Looking for advice? Advisor proposing 1% on $3M AUM

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boltonguy
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Looking for advice? Advisor proposing 1% on $3M AUM

Post by boltonguy »

Hi,

I just joined this forum today as I'm looking for some educated advice and based on what I've read so far I think I'm likely to get it here.

I am 53, employed full time with $3M in cash & investments (70% retirement / 30% other). I have been contributing to my 401k which was in the Fidelity Growth Fund and have also been investing a bit on the side in dividend-focused ETFs. I am 100% cash as I rolled my 401k into an IRA and moved non-retirement assets into cash 4 months ago, looking to wait for a better opportunity to get back into the market. Qualified funds are in a MM fund returning 5% and non-qualified funds are in a preferred deposit account at Merrill earning 4.7%

I took a call from a Merrill Financial Solutions Advisor - after a few discussions he has proposed moving me into several funds that are 6 months old so no performance history and not beating the comparative index net of fees including a commodities fund which has just seen abysmal and volatile performance over the past 10 years (excepting last 2 years which makes the yield look stunning). He has also proposed a 12-month treasury ladder. Cost is 1% AUM for the funds (on top of internal fund expenses) and .25% for the treasury ladder.

He seems like a nice guy but $30k a year seems like a lot where I think I may be able to do better myself. For example, using a fund screener to find active funds or etfs with a consistent performance history, and a bond fund or diy ladder with ishares etfs.

This is probably a DIY crowd so maybe I just need to type this out to see that I dont really feel like I'm getting anything for that $30k. I dont feel like I'm getting access to any funds or strategies I couldnt get on this forum or through a robo-advisor, etc. Thoughts?

Thank you!
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Sandi_k
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Sandi_k »

I wouldn't do it. You're doing fine on your own.

If I wanted to optimize my investment, I'd spend my time finding a CPA or enrolled agent that could focus on tax strategies that might be more beneficial to your cash flow. For example - spend $30k per year in converting pre-tax investments into a Roth IRA, thus reducing your RMDs when you reach 75.

Or investing in muni bonds. Or buying real estate, and depreciating the asset over 27 years for tax gains.

Investing isn't near as difficult in the days of automated index funds as it used to be; don't get sucked into a relationship where - in addition to the AUM fee - he finds a way to move you into funds with expensive front-end loaded of 5$ or more. Annuities? American Funds? Proprietary funds that cannot be moved later to a low cost brokerage like Fidelity or Schwab? No thanks.
FrugalConservative
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by FrugalConservative »

JUST SAY NO
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TomatoTomahto
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by TomatoTomahto »

Welcome to the forum!

You will find that you can manage your money without having to pay 1% to anyone. I am as dumb as a sack of hammers and do a really good job for my family.

Read up on a “three fund portfolio” on the site.
I get the FI part but not the RE part of FIRE.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by sailaway »

If you had moved all this four months ago you would have been invested during this latest upswing, so there is that. But as long as you actually make a plan, implement it and stick to it, you don't need an advisor. If you are going to play the market, you would probably be better off with an advisor, but perhaps one from Fidelity or Vanguard would be a better fit with lower fees.
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Pizza_and_Beer
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Pizza_and_Beer »

TomatoTomahto wrote: Thu Jun 08, 2023 10:45 am Welcome to the forum!

You will find that you can manage your money without having to pay 1% to anyone. I am as dumb as a sack of hammers and do a really good job for my family.

Read up on a “three fund portfolio” on the site.
+1
02nz
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by 02nz »

boltonguy wrote: Thu Jun 08, 2023 10:07 am ... I think I may be able to do better myself. For example, using a fund screener to find active funds or etfs with a consistent performance history, and a bond fund or diy ladder with ishares etfs.
Yes you probably should DIY, but just as importantly, you should probably default to index funds, rather than try to find funds that will outperform. The vast majority of active funds underperform the market, and the few that outperform over one period often underperform the next. The relatively few active funds with a consistent long-term record are generally closed to new investors.

Also watch out for charts that show incredible long-term performance, but based mostly on outperformance in the first few years when the fund was much smaller and often under a different manager. American Funds does this a lot - they have nice-looking charts based on outperformance from half a century or so ago. Those managers are long dead and the funds are far larger (making them less agile and more like "closet index funds.") People putting in money now are not getting that kind of outperformance.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Jack FFR1846 »

You won't be paying $30k a year for this advisor. You'll be paying $30k plus likely higher ERs for the investments they put you into. Let's say that they put you in only 0.5% ER funds. So now you're paying $45k. For what?

