OldArmyCT said:

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HoustonAg_2009 said:

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OldArmy - Great post & appreciate your opinion. 0.05% fee for an active financial advisor? Please let me know where I can get this rate!!

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I use Merrill, most FA's there start at 1.5% if you're investing the ML minimum which its $250K. The more you invest the less you pay. And the fee is negotiable..."I have another $500K with EJ, what will you do to my fee if I bring it over?"

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Yikes, unless that guy is doing something mind blowing, try and get away from that 1.5%. There are lots of guys in here that have been doing this longer than I have so maybe they've heard it happen, but I've never heard of an FA charging 1.5% (and be able to retain their clients).

In my opinion, yes it is. A good financial advisor does a lot more for a person than picking stocks, mutual funds, ETFs, etc. Not everyone needs one. But for the segment of folks who do, they can add a lot of value.

OldArmyCT said:

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HoustonAg_2009 said:

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OldArmy - Great post & appreciate your opinion. 0.05% fee for an active financial advisor? Please let me know where I can get this rate!!

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I use Merrill, most FA's there start at 1.5% if you're investing the ML minimum which its $250K. The more you invest the less you pay. And the fee is negotiable..."I have another $500K with EJ, what will you do to my fee if I bring it over?"

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Paying 1.5% is too high.

I'm at 0.2%. Flat fee for advisement. I have a separate, small portion of our portfolio under active management for 0.5%.

YouBet said:

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OldArmyCT said:

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HoustonAg_2009 said:

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OldArmy - Great post & appreciate your opinion. 0.05% fee for an active financial advisor? Please let me know where I can get this rate!!

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I use Merrill, most FA's there start at 1.5% if you're investing the ML minimum which its $250K. The more you invest the less you pay. And the fee is negotiable..."I have another $500K with EJ, what will you do to my fee if I bring it over?"

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Paying 1.5% is too high.

I'm at 0.2%. Flat fee for advisement. I have a separate, small portion of our portfolio under active management for 0.5%.

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1.5% gets you the same advisor every time you call. 0.2% gets you an advisor which is normally the guy answering the phone at the time you call. This isn't a locked in stone statement but most Fidelity advisors are new to the game, have a canned set of portfolios and wouldn't recognize you if you walked in and sat at their desk, which has no place for customers to sit anyway. No one hires an FA to get better financial returns than he or she can get themselves, or at least they don't need to. That doesn't mean they can't outperform most guys, it just means that's not their goal. I can take a Vanguard or Fidelity managed portfolio and duplicate it without the fee. So you're paying 0.2% extra for someone to do something you profess to be able to do yourself.

OldArmyCT said:

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YouBet said:

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OldArmyCT said:

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HoustonAg_2009 said:

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OldArmy - Great post & appreciate your opinion. 0.05% fee for an active financial advisor? Please let me know where I can get this rate!!

---

I use Merrill, most FA's there start at 1.5% if you're investing the ML minimum which its $250K. The more you invest the less you pay. And the fee is negotiable..."I have another $500K with EJ, what will you do to my fee if I bring it over?"

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Paying 1.5% is too high.

I'm at 0.2%. Flat fee for advisement. I have a separate, small portion of our portfolio under active management for 0.5%.

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1.5% gets you the same advisor every time you call. 0.2% gets you an advisor which is normally the guy answering the phone at the time you call. This isn't a locked in stone statement but most Fidelity advisors are new to the game, have a canned set of portfolios and wouldn't recognize you if you walked in and sat at their desk, which has no place for customers to sit anyway. No one hires an FA to get better financial returns than he or she can get themselves, or at least they don't need to. That doesn't mean they can't outperform most guys, it just means that's not their goal. I can take a Vanguard or Fidelity managed portfolio and duplicate it without the fee. So you're paying 0.2% extra for someone to do something you profess to be able to do yourself.

