I am also not happy with Fidelity’s services. They charge me 1% by providing a general strategy for someone like me (probably AI generated). I am meeting another advisor today who will take my taxes and assets under consideration. My objective is to do as much Roth conversion before I turn 75 (that’s when I need to take out RMD) and keep my tax bracket at a certain level. He has sent me his proposal. He was a accountant at a major consulting firm and now he also does investment.
Fidelity lost me when they said they didn’t do taxes.
2 Likes
One percent for a general strategy? That’s a lot.
5 Likes
Financial management firms that handle both wealth management and tax planning are known as Integrated Wealth Management Firms or Tax-Focused Financial Advisors. By unifying your investments and your tax strategy under one roof, you ensure your portfolio decisions are proactively evaluated for tax efficiency.
When we interviewed financial advisors, I recall stats that a smaller percentage of firms fall in this category. We are happy with our decision to use this type of a firm. Yes, there is a fee but we think their service is of value.
2 Likes
It will be interesting to see how AI disrupts the wealth management/tax planning industry. I have a separate wealth adviser and tax accountant who are excellent and worth every penny even though my career has been in law and finance. They see subtleties and options a person not in the business would never see. However, since I recently retired, there were questions on 401k conversions to Roth and when to take SS given our desired annual spend. I turned the exercise over to my FA (and his specialist in this area) but at the same time made a bunch of iterative queries to ChatGPT. The resulting “plans” were remarkably similar (input factors and assumptions were the same). I am happy to keep the human review but at some point, AI may be easier and more cost effective.
4 Likes
Assuming that the AI inputs are not negatively affected by human interaction. I worry that there is potential for nefarious people to do bad things with AI.
4 Likes
I almost posted this yesterday. Now that the topic has bee raised I’ll post it today.
2 Likes
We don’t have a tax adviser or accountant, but I feel like our situation is pretty simple. We do have a Vanguard guy, and part of his advice incorporates tax implications.
“daily oral chemo becoming unavailable on the formulary. (it’s beyond expensive)” - within the next few years something can change - if other drugs either get developed (or generic options). With the news, you can see that many drug costs in the US are getting reduced because we have been paying more than many other countries and now are getting lower costs.
You don’t say your age - if you are younger and your DH wants to work until you make it to your Medicare. I would keep making inquiries with your medical oncologist and staff there on developments, drug cost when you go to Medicare/supplement. Information is power.
Others have weighed in with good perspectives.
In 2003 we took out a low-cost term insurance policy for DH (the only earner in our household from the time DDs were 3 and 5 due to DH’s extensive work travel, no family here, and the kids needed to be raised with parenting), and it is a 30-year term policy and we have kept it – continuing it until the terms end (or his death and payout - one never knows if he passes before age 77). I would advise you to keep the term policy if it is affordable for you; you can have the beneficiary be your children if you want. A friend’s husband did stop on a term policy, and he then had cancer and died within 1 1/2 years of stopping the policy – IMHO it also was foolish because he was 10 years older than his wife (and she is DH’s age, was a classmate of mine). Financially she was OK w/o, but it would have been nice to have that insurance payout. He had a very rare cancer (but had health issues along the way), and the latest treatments were ineffective. IDK if he thought that as a pastor he would live much longer, but if he was my husband I would have kept the insurance policy.
We both have other life insurance that is ‘paid up’ and will have death pay-outs for them. I have my life insurance beneficiaries assigned to DDs. Once we move and have other changes, will probably assign some or all of DH’s life insurance beneficiaries be DDs/grandkids.
At 53 I had aggressive cancer (when DDs were in 8th and 10th grades) but thankfully have been OK for enough years to no longer see an oncologist. DH is 70 and I turn 70 in a few months. I was able to have a ‘sunset career’ for almost 5 years until I retired at 65 (DD2 was still in college when I started the job); it was very good for some cash flow in - and using my active nursing degree (I made a higher salary 22 years earlier but thankful I had my degree to re-enter the job market with OK situation). My end career job also provided lower cost health insurance from DH’s COBRA (saving us $1,000/month) when DH retired 11 months earlier than was our plan (that he work until we both turn 65). He was emotionally worn out from a jerk of a boss (I knew his boss well as I was a direct report to him in 1989/1990 when this boss wasn’t ‘over his head’ in his job/responsibilities), and as soon as DH retired his parents died a month later and 4-months later (both at 92) so he was 850 miles away with them. His mom’s caretaker died just prior to the father dying (his dad was in skilled care already for a few years), and DH was live-in caretaker for his mom at her home just prior to her moving into skilled care. MIL did great the first week at skilled care, but then her meds stopped working for her hypertensive heart disease and a short decline and natural death.
Sometimes various things happen in bunched up timeframes.