As a comparison, I DIY using mostly 3 fund strategy but with a big focus on cost. My portfolio is a bit over $3.9M and I pay a bit over $500 a year in total. For the difference, I could buy a new Cadillac CT4 every single year without even trading the old one in.

Pass. Go on your phone and find this advisor's number and block it.
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ROIGuy
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by ROIGuy »

Everyone's a "nice guy" when they are trying to get your business. Think about what you could for yourself with $30,000 a year extra.
niagara_guy
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by niagara_guy »

I do my own investing, I am not willing to pay 1% per year for 'help,' I think I do just as well as they would do (maybe better?). I basically use the 3 fund portfolio, low cost index funds that are diversified.

Here's 2 links:

https://www.bogleheads.org/wiki/Three-fund_portfolio


https://www.bogleheads.org/wiki/Getting_started

One option might be to hire an advisor who charges by the hour to review your situation, another option is to put your financial information in a post here to get some opinions from the smart people on this forum.
vxdx
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by vxdx »

boltonguy wrote: Thu Jun 08, 2023 10:07 amI am 100% cash as I rolled my 401k into an IRA and moved non-retirement assets into cash 4 months ago, looking to wait for a better opportunity to get back into the market.
You certainly don’t need a 1% AUM advisor, but based on this statement perhaps an advisor of some form could help you moderate your attempt to time the market.
steadyosmosis
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by steadyosmosis »

Mr.BB wrote: Thu Jun 08, 2023 11:01 am Everyone's a "nice guy" when they are trying to get your business. Think about what you could for yourself with $30,000 a year extra.
Agree.
That's like a decent new car ... every year!
One of the few 'people' able to get $30k (actually less) from me every year is dear old Uncle Sam.
If I can manage my own (basically 3-fund) portfolio, then most others have no excuse.
Plenty of help right here at bogleheads.org.
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Jimbo Moneybags
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Jimbo Moneybags »

Welcome!

As others have commented, NO! Absolutely not. You'll be flushing 1% of your wealth down the toilet every single year. Would you withdraw $30k from the bank in cash and light it on fire? At least then you might have some temporary amusement and thrill.

As noted, consider a one, two or three-fund portfolio consisting of low-cost index funds. One fund would be a total stock market index fund, two funds would add a total bond index fund and a three fund would add an international index fund.

By the way, don't try to time the market. A total stock market index fund is up about 8.7% year to date. How much of that gain have you missed by getting out of the market earlier this year?? Get that cash invested today in an asset allocation that matches your risk ability, willingness and need to take risk. While I don't like Vanguard and think you should stay at Fidelity, Vanguard's Investor Questionnaire is a good anonymous tool to help you determine your asset allocation: https://investor.vanguard.com/tools-cal ... stionnaire.

And while I am not a fan of AUM portfolios, if you cannot resist the emotions of the market and lack the self-control to stay invested through thick and thin, then a managed portfolio may be appropriate for you. In that case, consider FidelityGo. https://www.fidelity.com/managed-accoun ... o/overview.
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dogagility
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by dogagility »

Another vote for not using an advisor.

DIY using the three fund approach or simple variations of that approach.

If you feel you can't DIY, then choose Vanguard's PAS. 0.3% AUM fee, and they will invest your money in very low cost index funds. This would essentially be Boglehead investing with someone else making the major decisions.
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tibbitts
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by tibbitts »

boltonguy wrote: Thu Jun 08, 2023 10:07 am This is probably a DIY crowd so maybe I just need to type this out to see that I dont really feel like I'm getting anything for that $30k. I dont feel like I'm getting access to any funds or strategies I couldnt get on this forum or through a robo-advisor, etc. Thoughts?
It's a DIY crowd, but you've misread the room if you think you're going to get any support here for moving in and out of the market and researching the best-performing funds. On the other hand if you want to d-i-y an automatic transmission rebuild, hvac installation, or maybe attempt some minor heart surgery, you've come to the right place.
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arcticpineapplecorp.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by arcticpineapplecorp. »

welcome to the group.

I'd seem like a nice guy too if you paid me $30,000 a year to do what this advisor is doing.

You have an instinct followed up with evidence that this is not good advice (you've compared to benchmark after fees).

