Complex portfolio w/ high fees and unrealized gains

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Topic Author
FrankyZoo
Posts: 57
Joined: Mon Nov 08, 2021 10:28 pm

Complex portfolio w/ high fees and unrealized gains

Post by FrankyZoo »

Hi Bogleheads -

Looking for some advice on transitioning to a more simplified lower-cost portfolio.

Background
I recently left my job. I don’t have an immediate plan to go back to work, but wouldn’t rule it out if I found something fulfilling. I’m spending my some of my new-found time working on my portfolio.

~65% of the portfolio is with a Financial Advisor (RIA) who is charging 1% of AUM. If I simplify the portfolio I can manage it myself, as Bogleheads do, and save on the high fees. However, since i’ve been with the FA around 15 yrs, unwinding my taxable accounts would be easier said than done. My thought was to transfer as much as possible in kind to MerrillEdge, sell most of it and buy into low-cost index ETFs, probably just VTI, VXUS, and BND. Later I’d do the same with my Betterment accounts and cashed out Whole Life policy. Also planning to roll the 401k into a Merrill IRA.

See below for all my portfolio info, and specific questions. Thanks so much in advance for reading:

Emergency funds: Sufficient
Debt: None
Tax Filing Status: Single
Tax Rate: Not sure where this will land after this year. Next year i probably won’t have salary but will have the tax bill from surrendering my insurance (~$60k), capital gains and div income. In 2019 I had approx $43k in dividends and $33k in cap gains(all long-term), if that helps. 2020 had very low cap gains due to tax loss harvesting.

State of Residence: NY State
Age: 50
Desired Asset allocation: 60% stocks / 40% bonds
Desired International allocation: 40% of stocks

Approximate size of the portfolio: ~4.8M
Taxable accts at FA (there are 3 accounts which have different purposes but to simplify I consolidated them)
2.975% MORGAN STANLEY INSTL ADVANTAGE CL I (MPAIX) (0.85%)
2.231% WISDOMTREE TRUST US DIV GRWTH FUND (DGRW) (0.28%)
2.228% TOUCHSTONE DIVIDEND EQUITY CL Y (TQCYX) (0.77%)
1.935% WELLS FARGO STRATEGIC MUN BOND INSTL CL (STRIX) (0.46%)
1.928% SPDR PORTFOLIO S&P 500 ETF (SPLG) (0.03%)
1.760% JANUS HENDERSON GROWTH & INCOME CL T (JAGIX) (0.87%)
1.755% WELLS FARGO SPECIAL MID CAP VALUE INSTL CL (WFMIX) (0.81%)
1.731% CLEARBRIDGE LARGE CAP GROWTH CL I (SBLYX) (0.72%)
1.695% BNY MELLON EQUITY INCOME CL I (DQIRX) (0.78%)
1.564% GOLDMAN SACHS GQG PARTNERS INTL OPPTYS INVESTOR CL (GSINX) (0.92%)
1.438% DELAWARE TAX FREE NEW YORK INSTL CL (DTNIX) (0.55%)
1.413% SPDR S&P MID CAP 400 ETF (MDY) (0.23%)
1.392% TRANSAMERICA INTL EQUITY CL I (TSWIX) (0.86%)
1.267% INVESCO ROCHESTER LTD TERM NEW YORK MUN CL Y (LTBYX) (0.63%)
1.264% BLACKROCK NEW YORK MUN OPPTY INSTL CL (MANKX) (0.60%)
1.189% GOLDMAN SACHS SMALL CAP EQUITY INSIGHTS INVESTOR CL (GDSTX) (0.96%)
1.165% WELLS FARGO SPECIAL SMALL CAP VALUE INSTL CL (ESPNX) (0.95%)
1.121% MFS GLOBAL GROWTH CL I (MWOIX) (0.97%)
1.051% SPDR INDEX MSCI EAFE STRATEGIC FACTORS ETF (QEFA) (0.30%)
0.900% INVESCO NEW YORK AMT FREE MUNICIPAL BOND ETF (PZT) (0.28%)
0.889% VOYA STRATEGIC INCOME OPPTYS CL I (IISIX) (0.63%)
0.875% CALAMOS MARKET NEUTRAL INCOME CL I (CMNIX) (0.98%)
0.869% BLACKROCK INCOME INSTL CL (BMSIX) (0.65%)
0.859% JANUS HENDERSON ENTERPRISE CL I (JMGRX) (0.76%)
0.855% SPDR SERIES TRUST S&P 600 SMALL CAP ETF (SLY) (0.15%)
0.843% EVENTIDE GILEAD INSTL CL (ETILX) (1.18%)
0.836% FIDELITY ADVISOR INTL SMALL CAP CL I (FIXIX) (1.08%)
0.790% PIMCO NEW YORK MUN BOND CL I2 (PNYPX) (0.55%)
0.708% VICTORY INCORE FUND FOR INCOME CL Y (VFFYX) (0.71%)
0.633% PIMCO ALL ASSET CL I2 (PALPX) (1.02%)
0.621% PACIFIC STRATEGIC INCOME ADVISOR CL (PLSFX) (0.72%)
0.618% VIRTUS NEWFLEET MULTI SECTOR SHORT TERM BOND CL I (PIMSX) (0.73%)
0.616% JOHN HANCOCK STRATEGIC INCOME OPPTYS CL I (JIPIX) (0.77%)
0.611% GUGGENHEIM TOTAL RETURN BOND INSTL CL (GIBIX) (0.51%)
0.601% 1290 DIVERSIFIED BOND CL I (TNUIX) (0.50%)
0.534% NEUBERGER BERMAN STRATEGIC INCOME INSTL CL (NSTLX) (0.60%)
0.533% PIMCO INCOME CL I2 (PONPX) (0.72%)
0.525% MAINSTAY MACKAY NEW YORK TAX FREE OPPTYS CL I (MNOIX) (0.50%)
0.483% PACIFIC FLOATING RATE INCOME ADVISOR CL (PLFDX) (0.80%)
0.480% MAINSTAY MACKAY SHORT DURATION HIGH YIELD CL I (MDHIX) (0.79%)
0.476% FIRST TRUST TCW OPPORTUNISTIC FIXED INCOME ETF (FIXD) (0.56%)
0.472% AB INCOME ADVISOR CL (ACGYX) (0.53%)
0.470% WORLD GOLD TRUST SPDR GOLD MINISHARES TRUST ETF (GLDM) (0.18%)
0.379% PRINCIPAL LARGE CAP S&P 500 INDEX INSTL CL (PLFIX) (0.17%)
0.373% T ROWE PRICE DIVIDEND GROWTH INVESTOR CL (PRDGX) (0.63%)
0.366% TOUCHSTONE CREDIT OPPTYS CL Y (TMAYX) (0.93%)
0.303% Insured Cash Account (9999227) (0.00%)
0.286% BNY MELLON MIDCAP INDEX CL I (DMIDX) (0.25%)
0.159% VICTORY RS INTL CL Y (RSIGX) (0.88%)
0.098% BNY MELLON SMALLCAP STOCK INDEX CL I (DISIX) (0.25%)

Taxable at MerrillEdge
1.550% VANGUARD TOTAL BOND MKT (BND) (0.04%)
1.266% VANGUARD TOTAL STK MKT (VTI ) (0.03%)
0.891% BANK OF AMERICA CORP (BAC ) (0.00%)
0.769% VANGUARD TOTAL INTL STK (VXUS ) (0.08%)
0.376% VANGUARD 500 INDEX FUND (VOO ) (0.03%)
0.317% VANGUARD FTSE DEVELOPED (VEA ) (0.05%)
0.249% VANGUARD SHORT-TERM (VCSH ) (0.05%)
0.164% VANGUARD S AND P MID-CAP (IVOO ) (0.10%)
0.125% VANGUARD FTSE EMERGING (VWO ) (0.10%)
0.121% BERKSHIRE HATHAWAYINC (BRKB ) (0.00%)
0.116% INTEL CORP (INTC ) (0.00%)
0.105% VANGUARD S AND P SMALL (VIOO ) (0.10%)
0.102% WALMART INC (WMT ) (0.00%)
0.080% Cash (0.00%)
0.066% CHINA FUND INC COM (CHN ) (1.09%)
0.062% FRANCO NEV CORP (FNV ) (0.00%)

Taxable at Betterment
0.973% iShares:Core S&P Tot USM (ARCX:ITOT) (ITOT) (0.03%)
0.704% Schwab Str:Intl Eqty ETF (ARCX:SCHF) (SCHF) (0.06%)
0.529% Vanguard EM St I;ETF (ARCX:VWO) (VWO) (0.10%)
0.480% Vanguard Tot Itl BI;ETF (XNAS:BNDX) (BNDX) (0.08%)
0.420% iShares:NY Muni Bond (ARCX:NYF) (NYF) (0.25%)
0.331% Vanguard Val Idx;ETF (ARCX:VTV) (VTV) (0.04%)
0.295% Schwab Str:US Br Mkt ETF (ARCX:SCHB) (SCHB) (0.03%)
0.219% Vanguard MC V I;ETF (ARCX:VOE) (VOE) (0.07%)
0.208% Vanguard SC V I;ETF (ARCX:VBR) (VBR) (0.07%)
0.181% Vanguard EM G B;ETF (XNAS:VWOB) (VWOB) (0.25%)
0.175% iShares:Natl Muni Bond (ARCX:MUB) (MUB) (0.07%)
0.171% iShares:Core MSCI EAFE (BATS:IEFA) (IEFA) (0.07%)
0.162% iShares:Core US Agg Bd (ARCX:AGG) (AGG) (0.04%)
0.130% Vanguard TSM Idx;ETF (ARCX:VTI) (VTI) (0.03%)
0.128% iShares:Core MSCI EmMkts (ARCX:IEMG) (IEMG) (0.11%)
0.116% Vanguard Dev Mkt;ETF (ARCX:VEA) (VEA) (0.05%)
0.111% Vanguard ST IPSI;ETF (XNAS:VTIP) (VTIP) (0.05%)
0.100% iShares:JPM USD EM Bd (XNAS:EMB) (EMB) (0.39%)
0.078% iShares:Russ MC Val (ARCX:IWS) (IWS) (0.23%)
0.052% iShares:Russ 2000 Vl ETF (ARCX:IWN) (IWN) (0.24%)
0.033% Schwab Str:US LC Val ETF (ARCX:SCHV) (SCHV) (0.04%)

401k
2.756% T ROWE LARGE-CAP GR TRUS (JAQNT) (0.32%)
2.554% MFS INTERNATIONAL GROWTH (MIGFT) (0.38%)
2.544% ACADIAN ALL WORLD EX-US EQUITY (GGRRT) (0.45%)
2.138% VANGUARD INSTL EXTENDED MKT (VGIET) (0.02%)
1.708% DODGE & COX STOCK FUND (DODGX) (0.52%)
1.699% BLACKROCK EQUITY DIVIDEND CL M (EDFMT) (0.33%)
1.700% WESTERN ASSET CORE BOND R3 (WACIT) (0.25%)
1.690% STABLE VALUE FUND (MLSVF) (0.03%)
1.690% PIMCO TOTAL RETURN PORT. INSTL (PTTRX) (0.47%)
1.273% PIMCO ALL ASSET FUND (PAAIX) (1.00%)
0.857% BLACKROCK RUSSELL 2000 FUND G1 (RRUST) (0.43%)
0.641% VANGUARD INSTL 500 INDEX TRUST (VGINT) (0.01%)

Roth IRA at FA
0.441% PRINCIPAL LARGE CAP S&P 500 INDEX INSTL CL (PLFIX) (0.17%)
0.429% T ROWE PRICE DIVIDEND GROWTH INVESTOR CL (PRDGX) (0.63%)
0.335% BNY MELLON MIDCAP INDEX CL I (DMIDX) (0.25%)
0.203% GOLDMAN SACHS GQG PARTNERS INTL OPPTYS INVESTOR CL (GSINX) (0.92%)
0.185% VICTORY RS INTL CL Y (RSIGX) (0.88%)
0.118% BNY MELLON SMALLCAP STOCK INDEX CL I (DISIX) (0.25%)
0.107% VOYA STRATEGIC INCOME OPPTYS CL I (IISIX) (0.63%)
0.105% BLACKROCK INCOME INSTL CL (BMSIX) (0.65%)
0.073% CALAMOS MARKET NEUTRAL INCOME CL I (CMNIX) (0.98%)
0.043% 1290 DIVERSIFIED BOND CL I (TNUIX) (0.50%)
0.040% GUGGENHEIM TOTAL RETURN BOND INSTL CL (GIBIX) (0.51%)
0.028% VICTORY INCORE FUND FOR INCOME CL Y (VFFYX) (0.71%)
0.010% Cash

