use options to amplify or protect the portfolio?

If they are just using actively managed mutual funds, then no. Most funds don't beat the index so why pay for that!

If they are using a combination of etfs, individual equities, individual bonds etc etc. then it starts to get more interesting. Figure starting cost is 1% if there are more than 50% in equities. If more than 50% in bonds then .50%.

There are ways to cut capital gains that individuals may not know about. Hell some advisors may not know about them either. The ones who care about their craft do. Just sayin

Proposition Joe said:

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If your wealth manager is guiding you through tax benefits, I'd say yes.

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This is why I do it.

I could probably still do all of this myself, but just didn't have the bandwidth nor desire to get into the tax side of this. I'm about to have a lot more time on my hands though so I may take it back over. Will see.

FunkyKO said:

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Depends. Are they CFA or CIMA?

Do they use options to amplify or protect the portfolio?

If they are just using actively managed mutual funds, then no. Most funds don't beat the index so why pay for that!

If they are using a combination of etfs, individual equities, individual bonds etc etc. then it starts to get more interesting. Figure starting cost is 1% if there are more than 50% in equities. If more than 50% in bonds then .50%.

There are ways to cut capital gains that individuals may not know about. Hell some advisors may not know about them either. The ones who care about their craft do. Just sayin

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Example: I made a thread about it on here but mine had me proactively send a form into the gov last month to claw back tax money that could potentially become eligible for a refund. I'm guess I'm one of just a few people that did that and that isn't something I ever would have caught on my own. That deadline has passed so if you didn't do it then you are SOL if Congress does that make that available.

I handed it over to an advisor about 4 years ago. I did it because as you get older and your life changes, your savings goals get more complex other than sock money into accounts, take advantage of the tax advantaged savings and make sure your money grows. It has been worth it to me. I'm a CFA Charterholder and work in finance and trading (but not in personal finance) so I didn't do it because of lack of knowledge... but more along the lines of I'd rather spend my time on making money right now more than anything else.

Just remember you can have the most ethical person in the world managing your money... but still their incentives and goals aren't going to be 100% aligned with yours even if they are extremely close. Make sure you talk to them somewhat frequently (not daily or even weekly) and you are reviewing your goals and income and personal situation with them every 3-6 months. I think the thing that bugs me the most when I see the OP is the 'every couple of years' language. You need to be talking to your money manager way more than that in my opinion.

I think it depends on how much time you are willing and able to spend on managing your investments. No one will look after your money like you but it takes time and knowledge. The professional managers have access to info that you may not. They have staffs full of trained analysts feeding them data and analysis.

All A&M said:

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My brother-in-law made zero return from 2008-2016 managing his portfolio himself. The fees would have been well worth it for him if he had used a wealth manager.

So everyone's situation is different. If you have a complicated tax situation you don't understand, then hire a wealth manager. Also if you don't understand investing or can't remain disciplined, then hire a wealth manager.

As for me, I understand my tax situation and investments (and control my emotions) so I do it myself, but many if not most people with assets would be better off with a wealth manager.

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How is that even possible? Was he all cash?

That is very much possible. I believe it.

Diy is notorious for bad Timing.

Just missing the 10 best days of the last decade can change returns significant enough.

Don't underestimate the fear

Just this year So many diy folks sold in March. You can see etf fund flow data around that timeframe to take a guess. Statistics say they still haven't come back to market. They sold out -20%+.

It's a significant gap to what it is and what it should have been for those that sold at bottom. Feel for those folks.

FunkyKO said:

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Don't underestimate the fear

Just this year So many diy folks sold in March. You can see etf fund flow data around that timeframe to take a guess. Statistics say they still haven't come back to market. They sold out -20%+.

It's a significant gap to what it is and what it should have been for those that sold at bottom. Feel for those folks.

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I get that but to gain nothing in eight years is effectively sabotaging yourself to the point of liking it. Doing literally nothing is a better strategy than trading your entire portfolio over that kind of time span.

Amazing.

I moved over to a one stop shop around when I turned 40. I needed to focus on making money and running my businesses and they are making sure I keep more of it (taxes suck) and grow it. I've been with Cohesion Wealth (on the advice of another highly respected Aggie and Texags poster) and they have been doing excellent for us. Two Aggies run it. Their advice have been invaluable as my situation has become more complicated and my money is working for me.