There's nothing in your text that indicates if this financial advisor is a fiduciary (i'd bet money he's not, very few are).

why would you not follow your instinct and the evidence you found and invest with this advisor?

said another way, if a friend said to you:
I took a call from a Merrill Financial Solutions Advisor - after a few discussions he has proposed moving me into several funds that are 6 months old so no performance history and not beating the comparative index net of fees including a commodities fund which has just seen abysmal and volatile performance over the past 10 years (excepting last 2 years which makes the yield look stunning). He has also proposed a 12-month treasury ladder. Cost is 1% AUM for the funds (on top of internal fund expenses) and .25% for the treasury ladder.
what would you tell your friend to do?
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
Glockenspiel
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Glockenspiel »

Don't do it.

I'll do it for $25k/year and I'll get you a better return!

Giving away 1% of your wealth every single year for the rest of your life will add up to 20-40% of your overall wealth.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by gatorking »

Image
Glockenspiel
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Glockenspiel »

boltonguy wrote: Thu Jun 08, 2023 10:07 am I am 100% cash as I rolled my 401k into an IRA and moved non-retirement assets into cash 4 months ago, looking to wait for a better opportunity to get back into the market.
You've already missed the boat. Stocks are up 11% in the past three months. If you plan on continuing to be a market-timer it may be worthwhile to pay Vanguard Personal Advisory Services 0.3% to manage your investments.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Doctor Rhythm »

The advisor’s costs are ridiculously high for investors with 7-figure accounts. Ask yourself how long it takes you to earn $30,000 after tax. That’s how much longer you’d need to work each year to pay this “nice guy” to do a task that requires a couple hours.

However, your own investment strategy may need some consideration. You’ve been out of the market for four months and are still waiting for a time to get back in. This is the kind of mistake that an advisor would keep you from making — in fact, some would say that protecting investors from themselves is the main benefit of having an advisor.
grilli
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by grilli »

You seem to see DYI as including efforts to time the market, so it is quite possible that you would benefit from a good advisor, maybe even one that charges 1%.

But this particular advisor sounds like very bad news. And it is very hard to find a good advisor. Maybe something like Vanguard PAS would be suitable for you. Or use the 3 fund portfolio DYI if you can discipline yourself.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Doctor Rhythm »

grilli wrote: Thu Jun 08, 2023 11:50 am You seem to see DYI as including efforts to time the market, so it is quite possible that you would benefit from a good advisor, maybe even one that charges 1%.

But this particular advisor sounds like very bad news. And it is very hard to find a good advisor. Maybe something like Vanguard PAS would be suitable for you. Or use the 3 fund portfolio DYI if you can discipline yourself.
FYI, it’s DIY. :D
DYI might stand for Do Yourself In, which is a complication of DIY.
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boltonguy
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by boltonguy »

Thanks for all the advice - would it be a dumb idea to just put it all in a Vanguard target retirement 2035 fund and let them manage it?
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Stinky »

Welcome to the Forum!

You’ll get much better advice here than you will from this “advisor”. And the advice here is free!

If you were to follow the advice of this “advisor”, I expect that his fee plus the excess costs in his mutual funds would cost you $50,000 per year or so. That would probably be the largest expense in your household budget, except maybe federal taxes.

Save the fees! Ask the Forum for advice. You’ve already gotten some great suggestions upthread.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by livesoft »

boltonguy wrote: Thu Jun 08, 2023 12:13 pm Thanks for all the advice - would it be a dumb idea to just put it all in a Vanguard target retirement 2035 fund and let them manage it?
That would be a fine idea for all the money in your IRA.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by gblack »

boltonguy wrote: Thu Jun 08, 2023 12:13 pm Thanks for all the advice - would it be a dumb idea to just put it all in a Vanguard target retirement 2035 fund and let them manage it?
Not a dumb idea.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Glockenspiel »

boltonguy wrote: Thu Jun 08, 2023 12:13 pm Thanks for all the advice - would it be a dumb idea to just put it all in a Vanguard target retirement 2035 fund and let them manage it?
Not a dumb idea at all. MUCH better than the idea of paying $35-50k every year to an advisor. The Vanguard Target Retirement 2035 fund will only cost you $2,400/yr on your $3 million, as opposed to the $35-50k you'd pay to an advisor every year in AUM and expense ratios.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by aristotelian »

Nope, nyet, negatory. Find a fee-only advisor if you need professional help. Should cost $2-3k max.