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That's $15,000 per year you're paying to have someone "manage" your money on a million dollar portfolio. Not sure if the juice is worth the squeeze

OldArmyCT said:

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YouBet said:

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OldArmyCT said:

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HoustonAg_2009 said:

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OldArmy - Great post & appreciate your opinion. 0.05% fee for an active financial advisor? Please let me know where I can get this rate!!

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I use Merrill, most FA's there start at 1.5% if you're investing the ML minimum which its $250K. The more you invest the less you pay. And the fee is negotiable..."I have another $500K with EJ, what will you do to my fee if I bring it over?"

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Paying 1.5% is too high.

I'm at 0.2%. Flat fee for advisement. I have a separate, small portion of our portfolio under active management for 0.5%.

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1.5% gets you the same advisor every time you call. 0.2% gets you an advisor which is normally the guy answering the phone at the time you call. This isn't a locked in stone statement but most Fidelity advisors are new to the game, have a canned set of portfolios and wouldn't recognize you if you walked in and sat at their desk, which has no place for customers to sit anyway. No one hires an FA to get better financial returns than he or she can get themselves, or at least they don't need to. That doesn't mean they can't outperform most guys, it just means that's not their goal. I can take a Vanguard or Fidelity managed portfolio and duplicate it without the fee. So you're paying 0.2% extra for someone to do something you profess to be able to do yourself.

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I don't charge 1.5%, but I don't charge .2%, but my clients do always get me. I'm also not a big Fidelity, Vanguard, Merrill guy either.

I think it's difficult to lay out a few that should be used across the board because 1% could be high if all they're doing is throwing you in a portfolio, but if they're providing ongoing estate, tax, education, withdrawal, retirement income, active portfolio management, exposing you to different opportunities, etc, then 1% could be reasonable or even low. Then there's the intangible value assigned to trust, relationship, and overall relief/comfort in not having to "go it alone"

OldArmyCT said:

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YouBet said:

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OldArmyCT said:

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HoustonAg_2009 said:

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OldArmy - Great post & appreciate your opinion. 0.05% fee for an active financial advisor? Please let me know where I can get this rate!!

---

I use Merrill, most FA's there start at 1.5% if you're investing the ML minimum which its $250K. The more you invest the less you pay. And the fee is negotiable..."I have another $500K with EJ, what will you do to my fee if I bring it over?"

---

Paying 1.5% is too high.

I'm at 0.2%. Flat fee for advisement. I have a separate, small portion of our portfolio under active management for 0.5%.

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1.5% gets you the same advisor every time you call. 0.2% gets you an advisor which is normally the guy answering the phone at the time you call. This isn't a locked in stone statement but most Fidelity advisors are new to the game, have a canned set of portfolios and wouldn't recognize you if you walked in and sat at their desk, which has no place for customers to sit anyway. No one hires an FA to get better financial returns than he or she can get themselves, or at least they don't need to. That doesn't mean they can't outperform most guys, it just means that's not their goal. I can take a Vanguard or Fidelity managed portfolio and duplicate it without the fee. So you're paying 0.2% extra for someone to do something you profess to be able to do yourself.

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I've had a dedicated advisor since the beginning who I can contact anytime I want to talk about whatever at that 0.2 rate. And it's for every aspect of financial planning so not just investment decisions. It's been beneficial for us we had a somewhat complex situation that emerged with estate planning and divvying of assets.

Going forward I could probably take it back over but im also extremely busy posting on this website.

This has been an informative thread:

"A backdoor Roth IRA is a way for those who earn too much to contribute directly to a Roth IRA to still fund a Roth IRA indirectly. The backdoor Roth generally starts with an after-tax contribution to a traditional IRA, followed by a conversion to a Roth IRA.


First, you make an after-tax contribution to a traditional IRA, which is followed by a conversion to a Roth IRA. This can be a complicated transaction with a lot of moving parts, so you will want to be sure to understand all aspects of the backdoor Roth IRA before moving forward. A financial advisor with experience in Roth conversions can help you understand and navigate the complexities and pitfalls of this complicated transaction."