Traditional IRA at FA
0.696% INVESCO FTSE RAFI U S 1000 ETF(PRF) (0.39%)
0.693% MFS VALUE CL I(MEIIX) (0.58%)
0.681% JOHN HANCOCK DISCIPLINED VAL MID CAP CL I(JVMIX) (0.86%)
0.676% NEUBERGER BERMAN LARGE CAP VALUE INSTL CL(NBPIX) (0.68%)
0.631% MORGAN STANLEY INSTL ADVANTAGE CL I(MPAIX) (0.85%)
0.571% PUTNAM GROWTH OPPTYS CL Y(PGOYX) (0.80%)
0.568% ALGER FOCUS EQUITY CL Z(ALZFX) (0.63%)
0.534% GOLDMAN SACHS SMALL CAP EQUITY INSIGHTS INVESTOR CL(GDSTX) (0.96%)
0.533% GOLDMAN SACHS GQG PARTNERS INTL OPPTYS INVESTOR CL(GSINX) (0.92%)
0.520% FIDELITY ADVISOR SMALL CAP VALUE CL I(FCVIX) (0.98%)
0.516% TRANSAMERICA INTL EQUITY CL I(TSWIX) (0.86%)
0.458% SPDR PORTFOLIO S&P 500 ETF(SPLG) (0.03%)
0.440% VICTORY RS INTL CL Y(RSIGX) (0.88%)
0.438% JANUS HENDERSON ENTERPRISE CL I(JMGRX) (0.76%)
0.347% MFS GLOBAL GROWTH CL I(MWOIX) (0.97%)
0.277% EVENTIDE GILEAD INSTL CL(ETILX) (1.18%)
0.256% FIDELITY ADVISOR INTL SMALL CAP CL I(FIXIX) (1.08%)
0.161% PIMCO ALL ASSET CL I2(PALPX) (1.02%)
0.157% CALAMOS MARKET NEUTRAL INCOME CL I(CMNIX) (0.98%)
0.135% NEUBERGER BERMAN STRATEGIC INCOME INSTL CL(NSTLX) (0.60%)
0.135% PACIFIC STRATEGIC INCOME ADVISOR CL(PLSFX) (0.72%)
0.134% PIMCO INCOME CL I2(PONPX) (0.72%)
0.133% VIRTUS NEWFLEET MULTI SECTOR SHORT TERM BOND CL I(PIMSX) (0.73%)
0.133% VOYA STRATEGIC INCOME OPPTYS CL I(IISIX) (0.63%)
0.132% JOHN HANCOCK STRATEGIC INCOME OPPTYS CL I(JIPIX) (0.77%)
0.132% VICTORY INCORE FUND FOR INCOME CL Y (VFFYX) (0.71%)
0.130% BLACKROCK INCOME INSTL CL (BMSIX) (0.65%)
0.105% EATON VANCE FLOATING RATE ADVNTG CL I (EIFAX) (1.35%)
0.104% PGIM SHORT DURATION HIGH YIELD INCOME CL Z (HYSZX) (0.75%)
0.104% GUGGENHEIM TOTAL RETURN BOND INSTL CL (GIBIX) (0.51%)
0.104% FIRST TRUST TCW OPPORTUNISTIC FIXED INCOME ETF (FIXD) (0.56%)
0.102% AB INCOME ADVISOR CL (ACGYX) (0.53%)
0.100% 1290 DIVERSIFIED BOND CL I (TNUIX) (0.50%)
0.063% GGP Goldman Sachs Financial Square Gov MMF Premier (9999028) (0.00%)
0.061% WORLD GOLD TRUST SPDR GOLD MINISHARES TRUST ETF (GLDM) (0.18%)
0.002% Cash

Traditional IRA at Betterment
1.074% Vanguard TSM Idx;ETF (ARCX:VTI) (VTI) (0.03%)
0.878% Vanguard Dev Mkt;ETF (ARCX:VEA) (VEA) (0.05%)
0.525% Vanguard EM St I;ETF (ARCX:VWO) (VWO) (0.10%)
0.493% Vanguard Tot Itl BI;ETF (XNAS:BNDX) (BNDX) (0.08%)
0.445% iShares:Core US Agg Bd (ARCX:AGG) (AGG) (0.04%)
0.286% Vanguard Val Idx;ETF (ARCX:VTV) (VTV) (0.04%)
0.250% iShares:JPM USD EM Bd (XNAS:EMB) (EMB) (0.39%)
0.233% Vanguard MC V I;ETF (ARCX:VOE) (VOE) (0.07%)
0.199% Vanguard SC V I;ETF (ARCX:VBR) (VBR) (0.07%)
0.170% Vanguard ST IPSI;ETF (XNAS:VTIP) (VTIP) (0.05%)

Whole Life Insurance
Cash value of ~$130k.

Questions:
1. In the taxable FA account, as of end of Oct, I have an unrealized gain of over $520K. I’m guessing most of it is long-term. At the very least I’d probably want to keep my income low enough to qualify for a 15% tax on LT gains. What strategy do you recommend? Go with Vanguard PAS or some other low cost advisor and get their help managing the transition? Do the transfer and transition over a period of X years into the 3 funds? Transfer out the Roth and IRA and wait for a correction?

2. I see people mostly recommending Vanguard, Schwab, and Fidelity brokerages. Do you see any reason not to use MerrillEdge? I don’t trade in it that much, and they don’t charge commissions. What are the benefits of those 3?

3. In the Merrill account, I had bought into a bunch of different vanguard ETFs, but really only want to be in the 3 I mentioned (VTI, VXUS, BND). Is it worth it to take the capital gain in order to simplify things or just keep it as is since expenses are low and the performance won’t change in any big way. I’m inclined to keep them but it would obviously be neater and would have somewhat lower expenses if I consolidated them. This one is not urgent, as I have much bigger fish to fry. I'm guessing the answer may be mathematical - is capital gain cost + low fees > PV of future expenses?

4. As an aside, is there any good way to measure the performance of the portfolios compared with index benchmarks? Take the approximate Stock/Bond asset allocation and compare against an equivalent vanguard life strategy fund performance?

5. Any other advice is appreciated!

Thanks!
User avatar
retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: Complex portfolio w/ high fees and unrealized gains

Post by retiredjg »

Welcome to the forum, FrankyZoo. :happy

I've been around awhile and I think you must win the prize (or at least a close tie) for most complex portfolio ever seen. It's been a bit since I've seen one with near this many holdings. That does not make it bad. It does make it a hassle.

I admire someone who would do all these calculations and put in all this information. It must have taken quite a long time. Hat's off to you!


Questions:
1. In the taxable FA account, as of end of Oct, I have an unrealized gain of over $520K. I’m guessing most of it is long-term. At the very least I’d probably want to keep my income low enough to qualify for a 15% tax on LT gains. What strategy do you recommend? Go with Vanguard PAS or some other low cost advisor and get their help managing the transition? Do the transfer and transition over a period of X years into the 3 funds? Transfer out the Roth and IRA and wait for a correction?
There is no need to wait to get out from under the 1% AUM. However, you will need to carefully document the basis of each of these holdings in taxable before the transfer occurs because sometimes that information does not follow. You will also need to be sure Merrill will accept each one. When they get to Merrill DO NOT reinvest dividends as that will result in short term gains which you want to avoid if you can.

Strategy - do you still have any carryover losses? If yes, use them. Is there anything in taxable with a loss or about even? Sell them too.

After that, I would sell and stay in the 15% bracket but also stay under the NITT which adds 3.8% if your AGI is over $200k for a single person. This could mean your transition will take a few years. Or you can pay the extra tax and pull off the bandaid. Or pay some extra tax and pull off the bandaid half way....all your choice.

It appears that many of those funds are actively managed (not an index) and/or high expense ratio. You might decide to sell some of those even over the NITT limit because it will cost you extra in taxes and expenses to keep them longer.

The 401k and IRAs can be liquidated and immediately invested although it may not be very clear just how to invest them without knowing the stock to bond ratios of the other accounts.
2. I see people mostly recommending Vanguard, Schwab, and Fidelity brokerages. Do you see any reason not to use MerrillEdge? I don’t trade in it that much, and they don’t charge commissions. What are the benefits of those 3?
I don't think people mention ME often because fewer people know about it. If you like them, I see no reason not to use them until you want something different.

3. In the Merrill account, I had bought into a bunch of different vanguard ETFs, but really only want to be in the 3 I mentioned (VTI, VXUS, BND). Is it worth it to take the capital gain in order to simplify things or just keep it as is since expenses are low and the performance won’t change in any big way. I’m inclined to keep them but it would obviously be neater and would have somewhat lower expenses if I consolidated them. This one is not urgent, as I have much bigger fish to fry. I'm guessing the answer may be mathematical - is capital gain cost + low fees > PV of future expenses?
I would kick this bucket down the road but watch for anything with a loss or near even and sell if/when that happens.

4. As an aside, is there any good way to measure the performance of the portfolios compared with index benchmarks? Take the approximate Stock/Bond asset allocation and compare against an equivalent vanguard life strategy fund performance?
With the number of holdings you have I think this would be very long and tedious. Maybe Portfolio Visualizer would do it?


If you want someone to do this transition for you, I guess Vanguard is the one I would suggest. However, I don't know if they would do this transition over several years if that matters to you.

It will be interesting watching you unwind this ball of string. Please do stay in touch.

If you want to see comments on MerrilEdge, you can use the google box above and it will pull up old threads.
stan1
Posts: 14246
Joined: Mon Oct 08, 2007 4:35 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by stan1 »

Oh boy, what a mess!

My first question would be do you want to take on the task of managing this yourself (some spreadsheet work and tracking of cost basis for each holding)? If you like analytical tasks in your free time since you aren't working right now you can certainly learn how to manage it in a relatively short amount of time, but not everyone wants to do that.
exodusNH
Posts: 10347
Joined: Wed Jan 06, 2021 7:21 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by exodusNH »

FrankyZoo wrote: Fri Nov 12, 2021 1:39 pm Hi Bogleheads -

Looking for some advice on transitioning to a more simplified lower-cost portfolio.

Background
I recently left my job. I don’t have an immediate plan to go back to work, but wouldn’t rule it out if I found something fulfilling. I’m spending my some of my new-found time working on my portfolio.

~65% of the portfolio is with a Financial Advisor (RIA) who is charging 1% of AUM. If I simplify the portfolio I can manage it myself, as Bogleheads do, and save on the high fees. However, since i’ve been with the FA around 15 yrs, unwinding my taxable accounts would be easier said than done. My thought was to transfer as much as possible in kind to MerrillEdge, sell most of it and buy into low-cost index ETFs, probably just VTI, VXUS, and BND. Later I’d do the same with my Betterment accounts and cashed out Whole Life policy. Also planning to roll the 401k into a Merrill IRA.

See below for all my portfolio info, and specific questions. Thanks so much in advance for reading:

Emergency funds: Sufficient
Debt: None
Tax Filing Status: Single
Tax Rate: Not sure where this will land after this year. Next year i probably won’t have salary but will have the tax bill from surrendering my insurance (~$60k), capital gains and div income. In 2019 I had approx $43k in dividends and $33k in cap gains(all long-term), if that helps. 2020 had very low cap gains due to tax loss harvesting.