It does sound like you need some help with investing discipline. You picked a decent time to get out of the market but now you have missed out on a run back to where the market was (and then some). Most of us here would prefer to invest on their own taking a long term approach, but if you are unable to do that a professional may be a good idea. $30k is just way, way too much.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Jack FFR1846 »

boltonguy wrote: Thu Jun 08, 2023 12:13 pm Thanks for all the advice - would it be a dumb idea to just put it all in a Vanguard target retirement 2035 fund and let them manage it?
That is the PERFECT thing to do in your situation. You can literally leave it there for 10 years as you learn to DIY using the funds that make up the target. Or just leave it there. This will cost you 0.12% all in or $3600. Way better than the cost of that new Cadillac every single year.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by mikejuss »

In a word, no.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by runningshoes »

boltonguy wrote: Thu Jun 08, 2023 10:07 am ....
This is probably a DIY crowd so maybe I just need to type this out to see that I dont really feel like I'm getting anything for that $30k. I dont feel like I'm getting access to any funds or strategies I couldnt get on this forum or through a robo-advisor, etc. Thoughts?

Thank you!
You answered your own question in your OP - while I'm also firmly in the DIY crowd and have been for over 30 years, coming to the BH forum and asking that question falls in the "selection bias" trap. It's like going to an NBA players convention and asking why no one buys pants with a 30" inseam.....
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by mikejuss »

gblack wrote: Thu Jun 08, 2023 12:21 pm
boltonguy wrote: Thu Jun 08, 2023 12:13 pm Thanks for all the advice - would it be a dumb idea to just put it all in a Vanguard target retirement 2035 fund and let them manage it?
Not a dumb idea.
The only problem with this idea is that, if you're holding a target-date fund in a taxable account, the automatic rebalancing that happens in those funds (from stocks to bonds and vice versa) could trigger a taxable event. You might be better off just holding the individual components that make up the target-date fund and rebalancing when you feel like it, paying special attention to what and when you buy and sell in order to avoid paying capital gains. Others may disagree...
Last edited by mikejuss on Thu Jun 08, 2023 12:51 pm, edited 3 times in total.
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Jimbo Moneybags
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Jimbo Moneybags »

boltonguy wrote: Thu Jun 08, 2023 12:13 pm Thanks for all the advice - would it be a dumb idea to just put it all in a Vanguard target retirement 2035 fund and let them manage it?
I no longer recommend Vanguard due to their atrocious customer service (or lack of) and limited availability. I much prefer Fidelity. Consider a balanced index fund there like a Fidelity Freedom Index Fund (with the date that closely matches your planned retirement) or their newer Balanced Allocation Fund, FRYBX.

But you could do worse that going to Vanguard and choosing a target retirement fund. I'd suggest you peruse some of the many posts referencing issues at Vanguard before you invest $3m with them. If you don't want to stay at Fidelity, Schwab would be a better alternative in my opinion.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by GaryA505 »

boltonguy wrote: Thu Jun 08, 2023 12:13 pm Thanks for all the advice - would it be a dumb idea to just put it all in a Vanguard target retirement 2035 fund and let them manage it?
IMO, if you are capable of setting it up, staying the course, and not making changes based on emotions, and don't try to time the market, you should do it yourself. There are many reasonable solutions that would work, and nobody really knows in advance which one will do better. You can also use the services of a low-cost or hourly advisor to help you set it up, or check your work if you do it yourself. You can get recommendations here if you ask. I use Mark Zoril (PlanVision).

To earn the 1% fee the advisor has to beat your results by 1%. I think very few advisors can do that, assuming you do a decent job of managing it yourself. That means NO MARKET TIMING!
Get most of it right and don't make any big mistakes. All else being equal, simpler is better. Simple is as simple does.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by unclescrooge »

boltonguy wrote: Thu Jun 08, 2023 12:13 pm Thanks for all the advice - would it be a dumb idea to just put it all in a Vanguard target retirement 2035 fund and let them manage it?
Yes, is suboptimal.

TRD funds start off too aggressive and then quickly become too conservative.

If you have $3m in assets then probably a life style find might be a better choice, but you really want a tax-efficient portfolio, which mutual funds are not. Consider ETFs instead.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by GaryA505 »

aristotelian wrote: Thu Jun 08, 2023 12:32 pm Nope, nyet, negatory. Find a fee-only advisor if you need professional help. Should cost $2-3k max.

