My father is 90. He asked me to help him with his retirement portfolio 2 years ago. I was floored when I saw the fees and the funds. He was paying 1.7% fee, and the advisor (big bank, wealth advisor) was just trying to pick stocks and bond mutual funds. It was a mess. I couldn’t believe it. The advisor was not providing any financial advice. Absolutely criminal! We fired the advisor, and began the process of moving the portfolio to low cost diversified ETFs. It took 12+ months to fix it. And now everything is safely invested in diversified ETFs with an overall MER of $0.15. This is saving my father $40k+ per year, and his risk exposure is LESS.
Once you understand what you're doing.... (and it doesn't take long) you realize you don't need a financial advisor. Had 3 FA's in my life. 1st one sold me whole life. 2nd put all my available investing money in a single stock that went to zero. 3rd one is now in prison for embezzling clients money. Thank God he didn't get mine. How I wish I had learned earlier.
I agree 100% with you Otter. ETFs are the cheapest way to invest. Treasurer Bills are free to invest in for your safe fixed income cash. There are plenty of good books out there for people to learn from. My favorite is "Confessions of a Finance Planner" by David D Holland, CPA. Love your channel and nice puppy also.
Great video Sir!! A simple portfolio can be as easy as 70% in Vanguard Wellington and 30% in Vanguard Wellesley. A success track record for not running out of money in retirement.
rick: Wellington was the first fund I ever owned and it certainly has done well over the decades. However, in my 20s I never should have invested in it due to it having too big an allocation in bonds for my age. The other issue I have with blended funds is that during the withdrawal phase, you are forced to, in essence, sell both your stocks and bonds at the same time. With separate funds, one for bonds and one for stocks, you have more control over which asset you want to sell.
@@RetirementTalk43 Thanks for the feedback sir! Maybe just simplify it to VTI and BND? Maybe with a few years cash (MM, HYSA) just in case another 2022 comes around where stocks and bonds took a beating. In that case you wouldn't want to sell VTI or BND in that year to fund your needs.
Good advice! Thanks to John Bogle, we no longer need to try and pick individual stocks to invest in during retirement. A stock market index fund and a bond index fund can help diversify a portfolio very easily.
listening to the fee charge and then how many funds he had been invested in, really hurt my head! what a kind friend you are to help guide him and i hope he takes your advice. This is why target date funds are popular takes all the thinking out of it but doesn't rip you off and keeps you diversifed. Shame on that advisor!
I was talking to one of my tenants dealing with a plumbing issue. Her husband is 80 years old and still works at his upholstery business. I asked the wife who is 76 I think if they were collecting social security and she told me that he gets about $2k a month and her benefit is 25% of that. I told her thanks to listening to your channel and others that she should be getting half his. She told me her accountant never mentioned this. So I said check into this and contact the social security office. It’s called the spousal benefit. It is amazing the amount of poor financial advice is out there.
It amazes me that anyone would put their money into a situation where they are paying fees like that. Personally I manage my money myself and pay no fees of any kind. It doesn't take a rocket scientist to do that.
@@RetirementTalk43 every financial advisor charges a fee.. what the F r u talking about.. if they did not charge a fee they would not exist…. there r many people that are not rocket scentist and want financial advise as they are busy working, living, and taking care and spending time with there family…. ur comment is very condencending …. and the financial industry is doing very well so most people are not as smart as u…… enjoy your no rocket scientist life.. many are not as elite as u !!!
They wouldn't give me free checks..actually they have never done a thing for me and i have been with them well over 20 years..I pulled all my money out of this bank and put it in a credit union..Suncoast Credit Union..Best move I have ever made!! I hate this bank!!
When my husband retired, he rolled his 401K over to IRA’s with Fidelity. We are thankful for their guidance and the success of the portfolio. We continue to live frugally and are thankful that these funds will help supplement our pension in the future.
@ If you have a million dollars with 1% AUM fee and use the 4% annual drawdown, which seems to be typical, then you are paying the advisor $10,000 a year and you are living on $40,000. Or to put it another way, the total withdrawal is of your 4% and the advisor’s 1% is $50,000 and so the advisor is getting 20% of the total - so even if they do suggest a more tax efficient solution it probably won’t justify their fee. My opinion, twenty years retired, is that unless you are very wealthy with a complicated situation even 1% isn’t worth it, you are a lot better off with something like you suggest.
Good advice,Howard. I own Vanguard VTSAX 80% and VBTLX 20% in my portfolio. I have a Roth IRA and a Vanguard taxable account. I know both of these accounts are not great for bonds. I currently have 10% in each Roth and brokerage. Any thoughts on the best way to use bonds in this scenario. Great channel!