State of Residence: NY State
Age: 50
Desired Asset allocation: 60% stocks / 40% bonds
Desired International allocation: 40% of stocks

Approximate size of the portfolio: ~4.8M
Taxable accts at FA (there are 3 accounts which have different purposes but to simplify I consolidated them)
2.975% MORGAN STANLEY INSTL ADVANTAGE CL I (MPAIX) (0.85%)
2.231% WISDOMTREE TRUST US DIV GRWTH FUND (DGRW) (0.28%)
2.228% TOUCHSTONE DIVIDEND EQUITY CL Y (TQCYX) (0.77%)
1.935% WELLS FARGO STRATEGIC MUN BOND INSTL CL (STRIX) (0.46%)
1.928% SPDR PORTFOLIO S&P 500 ETF (SPLG) (0.03%)
1.760% JANUS HENDERSON GROWTH & INCOME CL T (JAGIX) (0.87%)
1.755% WELLS FARGO SPECIAL MID CAP VALUE INSTL CL (WFMIX) (0.81%)
1.731% CLEARBRIDGE LARGE CAP GROWTH CL I (SBLYX) (0.72%)
1.695% BNY MELLON EQUITY INCOME CL I (DQIRX) (0.78%)
1.564% GOLDMAN SACHS GQG PARTNERS INTL OPPTYS INVESTOR CL (GSINX) (0.92%)
1.438% DELAWARE TAX FREE NEW YORK INSTL CL (DTNIX) (0.55%)
1.413% SPDR S&P MID CAP 400 ETF (MDY) (0.23%)
1.392% TRANSAMERICA INTL EQUITY CL I (TSWIX) (0.86%)
1.267% INVESCO ROCHESTER LTD TERM NEW YORK MUN CL Y (LTBYX) (0.63%)
1.264% BLACKROCK NEW YORK MUN OPPTY INSTL CL (MANKX) (0.60%)
1.189% GOLDMAN SACHS SMALL CAP EQUITY INSIGHTS INVESTOR CL (GDSTX) (0.96%)
1.165% WELLS FARGO SPECIAL SMALL CAP VALUE INSTL CL (ESPNX) (0.95%)
1.121% MFS GLOBAL GROWTH CL I (MWOIX) (0.97%)
1.051% SPDR INDEX MSCI EAFE STRATEGIC FACTORS ETF (QEFA) (0.30%)
0.900% INVESCO NEW YORK AMT FREE MUNICIPAL BOND ETF (PZT) (0.28%)
0.889% VOYA STRATEGIC INCOME OPPTYS CL I (IISIX) (0.63%)
0.875% CALAMOS MARKET NEUTRAL INCOME CL I (CMNIX) (0.98%)
0.869% BLACKROCK INCOME INSTL CL (BMSIX) (0.65%)
0.859% JANUS HENDERSON ENTERPRISE CL I (JMGRX) (0.76%)
0.855% SPDR SERIES TRUST S&P 600 SMALL CAP ETF (SLY) (0.15%)
0.843% EVENTIDE GILEAD INSTL CL (ETILX) (1.18%)
0.836% FIDELITY ADVISOR INTL SMALL CAP CL I (FIXIX) (1.08%)
0.790% PIMCO NEW YORK MUN BOND CL I2 (PNYPX) (0.55%)
0.708% VICTORY INCORE FUND FOR INCOME CL Y (VFFYX) (0.71%)
0.633% PIMCO ALL ASSET CL I2 (PALPX) (1.02%)
0.621% PACIFIC STRATEGIC INCOME ADVISOR CL (PLSFX) (0.72%)
0.618% VIRTUS NEWFLEET MULTI SECTOR SHORT TERM BOND CL I (PIMSX) (0.73%)
0.616% JOHN HANCOCK STRATEGIC INCOME OPPTYS CL I (JIPIX) (0.77%)
0.611% GUGGENHEIM TOTAL RETURN BOND INSTL CL (GIBIX) (0.51%)
0.601% 1290 DIVERSIFIED BOND CL I (TNUIX) (0.50%)
0.534% NEUBERGER BERMAN STRATEGIC INCOME INSTL CL (NSTLX) (0.60%)
0.533% PIMCO INCOME CL I2 (PONPX) (0.72%)
0.525% MAINSTAY MACKAY NEW YORK TAX FREE OPPTYS CL I (MNOIX) (0.50%)
0.483% PACIFIC FLOATING RATE INCOME ADVISOR CL (PLFDX) (0.80%)
0.480% MAINSTAY MACKAY SHORT DURATION HIGH YIELD CL I (MDHIX) (0.79%)
0.476% FIRST TRUST TCW OPPORTUNISTIC FIXED INCOME ETF (FIXD) (0.56%)
0.472% AB INCOME ADVISOR CL (ACGYX) (0.53%)
0.470% WORLD GOLD TRUST SPDR GOLD MINISHARES TRUST ETF (GLDM) (0.18%)
0.379% PRINCIPAL LARGE CAP S&P 500 INDEX INSTL CL (PLFIX) (0.17%)
0.373% T ROWE PRICE DIVIDEND GROWTH INVESTOR CL (PRDGX) (0.63%)
0.366% TOUCHSTONE CREDIT OPPTYS CL Y (TMAYX) (0.93%)
0.303% Insured Cash Account (9999227) (0.00%)
0.286% BNY MELLON MIDCAP INDEX CL I (DMIDX) (0.25%)
0.159% VICTORY RS INTL CL Y (RSIGX) (0.88%)
0.098% BNY MELLON SMALLCAP STOCK INDEX CL I (DISIX) (0.25%)

Taxable at MerrillEdge
1.550% VANGUARD TOTAL BOND MKT (BND) (0.04%)
1.266% VANGUARD TOTAL STK MKT (VTI ) (0.03%)
0.891% BANK OF AMERICA CORP (BAC ) (0.00%)
0.769% VANGUARD TOTAL INTL STK (VXUS ) (0.08%)
0.376% VANGUARD 500 INDEX FUND (VOO ) (0.03%)
0.317% VANGUARD FTSE DEVELOPED (VEA ) (0.05%)
0.249% VANGUARD SHORT-TERM (VCSH ) (0.05%)
0.164% VANGUARD S AND P MID-CAP (IVOO ) (0.10%)
0.125% VANGUARD FTSE EMERGING (VWO ) (0.10%)
0.121% BERKSHIRE HATHAWAYINC (BRKB ) (0.00%)
0.116% INTEL CORP (INTC ) (0.00%)
0.105% VANGUARD S AND P SMALL (VIOO ) (0.10%)
0.102% WALMART INC (WMT ) (0.00%)
0.080% Cash (0.00%)
0.066% CHINA FUND INC COM (CHN ) (1.09%)
0.062% FRANCO NEV CORP (FNV ) (0.00%)

Taxable at Betterment
0.973% iShares:Core S&P Tot USM (ARCX:ITOT) (ITOT) (0.03%)
0.704% Schwab Str:Intl Eqty ETF (ARCX:SCHF) (SCHF) (0.06%)
0.529% Vanguard EM St I;ETF (ARCX:VWO) (VWO) (0.10%)
0.480% Vanguard Tot Itl BI;ETF (XNAS:BNDX) (BNDX) (0.08%)
0.420% iShares:NY Muni Bond (ARCX:NYF) (NYF) (0.25%)
0.331% Vanguard Val Idx;ETF (ARCX:VTV) (VTV) (0.04%)
0.295% Schwab Str:US Br Mkt ETF (ARCX:SCHB) (SCHB) (0.03%)
0.219% Vanguard MC V I;ETF (ARCX:VOE) (VOE) (0.07%)
0.208% Vanguard SC V I;ETF (ARCX:VBR) (VBR) (0.07%)
0.181% Vanguard EM G B;ETF (XNAS:VWOB) (VWOB) (0.25%)
0.175% iShares:Natl Muni Bond (ARCX:MUB) (MUB) (0.07%)
0.171% iShares:Core MSCI EAFE (BATS:IEFA) (IEFA) (0.07%)
0.162% iShares:Core US Agg Bd (ARCX:AGG) (AGG) (0.04%)
0.130% Vanguard TSM Idx;ETF (ARCX:VTI) (VTI) (0.03%)
0.128% iShares:Core MSCI EmMkts (ARCX:IEMG) (IEMG) (0.11%)
0.116% Vanguard Dev Mkt;ETF (ARCX:VEA) (VEA) (0.05%)
0.111% Vanguard ST IPSI;ETF (XNAS:VTIP) (VTIP) (0.05%)
0.100% iShares:JPM USD EM Bd (XNAS:EMB) (EMB) (0.39%)
0.078% iShares:Russ MC Val (ARCX:IWS) (IWS) (0.23%)
0.052% iShares:Russ 2000 Vl ETF (ARCX:IWN) (IWN) (0.24%)
0.033% Schwab Str:US LC Val ETF (ARCX:SCHV) (SCHV) (0.04%)

401k
2.756% T ROWE LARGE-CAP GR TRUS (JAQNT) (0.32%)
2.554% MFS INTERNATIONAL GROWTH (MIGFT) (0.38%)
2.544% ACADIAN ALL WORLD EX-US EQUITY (GGRRT) (0.45%)
2.138% VANGUARD INSTL EXTENDED MKT (VGIET) (0.02%)
1.708% DODGE & COX STOCK FUND (DODGX) (0.52%)
1.699% BLACKROCK EQUITY DIVIDEND CL M (EDFMT) (0.33%)
1.700% WESTERN ASSET CORE BOND R3 (WACIT) (0.25%)
1.690% STABLE VALUE FUND (MLSVF) (0.03%)
1.690% PIMCO TOTAL RETURN PORT. INSTL (PTTRX) (0.47%)
1.273% PIMCO ALL ASSET FUND (PAAIX) (1.00%)
0.857% BLACKROCK RUSSELL 2000 FUND G1 (RRUST) (0.43%)
0.641% VANGUARD INSTL 500 INDEX TRUST (VGINT) (0.01%)

Roth IRA at FA
0.441% PRINCIPAL LARGE CAP S&P 500 INDEX INSTL CL (PLFIX) (0.17%)
0.429% T ROWE PRICE DIVIDEND GROWTH INVESTOR CL (PRDGX) (0.63%)
0.335% BNY MELLON MIDCAP INDEX CL I (DMIDX) (0.25%)
0.203% GOLDMAN SACHS GQG PARTNERS INTL OPPTYS INVESTOR CL (GSINX) (0.92%)
0.185% VICTORY RS INTL CL Y (RSIGX) (0.88%)
0.118% BNY MELLON SMALLCAP STOCK INDEX CL I (DISIX) (0.25%)
0.107% VOYA STRATEGIC INCOME OPPTYS CL I (IISIX) (0.63%)
0.105% BLACKROCK INCOME INSTL CL (BMSIX) (0.65%)
0.073% CALAMOS MARKET NEUTRAL INCOME CL I (CMNIX) (0.98%)
0.043% 1290 DIVERSIFIED BOND CL I (TNUIX) (0.50%)
0.040% GUGGENHEIM TOTAL RETURN BOND INSTL CL (GIBIX) (0.51%)
0.028% VICTORY INCORE FUND FOR INCOME CL Y (VFFYX) (0.71%)
0.010% Cash

