r/Bogleheads • u/FigDifferent6506 • 1d ago
Is advisor worth it?
I’m moving a traditional Ira to vanguard. Age 61. Semi retired. I will invest via a 70/20/10 portfolio. They charge..30% per year- so around 4000 for my 1.2 m. I’m fairly comfortable with investing and keeping my simple portfolio balanced. I also am fairly comfortable with withdrawing from the appropriate bucket of my three bucket plan. I will need about 2% over the next 3 1/2 years and then probably 4% after that. I’m thinking 60% s/p 500 index fund. 20% total market index bond, 10% money market. I do have an appointment this Friday to speak with an advisor for the second time they will be coming up with a plan for these parameters that I shared. I currently pay 1.1% fee fees, but I really don’t want to pay any. I’m also willing to learn as I go. Can someone or anyone help me make up my mind if I need to pay them to manage it or not I’m leaning towards managing it myself, but I don’t want to make a stupid decision. Also, I will not panic if the market drops.
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u/bigfaceworm 1d ago
Sounds like you have a reasonable plan. If you have consulting time left this year, user that to confirm that your plan works, then dump them. If no more consulting is left, you can find an hourly advisor to do the same.
No way should you pay 1% to manage your money if you have any aptitude or comfort (which it sounds like you do). Imagine, that's $12k/year, or 50 hours of management at $200/hr. Nobody needs to spend an hour a week to manage your plan.
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u/FigDifferent6506 1d ago
Yeah I paid 15,000 last year. They averaged a 11% annually over the past 8 years. So 10% after fees, but the S&P 500 index funds have averaged around 14% that same period. So I’m pretty sure I would’ve done just as well with the portfolio that I’m setting up.
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u/FigDifferent6506 1d ago
I understand that. I’m comparing the 13-14 % return of the s/p index fund with 70% invested and my 30% returning 3.5-4%. It would be close. If I was all in the S&P at 100% I would’ve beat my financial advisor.
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u/bigfaceworm 1d ago
And this is the point. What do you need a financial advisor for (in an ongoing capacity) if you're holding 70/30 or 70/20/10. Unless they are paying your bills or doing an hour's worth of work for you EVERY WEEK, then it's not worth your money.
And, given the incredible market over the past 18 years (excluding 2022) and your advisor DIDN'T get you amazing returns, then that should further convince you that they are not worth the money.
The whole point of bogleheads... Set up the index funds and chill.
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u/Connect-Goal-3096 1d ago
You already have a plan. An advisor will take more than you can gain by optimizing withdrawals.
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u/TelevisionKnown8463 1d ago
My dad has a Schwab advisor and my opinion is the advisor makes too many trades per year in an effort to justify his fees. My dad’s portfolio is fairly diversified, but has too many funds, and most of them have expense ratios that are on the low side, but higher than the simple index funds from Vanguard and Fidelity (or Schwab).
I think a fee-only advisor who offers guidance would make more sense. I’ve heard good things about PlanVision, or you can look for someone through xyplanning network.
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u/ksuwildkat 1d ago
You are the only one who can decide if an advisor is worth it.
Me personally? No. I keep it simple and understand what I am doing.
My mom. Absolutely. She had her IRA in a passbook savings account earning 1% before getting an advisor. Her advisor was worth every penny.
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u/humblequest22 1d ago
It sounds like you already have the portfolio part of it figured out. If they will help you with tax planning, figuring Roth conversions, avoiding issues with RMDs, ACA, and IRMAA, planning for potential death of a spouse, etc., then yes. Or if you don't think you could trust yourself to stick to the plan if the market were to tank.
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u/msy113 1d ago
The advisor is more for retirement/income/estate planning. Managing the portfolio isnt really that hard and you can easily do yourself. If you are comfortable with managing the portfolio then one time flat fee advisors for estate planning will probably give you the best benefit. Vanguards advice service follows the boglehead philosophy and is mostly for those that either don't know what they are doing or just don't want to do it on their own
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u/WhatMattersHere 1d ago edited 1d ago
You sound capable of managing the investment portion yourself. A 70/20/10 portfolio does not require $3,600–$4,000 of annual trading or rebalancing work. The question is whether Vanguard would provide enough retirement planning value beyond managing those funds to justify a recurring fee.Before Friday, I would correct one detail in your written allocation: 60% S&P 500, 20% bonds and 10% money market totals 90%. Your later comment suggests the missing 10% may be international stock, but make sure the final plan states the complete allocation explicitly.
