Do you use a “wealth manager” or DIY?

[Anonymous]

Anonymous wrote:Has anyone used the Vanguard services? they are new and very reasonably priced.

Yes and we've been happy. Worth the money IMO.

[Anonymous]

I just switched to having others manage my money. They do a much better job than I did. Much better. I still manage a 1/3 and there is a difference in increases in the accounts they manage. Maybe I will get better over time - but happy having someone else do it for now.

[Anonymous]

I'm the PP who said not having someone to help with tax planning can cost you $200K. In my case my mom was a window and moved to Maryland so she could be in the same assisted living as a friend. When she died a few years later she had about $6M in her estate, to be split between 3 kids. Almost all of that $6M was in an IRA (so kids now have to pay the taxes within 10 years - we are all in high tax brackets). Because she died in Maryland with more than $5M in her estate, we had to pay about $200K in estate taxes - even though the estate is actually worth far less than $5M given that her kids will have to pay federal income tax on the estate. if we had a full service wealth manager, they would have caught the MD estate tax issue, my mom could have withdrawn more from her IRA before she died, paid the taxes herself and brought the value of the estate below the $5M estate tax limit in MD. But since none of her kids had ever lived in MD we had no idea this was even an issue (including my sister who was the executor and is an accountant).

Separately, there was just a thread here about the best way to buy a house in retirement -- take money from traditional IRA? Roth IRA? borrow against brokerage account? traditional mortgage? These are the kinds of things where (I would guess) a wealth manager can help you think it through given your specific situation. The actual investing is the easy part!

[Anonymous]

Anonymous wrote:I ($6M) use a financial planner who charges about 0.4% annually. There are some special services that he’s done, like setting up bond ladders for income, and advising on tax strategies. He also advises on insurance and setting up trusts. I could do all of it DIY in theory, but it’s not my area of expertise, and it’s nice to have a professional looking over our accounts every quarter.

This is pretty much exactly me. $6m or so in funds invested with my planner. Dh and i both make around $1m each; i work insane hours and it is hard for me to set aside time to do non-preferred household administrative activities. Like, i've owed my wealth planner 401k and other paperwork for years and literally never get to it because i work 60-70 hours a week (10pm right now and i'm on a work call). And i really don't enjoy financial planning and find it overwhelming, so it's the item that falls off my to do list all the time. DH has a lot more free time but he is very untrustworthy with money (he doesn't spend it, but he doesn't understand basic financial principles well).

So we pay a financial advisor some percent i don't even know (i think a bit less than 1%) and he does around index fund returns which isn't amazing but we've also not lost our shirts. ANd i don't have to think about it at all.

There are other things i do myself and save a lot of money; we haven't had any childcare costs since DS started K -- i've always been available to him and avoided needing a nanny, so that's $50-80k a year we've saved for 10 years. We also never really get takeout/delivery, while a lot of our neighbors do ubereats 4 times a week -- which never costs less than $80 for a family with delivery fees - so that's $20k a year. It's all about priorities. I can sleep at night handling my own childcare and cooking. I would not sleep well at night if $6m of investments were all my responsibility. So i'm happy to outsource that piece.

[Anonymous]

Anonymous wrote:I'm the PP who said not having someone to help with tax planning can cost you $200K. In my case my mom was a window and moved to Maryland so she could be in the same assisted living as a friend. When she died a few years later she had about $6M in her estate, to be split between 3 kids. Almost all of that $6M was in an IRA (so kids now have to pay the taxes within 10 years - we are all in high tax brackets). Because she died in Maryland with more than $5M in her estate, we had to pay about $200K in estate taxes - even though the estate is actually worth far less than $5M given that her kids will have to pay federal income tax on the estate. if we had a full service wealth manager, they would have caught the MD estate tax issue, my mom could have withdrawn more from her IRA before she died, paid the taxes herself and brought the value of the estate below the $5M estate tax limit in MD. But since none of her kids had ever lived in MD we had no idea this was even an issue (including my sister who was the executor and is an accountant).

Separately, there was just a thread here about the best way to buy a house in retirement -- take money from traditional IRA? Roth IRA? borrow against brokerage account? traditional mortgage? These are the kinds of things where (I would guess) a wealth manager can help you think it through given your specific situation. The actual investing is the easy part!

The point is you can get tax advice without paying AUM fees.

[Anonymous]

I think we need a tax adviser and not a wealth manager. How do we find a good tax adviser who will give advice and not just prepare our returns?