Knowledge is bliss! Most people have no idea how to invest as they may have had workplace 401k's that had date driven retirement accounts. And/Or just simply scared of making a mistake when investing their life savings. I retired 2 yrs ago moved 401k funds into Ira's with Fidelity, put 310k in an AUM with a 60/40 ratio. Started out at 1.23% fee. Now that account has a value of 360k with a 50/50 blend and the fees are at 1.28%. Not the best and not the worse. However, this is an area that I need to do more research and educate myself in investing.
@@mark-u4m2s Just look at rate of return in mutual funds over last 12 months and roll dice and monitor to make sure a decent Fund. MFS R6 Growth is good - did take a dip recently - a tech fund but do you own research. Was at 40% ytd until December's hit. GL.
I hired a financial advisor because I got tired of being blamed by my wife every time the stock market closed lower. I believe that a financial advisors main job is to talk their client into not cashing out when the stock market looses a lot of its value. Even though I have a good financial advisor that I trust, I still watch over the investments, do research, and ask questions.
I personally don't understand why anyone would use a financial adviser where they pay a % of assets to the adviser. There is nothing that they do which is worth that much. Most people can handle their own finances without the use of an adviser. It isn't that hard to do.
"don't put any money in a bank except a checking account". I don't put any personal money in a bank as I use a credit union and make over $40 monthly in interest on my checking account. Credit Unions offer far better interest rates and I am glad I made the move over 5 years ago. Last year I cleared over $1,300 in interest collectively on my savings account and my checking account. I doubt I made $250 of interest in the twenty years I had my money in a bank.
You can move it to your brokerage account without selling. Just call up Schwab or Fidelity and ask them how to do it. They will be very happy to help you. Then decide what to sell.
clearly that fpa didnt know what he was doing giving that guy 30 mutual funds. The cross funding on them must be insanely skewed to a few particular stocks when you take account. The only reason I think it's ok to be 100% in only stocks is when you are withdrawing only 2 or 3% and you're age is good enough to warrant it. I'm at 1% swr so 100% stocks is fine for me.
Do not blindly dump your 401K plan simply because someone tells you to! Not all 401K plans suck. Some are low fee and have excellent investment choices. The funds in our plan are the Institutional (vs Retail) versions of the funds and therefore have fund expenses as low as half the retail versions. 401K funds typically retain lawsuit/bankruptcy protection not offered by IRAs. So we do partial 401K rollovers to an IRA to fund our five year spending bucket.
there is a rating system, my 401k ranks in the middle ( not good, not the worst) .paying $900 a year in fees ( im ready to roll some out at 59.5 to my rollover IRA)
@@bluegillmich Not bad at all for fees - nice. In my case, I had to dig to determine fees and really understand them. I was $600 per month - not reasonable - usury even, to my mind. I 'think' all companies try to generate as much revenue on the 401k's they fund, so definitely bears very close scrutiny. Good luck.
@@RetirementTalk43 How about the following? (I hadn't reviewed our fees in detail for a while so I downloaded the past 18 months.) One annual fee of $39, applied $9.75 per quarter. Withdrawal fee of $25. (Since we do partial rollovers to an IRA where we keep our spending bucket, we tend to only have one withdrawal per year, if that.) The best part: Our 401K Plan uses *Institutional Funds* rather than *Retail Funds*. So the expense ratios in the funds can be as low as half the expense rations we would pay in a freestanding IRA. We estimate we save about $200/year using our 401K vs the same Retail funds in an IRA. (An aside: in several cases, the Institutional Funds require a minimum $100 million investment. It will be a while until we can hit that in our IRA. But should be easy to hit for a properly negotiated 401K plan.)
AUM (Assets Under Management)/% of portfolio fees by Financial Advisors can only make sense in two scenarios if you don’t otherwise know what you’re doing: 1) The Retiree is so wealthy and doesn’t want to mess with it that the fee is not material to them. 2) If the planning firm truly provides FULL scope retirement planning - investments being a small portion of their work. Should include expert Spend planning, tax planning, estate planning etc… Big Bank captive advisers are typically the absolute worst value. Typically all they provide is an impressive looking massively over-complex investment plan… that underperforms a simpler and just as diversified plan. If you’re lucky the big bank firm has sheepishly added a Monte Carlo simulation, but they have no clue what that even means. Big bank investment firms are stuck in the archaic “Investment Advisor” past. A ripoff.
@@RetirementTalk43 I didn't mention it, but the really egregious thing about % of assets fees - they do some work up front... but in many (most?) cases, their effort each and every year is minimal, perhaps a quick look, and a 30 minute phone call... all for the same forever 1% fee every year for the rest of your life.