Traditional IRA at FA
0.696% INVESCO FTSE RAFI U S 1000 ETF(PRF) (0.39%)
0.693% MFS VALUE CL I(MEIIX) (0.58%)
0.681% JOHN HANCOCK DISCIPLINED VAL MID CAP CL I(JVMIX) (0.86%)
0.676% NEUBERGER BERMAN LARGE CAP VALUE INSTL CL(NBPIX) (0.68%)
0.631% MORGAN STANLEY INSTL ADVANTAGE CL I(MPAIX) (0.85%)
0.571% PUTNAM GROWTH OPPTYS CL Y(PGOYX) (0.80%)
0.568% ALGER FOCUS EQUITY CL Z(ALZFX) (0.63%)
0.534% GOLDMAN SACHS SMALL CAP EQUITY INSIGHTS INVESTOR CL(GDSTX) (0.96%)
0.533% GOLDMAN SACHS GQG PARTNERS INTL OPPTYS INVESTOR CL(GSINX) (0.92%)
0.520% FIDELITY ADVISOR SMALL CAP VALUE CL I(FCVIX) (0.98%)
0.516% TRANSAMERICA INTL EQUITY CL I(TSWIX) (0.86%)
0.458% SPDR PORTFOLIO S&P 500 ETF(SPLG) (0.03%)
0.440% VICTORY RS INTL CL Y(RSIGX) (0.88%)
0.438% JANUS HENDERSON ENTERPRISE CL I(JMGRX) (0.76%)
0.347% MFS GLOBAL GROWTH CL I(MWOIX) (0.97%)
0.277% EVENTIDE GILEAD INSTL CL(ETILX) (1.18%)
0.256% FIDELITY ADVISOR INTL SMALL CAP CL I(FIXIX) (1.08%)
0.161% PIMCO ALL ASSET CL I2(PALPX) (1.02%)
0.157% CALAMOS MARKET NEUTRAL INCOME CL I(CMNIX) (0.98%)
0.135% NEUBERGER BERMAN STRATEGIC INCOME INSTL CL(NSTLX) (0.60%)
0.135% PACIFIC STRATEGIC INCOME ADVISOR CL(PLSFX) (0.72%)
0.134% PIMCO INCOME CL I2(PONPX) (0.72%)
0.133% VIRTUS NEWFLEET MULTI SECTOR SHORT TERM BOND CL I(PIMSX) (0.73%)
0.133% VOYA STRATEGIC INCOME OPPTYS CL I(IISIX) (0.63%)
0.132% JOHN HANCOCK STRATEGIC INCOME OPPTYS CL I(JIPIX) (0.77%)
0.132% VICTORY INCORE FUND FOR INCOME CL Y (VFFYX) (0.71%)
0.130% BLACKROCK INCOME INSTL CL (BMSIX) (0.65%)
0.105% EATON VANCE FLOATING RATE ADVNTG CL I (EIFAX) (1.35%)
0.104% PGIM SHORT DURATION HIGH YIELD INCOME CL Z (HYSZX) (0.75%)
0.104% GUGGENHEIM TOTAL RETURN BOND INSTL CL (GIBIX) (0.51%)
0.104% FIRST TRUST TCW OPPORTUNISTIC FIXED INCOME ETF (FIXD) (0.56%)
0.102% AB INCOME ADVISOR CL (ACGYX) (0.53%)
0.100% 1290 DIVERSIFIED BOND CL I (TNUIX) (0.50%)
0.063% GGP Goldman Sachs Financial Square Gov MMF Premier (9999028) (0.00%)
0.061% WORLD GOLD TRUST SPDR GOLD MINISHARES TRUST ETF (GLDM) (0.18%)
0.002% Cash

Traditional IRA at Betterment
1.074% Vanguard TSM Idx;ETF (ARCX:VTI) (VTI) (0.03%)
0.878% Vanguard Dev Mkt;ETF (ARCX:VEA) (VEA) (0.05%)
0.525% Vanguard EM St I;ETF (ARCX:VWO) (VWO) (0.10%)
0.493% Vanguard Tot Itl BI;ETF (XNAS:BNDX) (BNDX) (0.08%)
0.445% iShares:Core US Agg Bd (ARCX:AGG) (AGG) (0.04%)
0.286% Vanguard Val Idx;ETF (ARCX:VTV) (VTV) (0.04%)
0.250% iShares:JPM USD EM Bd (XNAS:EMB) (EMB) (0.39%)
0.233% Vanguard MC V I;ETF (ARCX:VOE) (VOE) (0.07%)
0.199% Vanguard SC V I;ETF (ARCX:VBR) (VBR) (0.07%)
0.170% Vanguard ST IPSI;ETF (XNAS:VTIP) (VTIP) (0.05%)

Whole Life Insurance
Cash value of ~$130k.

Questions:
1. In the taxable FA account, as of end of Oct, I have an unrealized gain of over $520K. I’m guessing most of it is long-term. At the very least I’d probably want to keep my income low enough to qualify for a 15% tax on LT gains. What strategy do you recommend? Go with Vanguard PAS or some other low cost advisor and get their help managing the transition? Do the transfer and transition over a period of X years into the 3 funds? Transfer out the Roth and IRA and wait for a correction?

2. I see people mostly recommending Vanguard, Schwab, and Fidelity brokerages. Do you see any reason not to use MerrillEdge? I don’t trade in it that much, and they don’t charge commissions. What are the benefits of those 3?

3. In the Merrill account, I had bought into a bunch of different vanguard ETFs, but really only want to be in the 3 I mentioned (VTI, VXUS, BND). Is it worth it to take the capital gain in order to simplify things or just keep it as is since expenses are low and the performance won’t change in any big way. I’m inclined to keep them but it would obviously be neater and would have somewhat lower expenses if I consolidated them. This one is not urgent, as I have much bigger fish to fry. I'm guessing the answer may be mathematical - is capital gain cost + low fees > PV of future expenses?

4. As an aside, is there any good way to measure the performance of the portfolios compared with index benchmarks? Take the approximate Stock/Bond asset allocation and compare against an equivalent vanguard life strategy fund performance?

5. Any other advice is appreciated!

Thanks!
Do you know approximately what your whole life policy is paying? If not, before you do anything, get an inforce illustration. Then post the details here.

If you're getting ~3%, one option is to put it in "reduced paid up" status. You will keep what you have and not have to pay more premiums. You can then consider that money to be part of your fixed income allocation.

Then, in a few years, after you've unwound your investments, you can decide to cash it in and pay the income tax or continue keeping it as part of your FI.
User avatar
patrick013
Posts: 3301
Joined: Mon Jul 13, 2015 7:49 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by patrick013 »

All the books say buy and hold. Perhaps sell the funds with the highest
fees and highest tax basis while staying in the lower tax bracket. It can
take several or more years to do so.

Everybody wants to be in a few funds. It may take a few years to sell and
adjust into bonds. Should be no problem.

If your portfolio beats the 500 and bonds 60/40 then it's doing well.
portfoliovisualizer.com has several good calculators.
age in bonds, buy-and-hold, 10 year business cycle
User avatar
David Jay
Posts: 14586
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Complex portfolio w/ high fees and unrealized gains

Post by David Jay »

Your FA wasn't just taking a shotgun approach, he was using #9 birdshot.

A lot of these can be cleaned up quickly because they are so small. I count 52 listings for less than two tenths of 1% (0.2%) of your portfolio.

Of course there are no tax implications for any sales inside the IRA or 401K accounts. As to where to hold which type of asset, the Wiki has a page on tax efficient fund placement here: https://www.bogleheads.org/wiki/Tax-eff ... _placement
Last edited by David Jay on Fri Nov 12, 2021 3:25 pm, edited 1 time in total.
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
wrongfunds
Posts: 3187
Joined: Tue Dec 21, 2010 2:55 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by wrongfunds »

Is it possible that every fund you hold charges fee to completely get out i.e. $100 "closing fee"? If so, that alone will cost you thousands of dollars!
User avatar
retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: Complex portfolio w/ high fees and unrealized gains

Post by retiredjg »

I don't think a fund can charge a closing fee. But a brokerage could charge a transaction fee for each sale and some do. I think that is one reason why MerrilEdge may be attractive to this poster.
psteinx
Posts: 5801
Joined: Tue Mar 13, 2007 2:24 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by psteinx »

That's a spectacularly convoluted portfolio.

The good news is, IT'S NOT AS SCARY AS IT LOOKS!!!!!

You can do this. You can do this on your own. You can save a lot of money and complexity.

I would recommend, roughly:

1) Do a lot of reading, and determine what your IDEAL portfolio would be (if you were constructing from scratch).

Note: I think an advantage of using an advisor, and something some DIY-ers lose, is risk tolerance and a fairly high equity allocation. You're relatively young. DON'T rush to move your portfolio elsewhere, liquidate a lot of equities, and then sit on large cash balances. In a 0% money market, ~6% inflation world, you're losing ~6% in purchasing power each year leaving investments in cash, and only a bit less in low yield bonds.

Figure out what you want (at least roughly) BEFORE you start. It could be roughly the same allocation you have now, just simpler and at lower cost.

2) Set up your new accounts, at a low-fee broker. Fidelity, Schwab, and Vanguard are all used - all are probably ok.

3) Make sure you have robust records on cost basis on your current taxable holdings.

4) Talk to the new broker about what transfers in kind, and what may have to liquidate to cash.

5) Transfer stuff over.

6) Set everything, initially, to NOT reinvest dividends - put it as cash in the MM funds.

7) You may want to wait ~30 days, to actually start selling. This is to avoid wash sales, in case there have been recent reinvestments across any of this multitude of funds. Really, this only matters where you may have losses, but you've likely got a lot of small lots, possibly including some at a loss, across your funds.

8) Do the IRA stuff first - there should be no tax consequences there. You should be able to sell basically everything and move the proceeds to your targeted portfolio - probably a 3 fund.

9) Sell everything in taxable that's at a loss or small gain. Just from a simplicity standpoint - consolidating a lot of those 0.104% type positions will be helpful, even if you have to pay some taxes.

10) For the larger positions, be tax aware, you may want to spread the selling across several years, to reduce taxes, and/or just keep some of those positions, if the gains are large and the expense rations are small.

Good luck!
User avatar
Stinky
Posts: 14152
Joined: Mon Jun 12, 2017 11:38 am
Location: Sweet Home Alabama

Re: Complex portfolio w/ high fees and unrealized gains

Post by Stinky »

psteinx wrote: Fri Nov 12, 2021 3:31 pm That's a spectacularly convoluted portfolio.

The good news is, IT'S NOT AS SCARY AS IT LOOKS!!!!!

You can do this. You can do this on your own. You can save a lot of money and complexity.

I would recommend, roughly:

1) Do a lot of reading, and determine what your IDEAL portfolio would be (if you were constructing from scratch).

Note: I think an advantage of using an advisor, and something some DIY-ers lose, is risk tolerance and a fairly high equity allocation. You're relatively young. DON'T rush to move your portfolio elsewhere, liquidate a lot of equities, and then sit on large cash balances. In a 0% money market, ~6% inflation world, you're losing ~6% in purchasing power each year leaving investments in cash, and only a bit less in low yield bonds.

Figure out what you want (at least roughly) BEFORE you start. It could be roughly the same allocation you have now, just simpler and at lower cost.

2) Set up your new accounts, at a low-fee broker. Fidelity, Schwab, and Vanguard are all used - all are probably ok.

3) Make sure you have robust records on cost basis on your current taxable holdings.

4) Talk to the new broker about what transfers in kind, and what may have to liquidate to cash.

5) Transfer stuff over.

6) Set everything, initially, to NOT reinvest dividends - put it as cash in the MM funds.

7) You may want to wait ~30 days, to actually start selling. This is to avoid wash sales, in case there have been recent reinvestments across any of this multitude of funds. Really, this only matters where you may have losses, but you've likely got a lot of small lots, possibly including some at a loss, across your funds.

8) Do the IRA stuff first - there should be no tax consequences there. You should be able to sell basically everything and move the proceeds to your targeted portfolio - probably a 3 fund.

9) Sell everything in taxable that's at a loss or small gain. Just from a simplicity standpoint - consolidating a lot of those 0.104% type positions will be helpful, even if you have to pay some taxes.

10) For the larger positions, be tax aware, you may want to spread the selling across several years, to reduce taxes, and/or just keep some of those positions, if the gains are large and the expense rations are small.

Good luck!
This sounds like very solid advice to me.

One question - has the whole life policy already been surrendered? If not, are you considering keeping it as part of the fixed income allocation?
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
Gill
Posts: 8221
Joined: Sun Mar 04, 2007 7:38 pm
Location: Florida

Re: Complex portfolio w/ high fees and unrealized gains

Post by Gill »

retiredjg wrote: Fri Nov 12, 2021 3:10 pm
I've been around awhile and I think you must win the prize (or at least a close tie) for most complex portfolio ever seen. It's been a bit since I've seen one with near this many holdings. That does not make it bad. It does make it a hassle.
Hardly any of the funds exceed 1% of the portfolio and most are considerably less. I'd liquidate all the funds in tax deferred accounts immediately and every other fund which represents less than .5% of the portfolio regardless of where held.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
livesoft
Posts: 86076
Joined: Thu Mar 01, 2007 7:00 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by livesoft »

Clearly, the OP has all these positions in a spreadsheet. And maybe the FA is at ML, so the transfer to MerrillEdge is not a big deal.

I would (in no particular order):

In the tax-advantaged accounts sell all positions with expense ratios larger than 0.3% to start. Just classify things at US, foreign, or fixed income and use the money to buy US, foreign, or fixed income of something in tax-advantaged accounts that you already own that is an index fund with sub 0.1% expense ratio.