[Anonymous]

Anonymous wrote:I'm the PP who said not having someone to help with tax planning can cost you $200K. In my case my mom was a window and moved to Maryland so she could be in the same assisted living as a friend. When she died a few years later she had about $6M in her estate, to be split between 3 kids. Almost all of that $6M was in an IRA (so kids now have to pay the taxes within 10 years - we are all in high tax brackets). Because she died in Maryland with more than $5M in her estate, we had to pay about $200K in estate taxes - even though the estate is actually worth far less than $5M given that her kids will have to pay federal income tax on the estate. if we had a full service wealth manager, they would have caught the MD estate tax issue, my mom could have withdrawn more from her IRA before she died, paid the taxes herself and brought the value of the estate below the $5M estate tax limit in MD. But since none of her kids had ever lived in MD we had no idea this was even an issue (including my sister who was the executor and is an accountant).

Separately, there was just a thread here about the best way to buy a house in retirement -- take money from traditional IRA? Roth IRA? borrow against brokerage account? traditional mortgage? These are the kinds of things where (I would guess) a wealth manager can help you think it through given your specific situation. The actual investing is the easy part!

This makes no sense. When she moved to Maryland she should have hired a MD trust attorney to review her trust. It works be significantly less.

We paid $5k for our trust, through an attorney. She said when we move to Virginia when we retire to meet with a lawyer there to review the docs. That’s her advice!

I’d rather work with an attorney who will get it right than someone on a wealth management team. And, save the $$ which is what you’re concerned about! You still will spend $200k in 8 years, then another $200k or more, in the next 8 years!

[Anonymous]

Anonymous wrote:I just switched to having others manage my money. They do a much better job than I did. Much better. I still manage a 1/3 and there is a difference in increases in the accounts they manage. Maybe I will get better over time - but happy having someone else do it for now.

This is probably more of a reflection on you than your money manager.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I just switched to having others manage my money. They do a much better job than I did. Much better. I still manage a 1/3 and there is a difference in increases in the accounts they manage. Maybe I will get better over time - but happy having someone else do it for now.

This is probably more of a reflection on you than your money manager.

I'm not the PP but this ("This is probably more of a reflection on you than your money manager") is the whole point of hiring someone. There are some of us, myself included, who are not skilled in managing investments so we contract out. Just like I contract out for landscape work, and pay a painter to paint my house. I'm capable of doing those things but the experts do them better.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I just switched to having others manage my money. They do a much better job than I did. Much better. I still manage a 1/3 and there is a difference in increases in the accounts they manage. Maybe I will get better over time - but happy having someone else do it for now.

This is probably more of a reflection on you than your money manager.

I'm not the PP but this ("This is probably more of a reflection on you than your money manager") is the whole point of hiring someone. There are some of us, myself included, who are not skilled in managing investments so we contract out. Just like I contract out for landscape work, and pay a painter to paint my house. I'm capable of doing those things but the experts do them better.

I get where you're coming from, I really do. But ~97% of households have uncomplicated finances, and managing investments means little more than selecting a basket of 3-5 broad market index funds in your retirement accounts -- set it and forget it. It truly is that simple for the vast, vast majority of folks out there. Paying 1%+ of your assets under management year after year after year for somebody else to click those buttons for you is completely unnecessary and creates a serious drag on your ability to accumulate further savings. To wit, I have about average retirement savings for my age, and the "typical" retirement age is about 30 years away. A 1% drag on my account costs me almost a million dollars after 30 years! That's insane! If your painter or landscaper charged similarly, people would rightly suggest you to DIY, too.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I just switched to having others manage my money. They do a much better job than I did. Much better. I still manage a 1/3 and there is a difference in increases in the accounts they manage. Maybe I will get better over time - but happy having someone else do it for now.

This is probably more of a reflection on you than your money manager.

I'm not the PP but this ("This is probably more of a reflection on you than your money manager") is the whole point of hiring someone. There are some of us, myself included, who are not skilled in managing investments so we contract out. Just like I contract out for landscape work, and pay a painter to paint my house. I'm capable of doing those things but the experts do them better.

I get where you're coming from, I really do. But ~97% of households have uncomplicated finances, and managing investments means little more than selecting a basket of 3-5 broad market index funds in your retirement accounts -- set it and forget it. It truly is that simple for the vast, vast majority of folks out there. Paying 1%+ of your assets under management year after year after year for somebody else to click those buttons for you is completely unnecessary and creates a serious drag on your ability to accumulate further savings. To wit, I have about average retirement savings for my age, and the "typical" retirement age is about 30 years away. A 1% drag on my account costs me almost a million dollars after 30 years! That's insane! If your painter or landscaper charged similarly, people would rightly suggest you to DIY, too.