It does sound like you need some help with investing discipline. You picked a decent time to get out of the market but now you have missed out on a run back to where the market was (and then some). Most of us here would prefer to invest on their own taking a long term approach, but if you are unable to do that a professional may be a good idea. $30k is just way, way too much.
+1
As they say, "market timing is a fool's game".
Get most of it right and don't make any big mistakes. All else being equal, simpler is better. Simple is as simple does.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Heian »

boltonguy wrote: Thu Jun 08, 2023 10:07 am Hi,

I just joined this forum today as I'm looking for some educated advice and based on what I've read so far I think I'm likely to get it here.

I am 53, employed full time with $3M in cash & investments (70% retirement / 30% other). I have been contributing to my 401k which was in the Fidelity Growth Fund and have also been investing a bit on the side in dividend-focused ETFs. I am 100% cash as I rolled my 401k into an IRA and moved non-retirement assets into cash 4 months ago, looking to wait for a better opportunity to get back into the market. Qualified funds are in a MM fund returning 5% and non-qualified funds are in a preferred deposit account at Merrill earning 4.7%

I took a call from a Merrill Financial Solutions Advisor - after a few discussions he has proposed moving me into several funds that are 6 months old so no performance history and not beating the comparative index net of fees including a commodities fund which has just seen abysmal and volatile performance over the past 10 years (excepting last 2 years which makes the yield look stunning). He has also proposed a 12-month treasury ladder. Cost is 1% AUM for the funds (on top of internal fund expenses) and .25% for the treasury ladder.

He seems like a nice guy but $30k a year seems like a lot where I think I may be able to do better myself. For example, using a fund screener to find active funds or etfs with a consistent performance history, and a bond fund or diy ladder with ishares etfs.

This is probably a DIY crowd so maybe I just need to type this out to see that I dont really feel like I'm getting anything for that $30k. I dont feel like I'm getting access to any funds or strategies I couldnt get on this forum or through a robo-advisor, etc. Thoughts?

Thank you!

RUN
Doctor Rhythm
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Doctor Rhythm »

An index TDF is reasonable for your retirement accounts. Just make sure its asset allocation and glide path are appropriate for you. Keep in mind that you don’t need to use the one that matches your retirement year; you can select one that is more or less aggressive depending on your personal risk tolerance.
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by MattB »

Glockenspiel wrote: Thu Jun 08, 2023 12:31 pm
boltonguy wrote: Thu Jun 08, 2023 12:13 pm Thanks for all the advice - would it be a dumb idea to just put it all in a Vanguard target retirement 2035 fund and let them manage it?
Not a dumb idea at all. MUCH better than the idea of paying $35-50k every year to an advisor. The Vanguard Target Retirement 2035 fund will only cost you $2,400/yr on your $3 million, as opposed to the $35-50k you'd pay to an advisor every year in AUM and expense ratios.
+4.
the_wiki
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by the_wiki »

I don't know, going all in on an advisor is expensive. But on the other hand it might keep you from making market timing decisions like "going all cash waiting for a better opportunity to get back in to the market"


If you don't want to fully manage your portfolio, there are much cheaper options today. Things like Wealthfront or Vanguard Personal advisor that charge about a quarter of what a traditional advisor does.


Also beware target date funds (really beware of most mutual funds) with your taxable accounts. They can kick off large distributions which can incur unexpected taxes. For example, if you had a million bucks in Vanguard 2030 Target in 2021, you would have received $166,000 in distributions. That's a lot of taxes!
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bertilak
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by bertilak »

Yeah, forget that 1% AUM advisor.

And don't confuse DIY with stock picking and market timing. Those truly are DYI (do yourself in).

Also, don't look for an advisor who will do your stock picking and market timing for you. That's just an expensive way to have someone else DYI (do you in).

The target date fund is a reasonable idea as is the three-fund approach which lets you decide how to split asset types (stocks, bonds) across tax-advantaged (bonds) and taxable (stocks plus remaining bonds) accounts. (A proper split will reduce taxes.)

IF you want more hand-holding, for less than a third of the cost of that 1% AUM advisor you can enroll in Vanguard's PAS and let them do all the work. Since you can unenroll from PAS at any time you might want to give it a trial period. I suggest 2 years.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
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Taylor Larimore
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Taylor Larimore »

boltonguy:

Many Bogleheads use The Three-Fund Portfolio which seldom requires an expensive advisor. You can read its many benefits here:

viewtopic.php?t=88005

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "The Three-Fund Portfolio will help you to develop a sound asset allocation strategy, make smart investment selections, and guide the implementation of your plan." -- "The beauty of owning the market is that you eliminate individual stock risk, you eliminate market sector risk, and you eliminate manager risk."
"Simplicity is the master key to financial success." -- Jack Bogle
GoldenFinch
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by GoldenFinch »

If you can manage a 10K portfolio yourself, you can manage a 3M portfolio yourself. Index funds work great and are so inexpensive. Why choose to have a middle man make decisions for you that will profit him when you can so easily keep that money and make your own decisions. Why not just drop the money into two or three index funds and set it and forget it?
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Wiggums
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Wiggums »

We have been investing for 37 years. We have all our investments in the three fund portfolio plus treasuries given the 5.x% interest rate.