In the taxable account, decide what is the amount of realized capital gains that you want for a calendar quarter, then start selling the positions with expense ratios larger than 0.3% to start preferably also the positions with the smallest percentages of your portfolio. This probably means ignore the Betterment taxable account for now. Use the money to buy US, foreign, or fixed income (tax-exempt? muni bonds) that you already own with sub 0.1% expense ratio.

The above is not optimal, but it is a simple start and can be changed.

As for portfolio comparison: I think you will have put all transactions in a program such as the free Microsoft Money running on a Windows computer and let it make the XIRR() performance calculations. Or use XIRR() in your spreadsheet. You can use tools at your brokerage to get your asset allocation. I know Vanguard, Fidelity, and TDAmeritrade have free tools. See also: viewtopic.php?t=150267
Wiki This signature message sponsored by sscritic: Learn to fish.
Topic Author
FrankyZoo
Posts: 57
Joined: Mon Nov 08, 2021 10:28 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by FrankyZoo »

retiredjg wrote: Fri Nov 12, 2021 3:10 pm Welcome to the forum, FrankyZoo. :happy

I've been around awhile and I think you must win the prize (or at least a close tie) for most complex portfolio ever seen. It's been a bit since I've seen one with near this many holdings. That does not make it bad. It does make it a hassle.

I admire someone who would do all these calculations and put in all this information. It must have taken quite a long time. Hat's off to you!
Thanks for that. I actually enjoyed the exercise of putting it together. I had never gathered all of that information in one place before. It wasn't easy, as the FA reports have very little information or they're in pdf format. I had to go to Mint, Personal Capital, and Betterment in some cases. And I got the free trial of Acrobat so I can export pdf files to xls, although the table exports are messy and not too helpful, so there's still a lot of manual manipulation.

Questions:
1. In the taxable FA account, as of end of Oct, I have an unrealized gain of over $520K. I’m guessing most of it is long-term. At the very least I’d probably want to keep my income low enough to qualify for a 15% tax on LT gains. What strategy do you recommend? Go with Vanguard PAS or some other low cost advisor and get their help managing the transition? Do the transfer and transition over a period of X years into the 3 funds? Transfer out the Roth and IRA and wait for a correction?
There is no need to wait to get out from under the 1% AUM. However, you will need to carefully document the basis of each of these holdings in taxable before the transfer occurs because sometimes that information does not follow. You will also need to be sure Merrill will accept each one. When they get to Merrill DO NOT reinvest dividends as that will result in short term gains which you want to avoid if you can.

Strategy - do you still have any carryover losses? If yes, use them. Is there anything in taxable with a loss or about even? Sell them too.
Thanks. No carryover losses. However, I'm glad you asked because it brought out something interesting. My statement only shows the unrealized for 2 of the 3 taxable accounts held with the FA for some reason, but that is the vast majority. Of those, 24 had unrealized gains < $1,000 (including losses), and the total for those 24 was < $2000. That is extremely helpful! Makes me realize I need to update my spreadsheet to have cost basis and unrealized gain (probably manually).
After that, I would sell and stay in the 15% bracket but also stay under the NITT which adds 3.8% if your AGI is over $200k for a single person. This could mean your transition will take a few years. Or you can pay the extra tax and pull off the bandaid. Or pay some extra tax and pull off the bandaid half way....all your choice.

It appears that many of those funds are actively managed (not an index) and/or high expense ratio. You might decide to sell some of those even over the NITT limit because it will cost you extra in taxes and expenses to keep them longer.

The 401k and IRAs can be liquidated and immediately invested although it may not be very clear just how to invest them without knowing the stock to bond ratios of the other accounts.
2. I see people mostly recommending Vanguard, Schwab, and Fidelity brokerages. Do you see any reason not to use MerrillEdge? I don’t trade in it that much, and they don’t charge commissions. What are the benefits of those 3?
I don't think people mention ME often because fewer people know about it. If you like them, I see no reason not to use them until you want something different.

3. In the Merrill account, I had bought into a bunch of different vanguard ETFs, but really only want to be in the 3 I mentioned (VTI, VXUS, BND). Is it worth it to take the capital gain in order to simplify things or just keep it as is since expenses are low and the performance won’t change in any big way. I’m inclined to keep them but it would obviously be neater and would have somewhat lower expenses if I consolidated them. This one is not urgent, as I have much bigger fish to fry. I'm guessing the answer may be mathematical - is capital gain cost + low fees > PV of future expenses?
I would kick this bucket down the road but watch for anything with a loss or near even and sell if/when that happens.

4. As an aside, is there any good way to measure the performance of the portfolios compared with index benchmarks? Take the approximate Stock/Bond asset allocation and compare against an equivalent vanguard life strategy fund performance?
With the number of holdings you have I think this would be very long and tedious. Maybe Portfolio Visualizer would do it?
I will have a look at portfolio visualizer. Thanks!
If you want someone to do this transition for you, I guess Vanguard is the one I would suggest. However, I don't know if they would do this transition over several years if that matters to you.
Yeah I think it would have to be over at least 2 or 3 years.
It will be interesting watching you unwind this ball of string. Please do stay in touch.

If you want to see comments on MerrilEdge, you can use the google box above and it will pull up old threads.
Thank you so much for your thoughtful response!
Topic Author
FrankyZoo
Posts: 57
Joined: Mon Nov 08, 2021 10:28 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by FrankyZoo »

stan1 wrote: Fri Nov 12, 2021 3:16 pm Oh boy, what a mess!

My first question would be do you want to take on the task of managing this yourself (some spreadsheet work and tracking of cost basis for each holding)? If you like analytical tasks in your free time since you aren't working right now you can certainly learn how to manage it in a relatively short amount of time, but not everyone wants to do that.
Thanks - you really got me thinking. It seems a little overwhelming right now because of the number of funds and the difficulty of pulling information together. I'm not a professional money manager, and I think this will be a multi-year effort. That said, I don't know if Vanguard PAS or equivalent would be able to do what I need and it might require a lot of effort on my part anyway. I believe I can do it myself and I'm encouraged by the number of responses to my questions, as it tells me how supportive this community can be. However, I'm reserving my decision for now until after I get some more advice here.
stan1
Posts: 14246
Joined: Mon Oct 08, 2007 4:35 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by stan1 »

FrankyZoo wrote: Fri Nov 12, 2021 10:11 pm
stan1 wrote: Fri Nov 12, 2021 3:16 pm Oh boy, what a mess!

My first question would be do you want to take on the task of managing this yourself (some spreadsheet work and tracking of cost basis for each holding)? If you like analytical tasks in your free time since you aren't working right now you can certainly learn how to manage it in a relatively short amount of time, but not everyone wants to do that.
Thanks - you really got me thinking. It seems a little overwhelming right now because of the number of funds and the difficulty of pulling information together. I'm not a professional money manager, and I think this will be a multi-year effort. That said, I don't know if Vanguard PAS or equivalent would be able to do what I need and it might require a lot of effort on my part anyway. I believe I can do it myself and I'm encouraged by the number of responses to my questions, as it tells me how supportive this community can be. However, I'm reserving my decision for now until after I get some more advice here.
You definitely don't need to be a professional money manager, just detailed oriented and willing to learn some new things about taxes and asset allocation to do it yourself. The resources are on the Bogleheads wiki and widely available through search engines, but it's a lot of information to digest. I don't think Vanguard PAS is going to optimize this for you plus I'm not sure you'd want to pay the management fee to them especially if you aren't planning to work for awhile and could instead essentially hire yourself to do the work rather than outsource it to Vanguard.

I'm encouraging you to learn how to do it yourself. The rest of 2021 you'll have a lot of learning, but after that you'll be able to get by with a few hours per week (or less) as you decide what/when to liquidate, and eventually even less than that if you don't want this to become a hobby/"job".
Topic Author
FrankyZoo
Posts: 57
Joined: Mon Nov 08, 2021 10:28 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by FrankyZoo »

exodusNH wrote: Fri Nov 12, 2021 3:16 pm
Do you know approximately what your whole life policy is paying? If not, before you do anything, get an inforce illustration. Then post the details here.

If you're getting ~3%, one option is to put it in "reduced paid up" status. You will keep what you have and not have to pay more premiums. You can then consider that money to be part of your fixed income allocation.

Then, in a few years, after you've unwound your investments, you can decide to cash it in and pay the income tax or continue keeping it as part of your FI.
The policy confuses the heck out of me, which is one of the reasons I wanted out, but I'll try to answer your question. I recently got an illustration which shows a $1,900 dividend on a cash value of $130k for this year. I think that means it is 1.5%. Is that right? I don't think the dividend is fixed, as it seems to float higher as time goes by in the illustration, so maybe they use some kind of term structure. I guess 3% would be worthwhile since it would beat what BND pays? My apologies as my eyes glaze over whenever I think about this policy.
Topic Author
FrankyZoo
Posts: 57
Joined: Mon Nov 08, 2021 10:28 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by FrankyZoo »

patrick013 wrote: Fri Nov 12, 2021 3:17 pm All the books say buy and hold. Perhaps sell the funds with the highest
fees and highest tax basis while staying in the lower tax bracket. It can
take several or more years to do so.

Everybody wants to be in a few funds. It may take a few years to sell and
adjust into bonds. Should be no problem.

If your portfolio beats the 500 and bonds 60/40 then it's doing well.
portfoliovisualizer.com has several good calculators.
I'm not sure if I am beating the market, but I do plan to check out portfoliovisualizer. Short-term, I'm fine keeping some of the lower cost managed funds with low tax basis but my goal would be to transition to low cost index funds over time to simplify the portfolio and also because managed funds don't beat the market the majority of the time.
Topic Author
FrankyZoo
Posts: 57
Joined: Mon Nov 08, 2021 10:28 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by FrankyZoo »

David Jay wrote: Fri Nov 12, 2021 3:22 pm Your FA wasn't just taking a shotgun approach, he was using #9 birdshot.

A lot of these can be cleaned up quickly because they are so small. I count 52 listings for less than two tenths of 1% (0.2%) of your portfolio.

Of course there are no tax implications for any sales inside the IRA or 401K accounts. As to where to hold which type of asset, the Wiki has a page on tax efficient fund placement here: https://www.bogleheads.org/wiki/Tax-eff ... _placement
Yes. I don't know how it got this way. I'm curious so I may ask to do a review with him before I take any action. For example, I'm not sure why there are so many NY Muni funds. Anyway, I agree I can clean up a bunch quickly - I realized that I can easily sell 24 of the positions and have a gain of less than $2000. However, I do have to be careful and make sure the allocation stays relatively stable.
Topic Author
FrankyZoo
Posts: 57
Joined: Mon Nov 08, 2021 10:28 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by FrankyZoo »

retiredjg wrote: Fri Nov 12, 2021 3:28 pm I don't think a fund can charge a closing fee. But a brokerage could charge a transaction fee for each sale and some do. I think that is one reason why MerrilEdge may be attractive to this poster.
Yes, I like Merrilledge because there are no transaction fees and also because I already have an account with them. But I am not married to using them if there are better alternatives.
Topic Author
FrankyZoo
Posts: 57
Joined: Mon Nov 08, 2021 10:28 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by FrankyZoo »

wrongfunds wrote: Fri Nov 12, 2021 3:22 pm Is it possible that every fund you hold charges fee to completely get out i.e. $100 "closing fee"? If so, that alone will cost you thousands of dollars!
Not sure - I've never heard of that. How would I find out?
Topic Author
FrankyZoo
Posts: 57
Joined: Mon Nov 08, 2021 10:28 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by FrankyZoo »

psteinx wrote: Fri Nov 12, 2021 3:31 pm That's a spectacularly convoluted portfolio.

The good news is, IT'S NOT AS SCARY AS IT LOOKS!!!!!

You can do this. You can do this on your own. You can save a lot of money and complexity.

I would recommend, roughly:

1) Do a lot of reading, and determine what your IDEAL portfolio would be (if you were constructing from scratch).

Note: I think an advantage of using an advisor, and something some DIY-ers lose, is risk tolerance and a fairly high equity allocation. You're relatively young. DON'T rush to move your portfolio elsewhere, liquidate a lot of equities, and then sit on large cash balances. In a 0% money market, ~6% inflation world, you're losing ~6% in purchasing power each year leaving investments in cash, and only a bit less in low yield bonds.

Figure out what you want (at least roughly) BEFORE you start. It could be roughly the same allocation you have now, just simpler and at lower cost.