I use a Wells Fargo advisor and was well aware of the fee. I accepted it because I wiped myself out in my late 30s and could not trust myself not to panic sell or impulse buy.
My guy charges 3/4% for balances over a mill. Doesn’t sound like much but 10,000 over 10yrs is 10000.00. So it really ads up. But I really have no idea how to purchase a stock or a bond and if I did I still won’t have a clue what to buy. With that charge they give me a comprehensive look at my entire portfolio on a continual basis and I’m able to talk with him at anytime to discuss concerns or ideas or just ask a question trying to learn the system and how it works. Basically I have his personal cell number. Also he has a team of people to back him up within the company that makes me feel good they are looking out for my best interest and doing tax planning in addition to planning my retirement over the long run.
So what’s your opinion for me. I paying 1.38% on Edward Jones on managing 400k for me. I can’t pick a darn thing so I like the idea of someone with more knowledge than me overseeing my accounts. However I don’t like the $460 taken out every month for fees. Is there a direction you can point me or am I doing okay?
gregg: Personally, I would move that money into a couple of index ETFs, stocks and bonds and move away from the active management. My wife used to manage clients' money for EJ and she would tell you the same thing.
…is your Edward Jones advisor sending you a jelly, fruit & nut basket for Christmas & your birthday?? If not, there’s absolutely no reason to stay with him. Open IRA with Vanguard or Fidelity, liquidate to cash all the silly-arsed funds EJ stuck you in; call Vanguard/Fidelity to do a custodian-to-custodian transfer of your IRA…purchase a S&P 500 etf….take the $5500 you’ll save from NOT paying Edward Jones for the year, go on a cruise and order a jelly, fruit & nut basket delivered to your cabin.
Warren Buffett always said buy the S&P 500 ( which is an index fund offered by every financial institution). Jack Bogle always said buy a large index stock fund with 60% of your money and buy a bond fund with 40% of your money. Those are the 2 main guys. However there is a small caveat which is that is open market advise. Many of us use a 401k with matching funds. That is not initially an open market system as we get various matching funds.
Financial advisors that use a bank as a front, are normally independent contractors just using the bank's name. Your friends situation may be different. But normally when you hear these fees and these type of diversifications that's the way it works. I wonder if his financial advisor is a fiduciary? I am thinking not.
Being a fiduciary is not really a protection based on what I have experienced. I thought it was, not that I got burned, but it means little in the real world. YMMV. Good luck.
isn't your beef with the brokerage firms rather than banks? The bank may have a brokerage arm (as we do) but they offer the same products as a stand alone Schwab/EdJones/Rjames office in a strip mall OR the fancier "RIA" investment firms.
BF: Banks in general and any other company that employs advisors who work like the guy I talked about in the video. Banks are really just a really bad place to have money.
When an advisor that is paid a %, the portion in a mutual fund should be exempt from the fee. IDK why anyone would have an advisor , with all of the ETF's available and the ease of getting into them with no fees , some have expenses but you can get into SPY for .09% and be fine.
@@kennv7566 your investments can be done much cheaper through standard mutual fund companies and brokerage houses. It’s always good to put some effort into learning about what would be best investment for your money. I have found banks to have considerably less polite, and less customer service than credit unions.less harassment at a credit union, definitely, cause I didn’t want the banks credit card. Omg what &$#@%s
Move it all over into Vanguard. 60% VTI. 40% BND. Pay the .30% Advisor Fee. BOOM you’re done! This guy will save SO much in fees! Vanguard will automatically rebalance every quarter and even do Tax Loss Harvesting. These financial planners at these banks are a rip-offs!!
mj: If you are going to do that investment mix, you really don't even need an advisor to rebalance. If you are in a tax deferred account you don't need the tax loss harvesting either.
@@gumby2241 Maybe, but downside risk is huge. A retiree has less time to recover from a market crash than a younger person. Depending on their goals, amount and age even higher bond allocation may be warranted. May end with a smaller balance but paying bills and sleeping at night are good if you're old.
Sure, if one has enough money. 75/25%, perhaps now, 'they' say, if one has stomach, stays involved and has enough fixed money coming in - major home equity add a cushion, plus pension, social security, HSA, etc. 401k/IRA/Roth is the top 1/3 of income base, so not really 'required' in a major way and in a perfect situation. Research-Research and ask the hard questions. Good luck.
I think almost every advisor works on a percentage basis of assets managed so if you said to him just based on that fact the financial service business in ur opinion he should do that….. so explain that statement ??? if that statement is ur opinion almost no one would have a financial advisory ???
lee: I can't find good numbers yet on flat fee vs. percentage of assets but I know there are thousands of advisors who will charge a simple flat fee of services. I just went to the NPFA site and put in my zip code and got a list of 22 firms that charge a fee only. Very often you can find advisors who will work under either scenario that works best for the client.