The limits on the Corporate 401K for 2023 are 22,500 with an additional allowance up to $30,000 for those over the age of 50.

would it just be the smartest plan to increase my corporate 401 up to the maximum $30,000 a year rather than dealing with setting up an IRA and then the back door IRA strategy?

or is the savings so much more that it makes sense to go through all the trouble to create a IRA account off of my personal private Fidelity Brokerage? My company only offers the 401K through Schwab/Wellington.

LMCane said:

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This has been an informative thread:

"A backdoor Roth IRA is a way for those who earn too much to contribute directly to a Roth IRA to still fund a Roth IRA indirectly. The backdoor Roth generally starts with an after-tax contribution to a traditional IRA, followed by a conversion to a Roth IRA.


First, you make an after-tax contribution to a traditional IRA, which is followed by a conversion to a Roth IRA. This can be a complicated transaction with a lot of moving parts, so you will want to be sure to understand all aspects of the backdoor Roth IRA before moving forward. A financial advisor with experience in Roth conversions can help you understand and navigate the complexities and pitfalls of this complicated transaction."

The limits on the Corporate 401K for 2023 are 22,500 with an additional allowance up to $30,000 for those over the age of 50.

would it just be the smartest plan to increase my corporate 401 up to the maximum $30,000 a year rather than dealing with setting up an IRA and then the back door IRA strategy?

or is the savings so much more that it makes sense to go through all the trouble to create a IRA account off of my personal private Fidelity Brokerage? My company only offers the 401K through Schwab/Wellington.

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I'm not an expert, but most agree that it's best to have a mix of pre tax and after tax savings in your retirement accounts to draw from. And a back door Roth IRA is super easy, not much hassle. Add $6000 to a traditional IRA then convert to Roth.

LMCane said:

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This has been an informative thread:

"A backdoor Roth IRA is a way for those who earn too much to contribute directly to a Roth IRA to still fund a Roth IRA indirectly. The backdoor Roth generally starts with an after-tax contribution to a traditional IRA, followed by a conversion to a Roth IRA.


First, you make an after-tax contribution to a traditional IRA, which is followed by a conversion to a Roth IRA. This can be a complicated transaction with a lot of moving parts, so you will want to be sure to understand all aspects of the backdoor Roth IRA before moving forward. A financial advisor with experience in Roth conversions can help you understand and navigate the complexities and pitfalls of this complicated transaction."

The limits on the Corporate 401K for 2023 are 22,500 with an additional allowance up to $30,000 for those over the age of 50.

would it just be the smartest plan to increase my corporate 401 up to the maximum $30,000 a year rather than dealing with setting up an IRA and then the back door IRA strategy?

or is the savings so much more that it makes sense to go through all the trouble to create a IRA account off of my personal private Fidelity Brokerage? My company only offers the 401K through Schwab/Wellington.

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Just do both assuming you have the funds for both. Setting up an account is easy on the latter and executing is literally a button click.

Financial advisor or financial planner?

Big difference between the two

deddog said:

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EliteZags said:

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the regular backdoor Roth is literally just putting $6K of after tax money into a Traditional IRA then converting to Roth and getting tax free growth, nothing that warrants a FA/CPA/tax person

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Spouse and i have been working for over 25 years so our traditional IRAs are pretty hefty.

Admittedly, i haven't looked into this much so it might not be too complicated, This is the part I was concerned about:

Quote:

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Here's how it works: When determining your tax bill on a conversion from a traditional IRA to a Roth IRA, the IRS is going to look at all of your traditional IRA accounts combined (to determine your tax bill)

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Thats just talking about the fact you could have multiple IRAs - some pretax and some post-tax - and when you're making a Roth conversion they will consider pre and post tax accounts as one account and tax the Roth at that percentage of accounts. For example, you have $10k in a pre-tax IRA (probably a 401k rollover from a previous employer) and a $5k post tax IRA you've been contributing to. When you convert that money to a Roth IRA 2/3rds of it will be taxed.