2) Set up your new accounts, at a low-fee broker. Fidelity, Schwab, and Vanguard are all used - all are probably ok.

3) Make sure you have robust records on cost basis on your current taxable holdings.

4) Talk to the new broker about what transfers in kind, and what may have to liquidate to cash.

5) Transfer stuff over.

6) Set everything, initially, to NOT reinvest dividends - put it as cash in the MM funds.

7) You may want to wait ~30 days, to actually start selling. This is to avoid wash sales, in case there have been recent reinvestments across any of this multitude of funds. Really, this only matters where you may have losses, but you've likely got a lot of small lots, possibly including some at a loss, across your funds.

8) Do the IRA stuff first - there should be no tax consequences there. You should be able to sell basically everything and move the proceeds to your targeted portfolio - probably a 3 fund.

9) Sell everything in taxable that's at a loss or small gain. Just from a simplicity standpoint - consolidating a lot of those 0.104% type positions will be helpful, even if you have to pay some taxes.

10) For the larger positions, be tax aware, you may want to spread the selling across several years, to reduce taxes, and/or just keep some of those positions, if the gains are large and the expense rations are small.

Good luck!
Wonderful advice. Thank you so much for your thoughtful response.
Topic Author
FrankyZoo
Posts: 57
Joined: Mon Nov 08, 2021 10:28 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by FrankyZoo »

Stinky wrote: Fri Nov 12, 2021 3:34 pm
psteinx wrote: Fri Nov 12, 2021 3:31 pm That's a spectacularly convoluted portfolio.

The good news is, IT'S NOT AS SCARY AS IT LOOKS!!!!!

You can do this. You can do this on your own. You can save a lot of money and complexity.

I would recommend, roughly:

1) Do a lot of reading, and determine what your IDEAL portfolio would be (if you were constructing from scratch).

Note: I think an advantage of using an advisor, and something some DIY-ers lose, is risk tolerance and a fairly high equity allocation. You're relatively young. DON'T rush to move your portfolio elsewhere, liquidate a lot of equities, and then sit on large cash balances. In a 0% money market, ~6% inflation world, you're losing ~6% in purchasing power each year leaving investments in cash, and only a bit less in low yield bonds.

Figure out what you want (at least roughly) BEFORE you start. It could be roughly the same allocation you have now, just simpler and at lower cost.

2) Set up your new accounts, at a low-fee broker. Fidelity, Schwab, and Vanguard are all used - all are probably ok.

3) Make sure you have robust records on cost basis on your current taxable holdings.

4) Talk to the new broker about what transfers in kind, and what may have to liquidate to cash.

5) Transfer stuff over.

6) Set everything, initially, to NOT reinvest dividends - put it as cash in the MM funds.

7) You may want to wait ~30 days, to actually start selling. This is to avoid wash sales, in case there have been recent reinvestments across any of this multitude of funds. Really, this only matters where you may have losses, but you've likely got a lot of small lots, possibly including some at a loss, across your funds.

8) Do the IRA stuff first - there should be no tax consequences there. You should be able to sell basically everything and move the proceeds to your targeted portfolio - probably a 3 fund.

9) Sell everything in taxable that's at a loss or small gain. Just from a simplicity standpoint - consolidating a lot of those 0.104% type positions will be helpful, even if you have to pay some taxes.

10) For the larger positions, be tax aware, you may want to spread the selling across several years, to reduce taxes, and/or just keep some of those positions, if the gains are large and the expense rations are small.

Good luck!
This sounds like very solid advice to me.

One question - has the whole life policy already been surrendered? If not, are you considering keeping it as part of the fixed income allocation?
It has not been surrendered. I wasn't thinking about it but one other poster made that suggestion as well. How do I know if that's worth doing?
Topic Author
FrankyZoo
Posts: 57
Joined: Mon Nov 08, 2021 10:28 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by FrankyZoo »

Gill wrote: Fri Nov 12, 2021 3:35 pm
retiredjg wrote: Fri Nov 12, 2021 3:10 pm
I've been around awhile and I think you must win the prize (or at least a close tie) for most complex portfolio ever seen. It's been a bit since I've seen one with near this many holdings. That does not make it bad. It does make it a hassle.
Hardly any of the funds exceed 1% of the portfolio and most are considerably less. I'd liquidate all the funds in tax deferred accounts immediately and every other fund which represents less than .5% of the portfolio regardless of where held.
Gill
Thank you. This is very solid advice.
exodusNH
Posts: 10347
Joined: Wed Jan 06, 2021 7:21 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by exodusNH »

FrankyZoo wrote: Fri Nov 12, 2021 10:39 pm
exodusNH wrote: Fri Nov 12, 2021 3:16 pm
Do you know approximately what your whole life policy is paying? If not, before you do anything, get an inforce illustration. Then post the details here.

If you're getting ~3%, one option is to put it in "reduced paid up" status. You will keep what you have and not have to pay more premiums. You can then consider that money to be part of your fixed income allocation.

Then, in a few years, after you've unwound your investments, you can decide to cash it in and pay the income tax or continue keeping it as part of your FI.
The policy confuses the heck out of me, which is one of the reasons I wanted out, but I'll try to answer your question. I recently got an illustration which shows a $1,900 dividend on a cash value of $130k for this year. I think that means it is 1.5%. Is that right? I don't think the dividend is fixed, as it seems to float higher as time goes by in the illustration, so maybe they use some kind of term structure. I guess 3% would be worthwhile since it would beat what BND pays? My apologies as my eyes glaze over whenever I think about this policy.
Ask them for an in-force illustration. This will show you the guaranteed rate vs their rosy projection. The return is usually somewhere between the two valued. But, yes, a $1900 dividend seems low. How old is the policy? I have one I bought about 17 years ago. I don't need it, but the actual vs. contractual dividend is somewhere around 3.5%. I'm keeping it for now and consider the cash value as part of my bond portfolio.

If your return is really that low, you could go to reduced paid up, which stops the bleeding, saves you $60k of income, and gives you a roughly bond level of return until you have the space to absorb the income. (Plus provide the insurance payout if you need that before you manage to get out if it.)

Another option you could consider is exchanging it for a deferred fixed income annuity. You can price those out and see what kind of income you could get 10 years for now. At least then the money comes back to your you in smaller chunks. One site that gets recommended here is https://www.immediateannuities.com/. Blue Print income is another. I have no affiliation to either.

A final option, and I don't know how good of an idea it is, but Fidelity's variable annuities aren't terrible... At that amount, you can get into their total market and bond funds for a .25% annuity fee plus the ER of the funds, which are actually reasonable. You'll eventually have to absorb the income, but it would get you out of the whole life plan.
User avatar
Stinky
Posts: 14152
Joined: Mon Jun 12, 2017 11:38 am
Location: Sweet Home Alabama

Re: Complex portfolio w/ high fees and unrealized gains

Post by Stinky »

FrankyZoo wrote: Fri Nov 12, 2021 10:39 pm
exodusNH wrote: Fri Nov 12, 2021 3:16 pm
Do you know approximately what your whole life policy is paying? If not, before you do anything, get an inforce illustration. Then post the details here.

If you're getting ~3%, one option is to put it in "reduced paid up" status. You will keep what you have and not have to pay more premiums. You can then consider that money to be part of your fixed income allocation.

Then, in a few years, after you've unwound your investments, you can decide to cash it in and pay the income tax or continue keeping it as part of your FI.
The policy confuses the heck out of me, which is one of the reasons I wanted out, but I'll try to answer your question. I recently got an illustration which shows a $1,900 dividend on a cash value of $130k for this year. I think that means it is 1.5%. Is that right? I don't think the dividend is fixed, as it seems to float higher as time goes by in the illustration, so maybe they use some kind of term structure. I guess 3% would be worthwhile since it would beat what BND pays? My apologies as my eyes glaze over whenever I think about this policy.
I’m presuming that you don’t have a “traditional” need for life insurance. That is, as a single person who isn’t employed, it sounds like there isn’t anyone who is depending on your income to support them, which is the reason that most folks have life insurance.

However, your the cash value of life insurance (which sure sounds like whole life since it’s paying a dividend) might be considered as part of your fixed income allocation.

In order to calculate the return on investment (ROI) on your cash value, look back at your inforce illustration and do the following calculation:

(next year surrender value minus this year surrender value minus next year net premium paid), all divided by this year surrender value

When you’re doing the ROI calculation, you can use the “non guaranteed” values, since it’s highly likely that the insurance company will pay very close to the illustrated dividend for the current and next policy years.

Also, what is your policy doing with the dividends? If it’s using dividends to reduce premiums, then the ROI will get the benefit of the dividend through the reduction of the net premium. If it’s using dividends to purchase paid up insurance, then the ROI will get the benefit of the dividend through the increase in surrender value.

I expect that the ROI will be in the 3-4% range. You can decide if it’s worth your while to look at this surrender value as part of your fixed income assets. Some folks hold older whole life policies to get that ROI, while others just cash them out and reinvest the proceeds per their asset allocation.

Post back with questions.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
User avatar
retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: Complex portfolio w/ high fees and unrealized gains

Post by retiredjg »

FrankyZoo wrote: Fri Nov 12, 2021 9:49 pm Thanks for that. I actually enjoyed the exercise of putting it together. I had never gathered all of that information in one place before. It wasn't easy, as the FA reports have very little information or they're in pdf format. I had to go to Mint, Personal Capital, and Betterment in some cases. And I got the free trial of Acrobat so I can export pdf files to xls, although the table exports are messy and not too helpful, so there's still a lot of manual manipulation.
The fact that you enjoyed this exercise indicates to me that you do not need someone like Vanguard's PAS to do this for you. It seems you will enjoy unwinding this yourself, at least until you get sick of it.

Having done all that work, you now have a more thorough understanding of your portfolio than most people will ever have.
HomeStretch
Posts: 11419
Joined: Thu Dec 27, 2018 2:06 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by HomeStretch »

FrankyZoo wrote: Fri Nov 12, 2021 9:49 pm … Makes me realize I need to update my spreadsheet to have cost basis and unrealized gain (probably manually). …
As you tackle the cleanup of each account, also add to your spreadsheet a column to categorize each holding as ‘U.S. equity’, ‘international equity’ or ‘fixed income’ as suggested by livesoft. As you sell each position, you can move the proceeds over to a low-cost diversified index fund in the same category. Once your accounts are cleaned up, you can do a final adjustment to balance your overall portfolio asset allocation to your desired 60/40.

Whichever brokerage you choose, do start the account transfers to get your holdings consolidated into one place. Choose a large low-cost brokerage with a local office to help with the paperwork and any medallion guarantees your current FA/brokerages will likely require in order to process the transfers.

Assuming you have control over the management of your 401k account, you can cleanup that account first to make some progress. Identify the 3 funds (US equity, International equity, fixed income) you want to exchange into. For example, VGINT (Vanguard S&P 500 fund) is a good destination choice for your current US equity holdings (JAQNT, DODGX, EDFMT, PTTRX, RRUST).

Edit - if there are no fees to sell at Betterment/FA, consider having the two traditional IRAs and Roth IRA transferred over in cash (rather than in-kind) to your new brokerage. Reinvest the cash when the account transfer is complete.

Edit - given the level of your assets, you should be able to negotiate with the receiving brokerage (1) reimbursement for any closing/transfer fees, (2) no-fee trades to clean-up your account, and (3) a bonus for bringing in new funds.
Last edited by HomeStretch on Sat Nov 13, 2021 7:47 am, edited 3 times in total.
Late2Brake
Posts: 56
Joined: Wed Jul 07, 2021 3:32 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by Late2Brake »

FrankyZoo wrote: Fri Nov 12, 2021 10:58 pm
David Jay wrote: Fri Nov 12, 2021 3:22 pm Your FA wasn't just taking a shotgun approach, he was using #9 birdshot.
Yes. I don't know how it got this way. I'm curious so I may ask to do a review with him before I take any action. For example, I'm not sure why there are so many NY Muni funds. Anyway, I agree I can clean up a bunch quickly - I realized that I can easily sell 24 of the positions and have a gain of less than $2000. However, I do have to be careful and make sure the allocation stays relatively stable.
IMO, it's not worth a discussion. They complicate portfolios so that an average person looks at it with glazed eyes and thinks that only an advisor can make financial decisions.