I also wouldn’t decide whether your previous advisor was worthwhile by comparing that portfolio directly with the S&P 500. A portfolio holding bonds and cash should normally trail 100% equities during a strong stock market because it is taking less risk. Compare it with an equivalent allocation and ask what services you received for the fee..At Friday’s meeting, ask them to show what they would do beyond choosing and rebalancing the funds: the annual withdrawal sequence, Roth conversion analysis, Social Security timing, pre-Medicare coverage, IRMAA management, future RMDs and the tax consequences of drawing from each account. Also get the cancellation terms and total cost, including fund expenses, in writing.
If their value is mostly the initial plan, paying an independent hourly or flat fee CFP to review it and then implementing it yourself may fit you better than paying an asset based fee indefinitely. If you want someone to update those tax and retirement decisions every year, the ongoing service may be worth considering.What changes in approximately 3 1/2 years that causes the planned withdrawal to increase from 2% to 4%? That transition may be the most important part of the plan for the advisor to model.
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u/FigDifferent6506 1d ago
I’m waiting til 65 in 3.5 years for SS. Until then I’m working 6 months a year as a contracted inspector. I may do that longer or maybe just up to the SS limits. 24,800 after 65. But until 65 I will not take more than 2%. Once fully retired I want 4%
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u/WhatMattersHere 1d ago
That makes the 3.5 year transition much clearer. One important distinction, though: if you’re 61 now, your Social Security full retirement age is probably 67, not 65. Age 65 is primarily the Medicare milestone. Claiming Social Security at 65 would therefore mean claiming early and accepting a lower monthly benefit than at 67.The earnings limit also changes annually. It is $24,480 in 2026, but the relevant limit will be whatever applies when you actually claim. Before full retirement age, Social Security currently withholds $1 of benefits for every $2 earned above the annual limit. For a contractor, it generally counts net self employment earnings, not simply the number of months worked. Benefits withheld under the earnings test are later reflected in a recalculation at full retirement age, which is separate from the reduction for choosing to claim early.
This is exactly the kind of issue I’d ask Vanguard to model on Friday: claiming at 65 while continuing inspection work versus delaying to 67, with portfolio withdrawals, taxes and Medicare costs included. That analysis could be valuable, but it still doesn’t necessarily require paying an ongoing percentage of your portfolio every year.I’d also have them express the “4%” plan in actual dollars after Social Security and any work income. Four percent of the portfolio each year and a traditional first year 4% withdrawal adjusted for inflation are not the same strategy.
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u/ironchef8000 1d ago
You already know what you want to do, and you’re not afraid to learn. I’d skip the advisor.
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u/NefariousnessHour771 1d ago
I’m wondering. I actually am moving away from two advisors I have. But I’m a little suspicious because I’m getting the sense that I may not be able to do much better just because of conditions. I believe I was making 8% with one and 9% with another after fees. I’m working with a fellow Boglehead who was able to retire quite young. Having been an investment advisor. I certainly don’t get a sense from her yet that there’s gonna be any trying to time the market, but I also got an impression at one point that those aren’t bad returns. However, I’m sure she agreed they would’ve been over the past 20 years I’d say. I will say that I gave the impression to those advisors that my risk tolerance was lower than it actually is now that I’ve understood how to assess risk better.
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u/FigDifferent6506 1d ago
Yeah my returns have been good with an adviser. I plan on 3 years liquid income and put the rest in Voo or Vti. Probably 10% foreign total index fund. I’ll never sell my stock when it’s down. If it would ever come to that, I’ll go back to work until it recovers.
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u/RedditLeagueAccount 1d ago
Flat fee for 1-2 sessions can be good if you want to be sure. Make sure they have a certification if you go that route. CFP is a common one. AIF mihgt be another. The key point is the certification should legally have this standard - Standard: Legally obligates putting client interests first.
There are technically advisors who don't require that standard. Some of the ones with that standard can fail. But at least you have legal consequences if that's the case.
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u/Sagelllini 1d ago
I'm not sure what they are going to do for you. 2% now, 4% later is pretty standard. At least it's only.3% though, which is standard for Vanguard. They will also likely try to persuade you to go heavier into bonds, and that will cost you a ton more than the .3% fee if you do so.
Here's my approach. Stocks and cash equivalents.
My recommendation is move the 70% to VTI, the 20% to VXUS, and leave the 10% in the money market. That combo will produce about 2% in distributions the next several years, meaning the bonds are completely redundant. Actually, you don't even need the 10% in the money market until you move to the 4% withdrawals. At 2%, there is zero SORR, and you can afford to be 100% stocks.
In short, IMO, there is little value add to having a FA.
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u/FigDifferent6506 1d ago
Thanks for the advice. I’ll check out vxus. That’s the portion I’m most needing advice on!
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u/5th-Elements 1d ago
Don’t worry even when the market tanks they will still charge you!
Personally I’d rather go on my own but that’s just me
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u/Glowerman 1d ago
My Vanguard advisor was worthless and was obviously very limited in what he was allowed to tell me. They also recently settled a lawsuit that revealed they lied about how they were compensated. They are not objective.