60/40 has been dead for many years. Consider social security to be a bond. Keep 3 years of expenses in short term US bonds or cash. Put the bulk of investments in sp500, or sector indexes if you want to get wild. Avoid international as the multinationals in the sp500 cover that. Have a gold and silver 'insurance' policy, no etf, physically own it.
gumby: Dead? Hardly. Misguided? Maybe. Yes, you can consider SS to be a bond, maybe $200k-$300k or more. However, when I construct a portfolio, I do so considering expenses AFTER SS benefits. There is a difference between buying international stocks and international exposure through large U.S. stocks, Although I understand your thinking.
@@RetirementTalk43 And I would add - consider RMD's and Roth's to make sure you understand issue(s). And IRMMA premiums, if close to 65. And convert to Roth in a dip - make the market down turn work for you. Research that. Good luck.
Agree completely that your softball buddy is getting ripped off. Vanguard charges 0.3% of assets to manage a portfolio. Or you can self manage for nothing. You can use Fidelity for free and still have a once a year chat with a financial advisor. ETFs in well diversified funds will add maybe 0.2%. Paying more than 0.5% in combined management fees (advisor + fund fees) is just not smart.
Maybe it will work out for your friend or maybe it won't. A fee of 1 1/2% sounds nuts.But people need to take responsibility for their own situation and their own decisions. And of course, there is that old rule, YOU CANNOT FIX STUPID!
Just to show contrarian view: Individual investors are pretty brave right now - after one of the longest bull markets. Individuals do really stupid things when the market turns. That's when the real test arrives. A good advisor will save you more than just fees when the time comes.
@@RetirementTalk43 Agree completely. Unfortunately, most people are lazy. Some advice & a push to at least participate in markets helps tremendously. Wish it wasn't that way.
My father is 90. He asked me to help him with his retirement portfolio 2 years ago. I was floored when I saw the fees and the funds. He was paying 1.7% fee, and the advisor (big bank, wealth advisor) was just trying to pick stocks and bond mutual funds. It was a mess. I couldn’t believe it. The advisor was not providing any financial advice. Absolutely criminal! We fired the advisor, and began the process of moving the portfolio to low cost diversified ETFs. It took 12+ months to fix it. And now everything is safely invested in diversified ETFs with an overall MER of $0.15. This is saving my father $40k+ per year, and his risk exposure is LESS.
max: If he allows me to do so, I'll fix my friend's portfolio in a week.
Once you understand what you're doing.... (and it doesn't take long) you realize you don't need a financial advisor.
Had 3 FA's in my life. 1st one sold me whole life. 2nd put all my available investing money in a single stock that went to zero. 3rd one is now in prison for embezzling clients money. Thank God he didn't get mine. How I wish I had learned earlier.
bg: Those are some tough life lessons.
@@bg5215 😡
I agree 100% with you Otter. ETFs are the cheapest way to invest. Treasurer Bills are free to invest in for your safe fixed income cash. There are plenty of good books out there for people to learn from. My favorite is "Confessions of a Finance Planner" by David D Holland, CPA. Love your channel and nice puppy also.
Thank you, John.
Great video Sir!! A simple portfolio can be as easy as 70% in Vanguard Wellington and 30% in Vanguard Wellesley. A success track record for not running out of money in retirement.
Perfect!
rick: Wellington was the first fund I ever owned and it certainly has done well over the decades. However, in my 20s I never should have invested in it due to it having too big an allocation in bonds for my age. The other issue I have with blended funds is that during the withdrawal phase, you are forced to, in essence, sell both your stocks and bonds at the same time. With separate funds, one for bonds and one for stocks, you have more control over which asset you want to sell.
@@RetirementTalk43 Thanks for the feedback sir! Maybe just simplify it to VTI and BND? Maybe with a few years cash (MM, HYSA) just in case another 2022 comes around where stocks and bonds took a beating. In that case you wouldn't want to sell VTI or BND in that year to fund your needs.
Good advice! Thanks to John Bogle, we no longer need to try and pick individual stocks to invest in during retirement. A stock market index fund and a bond index fund can help diversify a portfolio very easily.
traz: Easy and cheap.
listening to the fee charge and then how many funds he had been invested in, really hurt my head! what a kind friend you are to help guide him and i hope he takes your advice. This is why target date funds are popular takes all the thinking out of it but doesn't rip you off and keeps you diversifed. Shame on that advisor!