We have had our FA since 2013. We needed to lower our risk in investments and also some consolidation (Roths, IRAs, Sar-Sep) of accounts. Over time, we have spun out funds from sizable 401k (which has had very good returns in stock market, our ‘cash cow’) and also investing IRA funds into our now holding of 5 annuities - purchased at various times when conditions were favorable (four are DH due to his much longer work career) - neither of us have pensions, and after a year of holding an annuity, we take out non-fee monthly withdrawals for our incoming cash (which was the concept of the annuity purchases). We already have had 3 prior annuities mature and replaced. The annuity purchasing concept is that hopefully the returns within the annuity have the value retained (retained value due to internal investment returns higher than monthly distributions/cash out). Some annuities have done better than others.
”His 401k is in laddered target funds to risk-adjust money we won’t touch for another 20 years.” Because you have pension(s) and other investments, it seems you may be leaving this for any living costs/medical and care needs or as your estate. Different from our situation.
Our DDs thankfully have good careers and manage their households well. DD1 has 5 children ages 1 - 8 (and she continues to work FT in an excellent career), and we want to live in their city and be involved with them (be a safety net that is closer - and also involved with the grandkids). They lived 100 miles from us until mid-2023, and we have had blocks of time staying with them in their present location. We also have the advantage of DD1 being a BSN with many connections/resources/ideas as we age - I retired my RN license when I retired. So far DH says I am managing him well but he is concerned that he will have to be my caretaker…..how DH thinks. IMHO I am managing myself fine although as with many adults I can exercise more and take in less calories to lose weight (my blood pressure is fine, not diabetic, surviving the cancer has taken its toll).
You have to evaluate your own risk tolerance and how to get to the risk level you are comfortable with. Our FA manages our Roth IRAs which are funds we don’t plan on needing/using - and will then be inherited by our children/grandchildren. We did move some pre-tax retirement funds to Roth IRAs (and paid the taxes in those tax years) - but have instead switched to having some funds from DH’s 401k going into our own stock account last year (and may repeat this year) - to give us available cash for needs with purchasing a home in DD1’s city and other moving expenses - hard to know about the purchase of a home there and the transitional costs. We are getting good returns on DH’s 401k and on our personal stock account.
We have everything entered into a balance sheet (which DH prints off monthly - he has learned a lot since we gained our FA), and our current holding are 20.5% real estate (our home), taxable investments and cash alternatives 7.5%, annuities 26%, qualified retirement 33%, Roth IRAs 13%.
We have a FA who has done some good for us, with lowering our financial risk, another avenue of information, and SWAN. We manage DH’s significant 401k and our personal stock account (‘taxable investment’). If DH pre-deceases me, I will need to see what is within the company structure on options for me on the 401k. We plan to be living in DD1’s state in 2027 (or perhaps 2028) so we have some transitions to do and then set our estate up better with more plans in place. If I pre-decease DH, he will have to follow the paper trail and my organized information. One never knows when one’s life will end, although sometimes an illness will give clues.
Before I was a SAHM I initiated and was group administrator for a physician group 401k (I have two graduate business degrees and was their administrator and CFO). DH’s company changed their ‘cover’ 401k - in 2009 and in 2024, so I learned the best return choices each time. They went from Dreyfus to Prudential to Empower. The Dreyfus to Prudential was at the height of the 2009 downturns and we also were w/o us receiving fund information for a long stretch of time – be it his company or what was going on with Dreyfus and Prudential. Nov 2009 was the first of my 16 chemo treatments after diagnosis in Oct (misdiagnosed in Aug so went to stage IIIa in 10 weeks, aggressive cancer), so we were hanging on tight in a storm in our tiny family boat. I had a miraculous turnaround on my dismal cancer situation in 2010.
”and has made noises about other consulting/work in the civilian sector afterwards because he’s worried about being able to pay for medical expenses” - you have a few years to see what your nest egg looks like and all those other variables.
My thought is that if pension+SS covers all (or most) of your inome needs, there is less need for a paid FA. In our case, FA advise was really helpful as we milked our assets (and did Roth rollovers) prior to SS because our pensions are low. Now that we have started SS (husband age 70, me 62)… I do see value to continued, personalized spend-down coaching in place as we age. Having said that, for now I still manage my own 401k at Fidelity to let it grow fee-less (though FA is aware in order to give big picture advise).
4 Likes
Nefarious people are already doing very (very) bad things with AI. That ship has long sailed (and provides our son with his job).
9 Likes
To further comment on AI – technology does have far reaches, and it is a matter of information sources/processing information correctly and being careful with decisions. Just like industries change, we have changes all around us - living through these decades has shown us such.
Remember when many people had concerns with going to the year 2000 and how much that was in the media.
Technology can be misused.
Right now more and more people are understanding the data center problems (water demands and consequences, energy demands and consequences) and other things affecting their home/community/county/state.
