Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. Ugh I feel sick hearing this. Just spoke with DH and advisor had recommended deploying the mutual funds slow and steady in case the market crashed. The mutual funds were supposed to just beat inflation and do better than a savings account while we slowly deploy. I guess it’s all relative to risk tolerance, and we’re not being aggressive enough. What if I just tell him to move it all to a cleared S&P 500 index fund? We have time to ride the waves and understand there’s no guarantee.

I agree this has nothing to do with risk tolerance and everything to do with you being fleeced by fees.

Now that I think you have bought on to this, we need to help you get out of this. You need to exit every single one of those funds. Keeping the individual FAANG stocks is a personal risk choice; at least they are not generating expense fees. But I would move them to Vanguard, Schwab, or Fidelity to take them out of your assets generating an AUM fee. While you are at it, move the cash to one of their money market funds.

Tell us the extent to which these funds are held in a taxable account, that is, not held in a retirement account like a Roth IRA. (I am assuming that you do not have an active IRA because you are doing backdoor Roths.) You can sell all the funds in a retirement account immediately with no tax implications and move the funds over to a Roth account to wherever you are moving your stock and money market funds.

But as a previous PP has said, selling all the other funds, could generate taxable income if they are not in a retirement account, and you will need advice on how to unwind them. I think this is particularly a concern for you because I am quite sure Vanguard would not accept a portfolio of these funds; you' have to check if Schwab or Fidelity would. This might mean you would need to liquidate them with your current financial advisor and continue to pay those fees until they are liquidated.

You need to hire a good tax CPA or one-time advise only financial advisor to figure out the liquidation exit plan in a way that balances out taxes dues from sales and fees from continuing to hold.

Once these funds are liquidated you can figure out a new deployment plan for the cash. Don't try to ride the wave; you already have a hefty share of FAANG for that should you keep that. You should be planning for optimizing your returns for the long-run, not for whatever further gains you may think are possible this year--absolutely no one is able to predict that.

Excellent advice. Saved me the time to type up what I would have said, with more info. OP, this is your guide right here.

Op here. Thank you so much! I think I’m going to go with Schwab because it’s an approved brokerage listed by my husband’s company. I have no idea how to find a good fee-only based advisor (any specific recommendations?)so I’ll probably just go with someone through Schwab to help me liquidate all the other funds with the current FA, assuming they can’t be transferred over. Then as I get more comfortable, I’ll ditch the Schwab help and mange myself. And when I said “ride the wave,” I meant getting the most ROI while continuing to grow our portfolio. I’ll keep the individual stocks (for now) and move them over to Schwab as well. [At the moment, the individual stocks are like our fun gambling pot which we don’t touch]. As far as tax implications, if the Schwab level of support can’t help me, I can ask our CPA who does our taxes.

And once my Schwab accounts are set up, we’ll start adding funds to those accounts instead of sending to our current FA. I’m assuming my FA will be notified by Schwab that we’re moving our money? Is this a conversation I should have with him before they do (assuming they’ll help me through this)?

If you have youngish children, and you work, do you really think you will have the bandwidth to watch your portfolio?

I tried doing that myself, and it was too hard. I didn't have time to research everything, and pay attention to the stock market.

Been DIYing it since I was 19.

Yes, with a small child. Working, obviously.

NOT paying attention is the key. Set and forget.

OP, Atwood Financial are great. Elizabeth Pennington charges $260/hr and the core things you need are done in three hours.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Its fine, OP, everyone I know that works for a big 5 pays a financial advisor to handle their money, it's so much easier.

Op here. That’s exactly it. However, I’m wondering if we can just negotiate a lower fee, like someone else suggested at .85%.

The fees typically decrease as your assets increase. I imagine that once you hit a million, your fees will go down. This is very normal and I'm not sure why the people on here are freaking out. Totally, totally normal for someone in your situation.

Normal is broke.

Anonymous wrote:

Anonymous wrote:It should never be more than 1%. But I agree asset under management fees are generally not worth it unless you really are allergic to doing this yourself, in which case, I would just go with Vanguard Personal Advisors or similar, which runs 0.30% for all index to 0.40% for mix of indexes and individual investments.

But at $750,000 you can do it yourself. The clearance list would not be an issue for a broad based index fund like the S and P 500, so you wouldn't need to worry about that. If you need bonds, you can do a government bond fund, which also should not need clearance. So I don't think that service is worth much. And really, why does anyone need to invest outside of these indexes unless it a hobby or passion (clearly not your case)?

A backdoor Roth is super simple and takes very little time once a year through an account at Vanguard, Fidelity, or Scwab. Google whitecoatinvestor backdoor Roth for step by step instructions.

I would move everything at once to Vanguard or the other two. Pay for the really cheap personal advisor option and drop it once you are comfortable doing everything on your own.