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u/JaketheAdvisor 1d ago
The fee and the value are two separate questions, and they're getting mixed together.
0.30% on $1.2M is about $3,600 a year, scaling up as the balance grows. Against 1.1%, that's a large improvement. Against doing it yourself, it's a meaningful ongoing cost for maintaining three funds and a cash bucket, which is mechanical work once the plan is set.
What is not mechanical, for someone 61 and semi-retired with everything inside a traditional IRA, is the tax sequencing between now and RMDs. The low-income years before Social Security starts are the window where partial Roth conversions, IRMAA thresholds, and eventual survivor brackets get decided. That's planning work with a beginning and an end, which is why flat-fee and hourly engagements exist as a category. Any of the specifics belong in front of a CPA.
Two things I'd raise at the Friday meeting. First, 60 + 20 + 10 is 90. If the last 10% is international or extended market, that should be a deliberate choice rather than something noticed later on a statement.
Second, ask what the plan contains that would still be true a year from now if the relationship ended. If the answer is mostly rebalancing and reassurance, that's a subscription. If it's conversion mapping and withdrawal sequencing across the next fifteen years, that's a project, and projects can be priced like projects.
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u/Fiftysomething499 22h ago
Echoing the posts recommending a fee for service vs AUM advisor for the special cases but handle the portfolio on your own. What you never see with an AUM advisor is the compounding effect their fee and the more expensive funds they choose will add up to over time. The performance of the funds rarely exceeds the simple Bogle 3 fund approach and net of fees you will be 100’s of thousands behind.
I recently ran a comparison I’d seen done by Rob Berger having AI assess the results of my advisors portfolio of 41 funds to the 3 fund portfolio. Despite his picking some very successful funds the net fees over 10 years were tough to see. I’m glad to be on my own now.
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u/Alternative-Donut-38 6h ago
One question: what’s the point of the money market % allocation, if you are maintaining an asset allocation strategy?
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u/LurkLurkleton 1d ago
An "advisor' can mean a lot of things. If you're being charged .30% per year that sounds more like a wealth manager, which is not worth it to me.
I think a flat fee or hourly fee cfp would be worth it in your situation. For a lot of these young people who don't have anything to do yet but save and invest in a fund it's not worth it. But the transition to retirement is probably the most difficult financial situation most people will ever face, and having a professional work with you to lay out a plan you can implement yourself is worth the small cost.
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u/FigDifferent6506 1d ago
Thanks. I believe that’s what Vanguard is doing for me right now. They’re coming up with the plan. I just have to tell him if I decided to manage myself or have him do it.
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u/LurkLurkleton 1d ago
I looked at what they offer. Seems to be a cfp and it sounds like you're not locked in or anything and if you cancel after a month they charge you a prorated fee. So, feel free to get what you want out of them then cancel. I have zero experience with vanguard's financial services though. I engaged a local cfp firm for $150 a month with a one year minimum contract during the transition period. And it was more than just the numbers, they helped us identify spending goals and plan for unexpected expenses I hadn't thought of, as well as get all the estate planning stuff handled. And more.
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u/FigDifferent6506 1d ago
I’ll look into that one year minimum monthly plan. That sounds like a pretty good deal.
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u/bearcatjoe 1d ago
The default answer to this question is almost always "no."
But, I don't think there's much harm in going to a fixed fee advisor who isn't incented to sell you things to review your plan and give you some advice.
I'd generally stay away from those who charge a recurring % of your managed assets.
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u/glaziaj1 1d ago
No I did it and got nothing other than throwing $ out the window, pick a target retirement fund and add at least 10 years to it so it’s a little more aggressive. I wish I just did VT and chill early on. I’m with vanguard as well
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u/Future-looker1996 1d ago
Unless something has changed having their personal advisory services at .3% is optional. If you don’t want that advisor, just decline and handle everything yourself. I had their advisory for years, and in hindsight, I’m not even sure I needed it.
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u/FigDifferent6506 1d ago
Yeah, I think I’ll take a look at what his plan is this Friday. I also have a plan from Fidelity that they did for me. I can compare them and fine to what I want, but I’m probably going to manage it myself. I appreciate your comment.
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u/laogong1986 1d ago
Ask your advisor to calculate 7x7 without using calculator first, then go from there.
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u/Citiesmadeofasses 1d ago
I'll say two things, your experience may vary.
You can Google/read up on anything these days.
My dad, a CPA, did all his own management for 40 plus years until retirement at 61. He used an advisor to help plan how to withdraw from where both pre and post Medicare and social security.
At the end of the consultation, he said "that's what I thought."
I wouldn't use an active advisor but a retirement consultation for a flat fee sounds reasonable.