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Managed accounts (1% fee). Is it worth it?
Posted on 12/31/22 at 10:23 am
Posted on 12/31/22 at 10:23 am
We moved some IRA and other funds to managed accounts with our financial planner a couple of years ago. As jobs have changed and old 401ks added, the management fees are now into the 5 figures annually. Our situation is not complex, just talking retirement mainly, and a short term fund.
We’re told the benefits are avoidance of transaction fees (namely mutual fund sales loads) when trading, rebalancing etc. In addition to the convenience of a manager knowing when to do tax loss harvesting and rebalancing, and general expertise/performance.
If we move everything to non-managed accounts we were told to avoid mutual funds to avoid the sales loads.
We’re told the benefits are avoidance of transaction fees (namely mutual fund sales loads) when trading, rebalancing etc. In addition to the convenience of a manager knowing when to do tax loss harvesting and rebalancing, and general expertise/performance.
If we move everything to non-managed accounts we were told to avoid mutual funds to avoid the sales loads.
6
Posted on 12/31/22 at 10:33 am to TejasHorn
I'm curious about this too.
We recently inherited a mix of accounts in the 7 figures that are made up of IRA and non-IRA.
We know absolutely nothing about how to manage these funds and our financial advisor has been great to deal with so far.
Our plan is to never touch them and just let them grow and have something very nice to hand over to our kids.
We recently inherited a mix of accounts in the 7 figures that are made up of IRA and non-IRA.
We know absolutely nothing about how to manage these funds and our financial advisor has been great to deal with so far.
Our plan is to never touch them and just let them grow and have something very nice to hand over to our kids.
Posted on 12/31/22 at 10:38 am to hey benji
quote:
We know absolutely nothing about how to manage these funds
Then I would say it is worth it. If you like to read and learn how to do it yourself that is fine too. 95% of an advisor's job is to play psychologist in years like we jut had. A monkey can make money in year's like 2019, 2020 and 2021.
Posted on 12/31/22 at 10:49 am to TejasHorn
The transaction fees line is some BS as there are plenty of funds with zero to minimal transaction fees that can be self managed.
Five figures is a lot to pay for the service unless you are finding a lot of value in the tax loss harvest and the psychological component. Building a portfolio can be done with 3-5 funds but most advisors will make this seem more complex than it needs to be.
Five figures is a lot to pay for the service unless you are finding a lot of value in the tax loss harvest and the psychological component. Building a portfolio can be done with 3-5 funds but most advisors will make this seem more complex than it needs to be.
Posted on 12/31/22 at 10:50 am to TejasHorn
quote:
We’re told the benefits are avoidance of transaction fees (namely mutual fund sales loads)
Your advisor is full of shite. Most major companies like fidelity, vanguard etc.. no longer have transaction fees on thousands of funds
quote:
addition to the convenience of a manager knowing when to do tax loss harvesting
If this is mostly tax advantaged accounts, then none of this is going on.
quote:
we move everything to non-managed accounts we were told to avoid mutual funds to avoid the sales loads.
Once again full of shite. Only advisors pushing you into products with high commissions for them is going to say this.
If I were you I would do some research and determine if you want to manage it yourself. Otherwise I would find a fee only advisors. From the little you posted, this guy is raking in the commissions on top of his management fee.
This post was edited on 12/31/22 at 10:52 am
Posted on 12/31/22 at 10:56 am to UltimaParadox
quote:
UltimaParadox
Solid post. There are some things not adding up in OP. As noted, tax loss harvesting is really for taxable brokerage accounts and not IRAs or 401ks.
Ensure your financial advisor is a fee only FIDUCIARY. It raises the bar for how they represent you.
You could also look for an advisor that is paid hourly or per session if your needs are minimal.
Posted on 12/31/22 at 11:39 am to TejasHorn
Not worth it, never worth it.
If it gives you peace of mind and you don’t mind parting with the 1% then it’s probably not a big deal. But it’s 1% not worth giving away because they aren’t doing anything you couldn’t
If it gives you peace of mind and you don’t mind parting with the 1% then it’s probably not a big deal. But it’s 1% not worth giving away because they aren’t doing anything you couldn’t
Posted on 12/31/22 at 3:21 pm to lynxcat
quote:
Ensure your financial advisor is a fee only FIDUCIARY. It raises the bar for how they represent you.