Do you have sizable IRAs? Then a back door Roth is going to cost you $$$ in taxes. Beware of internet posters bloviating about which they know little. Your advisor may be worth his fee. Most great advisors don’t take on accounts of your size so that may be his fee for smaller households.

The resource we have all pointed OP to—White Coat Investor—explains this at great length!

TRULY, no need to pay this person 1.25% year after year after year.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
Is there any decent reason as to why my FA would put us in all of these different index funds (the ones I listed way up thread) instead of just one or two strong performing ones?

Diversification. Notice a bunch of people in this thread have said just put it in VTI or VTSAX and that's all you need to do. Those funds represent the total US stock market.

But... is that all you want to be exposed to? Companies in India and China saw rapid gains in the last 10 years. European stocks provide a level of stability in some times when the US markets take a dive (for example, related to US elections of inability to keep the government funded).

Then, when markets go down, do you want to take the ride the entire way down, or would you like it cushioned by holding some funds that are more stable in recessionary times, like bond funds?

Put another way, let's say you picked 1 tech stock and that was your portfolio. You wouldn't want to put all your eggs in that basket, as now you're tied to one company. So let's say you instead by 10 different tech stocks. Better, but now if the tech sector has a downturn, you're going down with it, so you diversify more into other sectors. Then you end up at the entire US market, which is what VTI/VTSAX represent. Great, but do you want to stop there, or go further in your diversification to other markets geographically, as well as adding on a bit higher proportion in certain industries, perhaps those that do better in downturns?

There's no reason to have more than a 3-fund strategy. Yes, you can throw around a lot of scare tactics. But there's no reason to buy separate funds to get total US market exposure.

Yup, or a total international fund for the international exposure. As you said, more than 3 funds (domestic stock, international stock, bond) is unnecessary and not really diversifying, just clumping the peanut butter in spots on the bread instead of spreading it evenly.

Most of the advice on this thread has been to just buy a US stock index fund. Why ignore other markets (abroad)?

Whether you buy US stock index or a 3-fund portfolio is a second-order issue. The key is to stop being ripped off by the financial advisor. You can get exposure to every significant stock market in the world just by buying VTWAX. Expense ratio? 0.1 percent.

Having an advisor for less than 10M is dumb and less than 1M is insane

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
Is there any decent reason as to why my FA would put us in all of these different index funds (the ones I listed way up thread) instead of just one or two strong performing ones?

Diversification. Notice a bunch of people in this thread have said just put it in VTI or VTSAX and that's all you need to do. Those funds represent the total US stock market.

But... is that all you want to be exposed to? Companies in India and China saw rapid gains in the last 10 years. European stocks provide a level of stability in some times when the US markets take a dive (for example, related to US elections of inability to keep the government funded).

Then, when markets go down, do you want to take the ride the entire way down, or would you like it cushioned by holding some funds that are more stable in recessionary times, like bond funds?

Put another way, let's say you picked 1 tech stock and that was your portfolio. You wouldn't want to put all your eggs in that basket, as now you're tied to one company. So let's say you instead by 10 different tech stocks. Better, but now if the tech sector has a downturn, you're going down with it, so you diversify more into other sectors. Then you end up at the entire US market, which is what VTI/VTSAX represent. Great, but do you want to stop there, or go further in your diversification to other markets geographically, as well as adding on a bit higher proportion in certain industries, perhaps those that do better in downturns?

There's no reason to have more than a 3-fund strategy. Yes, you can throw around a lot of scare tactics. But there's no reason to buy separate funds to get total US market exposure.

Yup, or a total international fund for the international exposure. As you said, more than 3 funds (domestic stock, international stock, bond) is unnecessary and not really diversifying, just clumping the peanut butter in spots on the bread instead of spreading it evenly.

Most of the advice on this thread has been to just buy a US stock index fund. Why ignore other markets (abroad)?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
Is there any decent reason as to why my FA would put us in all of these different index funds (the ones I listed way up thread) instead of just one or two strong performing ones?

Diversification. Notice a bunch of people in this thread have said just put it in VTI or VTSAX and that's all you need to do. Those funds represent the total US stock market.

But... is that all you want to be exposed to? Companies in India and China saw rapid gains in the last 10 years. European stocks provide a level of stability in some times when the US markets take a dive (for example, related to US elections of inability to keep the government funded).

Then, when markets go down, do you want to take the ride the entire way down, or would you like it cushioned by holding some funds that are more stable in recessionary times, like bond funds?

Put another way, let's say you picked 1 tech stock and that was your portfolio. You wouldn't want to put all your eggs in that basket, as now you're tied to one company. So let's say you instead by 10 different tech stocks. Better, but now if the tech sector has a downturn, you're going down with it, so you diversify more into other sectors. Then you end up at the entire US market, which is what VTI/VTSAX represent. Great, but do you want to stop there, or go further in your diversification to other markets geographically, as well as adding on a bit higher proportion in certain industries, perhaps those that do better in downturns?