I agree on some points but my place doesn’t just click a few boxes and invest my money. They understand taxes and estate planning and the nuances of tax loss harvesting. They reevaluate based on changing issues and needs. Like a similar poster above who learned a hard lesson about Maryland estate taxes, my wealth managers have recognized issues I wasn’t aware of and steered me back into safe territory.

We have massive elder care costs currently and once every month or two we evaluate how much we’re spending so they can do 401k to Roth conversions (for my elderly mom’s estate) without pushing her into a higher tax bracket. They know which pool to pull from and the beneficiaries are going to benefit from Roth money instead of 401k money. I understand these concepts in theory but would not be able to implement them successfully. I find value in their work, and I am okay with their fees.

[Anonymous]

DIY at 43/44 with ~2.6M. I definitely see the appeal of consulting with someone as retirement approaches to make sure you understand tax strategy, though.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I just switched to having others manage my money. They do a much better job than I did. Much better. I still manage a 1/3 and there is a difference in increases in the accounts they manage. Maybe I will get better over time - but happy having someone else do it for now.

This is probably more of a reflection on you than your money manager.

I'm not the PP but this ("This is probably more of a reflection on you than your money manager") is the whole point of hiring someone. There are some of us, myself included, who are not skilled in managing investments so we contract out. Just like I contract out for landscape work, and pay a painter to paint my house. I'm capable of doing those things but the experts do them better.

I get where you're coming from, I really do. But ~97% of households have uncomplicated finances, and managing investments means little more than selecting a basket of 3-5 broad market index funds in your retirement accounts -- set it and forget it. It truly is that simple for the vast, vast majority of folks out there. Paying 1%+ of your assets under management year after year after year for somebody else to click those buttons for you is completely unnecessary and creates a serious drag on your ability to accumulate further savings. To wit, I have about average retirement savings for my age, and the "typical" retirement age is about 30 years away. A 1% drag on my account costs me almost a million dollars after 30 years! That's insane! If your painter or landscaper charged similarly, people would rightly suggest you to DIY, too.

I agree on some points but my place doesn’t just click a few boxes and invest my money. They understand taxes and estate planning and the nuances of tax loss harvesting. They reevaluate based on changing issues and needs. Like a similar poster above who learned a hard lesson about Maryland estate taxes, my wealth managers have recognized issues I wasn’t aware of and steered me back into safe territory.

We have massive elder care costs currently and once every month or two we evaluate how much we’re spending so they can do 401k to Roth conversions (for my elderly mom’s estate) without pushing her into a higher tax bracket. They know which pool to pull from and the beneficiaries are going to benefit from Roth money instead of 401k money. I understand these concepts in theory but would not be able to implement them successfully. I find value in their work, and I am okay with their fees.

Not the PP you are responding to, but these are reasonable and you are in the 3% who yes would benefit from advice, because of the level of holdings and complexity.

[Anonymous]

My money is split in 3 buckets. For various reasons, I cannot (don't) want to touch bucket 1. Bucket 2 was under a wealth manager. And bucket 3, I manage myself and it is split in individual stocks (3a) and vanguard mutual funds (3b). Everyone has been telling me that I should move bucket 1 somewhere, where it can be actively managed, that the portfolio is unbalanced, and that the expense ratio on the mutual funds is too high. So this year, I finally sat down and took a deeper dive on the performance across my three buckets. Turns out, my 3a bucket that consists of individual stocks has done the best, but only because I bought NVIDIA and got lucky. Many of my other picks (DM for example) did terribly, but NVIDIA helps pull up the average. With that being said, I am done sock picking. My second best preforming bucket is 3b. And the third place was pretty much a tie between buckets 1 and 2, with bucket 1 actually doing a bit better. The only reason to keep my money under management are some perks that come with it. Like free updates on retirement planning, lower mortgage rates (though I may be done buying real estate), or that someone actually picks up the phone when there is an emergency.

[Anonymous]

Wealth manager all the way. We own a business together, and have large non-qualified accounts and business investment accounts. Also have a family trust so he keeps it all straight. Maybe it's not needed but helpful for our marriage to have it be a third party that we meet with a few times a year and have what amounts to marriage counseling around goals and finances in those meetings.