There was another IMHO thread asking for financial advice, so I hope this one does not run afoul of the rules. And forgive me if this sounds like a humblebrag.
I am not terribly organized, and my financial strategy is basically to invest in something and then ignore it for as long as possible. And that has worked out reasonably well. After years at tech companies (from startups to very large) I’m finally at a company that started small and is doing very well. I have stock options that are actually worth something. I’m in my mid-50s; not ready to retire yet, but it’s on the horizon. Overall, I think I’m doing well.
The issue I have is to get everything organized. I have a 401(k) from a company I was at decades ago. There are beneficiary IRAs from my mom’s estate, stock at a couple different brokerages, etc. About a dozen accounts, more or less. I may have even forgotten about some assets.
It’s more than I want to keep up with, to be honest. I’d love to have just one statement to review every month, and one point of contact to access the funds and get answers to questions. I’m not asking folks to recommend any particular company or account, but I don’t even really who I’m looking for to help with this. Do I want a brokerage, or an asset manager, or a financial services company, or something else? Big, national firm, or somebody independent who works on their own? What sort of questions do I ask, how do they make their money, and how do I find someone who’ll work in my interest and whom I can trust?
I think what you want is a CPA/CFP. It’s a rare breed, but they can organize everything, do your taxes, provide guidance, consolidate everything they can, and offer holistic advice across your entire financial landscape. The CFP side will create a long term financial plan and investment recommendations for all of your assets, the CPA will do your taxes (which you didn’t mention, but I imagine are also a pain in the ass for you.)
They make their money off of:
a fee-based plan for the financial planning side of things ($1000-1500)
an asset-based fee for managing your funds if you want them to (your plan should have a “invest your IRA in XYZ, invest your beneficiary IRA in QRS, etc. - but if you’re uninterested in doing that, they can). (Fees vary based on total assets - should range between 0.5 - 1.25%)
I’m not sure I’m even ready for the “planner” part of CFP. I need to find out what I have, first, and then I can plan what to do with it. But I think it’s a step in the right direction.
I just did a search to find some in my area, and most of them have minimum account requirements that I don’t quite meet, yet. But not all of them.
I appreciate the thought, but adding a new tool that I don’t know and have never used before is the opposite of what I’m trying to do.
You can move the 401(k) from the former employer and the beneficiary IRA to the same investment house. So they’re still separate accounts but easier to manage when at the same company.
I know, but I’m not particularly wedded to any particular company, or person, to handle these sorts of things. If there was one company that I’d had a memorably good experience with in the past, I’d probably consolidate the other accounts there, but I don’t. Like I said, I’m not an active investor. I don’t have some dream that I can outsmart The Street, and move money around like pawns on a chessboard. I’m very low-maintenance. I just want things to be safe, and to know how to access the money when I need to.
My recommendation is to consolidate the money at Vanguard and invest in index funds, or invest in low-cost index funds at another company. Note that if you do move tax-deferred accounts like an IRA or 401(k) around, be careful not to trigger a taxable event. The place where you move the money can advise you how to do this so you don’t end up losing money unnecessarily.
And if you’re not an active investor, look at target date funds, which is where my rollover IRA is invested (specifically the Vanguard Target Retirement 2035 Fund; but you pick the fund based on your age and expected retirement age).
I read a good review of Vanguard, and it does sound like it might be what I’m looking for, but I wasn’t sure if they had any sort of person-to-person presence or if they were purely online. I kinda hate calling a different total stranger all the time, especially in a field I’m so ignorant of. I know it’s old-school, but if I could just have one person to keep in touch with, I think that would help.
Vanguard is really just for self-service. If you have a lot of money in your account you can get a personal advisor, but otherwise you’d have to make the decisions yourself or talk to generic phone support people.
For a really simple plan that would work for you, roll the 401k and IRAs to Vanguard and invest in their S&P 500 mutual fund. That’s a set, forget, and retire strategy.
You can consolidate the stocks at an online firm like E-Trade, but it’s up to you to make decisions about when to buy/sell stocks.
Ask the HR rep at your company if they offer a session with a financial advisor as a benefit. That person will work one-on-one with you to figure out your situation.
You can also go with a commercial advisor, but they are really just salespeople who will tell you to put all your money into their funds.
It sounds like you really have two different things you need help with:
Consolidating all your investments so you can easily see them and keep track of them
Get advice on what to do with your investments so that you can retire.
The first one is pretty easy and can be done by you. The second one can be done with a financial advisor. It’s best to have an independent advisor who you are paying for advice rather than someone free who gets a cut of whatever they recommend you buy.
Definitely talk to a tax accountant before converting your options. Sometimes there’s some weird tax implications and you can inadvertently end up owing a lot.