There's no reason to have more than a 3-fund strategy. Yes, you can throw around a lot of scare tactics. But there's no reason to buy separate funds to get total US market exposure.

Yup, or a total international fund for the international exposure. As you said, more than 3 funds (domestic stock, international stock, bond) is unnecessary and not really diversifying, just clumping the peanut butter in spots on the bread instead of spreading it evenly.

Anonymous wrote:

Anonymous wrote:
Is there any decent reason as to why my FA would put us in all of these different index funds (the ones I listed way up thread) instead of just one or two strong performing ones?

Diversification. Notice a bunch of people in this thread have said just put it in VTI or VTSAX and that's all you need to do. Those funds represent the total US stock market.

But... is that all you want to be exposed to? Companies in India and China saw rapid gains in the last 10 years. European stocks provide a level of stability in some times when the US markets take a dive (for example, related to US elections of inability to keep the government funded).

Then, when markets go down, do you want to take the ride the entire way down, or would you like it cushioned by holding some funds that are more stable in recessionary times, like bond funds?

Put another way, let's say you picked 1 tech stock and that was your portfolio. You wouldn't want to put all your eggs in that basket, as now you're tied to one company. So let's say you instead by 10 different tech stocks. Better, but now if the tech sector has a downturn, you're going down with it, so you diversify more into other sectors. Then you end up at the entire US market, which is what VTI/VTSAX represent. Great, but do you want to stop there, or go further in your diversification to other markets geographically, as well as adding on a bit higher proportion in certain industries, perhaps those that do better in downturns?

There's no reason to have more than a 3-fund strategy. Yes, you can throw around a lot of scare tactics. But there's no reason to buy separate funds to get total US market exposure.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. Ugh I feel sick hearing this. Just spoke with DH and advisor had recommended deploying the mutual funds slow and steady in case the market crashed. The mutual funds were supposed to just beat inflation and do better than a savings account while we slowly deploy. I guess it’s all relative to risk tolerance, and we’re not being aggressive enough. What if I just tell him to move it all to a cleared S&P 500 index fund? We have time to ride the waves and understand there’s no guarantee.

I agree this has nothing to do with risk tolerance and everything to do with you being fleeced by fees.

Now that I think you have bought on to this, we need to help you get out of this. You need to exit every single one of those funds. Keeping the individual FAANG stocks is a personal risk choice; at least they are not generating expense fees. But I would move them to Vanguard, Schwab, or Fidelity to take them out of your assets generating an AUM fee. While you are at it, move the cash to one of their money market funds.

Tell us the extent to which these funds are held in a taxable account, that is, not held in a retirement account like a Roth IRA. (I am assuming that you do not have an active IRA because you are doing backdoor Roths.) You can sell all the funds in a retirement account immediately with no tax implications and move the funds over to a Roth account to wherever you are moving your stock and money market funds.

But as a previous PP has said, selling all the other funds, could generate taxable income if they are not in a retirement account, and you will need advice on how to unwind them. I think this is particularly a concern for you because I am quite sure Vanguard would not accept a portfolio of these funds; you' have to check if Schwab or Fidelity would. This might mean you would need to liquidate them with your current financial advisor and continue to pay those fees until they are liquidated.

You need to hire a good tax CPA or one-time advise only financial advisor to figure out the liquidation exit plan in a way that balances out taxes dues from sales and fees from continuing to hold.

Once these funds are liquidated you can figure out a new deployment plan for the cash. Don't try to ride the wave; you already have a hefty share of FAANG for that should you keep that. You should be planning for optimizing your returns for the long-run, not for whatever further gains you may think are possible this year--absolutely no one is able to predict that.

Excellent advice. Saved me the time to type up what I would have said, with more info. OP, this is your guide right here.

Op here. Thank you so much! I think I’m going to go with Schwab because it’s an approved brokerage listed by my husband’s company. I have no idea how to find a good fee-only based advisor (any specific recommendations?)so I’ll probably just go with someone through Schwab to help me liquidate all the other funds with the current FA, assuming they can’t be transferred over. Then as I get more comfortable, I’ll ditch the Schwab help and mange myself. And when I said “ride the wave,” I meant getting the most ROI while continuing to grow our portfolio. I’ll keep the individual stocks (for now) and move them over to Schwab as well. [At the moment, the individual stocks are like our fun gambling pot which we don’t touch]. As far as tax implications, if the Schwab level of support can’t help me, I can ask our CPA who does our taxes.

And once my Schwab accounts are set up, we’ll start adding funds to those accounts instead of sending to our current FA. I’m assuming my FA will be notified by Schwab that we’re moving our money? Is this a conversation I should have with him before they do (assuming they’ll help me through this)?

If you have youngish children, and you work, do you really think you will have the bandwidth to watch your portfolio?

I tried doing that myself, and it was too hard. I didn't have time to research everything, and pay attention to the stock market.