Catherine: Thank you.
I was talking to one of my tenants dealing with a plumbing issue. Her husband is 80 years old and still works at his upholstery business. I asked the wife who is 76 I think if they were collecting social security and she told me that he gets about $2k a month and her benefit is 25% of that. I told her thanks to listening to your channel and others that she should be getting half his. She told me her accountant never mentioned this. So I said check into this and contact the social security office. It’s called the spousal benefit. It is amazing the amount of poor financial advice is out there.
Bill: good job!! I hope she gets what she has coming.
advisors are crooks
Some. Some not.
It amazes me that anyone would put their money into a situation where they are paying fees like that. Personally I manage my money myself and pay no fees of any kind. It doesn't take a rocket scientist to do that.
Todd: many, many people do that.
@@RetirementTalk43 every financial advisor charges a fee.. what the F r u talking about.. if they did not charge a fee they would not exist…. there r many people that are not rocket scentist and want financial advise as they are busy working, living, and taking care and spending time with there family…. ur comment is very condencending …. and the financial industry is doing very well so most people are not as smart as u…… enjoy your no rocket scientist life.. many are not as elite as u !!!
@@leehaskins307 Todd was referring to advisors who charge percentage fees as opposed to a flat fee.
@leehaskins307 sounds like your one of those...
@@leehaskins307calm down francis
heard wells fargo that's all i needed to know.
steve: They certainly don't have a good reputation.
Wells Fargo sickens me
They wouldn't give me free checks..actually they have never done a thing for me and i have been with them well over 20 years..I pulled all my money out of this bank and put it in a credit union..Suncoast Credit Union..Best move I have ever made!! I hate this bank!!
When my husband retired, he rolled his 401K over to IRA’s with Fidelity. We are thankful for their guidance and the success of the portfolio. We continue to live frugally and are thankful that these funds will help supplement our pension in the future.
Lynn: Good for you.
Retirees typically draw down 4% a year so a 1% AUM is a quarter of what they are living on or equivalent to a 20% flat rate income tax.
glen: Not sure I follow what you are saying.
@ If you have a million dollars with 1% AUM fee and use the 4% annual drawdown, which seems to be typical, then you are paying the advisor $10,000 a year and you are living on $40,000.
Or to put it another way, the total withdrawal is of your 4% and the advisor’s 1% is $50,000 and so the advisor is getting 20% of the total - so even if they do suggest a more tax efficient solution it probably won’t justify their fee.
My opinion, twenty years retired, is that unless you are very wealthy with a complicated situation even 1% isn’t worth it, you are a lot better off with something like you suggest.
Good advice,Howard. I own Vanguard VTSAX 80% and VBTLX 20% in my portfolio. I have a Roth IRA and a Vanguard taxable account. I know both of these accounts are not great for bonds. I currently have 10% in each Roth and brokerage. Any thoughts on the best way to use bonds in this scenario. Great channel!
tom: What do you mean by, "best way to use bonds?"
Knowledge is bliss! Most people have no idea how to invest as they may have had workplace 401k's that had date driven retirement accounts. And/Or just simply scared of making a mistake when investing their life savings. I retired 2 yrs ago moved 401k funds into Ira's with Fidelity, put 310k in an AUM with a 60/40 ratio. Started out at 1.23% fee. Now that account has a value of 360k with a 50/50 blend and the fees are at 1.28%. Not the best and not the worse. However, this is an area that I need to do more research and educate myself in investing.
mark: An "AUM?" That means Assets Under Management," to me. In what sense are you using the acronym?
@@RetirementTalk43 Howard, yes, I was using as Account Under Management
@@mark-u4m2s Just look at rate of return in mutual funds over last 12 months and roll dice and monitor to make sure a decent Fund. MFS R6 Growth is good - did take a dip recently - a tech fund but do you own research. Was at 40% ytd until December's hit. GL.
I hired a financial advisor because I got tired of being blamed by my wife every time the stock market closed lower. I believe that a financial advisors main job is to talk their client into not cashing out when the stock market looses a lot of its value. Even though I have a good financial advisor that I trust, I still watch over the investments, do research, and ask questions.
Good video.
Thanks, Punisher.
Nice shirt - Wrigley Field! Thanks for the video!
Thanks Eric.
I personally don't understand why anyone would use a financial adviser where they pay a % of assets to the adviser. There is nothing that they do which is worth that much. Most people can handle their own finances without the use of an adviser. It isn't that hard to do.
My bank was trying to sell me an annuity from a company I never heard of. I said no thanks.
scott: Probably a good decision.
well said. It doesn't need to be complicated although many want to keep it so.
rick: I sense that advisors think that if they make a complicated portfolio, you will think they are doing far more work than they really are.