You're heading in the right direction, start small and eat away at the complexity. You don't have to do it all at once.
Jack FFR1846
Posts: 18502
Joined: Tue Dec 31, 2013 6:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: Complex portfolio w/ high fees and unrealized gains

Post by Jack FFR1846 »

You are wise to move this mess from the advisor and to know to watch sales in order to take advantage of your new, low cap gains tax.

As far as where to move, I would only warn with Merrill Edge that they are part of Bank of America who can be very harsh if they sense anything wrong with any of your accounts. I got myself 2 different BoA credit cards and wanted to be sure they were working one day, so charged like $1 on each of them at the gas station. BoA sensed something bad was being done and they closed ALL of my BoA accounts immediately. I'd hate to have all those investments with them, not knowing what they'd do if they got finicky about your spending on the credit cards. Would they sell everything and mail you a check? I don't know, but I wouldn't chance it. I'd tend to go to Schwab, where I have an account and find that their service is better than anyone else's. (I also have or have had accounts at Vanguard, Fidelity, TDAmeritrade, eTrade and Ally Invest).
Bogle: Smart Beta is stupid
User avatar
retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: Complex portfolio w/ high fees and unrealized gains

Post by retiredjg »

FrankyZoo wrote: Fri Nov 12, 2021 10:53 pm Short-term, I'm fine keeping some of the lower cost managed funds with low tax basis but my goal would be to transition to low cost index funds over time to simplify the portfolio and also because managed funds don't beat the market the majority of the time.
I'll just bring this up now even though you are not really at this stage yet. This might be something you don't know and it can cook on the back burner until you are ready to tackle it. These statements refer to holdings in a taxable account.

Index stock funds (including most ETFs) are tax-efficient. This means they do not throw off a lot of taxable income each year. The broader the fund, the more tax-efficient.

Actively managed funds are not tax-efficient and frequently do throw off a lot of taxable income each year in the form of taxable dividends and capital gains distributions. In other words, you get taxed on money that you may not even be spending.

Bond bonds and ETFs (other than tax-exempt munis) are also not tax-efficient because they also throw off dividends and these dividends are taxed at your marginal tax rate (rather than the lower qualified dividend rate). With current low interest rates, though, the damage is not very bad.

Long story short, it is optimal to not hold any actively managed fund or any taxable bond fund in a taxable account.

Optimal is rarely achieved. In your particular situation, you may need to hold a bond fund (or some kind of fixed income asset) in taxable anyway, just to achieve your desired stock to bond ratio. Whether the bond fund in your taxable account should be taxable or tax-exempt will depend on your tax bracket when that time comes.

A long term goal for you would be to hold nothing but two funds - a total stock index and a total international index (and bond fund if needed) - in your taxable account.

However, as you move through this transition, you will probably have to hold a lot of misc things that can be seen as "building blocks" for a total stock index because it will be costly to get rid of them all. At your age, chances are good that we'll have a significant downturn and you can consolidate all those building blocks into just the two funds at that time.
wrongfunds
Posts: 3187
Joined: Tue Dec 21, 2010 2:55 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by wrongfunds »

FrankyZoo wrote: Fri Nov 12, 2021 11:01 pm
wrongfunds wrote: Fri Nov 12, 2021 3:22 pm Is it possible that every fund you hold charges fee to completely get out i.e. $100 "closing fee"? If so, that alone will cost you thousands of dollars!
Not sure - I've never heard of that. How would I find out?
Should be in the prospectus of your fund or your account. "Closing fees" are not uncommon in financial institution. You could call or liquidate a fund to see what happens.
User avatar
retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: Complex portfolio w/ high fees and unrealized gains

Post by retiredjg »

I think you can assume that some or all of your accounts will have a closing fee. This is expected for an IRA or Roth IRA, but it does not seem very common for taxable accounts.

Can a fund even have a closing fee? I don't recall ever hearing that, but nothing seems impossible in the world of investing. :twisted: I'd be interested in hearing if you do find some fund closing fees.
cas
Posts: 2258
Joined: Wed Apr 26, 2017 8:41 am

Re: Complex portfolio w/ high fees and unrealized gains

Post by cas »

retiredjg wrote: Sat Nov 13, 2021 7:36 am Can a fund even have a closing fee? I don't recall ever hearing that, but nothing seems impossible in the world of investing. :twisted: I'd be interested in hearing if you do find some fund closing fees.
I think wrongfunds might be thinking of funds with back end loads? Or possibly early redemption penalties? That is the kind of thing that would be in the prospectus.

My hazy recollection is that there might be a back end load if OP's financial advisor put him into Class B or Class C shares of some mutual funds? And the back end load might or might not go away if they are owned for a certain minimum holding period?
User avatar
retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: Complex portfolio w/ high fees and unrealized gains

Post by retiredjg »

cas wrote: Sat Nov 13, 2021 7:51 am
retiredjg wrote: Sat Nov 13, 2021 7:36 am Can a fund even have a closing fee? I don't recall ever hearing that, but nothing seems impossible in the world of investing. :twisted: I'd be interested in hearing if you do find some fund closing fees.
I think wrongfunds might be thinking of funds with back end loads? Or possibly early redemption penalties? That is the kind of thing that would be in the prospectus.

My hazy recollection is that there might be a back end load if OP's financial advisor put him into Class B or Class C shares of some mutual funds? And the back end load might or might not go away if they are owned for a certain minimum holding period?
Thanks cas. That makes perfect sense now.
cas
Posts: 2258
Joined: Wed Apr 26, 2017 8:41 am

Re: Complex portfolio w/ high fees and unrealized gains

Post by cas »

retiredjg wrote: Sat Nov 13, 2021 7:53 am
cas wrote: Sat Nov 13, 2021 7:51 am
retiredjg wrote: Sat Nov 13, 2021 7:36 am Can a fund even have a closing fee? I don't recall ever hearing that, but nothing seems impossible in the world of investing. :twisted: I'd be interested in hearing if you do find some fund closing fees.
I think wrongfunds might be thinking of funds with back end loads? Or possibly early redemption penalties? That is the kind of thing that would be in the prospectus.

My hazy recollection is that there might be a back end load if OP's financial advisor put him into Class B or Class C shares of some mutual funds? And the back end load might or might not go away if they are owned for a certain minimum holding period?
Thanks cas. That makes perfect sense now.
Now that I'm looking at OP's portfolio with that in mind, it looks like there are a lot of Class I shares? I think that is institutional shares. That might be good (lower expense ratio than other shares classes) while OP was with the advisor, but I'm unsure whether class I shares can transfer into a non-advisor account or whether that is a perq that requires having the advisor.
ClaycordJCA
Moderator
Posts: 2332
Joined: Sun Aug 09, 2015 11:19 pm
Location: SF Bay Area

Re: Complex portfolio w/ high fees and unrealized gains

Post by ClaycordJCA »

One additional point that I don’t believe has been mentioned yet, one you transfer the accounts to Merrill Edge or other preferred brokerage, turn off automatic reinvestment of the capital gains and dividends generated by the funds. Invest those proceeds in broad based index funds consistent with your desired asset allocation (for example, buy VXUS if you are underweight in international stocks) and to the extent possible, tax efficient fund placement.
User avatar
Sage16
Posts: 277
Joined: Sun Mar 27, 2016 11:06 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by Sage16 »

If this list was of individual stocks, you may have a pretty diversified portfolio. But it looks like each item is a mutual fund or ETF that is a portfolio itself of stocks or bonds. You probably have tremendous overlap in securities between the funds and additional trading costs as one fund is selling a stock and another buying the same one. I would question the competence of the FA and wonder if you have legal grounds to make a claim. I am not a lawyer but this just doesn't look like the FA is working in your best interest. My 2 cents.
Bogle on investing: Diversify, focus on low costs, invest for the long term. Don't speculate and don't be distracted by volatility.
User avatar
TomatoTomahto
Posts: 17158
Joined: Mon Apr 11, 2011 1:48 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by TomatoTomahto »

Sage16 wrote: Sat Nov 13, 2021 1:41 pm If this list was of individual stocks, you may have a pretty diversified portfolio. But it looks like each item is a mutual fund or ETF that is a portfolio itself of stocks or bonds. You probably have tremendous overlap in securities between the funds and additional trading costs as one fund is selling a stock and another buying the same one. I would question the competence of the FA and wonder if you have legal grounds to make a claim. I am not a lawyer but this just doesn't look like the FA is working in your best interest. My 2 cents.
My Mother in Law’s Wells Fargo account was a similar dog’s breakfast, but making their bad allocations actionable was a non starter. You pretty much have to prove they’re using your money in Vegas.
I get the FI part but not the RE part of FIRE.
RetiredAL
Posts: 3537
Joined: Tue Jun 06, 2017 12:09 am
Location: SF Bay Area

Re: Complex portfolio w/ high fees and unrealized gains

Post by RetiredAL »

FrankyZoo wrote: Fri Nov 12, 2021 1:39 pm
Understand first that the multitude of funds is a smoke and mirror tactic to scare you into think investing is terribly complex.

I unwound my then 94 yr old Dad's managed accounts a few years back. In taxable, I was planning to sell 1/2 in Dec and 1/2 the following year to minimize tax impact. A Lucky Timing Event arose in Dec with a sudden short-term dip that wiped out 3/4 the Cap Gains, so I sold it all and re-bought a simplified portfolio.

For my Dad's IRA's, which I got control of 4 months later, I quickly sold the losers and dogs. I chose to let the winners ride with tight stop-loss targets. They all stopped out within a couple of months. As things sold, I bought a simplified portfolio.

Dad also has some Schwab self directed accounts that I made minor adjustments to. Two holding dating to 1997 with large positions are the Janus Henderson Balanced Fund and Schwab 1000 fund -a very fine fund. Both are still held today. I believe that someone pro-bono selected these Schwab items for him, likely a Rotary Buddy who also worked at Schwab. Most of the Schwab items were good, only a few were dogs.

So FrankyZoo, my suggestion to you is to identify the losers and dogs and get rid of them first and soon. Then take your time to plan for controlled selling to manage your tax bill. As noted up thread: 1) one simple way to start it to make sure dividend re-investment is turned off, then use those proceeds to buy into your new simplified holdings. 2) Many holding are small $ amounts, so while whittling away at them is not a lot of $, it will help you see the true nature forest after a bunch of small trees have been cleared out of the way.
leo383
Posts: 569
Joined: Thu Nov 29, 2007 8:36 pm
Location: Durham, NC

Re: Complex portfolio w/ high fees and unrealized gains

Post by leo383 »

You are getting dynamite advice here, op. Good luck with this process--it looks daunting but it will feel good.

What on earth is an advisor(s) doing putting anyone in this many investments? I don't get it.
User avatar
retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: Complex portfolio w/ high fees and unrealized gains

Post by retiredjg »

leo383 wrote: Sat Nov 13, 2021 3:56 pm What on earth is an advisor(s) doing putting anyone in this many investments? I don't get it.
Well, for all we know, the advisor may have this all in a computer model with algorithms out the wazoo and know exactly what the portfolio "looks like". And there could actually be some kind of plan behind it. But...

A likely suggestion is the advisor thinks this mess is "diversification" or more likely for some...it is a baffle the customer with BS approach. When most clients see this they are immediately reassured it would be impossible to do this yourself. This could be a customer retention strategy.
User avatar
Stinky
Posts: 14152
Joined: Mon Jun 12, 2017 11:38 am
Location: Sweet Home Alabama

Re: Complex portfolio w/ high fees and unrealized gains

Post by Stinky »

retiredjg wrote: Sat Nov 13, 2021 4:06 pm
leo383 wrote: Sat Nov 13, 2021 3:56 pm What on earth is an advisor(s) doing putting anyone in this many investments? I don't get it.
Well, for all we know, the advisor may have this all in a computer model with algorithms out the wazoo and know exactly what the portfolio "looks like". And there could actually be some kind of plan behind it. But...

A likely suggestion is the advisor thinks this mess is "diversification" or more likely for some...it is a baffle the customer with BS approach. When most clients see this they are immediately reassured it would be impossible to do this yourself. This could be a customer retention strategy.
OP listed out 160 positions amongst his portfolios. (There may be duplicate holdings in two or more accounts - I was too lazy to ferret this out). That probably is a Forum record.