Op here. I do work and no, I don’t have time to routinely manage it, but I think putting new funds in an S&P index fund or something similar would be more beneficial over the long term and I won’t be paying $10k+ a year in just fees (especially since we only have $750k).

This is the beauty of index funds. You don't need to manage them if you are investing for the long-run.

You do need to decide on your asset allocation between stocks and bonds, though at OP's age if she doesn't need the funds for anything other than retirement she could go all equity for another 15 to 20 years. Aggressive? Yes, but not strongly so if it is all broadly-based index funds. She will have most of her money in taxable accounts, however, and that does does have long-term capital gains tax implications, so she may need some light tax advice towards the end of the year for that. She can call upon her CPA if need be.

The key to minimizing taxes is to look at turnover ratios of the various fund choices. Generally, the indexes have very low turnover rates. VOO for example is 2.1%. In contrast, the first fund she listed, CMNX, is a whopping 32.1%. So on top of the load fees and very high expense ratios, she likely was being saddled as well with capital gains.

OP here. I’m embarrassed to say that I don’t know what this means.

Is there any decent reason as to why my FA would put us in all of these different index funds (the ones I listed way up thread) instead of just one or two strong performing ones?

And also, before I ditch him, do you think I can ask him to sort out the mess and streamline all of these into one or two funds in a way that is tax advantageous to us? Then when it’s sorted, ditch him? Trying to figure out the best path forward: have him clean it up first or just let him go (this week) by telling him I want to self-manage.

Thank you all for your advice!

Don't tell him anything. Bogleheads and/or yne brokerage you're going to can tell you how to get everything pulled over. Bogleheads are always saying get the new brokerage to pull from the old rather than the old brokerage to push to the new. The also say download your statements and cost basis first.

yne=the

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. Ugh I feel sick hearing this. Just spoke with DH and advisor had recommended deploying the mutual funds slow and steady in case the market crashed. The mutual funds were supposed to just beat inflation and do better than a savings account while we slowly deploy. I guess it’s all relative to risk tolerance, and we’re not being aggressive enough. What if I just tell him to move it all to a cleared S&P 500 index fund? We have time to ride the waves and understand there’s no guarantee.

I agree this has nothing to do with risk tolerance and everything to do with you being fleeced by fees.

Now that I think you have bought on to this, we need to help you get out of this. You need to exit every single one of those funds. Keeping the individual FAANG stocks is a personal risk choice; at least they are not generating expense fees. But I would move them to Vanguard, Schwab, or Fidelity to take them out of your assets generating an AUM fee. While you are at it, move the cash to one of their money market funds.

Tell us the extent to which these funds are held in a taxable account, that is, not held in a retirement account like a Roth IRA. (I am assuming that you do not have an active IRA because you are doing backdoor Roths.) You can sell all the funds in a retirement account immediately with no tax implications and move the funds over to a Roth account to wherever you are moving your stock and money market funds.

But as a previous PP has said, selling all the other funds, could generate taxable income if they are not in a retirement account, and you will need advice on how to unwind them. I think this is particularly a concern for you because I am quite sure Vanguard would not accept a portfolio of these funds; you' have to check if Schwab or Fidelity would. This might mean you would need to liquidate them with your current financial advisor and continue to pay those fees until they are liquidated.

You need to hire a good tax CPA or one-time advise only financial advisor to figure out the liquidation exit plan in a way that balances out taxes dues from sales and fees from continuing to hold.

Once these funds are liquidated you can figure out a new deployment plan for the cash. Don't try to ride the wave; you already have a hefty share of FAANG for that should you keep that. You should be planning for optimizing your returns for the long-run, not for whatever further gains you may think are possible this year--absolutely no one is able to predict that.

Excellent advice. Saved me the time to type up what I would have said, with more info. OP, this is your guide right here.

Op here. Thank you so much! I think I’m going to go with Schwab because it’s an approved brokerage listed by my husband’s company. I have no idea how to find a good fee-only based advisor (any specific recommendations?)so I’ll probably just go with someone through Schwab to help me liquidate all the other funds with the current FA, assuming they can’t be transferred over. Then as I get more comfortable, I’ll ditch the Schwab help and mange myself. And when I said “ride the wave,” I meant getting the most ROI while continuing to grow our portfolio. I’ll keep the individual stocks (for now) and move them over to Schwab as well. [At the moment, the individual stocks are like our fun gambling pot which we don’t touch]. As far as tax implications, if the Schwab level of support can’t help me, I can ask our CPA who does our taxes.

And once my Schwab accounts are set up, we’ll start adding funds to those accounts instead of sending to our current FA. I’m assuming my FA will be notified by Schwab that we’re moving our money? Is this a conversation I should have with him before they do (assuming they’ll help me through this)?

If you have youngish children, and you work, do you really think you will have the bandwidth to watch your portfolio?

I tried doing that myself, and it was too hard. I didn't have time to research everything, and pay attention to the stock market.