Anyone have recs for fee based advisors in Houston?

"Missing the 10 best days in a decade... article below".


https://www.cnbc.com/2020/03/07/when-you-sell-during-a-panic-you-may-miss-the-markets-best-days.html

What are thoughts on flat fee based advisors vs. the % fee based.

Cyp0111 said:

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What are thoughts on flat fee based advisors vs. the % fee based.

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With the latter your fee will grow as your wealth grows. It does not with flat fee. My flat fee has gone from about ~1% to .3% of total investment dollars over time.

FunkyKO said:

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Don't underestimate the fear

Just this year So many diy folks sold in March. You can see etf fund flow data around that timeframe to take a guess. Statistics say they still haven't come back to market. They sold out -20%+.

It's a significant gap to what it is and what it should have been for those that sold at bottom. Feel for those folks.

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And this is the biggest value a wealth manager/financial advisor provides. Behavioral management. Stopping people from making this mistake during every bear market will pay for their annual fee 15 times over.

Most fee based systems work on a declining scale.

0-250k. X%
250-500 X%
500-1m. X%.
1m-2m. X%

Say it starts at 1.00%
Then .9
Then .8
Then .7


Now say the portfolio has more fixed income than equities, then you may be able to use the fixed income fee schedule which starts at .60% Somewhere there. Same declining scale

A flat fee is just taking that declining scale and fixing the rate. So it really depends on the flat charge vs the assets under mgmt.

As a consumer I would imagine we all like the declining scale method with the caveat that if we go over a breakpoint we get the lower charge. But if we move below the breakpoint due to market activity you keep the lower cost. Makes sense right.


I think that people should get the benefit of assets held at the firm whether they are in a fee managed program or not.

Example.

You have vanguard index 500 and AAPL stock in one account that have no need to be managed. Just let them roll. Let's say the value is 100k.

Account 2 is an irra and it has 400k in it that you would like to be managed.

So two accounts. 500k total. 400k of that is managed. I think you should get credit for the 100k and thus pay the 500k-1m rate on the 400k account number two.
Account 1 since you are holding bears no cost, but counts towards the fee based schedule for the 400k.

I hope that made sense

YouBet said:

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Cyp0111 said:

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What are thoughts on flat fee based advisors vs. the % fee based.

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With the latter your fee will grow as your wealth grows. It does not with flat fee. My flat fee has gone from about ~1% to .3% of total investment dollars over time.

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No, your fee will always stay the same %. As your money grows, so does the complexity and consequences of you and the advisors decisions.

Think of it like your HO policy. Insuring a $2M home costs proportionately more, in dollars, than a $500k home, but as a percentage of value is usually the same or less

If you're an accredited investor then it helps to have one or preferably more wealth managers. They get me into deals that I would never know about.

FunkyKO said:

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That is very much possible. I believe it.

Diy is notorious for bad Timing.

Just missing the 10 best days of the last decade can change returns significant enough.

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I'll be honest, I still don't understand how someone can have no gains in those 8 years of investing. I feel like you'd have to almost try harder to do that than to profit.

This isn't meant as a put down but truly out of confusion. Any details you could share as to what your BIL was investing in, All A&M? Did he put ANYTHING in the index?

ehrmantraut said:

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YouBet said:

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Cyp0111 said:

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What are thoughts on flat fee based advisors vs. the % fee based.

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With the latter your fee will grow as your wealth grows. It does not with flat fee. My flat fee has gone from about ~1% to .3% of total investment dollars over time.

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No, your fee will always stay the same %. As your money grows, so does the complexity and consequences of you and the advisors decisions.

Think of it like your HO policy. Insuring a $2M home costs proportionately more, in dollars, than a $500k home, but as a percentage of value is usually the same or less

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We are saying the same thing. I meant actual dollars you pay out would grow and not the % would grow. Conversely, my flat nominal fee has remained the same over the years but as a % of total assets it has dropped because my assets have grown.

One small word of advice: don't step over dollars to pick up a dime.