Hopefully all on this thread continue to make good decisions before and during retirement.
We do not have an accountant/tax advisor.
We are both federal retirees, and our taxes are pretty straightforward.
I know your H may be a special class of federal employee, but having the combo of federal employees health insurance plus Medicare part B is supposed to be pretty darn great regarding how much you pay out of pocket, so I’m surprised your H is worried about other health insurance.
Once our kids were grown/our house was paid off we let our term life insurance lapse. Assuming you will get some portion of your H’s pension and can keep the health insurance, I don’t see any need for add’l insurance, but if it makes him sleep well at nigh, so be it.
Have you considered converting some of your (yours and his) retirement savings to Roth? We’ve considered it but haven’t done it, and where we could “be in trouble” is when we start having to take RMDs (which is at 75).
ETA - one other thing to “worry about” is IRMAA brackets, depending on withdrawals and pension amount.
2 Likes
We have an excellent tax guy/accountant whose firm does our individual taxes but also for my companies and for my kids. We have two financial advisors. I am thinking hard about consolidating to one. We also have begun to redo our estate planning with a law firm. We did meet with the head of wealth planning at one of the FAs, who was very sophisticated. But, they tell you to work with your lawyers and accountant.
But, as an entrepreneur with a self-employed spouse, my tax situation is more complex than that of an employee.
I had not hear about integrated wealth managers. Will investigate.
4 Likes
We definitely were winging it with term life insurance! Other than whatever the basic amount an employer offered as a part of the benefits package, never had one. Thank goodness we both survived past the full launch of the kids. Do not recommend that strategy! Lol.
No tax advisor or FA here yet. Our income is simple.
3 Likes
I’ll put in my pitch here for term life policies for all our young adults! I got a term policy just after S1 was born. I was 30. Was a SAHP at the time, but recognized that if something happened to me, H wold have a lot of other child-related expenses. I doubled it a year later when pregnant with S2. Got an automatic increase rider that hiked it 7% a year for ten years. I had life insurance under my employer when I went back to work, but that was only as long as I was working, and because I worked at a tiny company, it was not transferrable to an individual policy.
Fast forward ten years – diagnosed with leukemia at age 41, given 3-5 years. Kids were 10 & 11. Still had the policy. Good thing – because I was now (and still am) uninsurable. That was their college fund if anything happened to me. Fortunately, they still had a mom and we got to pay for college. Happy tradeoff!
The policy is still in place. It’s not terribly expensive and will expire at age 70. Having that in place took away a lot of worry about the financial what-ifs. If one develops a health issue later, the policy is still there and can’t be revoked. An individual term policy separated from work is excellent protection. The cost is low when you get it young. Am not a fan of whole life; the interest you earn isn’t great. My boss sold the stuff and he did very well on the commission side.
10 Likes
DW and I are both accountants. No tax accountants. So basically we know just enough to be dangerous as I like to say. Also we don’t have a super complicated return. Darn kids were got to be more complicated with all the scholarships. I did get them off our taxes quickly and overall it is better as we don’t get much of anything for having them as dependents.
We do use a FA. I like them as they have gotten us into somethings I wouldn’t on our own. Also we are just now in recent years qualifying to be their clients. They generally deal with people more well off than us. At least that is my feeling.
2 Likes
I’m still FAR behind on this thread, so apologies if answered: @Data10: can you share your insurance carrier (or DM)? I’m expecting to be in the market soon. We are in the middle of a high claim due to a major fire in an apartment unit one floor below ours. All units had smoke damage, leases terminated, and now working through the claim. Although no fault of ours, I’m expecting our rates to increase - or be dropped, based on the amount. We cleaned a lot ourselves, ditched a lot, and still can’t believe how expensive it is for a restoration company to handle the rest.
2 Likes
Well, I did sign with the Vanguard Personal Advisor Select and he did advise me to do conversions (I couldn’t make it work in my head) and also advises on our tax situation. He is not a tax accountant but takes our investments and other assets into consideration. My husband does not have a Vanguard account but my PAS takes his retirement funds into consideration as well. You do pay more than the digital but not much, 0.3% I believe. I can drop him anytime I like so if we are well our way and into getting our conversions done before 73, I might say goodbye at that time but we’ll see.
2 Likes
@kjofkw In another thread you said, the fire was in Seattle. My current home insurance offers coverage in 6 states, which does not include Washington. I had a different insurer following the water damage event mentioned in my post. That insurer closed (with warning and time for customers to get a different policy) following the debacle in CA, with a state law preventing CA insurers from increasing rates to align with their dramatically increased replacement costs, post COVID.
We do not have an accountant or a tax advisor, but we do have an outstanding CFP. He does help us plan for things like Roth conversions, RMD, etc. in terms of how they will affect our taxes.
But an accountant or dedicated tax advisor…no.
2 Likes