Op here. I do work and no, I don’t have time to routinely manage it, but I think putting new funds in an S&P index fund or something similar would be more beneficial over the long term and I won’t be paying $10k+ a year in just fees (especially since we only have $750k).

This is the beauty of index funds. You don't need to manage them if you are investing for the long-run.

You do need to decide on your asset allocation between stocks and bonds, though at OP's age if she doesn't need the funds for anything other than retirement she could go all equity for another 15 to 20 years. Aggressive? Yes, but not strongly so if it is all broadly-based index funds. She will have most of her money in taxable accounts, however, and that does does have long-term capital gains tax implications, so she may need some light tax advice towards the end of the year for that. She can call upon her CPA if need be.

The key to minimizing taxes is to look at turnover ratios of the various fund choices. Generally, the indexes have very low turnover rates. VOO for example is 2.1%. In contrast, the first fund she listed, CMNX, is a whopping 32.1%. So on top of the load fees and very high expense ratios, she likely was being saddled as well with capital gains.

OP here. I’m embarrassed to say that I don’t know what this means.

Is there any decent reason as to why my FA would put us in all of these different index funds (the ones I listed way up thread) instead of just one or two strong performing ones?

And also, before I ditch him, do you think I can ask him to sort out the mess and streamline all of these into one or two funds in a way that is tax advantageous to us? Then when it’s sorted, ditch him? Trying to figure out the best path forward: have him clean it up first or just let him go (this week) by telling him I want to self-manage.

Thank you all for your advice!

Don't tell him anything. Bogleheads and/or yne brokerage you're going to can tell you how to get everything pulled over. Bogleheads are always saying get the new brokerage to pull from the old rather than the old brokerage to push to the new. The also say download your statements and cost basis first.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. Ugh I feel sick hearing this. Just spoke with DH and advisor had recommended deploying the mutual funds slow and steady in case the market crashed. The mutual funds were supposed to just beat inflation and do better than a savings account while we slowly deploy. I guess it’s all relative to risk tolerance, and we’re not being aggressive enough. What if I just tell him to move it all to a cleared S&P 500 index fund? We have time to ride the waves and understand there’s no guarantee.

I agree this has nothing to do with risk tolerance and everything to do with you being fleeced by fees.

Now that I think you have bought on to this, we need to help you get out of this. You need to exit every single one of those funds. Keeping the individual FAANG stocks is a personal risk choice; at least they are not generating expense fees. But I would move them to Vanguard, Schwab, or Fidelity to take them out of your assets generating an AUM fee. While you are at it, move the cash to one of their money market funds.

Tell us the extent to which these funds are held in a taxable account, that is, not held in a retirement account like a Roth IRA. (I am assuming that you do not have an active IRA because you are doing backdoor Roths.) You can sell all the funds in a retirement account immediately with no tax implications and move the funds over to a Roth account to wherever you are moving your stock and money market funds.

But as a previous PP has said, selling all the other funds, could generate taxable income if they are not in a retirement account, and you will need advice on how to unwind them. I think this is particularly a concern for you because I am quite sure Vanguard would not accept a portfolio of these funds; you' have to check if Schwab or Fidelity would. This might mean you would need to liquidate them with your current financial advisor and continue to pay those fees until they are liquidated.

You need to hire a good tax CPA or one-time advise only financial advisor to figure out the liquidation exit plan in a way that balances out taxes dues from sales and fees from continuing to hold.

Once these funds are liquidated you can figure out a new deployment plan for the cash. Don't try to ride the wave; you already have a hefty share of FAANG for that should you keep that. You should be planning for optimizing your returns for the long-run, not for whatever further gains you may think are possible this year--absolutely no one is able to predict that.

Excellent advice. Saved me the time to type up what I would have said, with more info. OP, this is your guide right here.

Op here. Thank you so much! I think I’m going to go with Schwab because it’s an approved brokerage listed by my husband’s company. I have no idea how to find a good fee-only based advisor (any specific recommendations?)so I’ll probably just go with someone through Schwab to help me liquidate all the other funds with the current FA, assuming they can’t be transferred over. Then as I get more comfortable, I’ll ditch the Schwab help and mange myself. And when I said “ride the wave,” I meant getting the most ROI while continuing to grow our portfolio. I’ll keep the individual stocks (for now) and move them over to Schwab as well. [At the moment, the individual stocks are like our fun gambling pot which we don’t touch]. As far as tax implications, if the Schwab level of support can’t help me, I can ask our CPA who does our taxes.

And once my Schwab accounts are set up, we’ll start adding funds to those accounts instead of sending to our current FA. I’m assuming my FA will be notified by Schwab that we’re moving our money? Is this a conversation I should have with him before they do (assuming they’ll help me through this)?

If you have youngish children, and you work, do you really think you will have the bandwidth to watch your portfolio?

I tried doing that myself, and it was too hard. I didn't have time to research everything, and pay attention to the stock market.

