Do you use a “wealth manager” or DIY?

[Anonymous]

Anonymous wrote: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.

PP. ^Also, we are likely retiring/downsizing our careers/selling or closing business (Thanks Trump) in a few years so he's getting us into the right strategy for that at our age - we are early 50s and have kids in college.

[Anonymous]

Anonymous wrote:

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 if we had a full service wealth manager, they would have caught the MD estate tax issue, my mom could have withdrawn more from her IRA before she died, paid the taxes herself and brought the value of the estate below the $5M estate tax limit in MD.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!

I'm the PP you are referring to. We did not know what we did not know. None of us had lived in a state with a state estate tax before and we did not realize it was a possibility. I did not have access to info on my mom's accounts since I was not the executor and my sister who was is a CPA but works on corporate tax issues so missed it too. Luckily we are all doing well and can afford to just shrug it off - but it definitely taught me a lesson to be careful with my own financial plans (which are now more complicated due to having an inherited IRA). We also got lucky in that my mom's estate essentially doubled because she randomly took all her money out of the stock market in Feb 2020 while transferring accounts to a new mutual fund company and put the money back in right after the market dropped due to COVID. So you win some and you lose some!!!

[Anonymous]

Anonymous wrote:I feel confident in my ability to manage my own finances. But I often run into wealth managers at work events and they always offer their services. What exactly do they do that I’m not doing?

DIY unless you have no sense and won it in a lottery. If you can earn, you can manage. If they could earn, they wouldn't be managing other's money on commission.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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!

I'm the PP you are referring to. We did not know what we did not know. None of us had lived in a state with a state estate tax before and we did not realize it was a possibility. I did not have access to info on my mom's accounts since I was not the executor and my sister who was is a CPA but works on corporate tax issues so missed it too. Luckily we are all doing well and can afford to just shrug it off - but it definitely taught me a lesson to be careful with my own financial plans (which are now more complicated due to having an inherited IRA). We also got lucky in that my mom's estate essentially doubled because she randomly took all her money out of the stock market in Feb 2020 while transferring accounts to a new mutual fund company and put the money back in right after the market dropped due to COVID. So you win some and you lose some!!!

I'm pp and if it makes sense for you, then it makes sense. My only point was that you wanted to save money, specifically $200K. If you want to do that, there's a much cheaper way to manage this instead of spending $200K to save $200K.

[Anonymous]

May be worth it if you've more than $5 million and pick a fiduciary.

[Anonymous]

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

Yes and we have been very happy with the service. They came recommended by my father-in-law and he’s very picky and was a CFO of a major company so I trust this recommendation.

[Anonymous]

Isn't a wealth manager basically a glorified financial planner?

[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.

I wonder if advisors stress tax loss harvesting because they can sell off their underperforming stocks as a win.

You could easily hire a fiduciary to do this every other year for $5k - $10k and save boatloads.

[Anonymous]

Anonymous wrote:

Anonymous wrote:For those of you using outside help, make sure to track and compare your funds’ performance against benchmarks.

What do you mean by this?

Many funds are index funds which, follow a specific index…like the S&P 500. That funds performance will be nearly identical to the index it tracks.

If you are paying a wealth manager to put you in index funds, you are literally p1ssing money away, and are so stupid that you deserve what you get.

[Anonymous]

Yes, and she's worth it because I'm a worry wort. Also, their firm has access to investments that the public doesn't have access to.

[Anonymous]

Some of each. I do about 60 percent DIY, and 40 percent wealth manager. I'm tracking comparison of results.

[Anonymous]

Anonymous wrote:Yes, and she's worth it because I'm a worry wort. Also, their firm has access to investments that the public doesn't have access to.

That would raise my flags. Check the fund fees.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Yes, and she's worth it because I'm a worry wort. Also, their firm has access to investments that the public doesn't have access to.

That would raise my flags. Check the fund fees.

They get a flat .9%.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, and she's worth it because I'm a worry wort. Also, their firm has access to investments that the public doesn't have access to.

That would raise my flags. Check the fund fees.

They get a flat .9%.

Is that the fund fees or the AUM?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, and she's worth it because I'm a worry wort. Also, their firm has access to investments that the public doesn't have access to.

That would raise my flags. Check the fund fees.

They get a flat .9%.

Is that the fund fees or the AUM?

aum