Examples
- My parents have low incomes. I have now taken over their finances due to age and dementia. I learned their advisor had them in some tax free (Fed and State) municipal bonds from a state where they do not live. The do not need municipal bonds and if the did, it would have been nice to have them for the state they lived in.
- My mom has a non-qualified annuity that we want to cash in / take a lump sum payment. I contacted the holding company and inquired if the amount over the cost basis would be reported as a cap gain or simply income. I was told a cap gain. Fortunately, I found the IRS publication which corrected that. Its income.
- We fired our AUM advisor and went the Boglehead way of doing things. However, as I turn 65, I see that I will suffer some unnecessary IRMAA thanks to the advisor having a substantial amount of our taxable account in bonds and mutual funds which generated significant cap gains two years ago. Bonds in our IRAs and etfs in taxable would have avoided this problem. That has all been fixed, but it still impacts us since this happened two years ago when IRMAA is calculated. Our financial guy is the gift that keeps on taking
As they say in the ring, "protect yourself at all times."
So I thought it might be an interesting conversation to see if we have bad judgement in selecting professionals or we are the norm.