Op here. I do work and no, I don’t have time to routinely manage it, but I think putting new funds in an S&P index fund or something similar would be more beneficial over the long term and I won’t be paying $10k+ a year in just fees (especially since we only have $750k).

This is the beauty of index funds. You don't need to manage them if you are investing for the long-run.

You do need to decide on your asset allocation between stocks and bonds, though at OP's age if she doesn't need the funds for anything other than retirement she could go all equity for another 15 to 20 years. Aggressive? Yes, but not strongly so if it is all broadly-based index funds. She will have most of her money in taxable accounts, however, and that does does have long-term capital gains tax implications, so she may need some light tax advice towards the end of the year for that. She can call upon her CPA if need be.

The key to minimizing taxes is to look at turnover ratios of the various fund choices. Generally, the indexes have very low turnover rates. VOO for example is 2.1%. In contrast, the first fund she listed, CMNX, is a whopping 32.1%. So on top of the load fees and very high expense ratios, she likely was being saddled as well with capital gains.

OP here. I’m embarrassed to say that I don’t know what this means.

Is there any decent reason as to why my FA would put us in all of these different index funds (the ones I listed way up thread) instead of just one or two strong performing ones?

And also, before I ditch him, do you think I can ask him to sort out the mess and streamline all of these into one or two funds in a way that is tax advantageous to us? Then when it’s sorted, ditch him? Trying to figure out the best path forward: have him clean it up first or just let him go (this week) by telling him I want to self-manage.

Thank you all for your advice!

A turnover of 32% means the fund is selling around a third of the securities it holds every year. If they are sold for a higher price than at which they were bought a capital gain is realized. You have to pay taxes on the gains the fund has generated this way. They may have sold some securities at a loss to help off set this, but it is hard to know without looking at your 1099. But you have a lot of these funds likely with similarly high turnover. As a general rule, the higher the turnover, the greater your exposure to gains subject to taxes. I will note that to the extent such funds are in your Roth, the gains would not be subject to tax.

Index funds, on the other hand, sell securities only to the extent needed to replicate the index. That is why VOO has such a low turnover and is considered tax-efficient.

There is no decent reason for your FA to have put in such a portfolio. There is no decent reason to put any load funds into a portfolio of your size, let alone funds with such high expense ratios and turnovers. Your FA is not decent; he has taken advantage of you, and I would not trust him to straighten out the mess.

I a with those who say call him up and say you want to self-direct in WellsTrade, figure out taxes for disposing of the funds with your CPA, and put the cash into money market fund before redeploying the cash once you have a strategy.

Where you see differences in responses is whether you should get a new financial advisor or not and what type.

Some are on the full-fledged asset manager side for which you will spend 1% AUM a year. If I were you, I would be too scarred by what this FA has done to go this route (plus i can't stomach AUM fees). Others would instead go FA-lite through Schwab or an advice only advisor, particularly as your portfolio is not that large.

You may wish to consider this advice only planner is often mentioned on Bogleheads. It is $300 a year and $8 a year thereafter; you have to execute. It has a waiting list; you may be able to get in by late April. https://planvisionmn.com/

Anonymous wrote:
Is there any decent reason as to why my FA would put us in all of these different index funds (the ones I listed way up thread) instead of just one or two strong performing ones?

Diversification. Notice a bunch of people in this thread have said just put it in VTI or VTSAX and that's all you need to do. Those funds represent the total US stock market.

But... is that all you want to be exposed to? Companies in India and China saw rapid gains in the last 10 years. European stocks provide a level of stability in some times when the US markets take a dive (for example, related to US elections of inability to keep the government funded).

Then, when markets go down, do you want to take the ride the entire way down, or would you like it cushioned by holding some funds that are more stable in recessionary times, like bond funds?

Put another way, let's say you picked 1 tech stock and that was your portfolio. You wouldn't want to put all your eggs in that basket, as now you're tied to one company. So let's say you instead by 10 different tech stocks. Better, but now if the tech sector has a downturn, you're going down with it, so you diversify more into other sectors. Then you end up at the entire US market, which is what VTI/VTSAX represent. Great, but do you want to stop there, or go further in your diversification to other markets geographically, as well as adding on a bit higher proportion in certain industries, perhaps those that do better in downturns?

OP, do this

This is not something to make a quick decision on. You can find a good financial advisor in less than a month. Check out their websites, call up to 10 and meet with 3 in person, then choose one.

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Anonymous wrote:OP here. Ugh I feel sick hearing this. Just spoke with DH and advisor had recommended deploying the mutual funds slow and steady in case the market crashed. The mutual funds were supposed to just beat inflation and do better than a savings account while we slowly deploy. I guess it’s all relative to risk tolerance, and we’re not being aggressive enough. What if I just tell him to move it all to a cleared S&P 500 index fund? We have time to ride the waves and understand there’s no guarantee.

I agree this has nothing to do with risk tolerance and everything to do with you being fleeced by fees.