$30,000 is a lot of money to pay EACH year for the same portfolio plus any questions they answer for you. They may also churn your account to generate more fees for themselves, or put you into a complex set of investments to make it more difficult for you to leave them. Just say, “no thank you”.
"I started with nothing and I still have most of it left."
bloom2708
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by bloom2708 »

Put 50% in Total US Stock index (VTSAX) and put 50% in the Settlement Fund (Federal Money Market, 5.04% currently).

Save the ~$40k. Over 20-30 years, it is another 500k or more you sent them.

Good job finding your way here. Say "thanks but no thanks" to the different advisors. Tell them you are going to mull it over for 30 days.

Good luck.
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Mel Lindauer
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Mel Lindauer »

Let that $30,000 work for you, not for that advisor.
Best Regards - Mel | | Semper Fi
Wanderingwheelz
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Wanderingwheelz »

I might be the only person the reply to this who was an ML advisor for a long time.

Don’t do it. As had been suggested, read up on the 3 Fund Portfolio. That said, stop doing counterproductive things like going to cash because you want to buy a lower prices later. With assets like you have it doesn’t matter if you get lucky and can buy back in a little cheaper at some point down the road. Over time you’ll probably lose more than win and those mistakes will most likely cost you a lot of money.
Being wrong compounds forever.
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Mel Lindauer
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by Mel Lindauer »

Wanderingwheelz wrote: Thu Jun 08, 2023 3:18 pm I might be the only person the reply to this who was an ML advisor for a long time.

Don’t do it. As had been suggested, read up on the 3 Fund Portfolio. That said, stop doing counterproductive things like going to cash because you want to buy a lower prices later. With assets like you have it doesn’t matter if you get lucky and can buy back in a little cheaper at some point down the road. Over time you’ll probably lose more than win and those mistakes will most likely cost you a lot of money.
A good, balanced response by a former ML advisor.
Best Regards - Mel | | Semper Fi
GaryA505
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by GaryA505 »

Wanderingwheelz wrote: Thu Jun 08, 2023 3:18 pm I might be the only person the reply to this who was an ML advisor for a long time.

Don’t do it. As had been suggested, read up on the 3 Fund Portfolio. That said, stop doing counterproductive things like going to cash because you want to buy a lower prices later. With assets like you have it doesn’t matter if you get lucky and can buy back in a little cheaper at some point down the road. Over time you’ll probably lose more than win and those mistakes will most likely cost you a lot of money.
Some people don't have the personality or discipline for DIY investing. If someone has any of the following traits, they would probably be better off with an advisor (even at 1% AUM):
- Can't sleep at night worrying about their investments going down.
- Can't resist market timing.
- Can't keep their emotions out of their investment decisions.
- Invest too conservatively because they are afraid of market risk.
- Think the stock market is gambling.
- Want to sell everything when the market takes a tumble.
- Want to buy everything when the market is going up.
- Think Dave Ramsey is a genius.

As a former ML advisor I'm sure you met many clients with some of these traits. Some people are their own worst enemy and need an advisor to keep them from shooting themselves in the foot.
Get most of it right and don't make any big mistakes. All else being equal, simpler is better. Simple is as simple does.
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dogagility
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Re: Looking for advice? Advisor proposing 1% on $3M AUM

Post by dogagility »

boltonguy wrote: Thu Jun 08, 2023 12:13 pm Thanks for all the advice - would it be a dumb idea to just put it all in a Vanguard target retirement 2035 fund and let them manage it?
If that suits your asset allocation choice and you're OK with the asset allocation glide slope (more bonds; less stocks), then it would be a perfectly fine hands-off, DIY choice.

If you want to spend 30 minutes a year maintaining a chosen asset allocation no matter when your retirement date is, then you could do this with a three fund portfolio.
Make sure you check out my list of certifications. The list is short, and there aren't any. - Eric 0. from SMA
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