"don't put any money in a bank except a checking account". I don't put any personal money in a bank as I use a credit union and make over $40 monthly in interest on my checking account. Credit Unions offer far better interest rates and I am glad I made the move over 5 years ago. Last year I cleared over $1,300 in interest collectively on my savings account and my checking account. I doubt I made $250 of interest in the twenty years I had my money in a bank.
They are worth checking into!
@@mikemchugh3784 you lost a TON OF MONEY last year by leaving too much money in a credit union.
mike: why do you have a savings account? what is the interest rate?
When we tell the advisor to sell everything for cash, do we have to pay tax on that even if we are transferring and reinvesting?
If the money is in a taxable account you will have to pay taxes. IRA 401k 403b or Roth IRA are not taxable accounts ( no taxes for selling stock ).
You can move it to your brokerage account without selling. Just call up Schwab or Fidelity and ask them how to do it. They will be very happy to help you. Then decide what to sell.
Skel: If you don't remove the money from a tax deferred structure, you do not have to pay taxes.
Wells Fargo said it all for me😂
Al: And to many others.
clearly that fpa didnt know what he was doing giving that guy 30 mutual funds. The cross funding on them must be insanely skewed to a few particular stocks when you take account. The only reason I think it's ok to be 100% in only stocks is when you are withdrawing only 2 or 3% and you're age is good enough to warrant it. I'm at 1% swr so 100% stocks is fine for me.
Frank: Are you retired? What size cash holding do you have in terms of number of years of expenses?
@@RetirementTalk43 Sorry man, I don't know you, I don't answer personal questions.
NEVER, I REPEAT NEVER use a BANK, especially Wells Fargo, to manage your funds. damn banks this may be criminal.
captain: It makes my blood boil.
I am very sensitive to fees. The first thing I did after retiring was move my 403(b) from TIAA to Vanguard low cost ETFs. TIAA was way too expensive.
dan: You got it!
Concerning the straight fee of $500 to $1000, is that a one-time or annual fee?
One time. Or any time you rehire the advisor.
Do not blindly dump your 401K plan simply because someone tells you to!
Not all 401K plans suck.
Some are low fee and have excellent investment choices.
The funds in our plan are the Institutional (vs Retail) versions of the funds and therefore have fund expenses as low as half the retail versions.
401K funds typically retain lawsuit/bankruptcy protection not offered by IRAs.
So we do partial 401K rollovers to an IRA to fund our five year spending bucket.
there is a rating system, my 401k ranks in the middle ( not good, not the worst) .paying $900 a year in fees ( im ready to roll some out at 59.5 to my rollover IRA)
M22: I would struggle to find a 401K plan where someone is not at a disadvantage to a self directed IRA.
@RetirementTalk43 they're ERISA protection is a valid point.
@@bluegillmich Not bad at all for fees - nice. In my case, I had to dig to determine fees and really understand them. I was $600 per month - not reasonable - usury even, to my mind. I 'think' all companies try to generate as much revenue on the 401k's they fund, so definitely bears very close scrutiny. Good luck.
@@RetirementTalk43 How about the following? (I hadn't reviewed our fees in detail for a while so I downloaded the past 18 months.)
One annual fee of $39, applied $9.75 per quarter.
Withdrawal fee of $25. (Since we do partial rollovers to an IRA where we keep our spending bucket, we tend to only have one withdrawal per year, if that.)
The best part: Our 401K Plan uses *Institutional Funds* rather than *Retail Funds*. So the expense ratios in the funds can be as low as half the expense rations we would pay in a freestanding IRA. We estimate we save about $200/year using our 401K vs the same Retail funds in an IRA.
(An aside: in several cases, the Institutional Funds require a minimum $100 million investment. It will be a while until we can hit that in our IRA. But should be easy to hit for a properly negotiated 401K plan.)
1.5% fee, yikes! Glad you could help this person. I prefer your channel when you are not talking about ST.
Thank you, VT.
AUM (Assets Under Management)/% of portfolio fees by Financial Advisors can only make sense in two scenarios if you don’t otherwise know what you’re doing:
1) The Retiree is so wealthy and doesn’t want to mess with it that the fee is not material to them.
2) If the planning firm truly provides FULL scope retirement planning - investments being a small portion of their work. Should include expert Spend planning, tax planning, estate planning etc…
Big Bank captive advisers are typically the absolute worst value. Typically all they provide is an impressive looking massively over-complex investment plan… that underperforms a simpler and just as diversified plan. If you’re lucky the big bank firm has sheepishly added a Monte Carlo simulation, but they have no clue what that even means.