They do, and I’ve already done that, but it wasn’t very helpful. He wanted to know all the different accounts, how much was in each one, how much my living expenses were, that sort of thing. And I’m sure that’s great advice for most people, but he wasn’t very helpful for the question I was trying to ask. Hence, this thread.
Ask around your friends and coworkers if they have a financial advisor they would recommend. There are many advisors who will provide what you want, but they are typically paid by taking a cut of your investments. Even if they have good investment advice, their fees and cuts can nip away at investment gains. Quite often you can do better by just investing in a boring, indexed mutual fund. But the feeling of security from having a personal advisor may be worth it. It sounds like right now you are looking for someone to personally consolidate and manage all your accounts, so this is probably the way to go. Asking your contemporaries for recommendations of which advisor they use will likely work best to find an advisor you can trust rather than trying to find one yourself.
This was going to be my advice. When I was thinking of retiring, I didn’t need to merge a bunch of accounts , but I did want someone I could deal with personally. Fortunately, I found my guy from a friend’s recommendation. She’d retired about 10 years before me and went through 3 financial advisors in the first few years. The third one stuck, and she really liked him. I interviewed him and liked him, too. He just sent me a snapshot this morning, and after being retired for 9.5 years, I have only $100K less in my account than when I first set it up. It’s a good feeling to have someone to talk with that you trust.
I work in tech, so most of my coworkers are much younger than I am, so might not be dealing with this sort of issue in their lives, yet, but I’ll ask around. And there are probably folks at my curling club who could recommend someone.
How 'bout you all; anybody in the Boston area, and have someone you like?
I have no direct experience with the company and so can’t personally recommend them, but my grandmother had similar problems to you and an advisor from Edward Jones was able to help. My grandfather handled their household finances, and unfortunately left my grandmother with little more than a notebook with account numbers and logins when he died. He’d created numerous accounts at various brokerages, and sadly, with his declining mental state, they were in pretty sorry state. The advisor was able to track down the accounts, find the missing logins when necessary, consolidate the funds, and close down the excess ones.
She’s likely paying more than she would if she consolidated everything at Vanguard or the like, but ultimately the costs are worth it to her, and she gets more than sufficient income from the investments she has. So it’s worked out very well for her. I don’t know what she pays but it’s probably around 1%-1.5% of the total assets.
Keep in mind that many advisors are working remotely and can meet over Zoom. You don’t necessarily need an advisor in the Boston area. If you have friends and family in other parts of the country, their advisor may be able to work with you as well.
The best part about this is that the shady ones that just want to push whole life and expensive annuities on you will self-select out because they’d need to cough up for a Massachusetts insurance license.
A few years ago I found myself in the exact same situation. I asked a few friends and got a recommendation for a “financial advisor,” and the first guy I met with worked out perfectly. When I first went to see him, my husband and I had between us a few IRAs and a few 401(k)s, from current and past jobs, and a kid about to go to college. Over several months, the advisor rolled over everything he could (all but one of the IRAs) into funds managed by Raymond James. We get one envelope of statements per quarter.
We meet in person once a year (ironically, I met with him just this morning), and he’s armed with charts and graphs showing me different scenarios and projected outcomes. He knows where to put money that will go towards our daughter’s college tuition, how much we can invest each year into the different types of IRAs, how much we can expect to have in the accounts at retirement, etc. Other than the annual meeting, we just correspond through e-mail - for instance, I’ll let him know when I get a raise, or when tuition is due, or that we’re having some work done on the house, and he’ll update his files or liquidate funds and deposit the money into our bank account. We have no direct access to the accounts, and I like having a gatekeeper.
I agree that you don’t necessarily need somebody you can meet with in person, but it is a really nice perk, and you should have somebody who’s at least in MA, because tax and financial laws will be different in other states. My guy has CRPC (Chartered Retirement Planning Counselor) designation. I’ll admit that I have no idea how he’s getting paid, but I assume it’s a fee based on my assets or investments. At any rate, it’s invisible to me. I definitely don’t care enough to try to save money that way. He’s exactly what I was looking for, and I’m happy to pay for the service.
Just for the FYI, typically the advisors get paid with fees called “loads” and “management fees”. Loads are percentages that get taken out when a fund is bought or sold. For example, when buying a fund, the advisor might get 3% of a cut of what goes in. That’s called a front-end load since it’s a cut of what goes in. There are also back-end loads where it’s a cut of what comes out of the fund. Since the advisor gets paid when funds are bought and/or sold, there can be a conflict of interest when it comes to buying and selling. A shady investor may churn the investments so they get lots of these fees. So when looking for an advisor, you need to find one you can trust to really have your best interests in mind.