How Many With $1Million+ Manage Own Money/File own Taxes

[Anonymous]

We are right at $1M, in our early 30s, and use a fee-only financial advisor because for years we thought "Ugh, we really need to reallocate our funds" and would keep putting it off. We just don't enjoy figuring out the right mix, making sure everything is on track, determining how much should go into which type of investment vehicle, etc. We use an advisor who has a pretty passive investment approach, which we know we could do ourselves, but we don't. We save more and make more returns because we use them, plus they've helped advise us on insurance (they don't sell, just a second opinion on amount and type), timing on selling properties, and so on.

I usually our own taxes, because our income and deductions are very simple. This year we have a complex property sale with capital gains, so we will hire a CPA, but after that will go back to diy.

[Anonymous]

A $1 million, sure we were able to do it ourselves. Most of it was in 529s or 401ks at that point. At c. $5m we have an advisor because we need help balancing investments, and thinking about the tax implications of trades, etc.. It's helpful to have someone whose job it is to pay attention to this stuff. They also do annual retirement projections and have provided broader advice about overall financial matters.

We also switched to a tax preparer about a decade ago. I was an owner in a business that was sold and that had some complications, and my current business requires me to file taxes in 3-4 states and it just got beyond what I wanted to spend the time to figure out. Our taxes can be 200 pages with various schedules and attachments (some of which are the state forms).

[Anonymous]

$1M invested, own my own business and have two rental properties and we do it all ourselves. It's not that hard, and in my business I see the underside of "money management" -- it's slightly more consumer friendly than used car sales.

[Anonymous]

I am not quite 1 mil (401K). I kind of ignore it, and let it grow. I do my own taxes.

[Anonymous]

Anonymous wrote:We are right at $1M, in our early 30s, and use a fee-only financial advisor because for years we thought "Ugh, we really need to reallocate our funds" and would keep putting it off. We just don't enjoy figuring out the right mix, making sure everything is on track, determining how much should go into which type of investment vehicle, etc. We use an advisor who has a pretty passive investment approach, which we know we could do ourselves, but we don't. We save more and make more returns because we use them, plus they've helped advise us on insurance (they don't sell, just a second opinion on amount and type), timing on selling properties, and so on.

I usually our own taxes, because our income and deductions are very simple. This year we have a complex property sale with capital gains, so we will hire a CPA, but after that will go back to diy.

Except you and many like you have no idea if your advisor is doing well or not -- you are relying so heavily on salesmen that do you really understand what fees and expense ratios are being paid and after you pay them, are you actually beating the market??

[Anonymous]

I most certainly don't. 4 rental units, stocks from work and several investments my taxes are a nightmare. I just recently dumped my Ameriprise person for Fidelity cause Ameriprise wasn't really looking out for what was best for me and Fidelity seems to be doing better. Worth about 2.4

[Anonymous]

We do - have $5M+ in assets. Had a well-known CPA firm do our taxes when DH first made partner, but I caught a couple of mistakes they made so I figured I could do it just as well, with help from Turbo Tax.

After seeing how much my parents paid in fees and commissions to own various mutual funds, we've decided that it makes more sense to just use Vanguard. We also have a couple of small brokerage accounts in 401Ks which we handle ourselves and are doing well.

[Anonymous]

We are at about $3-4m at 40yo.

Money I would never have someone else manage. Too much money to be made by them at our expense. And honestly we do simplicity. We have money because of high incomes not speculation/investment so I just save in basic index funds, use time tested ideas. Vanguard like a PP for most things. We met with a financial planner to decide how much life insurance etc we need but would not outsource the everyday management.

Would love to find an accountant to do our taxes, but they all stink that i've tried in my small city, and I'm not looking for fancy, just the quality I had as a Ph.D. student. So I do ours with Turbo Tax - it takes a day or so and then I have a relative who is a retired accountant look them over.

[Anonymous]

Anonymous wrote:
Except you and many like you have no idea if your advisor is doing well or not -- you are relying so heavily on salesmen that do you really understand what fees and expense ratios are being paid and after you pay them, are you actually beating the market??

Uh yeah, I do. We use a fee only advisor (not fee based), and their fee is directly billed to us. They detail out the other fees that the funds charge, which we weren't paying attention to prior to using them. We interviewed 4 different advisors (2 fee only, 1 fee based, and 1 traditional commission).

The reality is that the switches they made after we hired them offset more than half their annual fee in fund expenses alone. And we're better diversified now. It's not that we couldn't have done it ourselves, just that we weren't, and don't care to. I'm confident our $1M is going to become $2M and then beyond much faster since we're working with them than if we didn't have the couple thousand in expenses but we kept ignoring allocating and other decisions.

If people can and do do it themselves, that's the best way. But hiring a trustworthy fee only advisor is better than what we were doing, which was pouring money in but not spending any time thinking about where the real value is - the growth.

[Anonymous]

We use a finanical advisor, but I do our taxes in Turbotax because I like to play with scenarios as I go aloing, like what if we gave more to charity X next year, how would that change our tax bill and so on. It takes me a few hours a year, mainly because I keep all our papework in order throughout the year.

The reason for our advisor is time. I do know finance and could do rebalancing; read up on the latest tax laws, etc but I'd rather spend that time playing with my kids. Maybe it'll change when they're older and they no longer want to cuddle with me and say "I love you" to me every 15 minutes, but for now that's worth more than the money I'd possibly gain from not paying a financial advisor... and even then I'm not sure I'd beat them at their own game.

[Anonymous]

Anonymous wrote:

The reality is that the switches they made after we hired them offset more than half their annual fee in fund expenses alone. And we're better diversified now. It's not that we couldn't have done it ourselves, just that we weren't, and don't care to. I'm confident our $1M is going to become $2M and then beyond much faster since we're working with them than if we didn't have the couple thousand in expenses but we kept ignoring allocating and other decisions.

If people can and do do it themselves, that's the best way. But hiring a trustworthy fee only advisor is better than what we were doing, which was pouring money in but not spending any time thinking about where the real value is - the growth.

Same sitautino here. Before the advisor, I'd just dump our money that year into whatever fund looked nice and forget about it. I just didn't have time to deal with it. Our advisor is surely doing a lot better for us than my non-method.

[Anonymous]

OP here. Thanks, everyone, for the feedback. (As for me, I'll continue managing my own money indefinitely, as I enjoy it, but will hire an accountant for taxes if I run into a really complicated year. Otherwise, TurboTax works well.)

[Anonymous]

Anonymous wrote:I did until it got too complicated. Yes, it is certainly possible; you can see from the above responses that it isn't the $ amount that defines the ability to do it. We have tax filings in many states, several companies, rental properties, businesses (k1s), partnerships, etc. It is extremely complicated and the returns are lengthy. I did it on my own when I had a few of those things, but not all of them.

This. Has less to do with amount of $$, more to do with other investments, etc.

[Anonymous]

We do, but I'm a CPA.

[Anonymous]

Anonymous wrote:We manage our own money which I find fun. We pay to have our taxes done because I do not find that fun.

+1