My advise is to NOT trust financial managers. I retired in 2008, so that is not recent, but before I retired I tested the waters. I tried three different financial management organizations. I put $100,000 in each of their hands and measured the results after 1 year. They all made money off of me, but the results for me were unacceptable. Fees canceled out any gains at one place. One firm put my money into money market funds that had no gain in value over the year, but reported supposed dividends paid by the investments. Bottom line was I had to pay taxes on dividends that I never got. One firm actually lost money over the year.
Friends of mine have had their life savings totally drained by financial managers. Now that was sad.
So I decided I would not let anyone manage my money. My advice is to ignore those financial advisors that invite you to the rubber chicken dinners and wow you with their supposed successes. They lie lie lie. They will tell you that you will be able to live on less money because you don't have to drive to work and buy work clothes and on and on.
We drive more that we did when working. All of our expenses have gone up since retiring. But because of years of saving, we have managed to not spend any of our savings. We live strictly off annuity, social security, interest, and dividends. But our income is more that when we were working because of good investments in dividend paying stocks.
+1 though results can vary depending on the manager. I don't use anyone either. My simple philosophy is "buy low, sell when the greed sets in". I get nervous when the Dow gets near a record high, then consider switching to bonds/income fund. My father-in-law's philosophy was/is that the stock market, in the long run, is your best investment. He'd keep 2 years of "needs" in an income fund and let the rest ride in the market. His thought was when the Dow does drop, it always recovers within 2 years. That way they could live off from income fund money and not have to sell low; just wait for the recovery and transfer funds back into their income fund. Then around 2000 hit and the market dropped from around 11,000 in early 2000 and was still low (around 8000) in early 2003. They'd used up their income fund stash and needed to sell depressed stocks to make payments.
I thinks it's a good strategy, but I use 6 years of income fund with the rest being available for "playing". I was getting nervous in 2008 when the Dow hit around 13,000 and started to fluctuate. I moved 90% of my Dow investments into bonds. I got back in around mid-2009 at around 8500 and rode the wave going up. I did not violate my "6 year rule" of income fund reserves.
I got out of the market again in late 2019 as I was getting closer to retirement and the Dow was fluctuating around 28,000. Also, was going by my "buy low, sell when the greed sets in" philosophy; I'd gotten in at 8500 and tripled my money in 10 years. Then Covid hit and the market tanked to under 20,000. I got back in around April 2020, again not violating my "6 year rule" of income fund reserves. The Dow got up to around 36,000, I got nervous again and got out. It dropped again to under 30,000 when I got back in. Things went back up to >33,000, I got a 10% gain and got out again (and am still out).
Long story longer, looking at my mom and dad's performance from their advisor at Ameriprise, I WAY out performed them over the last 15 years. Not that I don't trust them, but I'm hesitant to invest my money with someone else who has no "skin in the game".
The one advantage I see having an advisor is that they "should" be fluent in the rules/laws. This isn't financial advisor related, but is similar. My mom passed away in May 2022 (dad passed away in 2019). Their two houses were deeded to their living trust. As executor of the trust, I was going to quit claim deed one property to my sister and brother in law, and the other to my wife and me. We went to an attorney to process the paperwork and were informed that my plan wasn't our best option tax-wise.
Michigan passed something called the Headlee amendment in around 1980 which caps property taxes at an annual increase of 3% or the rate of inflation, whichever is lower. Our property tax statements carry two numbers: Taxable value and Market value. In the case of the home I was taking, the taxable value is $57,600 (actually the half-value) and the market value is $77,400. Our property taxes are the millage rate times the assessed value which is the taxable value. However, if the property is sold, the taxable value becomes the market value; the Headlee amendment rule does not apply when the property is sold.
The properties were both in the trust with my sister and me as the beneficiaries. Beneficiaries are grandfathered in at the lower taxable value. However, my brother in law and wife were not named beneficiaries in the trust. So, if I would have written quit claim deeds to transfer the properties with my sister/me and our spouses, that could be interpreted as a sale of the property adjusting the assessed values to the higher market value. In our case, the property taxes would have gone up from $4000 a year to $5400. I had no clue about that rule, but the attorney did.
You would hope that a financial advisor would be privy of ways to minimize your tax burden. My wife usually does our taxes with TurboTax, but we're going to an accountant this year. With my mom passing, we inherited a house and some other cash. The limit is something like $12.06 million (total for all beneficiaries) before you need to pay inheritance taxes. We're WAY away from that, but it's still a good chunk of cash. I "think" all I have to do is file a 1041 detailing the >$10,000 chunks we've received from cashed-out annuities, life insurance, liquidation of some bank accounts, etc. We're also selling off a lot of my parent's household items (cameras, nick nacks, general clutter, etc.) on eBay. eBay will be sending us a 1099 as we're way over $600 so far. Items from the trust are not subject to income tax.
The other thing I'm taking advantage of, which I'd hope a financial advisor would recommend too, is the transfer of some of my assets to my mom before she passed. I make/made a fair supply of old Erector set manuals and parts that I sell on eBay. I'm also selling off my collection. While my mom was living, I gifted my Erector set collection, spare parts, my reproduction manuals, and all of my reproduction parts to her. When she died, her pour-over will transferred everything to my parent's living trust. I'm still selling stuff on eBay, but now it's stuff owned by the trust which is not subject to Federal Income Taxes as long is it's under the $12.06 million total (and it's WAY under that). I didn't make the tax rules, but I'm taking advantage of them to avoid paying income tax on my (I'm sorry, my parent's trust) eBay sales.
Again, a good financial advisor would be wary of ways to maximize your income and minimize your tax burden (within the current rules/laws).
Bruce