You could also look for an advisor that is paid hourly or per session if your needs are minimal.
Exactly!!!
Based on the down votes definitely some "advisors" on this board lurking
Posted on 12/31/22 at 4:35 pm to TejasHorn
As said OP managing an investment account or multiple is really pretty easy. 3-5 funds is all you really need and 10-15 is not any harder. They are damn near free for companies like Vanguard, schwab, etc.
So really, you are paying for advice and confidence.
I also very much doubt unless your net worth is $10mil plus that a financial advisor is routinely helping you tax loss harvest. They just aren’t watching those small accounts that much to do that most likely. Maybe once or twice a year.
But ultimately a financial advisor is about confidence. If you aren’t completely confident in their work interview some others until you find one you are. That’s what you are paying for after all.
So really, you are paying for advice and confidence.
I also very much doubt unless your net worth is $10mil plus that a financial advisor is routinely helping you tax loss harvest. They just aren’t watching those small accounts that much to do that most likely. Maybe once or twice a year.
But ultimately a financial advisor is about confidence. If you aren’t completely confident in their work interview some others until you find one you are. That’s what you are paying for after all.
Posted on 12/31/22 at 7:39 pm to baldona
I’m surprised how many unintelligent investors there are out there, I guess I shouldn’t be. Most of the market is driven by that.
But as has been evidenced many many times. All you need is a 2 or 3 fund portfolio and rebalance once a year. It’s not that hard. Takes maybe 10 minutes per year. Silly to waste thousands of dollars per year on an “advisors” when plenty of studies have shown it doesn’t help.
But you can tell by the downvotes that people are just uninformed I guess. Market wouldn’t go down without people like you mismanaging their money, so thanks to all of you creating buying opportunities
But as has been evidenced many many times. All you need is a 2 or 3 fund portfolio and rebalance once a year. It’s not that hard. Takes maybe 10 minutes per year. Silly to waste thousands of dollars per year on an “advisors” when plenty of studies have shown it doesn’t help.
But you can tell by the downvotes that people are just uninformed I guess. Market wouldn’t go down without people like you mismanaging their money, so thanks to all of you creating buying opportunities
Posted on 12/31/22 at 7:43 pm to TejasHorn
Not worth it. Family member passed in April 2020. His positions were split between all the children and some grandchild (small part to me). My uncle is a “VP” with Edward Jones and convinced his siblings to transfer their shares to his book. It was so obvious what was going on because he wanted the fees to carry the accounts.
I simply liquidated the position, it was at a 10 YR high and an over levered bank in the ag biz - it’s now trading at its normal run but that’s not the point. Point is I moved 100% of the funds into 3 fidelity mutual funds that have 0% fees but very minimal annual fees with decent returns. I’m not trying to make that money turn into 1,000% I don’t have time. I set it to auto reinvest dividends and checked it for the first time when I saw this post.
Im not paying some country club guy 6-8k to do the same thing.
Eta: tax harvesting is important but if you don’t have a current job to support the kind of earnings the investment throws off then I’d definitely suggest a high quality broker. I’m not overly concerned about tax harvesting unless the overall market is down (as is now)
I simply liquidated the position, it was at a 10 YR high and an over levered bank in the ag biz - it’s now trading at its normal run but that’s not the point. Point is I moved 100% of the funds into 3 fidelity mutual funds that have 0% fees but very minimal annual fees with decent returns. I’m not trying to make that money turn into 1,000% I don’t have time. I set it to auto reinvest dividends and checked it for the first time when I saw this post.
Im not paying some country club guy 6-8k to do the same thing.
Eta: tax harvesting is important but if you don’t have a current job to support the kind of earnings the investment throws off then I’d definitely suggest a high quality broker. I’m not overly concerned about tax harvesting unless the overall market is down (as is now)
This post was edited on 12/31/22 at 7:46 pm
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