Big bank investment firms are stuck in the archaic “Investment Advisor” past. A ripoff.
M22: they know what they are dong in terms of getting their fees.
@@RetirementTalk43 I didn't mention it, but the really egregious thing about % of assets fees - they do some work up front... but in many (most?) cases, their effort each and every year is minimal, perhaps a quick look, and a 30 minute phone call... all for the same forever 1% fee every year for the rest of your life.
@@M22Research The gift that keeps on giving.
I use a Wells Fargo advisor and was well aware of the fee. I accepted it because I wiped myself out in my late 30s and could not trust myself not to panic sell or impulse buy.
thor: How much do you think you will pay in fees over your lifetime?
@RetirementTalk43 way,way,way too much😂😂😂😢😢😢.
Panic selling is death, you are right to prevent yourself from doing that! That said, why not a low cost mutual fund?
My guy charges 3/4% for balances over a mill. Doesn’t sound like much but 10,000 over 10yrs is 10000.00. So it really ads up. But I really have no idea how to purchase a stock or a bond and if I did I still won’t have a clue what to buy.
With that charge they give me a comprehensive look at my entire portfolio on a continual basis and I’m able to talk with him at anytime to discuss concerns or ideas or just ask a question trying to learn the system and how it works. Basically I have his personal cell number.
Also he has a team of people to back him up within the company that makes me feel good they are looking out for my best interest and doing tax planning in addition to planning my retirement over the long run.
52: VTI and BND and forget it.
So what’s your opinion for me. I paying 1.38% on Edward Jones on managing 400k for me. I can’t pick a darn thing so I like the idea of someone with more knowledge than me overseeing my accounts. However I don’t like the $460 taken out every month for fees. Is there a direction you can point me or am I doing okay?
If you think the fee is too much, it's probably too much.
gregg: Personally, I would move that money into a couple of index ETFs, stocks and bonds and move away from the active management. My wife used to manage clients' money for EJ and she would tell you the same thing.
…is your Edward Jones advisor sending you a jelly, fruit & nut basket for Christmas & your birthday?? If not, there’s absolutely no reason to stay with him. Open IRA with Vanguard or Fidelity, liquidate to cash all the silly-arsed funds EJ stuck you in; call Vanguard/Fidelity to do a custodian-to-custodian transfer of your IRA…purchase a S&P 500 etf….take the $5500 you’ll save from NOT paying Edward Jones for the year, go on a cruise and order a jelly, fruit & nut basket delivered to your cabin.
Warren Buffett always said buy the S&P 500 ( which is an index fund offered by every financial institution). Jack Bogle always said buy a large index stock fund with 60% of your money and buy a bond fund with 40% of your money. Those are the 2 main guys. However there is a small caveat which is that is open market advise. Many of us use a 401k with matching funds. That is not initially an open market system as we get various matching funds.
Financial advisors that use a bank as a front, are normally independent contractors just using the bank's name.
Your friends situation may be different. But normally when you hear these fees and these type of diversifications that's the way it works.
I wonder if his financial advisor is a fiduciary? I am thinking not.
pensacola: Banks employ many of their own financial advisors. Many times there are advisors working under an LLC owned by the bank.
Being a fiduciary is not really a protection based on what I have experienced. I thought it was, not that I got burned, but it means little in the real world. YMMV. Good luck.
isn't your beef with the brokerage firms rather than banks? The bank may have a brokerage arm (as we do) but they offer the same products as a stand alone Schwab/EdJones/Rjames office in a strip mall OR the fancier "RIA" investment firms.
BF: Banks in general and any other company that employs advisors who work like the guy I talked about in the video. Banks are really just a really bad place to have money.
When an advisor that is paid a %, the portion in a mutual fund should be exempt from the fee. IDK why anyone would have an advisor , with all of the ETF's available and the ease of getting into them with no fees , some have expenses but you can get into SPY for .09% and be fine.
Terry: Like my friend, most people simply have no idea how to invest and have a fear of trying to learn. It is the path of least resistance.
Depends if he needs the money. He should just own an S&P index. That’s all the diversity he’ll need.
paul: Not if wants midcap and small cap.
Banks are always a bad idea.
Yep.
I like banks my money is safe.
@@kennv7566 your investments can be done much cheaper through standard mutual fund companies and brokerage houses. It’s always good to put some effort into learning about what would be best investment for your money.
I have found banks to have considerably less polite, and less customer service than credit unions.less harassment at a credit union, definitely, cause I didn’t want the banks credit card. Omg what &$#@%s
Move it all over into Vanguard.
60% VTI. 40% BND. Pay the .30% Advisor Fee. BOOM you’re done! This guy will save SO much in fees!