Now that I think you have bought on to this, we need to help you get out of this. You need to exit every single one of those funds. Keeping the individual FAANG stocks is a personal risk choice; at least they are not generating expense fees. But I would move them to Vanguard, Schwab, or Fidelity to take them out of your assets generating an AUM fee. While you are at it, move the cash to one of their money market funds.

Tell us the extent to which these funds are held in a taxable account, that is, not held in a retirement account like a Roth IRA. (I am assuming that you do not have an active IRA because you are doing backdoor Roths.) You can sell all the funds in a retirement account immediately with no tax implications and move the funds over to a Roth account to wherever you are moving your stock and money market funds.

But as a previous PP has said, selling all the other funds, could generate taxable income if they are not in a retirement account, and you will need advice on how to unwind them. I think this is particularly a concern for you because I am quite sure Vanguard would not accept a portfolio of these funds; you' have to check if Schwab or Fidelity would. This might mean you would need to liquidate them with your current financial advisor and continue to pay those fees until they are liquidated.

You need to hire a good tax CPA or one-time advise only financial advisor to figure out the liquidation exit plan in a way that balances out taxes dues from sales and fees from continuing to hold.

Once these funds are liquidated you can figure out a new deployment plan for the cash. Don't try to ride the wave; you already have a hefty share of FAANG for that should you keep that. You should be planning for optimizing your returns for the long-run, not for whatever further gains you may think are possible this year--absolutely no one is able to predict that.

Excellent advice. Saved me the time to type up what I would have said, with more info. OP, this is your guide right here.

Op here. Thank you so much! I think I’m going to go with Schwab because it’s an approved brokerage listed by my husband’s company. I have no idea how to find a good fee-only based advisor (any specific recommendations?)so I’ll probably just go with someone through Schwab to help me liquidate all the other funds with the current FA, assuming they can’t be transferred over. Then as I get more comfortable, I’ll ditch the Schwab help and mange myself. And when I said “ride the wave,” I meant getting the most ROI while continuing to grow our portfolio. I’ll keep the individual stocks (for now) and move them over to Schwab as well. [At the moment, the individual stocks are like our fun gambling pot which we don’t touch]. As far as tax implications, if the Schwab level of support can’t help me, I can ask our CPA who does our taxes.

And once my Schwab accounts are set up, we’ll start adding funds to those accounts instead of sending to our current FA. I’m assuming my FA will be notified by Schwab that we’re moving our money? Is this a conversation I should have with him before they do (assuming they’ll help me through this)?

If you have youngish children, and you work, do you really think you will have the bandwidth to watch your portfolio?

I tried doing that myself, and it was too hard. I didn't have time to research everything, and pay attention to the stock market.

Op here. I do work and no, I don’t have time to routinely manage it, but I think putting new funds in an S&P index fund or something similar would be more beneficial over the long term and I won’t be paying $10k+ a year in just fees (especially since we only have $750k).

This is the beauty of index funds. You don't need to manage them if you are investing for the long-run.

You do need to decide on your asset allocation between stocks and bonds, though at OP's age if she doesn't need the funds for anything other than retirement she could go all equity for another 15 to 20 years. Aggressive? Yes, but not strongly so if it is all broadly-based index funds. She will have most of her money in taxable accounts, however, and that does does have long-term capital gains tax implications, so she may need some light tax advice towards the end of the year for that. She can call upon her CPA if need be.

The key to minimizing taxes is to look at turnover ratios of the various fund choices. Generally, the indexes have very low turnover rates. VOO for example is 2.1%. In contrast, the first fund she listed, CMNX, is a whopping 32.1%. So on top of the load fees and very high expense ratios, she likely was being saddled as well with capital gains.

OP here. I’m embarrassed to say that I don’t know what this means.

Is there any decent reason as to why my FA would put us in all of these different index funds (the ones I listed way up thread) instead of just one or two strong performing ones?

And also, before I ditch him, do you think I can ask him to sort out the mess and streamline all of these into one or two funds in a way that is tax advantageous to us? Then when it’s sorted, ditch him? Trying to figure out the best path forward: have him clean it up first or just let him go (this week) by telling him I want to self-manage.

Thank you all for your advice!

I already mentioned why they do what they do

Here is the quick analysis.

1) You do not have a financial advisor, you have a salesperson.

2) Salespeople, big banks, brokerage firms and bad advisors use a large number of funds to trick you into thinking they have some magic formula. They are full of sh.t.

3)You probable got bad financial planning advise based on your portfolio. I hope this firm does not also sell annuities and life insurance.

4) You are paying way more than 1.25% when you add in the cost of the fees.

What you should do>


A) Do not tell him to do anything. He can really screw things up more. Are these funds in an IRA or taxable account?

B) Find an independent, fee-only firm that does financial planning along with investment management. They will be able to clean your mess up in a cost effective manner.