I’m sure that OP’s advisor would tell him he’s “well diversified”. But personally, I agree with retiredjg that the advisor uses the “baffle with BS” approach.
Last edited by Stinky on Sat Nov 13, 2021 4:47 pm, edited 1 time in total.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
Topic Author
FrankyZoo
Posts: 57
Joined: Mon Nov 08, 2021 10:28 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by FrankyZoo »

Stinky wrote: Sat Nov 13, 2021 2:37 am
FrankyZoo wrote: Fri Nov 12, 2021 10:39 pm
exodusNH wrote: Fri Nov 12, 2021 3:16 pm
Do you know approximately what your whole life policy is paying? If not, before you do anything, get an inforce illustration. Then post the details here.

If you're getting ~3%, one option is to put it in "reduced paid up" status. You will keep what you have and not have to pay more premiums. You can then consider that money to be part of your fixed income allocation.

Then, in a few years, after you've unwound your investments, you can decide to cash it in and pay the income tax or continue keeping it as part of your FI.
The policy confuses the heck out of me, which is one of the reasons I wanted out, but I'll try to answer your question. I recently got an illustration which shows a $1,900 dividend on a cash value of $130k for this year. I think that means it is 1.5%. Is that right? I don't think the dividend is fixed, as it seems to float higher as time goes by in the illustration, so maybe they use some kind of term structure. I guess 3% would be worthwhile since it would beat what BND pays? My apologies as my eyes glaze over whenever I think about this policy.
I’m presuming that you don’t have a “traditional” need for life insurance. That is, as a single person who isn’t employed, it sounds like there isn’t anyone who is depending on your income to support them, which is the reason that most folks have life insurance.

However, your the cash value of life insurance (which sure sounds like whole life since it’s paying a dividend) might be considered as part of your fixed income allocation.

In order to calculate the return on investment (ROI) on your cash value, look back at your inforce illustration and do the following calculation:

(next year surrender value minus this year surrender value minus next year net premium paid), all divided by this year surrender value

When you’re doing the ROI calculation, you can use the “non guaranteed” values, since it’s highly likely that the insurance company will pay very close to the illustrated dividend for the current and next policy years.

Also, what is your policy doing with the dividends? If it’s using dividends to reduce premiums, then the ROI will get the benefit of the dividend through the reduction of the net premium. If it’s using dividends to purchase paid up insurance, then the ROI will get the benefit of the dividend through the increase in surrender value.

I expect that the ROI will be in the 3-4% range. You can decide if it’s worth your while to look at this surrender value as part of your fixed income assets. Some folks hold older whole life policies to get that ROI, while others just cash them out and reinvest the proceeds per their asset allocation.

Post back with questions.
You are correct that I don't have a real need for the insurance. The policy is using dividends to purchase paid-up insurance.

The illustration was made before the last premium payment, so it is a little out of date. However, here's what it shows for the next 4 years based on your formula (I'm assuming "surrender value" is the same as "total cash value").
2021 2.37%
2022 2.65%
2023 3.11%
2024 3.48%
It goes up from there into the 4% range.

The %age is lower if I just use the dividend payment/cash value. How does the cash value increase more than the dividend payment + premium? If I stop paying the premium, will the ROI be the same as when I was paying?
Tucker50
Posts: 28
Joined: Mon Jun 26, 2017 5:57 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by Tucker50 »

OMG. Someone got confused about diversify means. I hope others can provide a fix. Definitely rid yourself of current FA.
User avatar
Stinky
Posts: 14152
Joined: Mon Jun 12, 2017 11:38 am
Location: Sweet Home Alabama

Re: Complex portfolio w/ high fees and unrealized gains

Post by Stinky »

FrankyZoo wrote: Sat Nov 13, 2021 4:41 pm You are correct that I don't have a real need for the insurance. The policy is using dividends to purchase paid-up insurance.

The illustration was made before the last premium payment, so it is a little out of date. However, here's what it shows for the next 4 years based on your formula (I'm assuming "surrender value" is the same as "total cash value").
2021 2.37%
2022 2.65%
2023 3.11%
2024 3.48%
It goes up from there into the 4% range.

The %age is lower if I just use the dividend payment/cash value. How does the cash value increase more than the dividend payment + premium? If I stop paying the premium, will the ROI be the same as when I was paying?
Yes, surrender value and total cash value mean the same thing.

The cash value increases more than the sum of the premium and the dividend due to interest earnings on the cash value. Part of those interest earnings are captured in the increase in the “guaranteed” cash value, and part is captured in the dividends.

From the pattern of ROIs, it sounds like your policy is finally breaking out of paying for acquisition expenses. I expect that the 4% range will be the projected ROI for years to come. Of course, the actual ROI becomes less certain for later durations, as the life insurer retains the right to change the dividend scale.

I suggest that you get new inforce illustrations on two bases. First, assume continued premium payments. Second, assume that the policy is immediately placed on reduced paid up status. Run your ROI calculation and see how it looks.

Post back with questions.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
Topic Author
FrankyZoo
Posts: 57
Joined: Mon Nov 08, 2021 10:28 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by FrankyZoo »

exodusNH wrote: Sat Nov 13, 2021 12:15 am
FrankyZoo wrote: Fri Nov 12, 2021 10:39 pm
exodusNH wrote: Fri Nov 12, 2021 3:16 pm
Do you know approximately what your whole life policy is paying? If not, before you do anything, get an inforce illustration. Then post the details here.

If you're getting ~3%, one option is to put it in "reduced paid up" status. You will keep what you have and not have to pay more premiums. You can then consider that money to be part of your fixed income allocation.

Then, in a few years, after you've unwound your investments, you can decide to cash it in and pay the income tax or continue keeping it as part of your FI.
The policy confuses the heck out of me, which is one of the reasons I wanted out, but I'll try to answer your question. I recently got an illustration which shows a $1,900 dividend on a cash value of $130k for this year. I think that means it is 1.5%. Is that right? I don't think the dividend is fixed, as it seems to float higher as time goes by in the illustration, so maybe they use some kind of term structure. I guess 3% would be worthwhile since it would beat what BND pays? My apologies as my eyes glaze over whenever I think about this policy.
Ask them for an in-force illustration. This will show you the guaranteed rate vs their rosy projection. The return is usually somewhere between the two valued. But, yes, a $1900 dividend seems low. How old is the policy? I have one I bought about 17 years ago. I don't need it, but the actual vs. contractual dividend is somewhere around 3.5%. I'm keeping it for now and consider the cash value as part of my bond portfolio.

If your return is really that low, you could go to reduced paid up, which stops the bleeding, saves you $60k of income, and gives you a roughly bond level of return until you have the space to absorb the income. (Plus provide the insurance payout if you need that before you manage to get out if it.)

Another option you could consider is exchanging it for a deferred fixed income annuity. You can price those out and see what kind of income you could get 10 years for now. At least then the money comes back to your you in smaller chunks. One site that gets recommended here is https://www.immediateannuities.com/. Blue Print income is another. I have no affiliation to either.

A final option, and I don't know how good of an idea it is, but Fidelity's variable annuities aren't terrible... At that amount, you can get into their total market and bond funds for a .25% annuity fee plus the ER of the funds, which are actually reasonable. You'll eventually have to absorb the income, but it would get you out of the whole life plan.
I have an in-force illustration from last year. That's where I got the $1900. The policy is around 4 years old, but I rolled over a VUL policy into this one. Using a formula given to me by Stinky for ROI, I get 2.37% non-guaranteed, and .664% guaranteed. You've given me something to think about. I presume the value of these options are they get me to defer paying the tax bill on the 60k income (and any future dividends), and transitioning my account will carry a big tax burden as it is.
Topic Author
FrankyZoo
Posts: 57
Joined: Mon Nov 08, 2021 10:28 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by FrankyZoo »

cas wrote: Sat Nov 13, 2021 8:10 am
retiredjg wrote: Sat Nov 13, 2021 7:53 am
cas wrote: Sat Nov 13, 2021 7:51 am
retiredjg wrote: Sat Nov 13, 2021 7:36 am Can a fund even have a closing fee? I don't recall ever hearing that, but nothing seems impossible in the world of investing. :twisted: I'd be interested in hearing if you do find some fund closing fees.
I think wrongfunds might be thinking of funds with back end loads? Or possibly early redemption penalties? That is the kind of thing that would be in the prospectus.

My hazy recollection is that there might be a back end load if OP's financial advisor put him into Class B or Class C shares of some mutual funds? And the back end load might or might not go away if they are owned for a certain minimum holding period?
Thanks cas. That makes perfect sense now.
Now that I'm looking at OP's portfolio with that in mind, it looks like there are a lot of Class I shares? I think that is institutional shares. That might be good (lower expense ratio than other shares classes) while OP was with the advisor, but I'm unsure whether class I shares can transfer into a non-advisor account or whether that is a perq that requires having the advisor.
I'm assuming there will be some institutional funds that won't transfer in kind and I'll have to sell. That adds another dimension. I guess Merrill can tell me which ones won't transfer.
Topic Author
FrankyZoo
Posts: 57
Joined: Mon Nov 08, 2021 10:28 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by FrankyZoo »

Stinky wrote: Sat Nov 13, 2021 4:56 pm
FrankyZoo wrote: Sat Nov 13, 2021 4:41 pm You are correct that I don't have a real need for the insurance. The policy is using dividends to purchase paid-up insurance.

The illustration was made before the last premium payment, so it is a little out of date. However, here's what it shows for the next 4 years based on your formula (I'm assuming "surrender value" is the same as "total cash value").
2021 2.37%
2022 2.65%
2023 3.11%
2024 3.48%
It goes up from there into the 4% range.

The %age is lower if I just use the dividend payment/cash value. How does the cash value increase more than the dividend payment + premium? If I stop paying the premium, will the ROI be the same as when I was paying?
Yes, surrender value and total cash value mean the same thing.

The cash value increases more than the sum of the premium and the dividend due to interest earnings on the cash value. Part of those interest earnings are captured in the increase in the “guaranteed” cash value, and part is captured in the dividends.

From the pattern of ROIs, it sounds like your policy is finally breaking out of paying for acquisition expenses. I expect that the 4% range will be the projected ROI for years to come. Of course, the actual ROI becomes less certain for later durations, as the life insurer retains the right to change the dividend scale.

I suggest that you get new inforce illustrations on two bases. First, assume continued premium payments. Second, assume that the policy is immediately placed on reduced paid up status. Run your ROI calculation and see how it looks.

Post back with questions.
Will do. Thanks!
Topic Author
FrankyZoo
Posts: 57
Joined: Mon Nov 08, 2021 10:28 pm

Re: Complex portfolio w/ high fees and unrealized gains

Post by FrankyZoo »

ClaycordJCA wrote: Sat Nov 13, 2021 1:24 pm One additional point that I don’t believe has been mentioned yet, one you transfer the accounts to Merrill Edge or other preferred brokerage, turn off automatic reinvestment of the capital gains and dividends generated by the funds. Invest those proceeds in broad based index funds consistent with your desired asset allocation (for example, buy VXUS if you are underweight in international stocks) and to the extent possible, tax efficient fund placement.
Thanks - I think someone did mention it, but I appreciate it and I will be sure to do this.
User avatar
Stinky
Posts: 14152
Joined: Mon Jun 12, 2017 11:38 am
Location: Sweet Home Alabama

Re: Complex portfolio w/ high fees and unrealized gains

Post by Stinky »

FrankyZoo wrote: Sat Nov 13, 2021 5:02 pm Using a formula given to me by Stinky for ROI, I get 2.37% non-guaranteed, and .664% guaranteed.
......
I presume the value of these options are they get me to defer paying the tax bill on the 60k income (and any future dividends), and transitioning my account will carry a big tax burden as it is.
Expect the actual ROI to be much closer to the "non-guaranteed" calculation than to the "guaranteed" calculation.

Yes, ExodusNH gave you some nice tax deferral suggestions using life insurance or annuity products. Of course, the ultimate tax deferral/avoidance strategy is to die with the life insurance policy inforce. It that happens, your beneficiary will owe no income taxes on the life insurance proceeds.

Is $60k the actual taxable income that would be reported to you if you were to surrender the policy now? Has the life insurance company told you that?
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
Post Reply