Vanguard will automatically rebalance every quarter and even do Tax Loss Harvesting.
These financial planners at these banks are a rip-offs!!
Great mix! you can even trim the fat more by doing the rebalancing and tax loss harvesting yourself. So easy to do.
mj: If you are going to do that investment mix, you really don't even need an advisor to rebalance. If you are in a tax deferred account you don't need the tax loss harvesting either.
Dangerous to be 100% stocks for a retiree now. Seen this before the GFC, does not end well. SCHD/BND 50/50 would be a safer combo.
Steve: Yep.
With govt budget deficits exploding exponentially, asset prices are melting up. Bonds will be left behind.
@@gumby2241 Maybe, but downside risk is huge. A retiree has less time to recover from a market crash than a younger person. Depending on their goals, amount and age even higher bond allocation may be warranted. May end with a smaller balance but paying bills and sleeping at night are good if you're old.
@@gumby2241 Bonds aren't assets?
Sure, if one has enough money. 75/25%, perhaps now, 'they' say, if one has stomach, stays involved and has enough fixed money coming in - major home equity add a cushion, plus pension, social security, HSA, etc. 401k/IRA/Roth is the top 1/3 of income base, so not really 'required' in a major way and in a perfect situation. Research-Research and ask the hard questions. Good luck.
I think almost every advisor works on a percentage basis of assets managed so if you said to him just based on that fact the financial service business in ur opinion he should do that….. so explain that statement ??? if that statement is ur opinion almost no one would have a financial advisory ???
lee: I can't find good numbers yet on flat fee vs. percentage of assets but I know there are thousands of advisors who will charge a simple flat fee of services. I just went to the NPFA site and put in my zip code and got a list of 22 firms that charge a fee only. Very often you can find advisors who will work under either scenario that works best for the client.
Are you a proponent of the 100-minus-age rule?
No. I actually think it is okay to let your equity allocation grow in retirement.
60/40 has been dead for many years. Consider social security to be a bond. Keep 3 years of expenses in short term US bonds or cash. Put the bulk of investments in sp500, or sector indexes if you want to get wild. Avoid international as the multinationals in the sp500 cover that. Have a gold and silver 'insurance' policy, no etf, physically own it.
gumby: Dead? Hardly. Misguided? Maybe. Yes, you can consider SS to be a bond, maybe $200k-$300k or more. However, when I construct a portfolio, I do so considering expenses AFTER SS benefits. There is a difference between buying international stocks and international exposure through large U.S. stocks, Although I understand your thinking.
@@RetirementTalk43 And I would add - consider RMD's and Roth's to make sure you understand issue(s). And IRMMA premiums, if close to 65. And convert to Roth in a dip - make the market down turn work for you. Research that. Good luck.
@@alexschuster9567 Taxes are probably the biggest issue if you want to take this even further.
Next you need to educate him on filling up tax brackets with Roth conversions, yes i know, baby steps for him.😢😮😊
captain: Yep, one step at a time.
Agree completely that your softball buddy is getting ripped off. Vanguard charges 0.3% of assets to manage a portfolio. Or you can self manage for nothing. You can use Fidelity for free and still have a once a year chat with a financial advisor. ETFs in well diversified funds will add maybe 0.2%. Paying more than 0.5% in combined management fees (advisor + fund fees) is just not smart.
Matthew: It is ignorance rather than stupidity.
How about having a % fee advisor manage 10% of your assets then mirror the other 90% on your own😂😂😂😂😂😂😂😂😂😂😂.
captain: that could work.
Maybe it will work out for your friend or maybe it won't.
A fee of 1 1/2% sounds nuts.But people need to take responsibility for their own situation and their own decisions.
And of course, there is that old rule, YOU CANNOT FIX STUPID!
Pensacola: Ignorant, not stupid.
Just to show contrarian view: Individual investors are pretty brave right now - after one of the longest bull markets.
Individuals do really stupid things when the market turns.
That's when the real test arrives. A good advisor will save you more than just fees when the time comes.
mattie: history and research have shown that you are much better off with some basic index funds, over time.
@@RetirementTalk43 Agree completely.
Unfortunately, most people are lazy. Some advice & a push to at least participate in markets helps tremendously. Wish it wasn't that way.
It always amazes me when people on the left avoid taxes. LOL
paul: What the what? Did you think you were on a different thread?
ua-cam.com/video/zvjcJsy51oc/v-deo.htmlsi=PUtgtya5anw1khu6
rick: Let's focus on ignorance instead.
your sound echo is awful
Sorry, forgot to use my external microphone on this one.
VTSAX
Paul: for just stocks, yes.