Wells Fargo, Merrill , Morgan Stanley, Ameriprise, Edward Jones - they all provide expensive, shatty, confusing portfolios.

Capital gains or paid by you at the end of the year when fund companies sell some of their securities. Check your 1099's.

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Anonymous wrote:OP here. Ugh I feel sick hearing this. Just spoke with DH and advisor had recommended deploying the mutual funds slow and steady in case the market crashed. The mutual funds were supposed to just beat inflation and do better than a savings account while we slowly deploy. I guess it’s all relative to risk tolerance, and we’re not being aggressive enough. What if I just tell him to move it all to a cleared S&P 500 index fund? We have time to ride the waves and understand there’s no guarantee.

I agree this has nothing to do with risk tolerance and everything to do with you being fleeced by fees.

Now that I think you have bought on to this, we need to help you get out of this. You need to exit every single one of those funds. Keeping the individual FAANG stocks is a personal risk choice; at least they are not generating expense fees. But I would move them to Vanguard, Schwab, or Fidelity to take them out of your assets generating an AUM fee. While you are at it, move the cash to one of their money market funds.

Tell us the extent to which these funds are held in a taxable account, that is, not held in a retirement account like a Roth IRA. (I am assuming that you do not have an active IRA because you are doing backdoor Roths.) You can sell all the funds in a retirement account immediately with no tax implications and move the funds over to a Roth account to wherever you are moving your stock and money market funds.

But as a previous PP has said, selling all the other funds, could generate taxable income if they are not in a retirement account, and you will need advice on how to unwind them. I think this is particularly a concern for you because I am quite sure Vanguard would not accept a portfolio of these funds; you' have to check if Schwab or Fidelity would. This might mean you would need to liquidate them with your current financial advisor and continue to pay those fees until they are liquidated.

You need to hire a good tax CPA or one-time advise only financial advisor to figure out the liquidation exit plan in a way that balances out taxes dues from sales and fees from continuing to hold.

Once these funds are liquidated you can figure out a new deployment plan for the cash. Don't try to ride the wave; you already have a hefty share of FAANG for that should you keep that. You should be planning for optimizing your returns for the long-run, not for whatever further gains you may think are possible this year--absolutely no one is able to predict that.

Excellent advice. Saved me the time to type up what I would have said, with more info. OP, this is your guide right here.

Op here. Thank you so much! I think I’m going to go with Schwab because it’s an approved brokerage listed by my husband’s company. I have no idea how to find a good fee-only based advisor (any specific recommendations?)so I’ll probably just go with someone through Schwab to help me liquidate all the other funds with the current FA, assuming they can’t be transferred over. Then as I get more comfortable, I’ll ditch the Schwab help and mange myself. And when I said “ride the wave,” I meant getting the most ROI while continuing to grow our portfolio. I’ll keep the individual stocks (for now) and move them over to Schwab as well. [At the moment, the individual stocks are like our fun gambling pot which we don’t touch]. As far as tax implications, if the Schwab level of support can’t help me, I can ask our CPA who does our taxes.

And once my Schwab accounts are set up, we’ll start adding funds to those accounts instead of sending to our current FA. I’m assuming my FA will be notified by Schwab that we’re moving our money? Is this a conversation I should have with him before they do (assuming they’ll help me through this)?

If you have youngish children, and you work, do you really think you will have the bandwidth to watch your portfolio?

I tried doing that myself, and it was too hard. I didn't have time to research everything, and pay attention to the stock market.

Op here. I do work and no, I don’t have time to routinely manage it, but I think putting new funds in an S&P index fund or something similar would be more beneficial over the long term and I won’t be paying $10k+ a year in just fees (especially since we only have $750k).

This is the beauty of index funds. You don't need to manage them if you are investing for the long-run.

You do need to decide on your asset allocation between stocks and bonds, though at OP's age if she doesn't need the funds for anything other than retirement she could go all equity for another 15 to 20 years. Aggressive? Yes, but not strongly so if it is all broadly-based index funds. She will have most of her money in taxable accounts, however, and that does does have long-term capital gains tax implications, so she may need some light tax advice towards the end of the year for that. She can call upon her CPA if need be.

The key to minimizing taxes is to look at turnover ratios of the various fund choices. Generally, the indexes have very low turnover rates. VOO for example is 2.1%. In contrast, the first fund she listed, CMNX, is a whopping 32.1%. So on top of the load fees and very high expense ratios, she likely was being saddled as well with capital gains.

OP here. I’m embarrassed to say that I don’t know what this means.

Is there any decent reason as to why my FA would put us in all of these different index funds (the ones I listed way up thread) instead of just one or two strong performing ones?

And also, before I ditch him, do you think I can ask him to sort out the mess and streamline all of these into one or two funds in a way that is tax advantageous to us? Then when it’s sorted, ditch him? Trying to figure out the best path forward: have him clean it up first or just let him go (this week) by telling him I want to self-manage.

Thank you all for your advice!