Should I Fire My Financial Advisor And Manage My Money By Myself? YQA 279-1

In this video we’re answering the question “Should I Fire My Financial Advisor And Manage My Money By Myself?” The White Coat Investor wants to help you stop doing dumb things with your money, so in this video series we answer questions you have submitted.

I’ve had a financial advisor for about 10 years who really helped me get my house in order i maximized my 403 b and roth ira contributions and i’ve been saving about 2 000 a month to a taxable account at schwab my hospital also has a pension plan believe it or not my advisor designed my portfolio for both my roth and taxable accounts at schwab now that i’ve educated

Myself more about the wisdom of indexing and wisdom and simplicity of indexing i’m looking at it with a more critical eye in my roth account i have about 17 funds in my taxable account i have 15 funds some funds in both accounts are actively managed with an expense ratio of over one percent two questions one does this portfolio sound excessively complex to you

Too if so would it be unwise for me to consider eventually managing it on my own to at least avoid my advisor’s fee i’ve read lots about designing a simple tax efficient portfolio but what’s a person to do with a portfolio designed by someone else when i was a financial neophyte just out of res residency wouldn’t selling the actively managed funds have a huge tax

Wall up in the spirit of buy and hold am i better off just staying the course i realize it may be difficult for you to answer these questions without seeing my portfolio but i’d appreciate any advice you have thanks so much i get accused a lot of being anti-financial advisor that’s not actually the case i like financial advisors i have friends that are financial

Advisors i uh i think there’s a lot of really good financial advisors out there who give good advice at a fair price this person that you have engaged to function as your financial advisor is not a good financial advisor they suck at what they do i don’t know if they are a mutual fund salesman if that is how they’re being paid if you’re paying on commissions if

These are loaded or commissioned mutual funds that’s the mistake you’ve made you have basically hired a commissioned sales agent masquerading as an advisor um if that’s not the case and this is just a terribly untalented unknowledgeable ignorant advisor i guess the end result is the same this person needs to be fired they’re terrible they really are and if this

Is your portfolio if you’re this poor docs advisor you suck why did you do this why are you in this profession if this is the kind of work you’re going to do this is basically financial malpractice to set up a portfolio with 15 funds in one 17 funds in another one percent plus ers i mean come on you’re not doing this person a service you’re ripping them off most

Likely this advisor is not doing it deliberately that they’re not um you know a bad person it’s that they’re ignorant they don’t know how to construct a portfolio properly they don’t know about index funds they don’t know about the importance of keeping costs low they don’t know about the importance of of having a reasonably simple portfolio all right so this is an

Advisor that needs to be fired so step number one is to figure out what are you going to do going forward you have two good options one is to get a real financial advisor that offers good advice at a fair price you can find a list of these folks at whitecoteinvestor.com go into the recommended tab for financial advisors we got a lot of great people they do charge

Money financial advice isn’t cheap you gotta expect to pay a four figure amount a year um but they give good advice okay they’re not going to put you into this crappy portfolio and if they do i want to hear about it because i’m taking them off my list okay but we ask them about this sort of stuff when we uh you know vet them to put them on that list do you use

A bunch of actively managed funds do you use a bunch of high expense ratio funds do you know we ask them these questions are you trying to time the market and we actually make uh that application with those questions available to you you can read their answers before you hire them um so that’s one option the second option is to do a lots of white code investors

Doing that is manage your own money there’s some real advantages to managing your own money number one you save the fees so even if you’re not exactly quite as good as a professional talented financial advisor as long as you are no worse than the amount it costs to hire that person then you’re still coming out ahead so that’s one option the other thing is you

Know you’re not going to rip yourself off and you don’t have to you know schedule a bunch of time to meet with yourself and so there’s some advantages to uh you know doing it yourself in that way i’ve been a do-it-yourself investor for a couple of decades now and i intend to do that continuing forward i don’t find it complicated i find the uh the price to hire

Somebody to do this to be dramatically more than the value i get from having them do it um so i think that’s perfectly reasonable option either way you’ve got to choose what you’re going to do going forward um and i wouldn’t do anything until you’ve made that decision um so that’s step one if the plan is to hire a good advisor you dump this in their lap and have

Them sorted out okay that’s their job that’s why you’re hiring them and that’s perfectly acceptable to do in fact you can just hire somebody to help you sort it out and then going forward manage it yourself we have lots of people on the list that specialize in doing that sort of a thing where they just do it on hourly base or on a flat fee base and help you get

Your portfolio set up properly uh assuming and you sound like you’re probably going to be a do-it-yourself investor going forward then you got to figure out how to do this on your own so again don’t do anything until you have the plan in place get a written financial plan in place if you need to hire an advisor to do that iron advisor do that if you need to take

Our fire your financial advisor online course to learn how to do that do that if you feel like you’re now competent to do it then do it but get the plan in place first then it’s just a question of going from here to there with the tax protected accounts it’s very very easy right there’s no tax cost to selling any of that crap you just sell it all you put it in the

Portfolio that you want in a taxable account it’s a little more complicated and you may end up with some legacy investments legacy investments are investments you wouldn’t buy now but you don’t want to sell because the tax cost to selling is too high and uh and you got some options of what to do with that but step one when you look at a taxable account that’s in 15

Or 17 different funds or whatever the crap that was uh you first thing you do is you figure out the cost basis for each of those tax lots and you may find especially with the performance of the market this year that you’ve actually got a bunch of those lots with losses so if you were underwater on any of that great selling buy what you should actually be investing

In the first place you’re actually in a tax loss harvest at the same time this is a good thing if the basis is about the same as what you bought it at great no tax cost you can sell it and buy what you’d rather own if you were able to pick up a bunch of tax losses in this process you can now sell some of those things with gains and use the losses to offset the gains

And again you know get invested into that sort of stuff that you actually want then if you’ve got a few things left that have a very low basis compared to their current value well you may want to build around those in your portfolio okay you may want to say well these are mostly large cap blend funds so i’ll just own a little bit less of the total stock market fund

In order to account for the fact that some of my portfolio is going to sit in these at least for a while if you end up gifting something to you know your children or something you can gift those appreciated shares if you give to charity those are great things to give to charity these appreciated shares you don’t actually even want and that you can do that with no

Tax cost obviously don’t be reinvesting dividends into those funds but they’ve just become legacy investments for you and you just have to deal with them in that way but most people that go into this process that have only been doing this for a couple of years you’re probably going to be able to change 95 percent of your portfolio to what you actually want to be

Invested in no problem you might have a little bit of legacy investments going forward uh and that’s not a big deal to deal with going forward every time you look at it it’ll remind you of the importance of being financially literate if you want your questions answered by the white code investor record your question at whitecoteinvestor.com yqa or click the link

In the description the host of the y code investor podcast are not licensed accountants attorneys or financial advisors this podcast is free entertainment and information only it should not be considered professional or personalized financial advice you should consult the appropriate professional for specific advice relating to your situation

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Should I Fire My Financial Advisor And Manage My Money By Myself? YQA 279-1 By The White Coat Investor