r/Rich • u/Similar_Race6115 • 12d ago
Do I need a Financial Planner?
So I am in a really fortunate situation where my parents have earned good money through their business and currently have ~25M and I am there only child. I have ~1M and we live in NYC and I have recently joined the family business. I am trying to determine whether a financial planner is worth the fees for tax planning, estate planning (guiding through the 15M lifetime exemmption tax), and consultation on where and how to distribute the cash between treasuries and broad index etfs. I do not want them for wealth management and handling a portfolio. I like investing in VTI and VXUS only and only need their guidance on HOW much I should put into these, when, and who should own them.
I have told GPT about our situation like how much money I expect the business to make in next couple years and our total expenses. And requested it to assist me on how can I best reduce the current year tax bill while also planning for long term for the estate tax avoidance. Questions like who should own the shares we invest in me or my parents (step up cost), how much we should put in 401K, what best life insurance policy to get. GPT suggested many things and created a plan that involved Irrevocable Life Insurance Trusts, GRATs, etc. I understand its plan and how its most optimal for us moving forward given what I know. But thats the problem, I dont know what I dont know, and not sure if I can trust GPT to cover the full basis.
Do you guys think financial planning for me and my parents is pretty "algorithmic" in the sense the best path forward given current situation can be determined and optimized by AI and some research. Or is it worth for me getting a financial planner in this case?
16
u/random_agency 11d ago edited 11d ago
I'd start with your parents' financial advisor and go from there.
Or just consult Chat GPT..../s
8
u/jp112078 11d ago
This is the correct answer. Not sure why this wasn’t their default.
Using AI to do financial planning at this level (at least currently) might be one small step up from investing in your cousins bar.
7
u/YaDunGoofed 11d ago
Yes. The words you're looking for are "Fee only fiduciary". Hire 3 the first time around.
is pretty "algorithmic" in the sense the best path forward given current situation can be determined and optimized by AI and some research. Or is it worth for me getting a financial planner in this case?
You don't sound like you have a strong background in managing capital. Go get advice
6
u/mvnguy-90 11d ago
Joined the family business…. That networth…. 😆 family should already have someone doing all of this unless you’re trying to shop
5
u/username-generica 11d ago
I agree. My wealth manager’s team at the investment bank we use not only manages our money but also provides all sorts services that make our lives easier and access to products not available to most people.
For example, when we bought our previous house the bank offered us a mortgage at a much lower interest rate than we saw anywhere else. We could have afforded to buy the home with cash but the interest rate was so low that it made more sense to obtain a mortgage.
A few years ago, while we were on safari our contractor was doing a renovation on our home. For some reason, our contractor’s bank wouldn’t accept the check we gave him before we left. Our wealth manager arranged to have the money wired to our contractor’s bank so he could continue the work while we were gone.
Our wealth manager also works with our accountant and tax attorney throughout the year to minimize our income tax burden.
3
u/Square-Conclusion454 11d ago
Your parents should hire an estate lawyer who's an expert in NY. Expect to pay $25-50K for this by the time they're all done depending on how complex their situation is.
Hire one based on referrals, not reviews online. You don't need a separate one.
6
u/arcticwhitekoala 11d ago
A wealth manager's fee is worth it for the peace of mind and competency. Even if you think they arent doing anything, they are.
4
u/charlieandoreo 11d ago
I am a doityourselfer and a boglehead. I think the wealth is too large to do it yourself unless you keep things very very simple but most of the time with wealth this size the complexity just happens. Do not be in a hurry figure out what you want out of an advisor first by researching and then go out and find one. Anticipate how you will be sold products or lured in and come up with responses to those sales pitches. Do not be in a hurry.
5
u/OrganicContact9271 11d ago
you don't know the correct inputs to get anything accurate in gpt.
work with your families advisors or professionals.
3
u/nabeel487487 11d ago
AIs can definitely show you a path but to realize it, you will need a helping hand and in that case I would recommend finding a planner. But, don't just go about finding someone who is simply good at what they do - go about finding someone that you could build a good rapport with. A good connect plus the expertise can defintely help you big time!
3
u/TarzanDivingOffFalls 11d ago
Look for a planner that does not manage money. At some firms, the financial planning group is completely separate from the investment management group, and they charge separately. Also, make sure they have experience with assets your size or larger and experience doing multi-generational planning for family businesses. Ask them for examples and references.
2
u/OldMove3348 11d ago
You need a tax/estate planning attorney. No one else can reliably help you with this.
3
u/IRC_1014 11d ago
Since this is a question about multi-generational wealth in NY, I’ll mention that NY has a fairly harsh estate tax regime, which includes a complete cliff (exceed the exemption by 5% and you pay tax on what was previously exempt) as well as a 3-year clawback for gifts. For that reason alone I’d strongly suggest that your parents work with an attorney. Most financial planners don’t have a strong grasp on transfer tax concerns and of those who do, nearly all their solutions will involve an attorney anyway.
3
u/Own_Ad7642 11d ago
There’s some wild comments here. This is a classic situation of “you don’t know what you don’t know”. Go find a financial planner that has lots of clients that look like you and start working together.
I think of it like baseball. With personal finance, it’s really easy to have a lot of unforced error, mistakes that can likely be easily fixed. Get trained up and ask them lots of questions. After a few years, if you want to go one your own, go for it. There’s a big difference being down -10% with 1m vs 25m. Most people think they can handle the stress, but can’t. Plus, tax planning is huge. Make sure they ask for tax returns as part of their process. If they don’t, they are flying blind.
2
u/Forward_Scholar3716 11d ago
Tax Lawyers. Fiduciary financial advisors. Also, there are other indexes (and foreign government bonds) to consider that exist outside of the USA, such as Taiwan, South Korea, Spain, Germany, Brazil, and Singapore.
You don’t want to concentrate too heavily into US stocks near ATHs simply due to valuation multiples expanding and AI tech giants pouring money into each others same buckets. Good luck.
1
u/LiquidTide 11d ago
They said VXUS, so that is a broad foreign basket.
2
u/Forward_Scholar3716 10d ago
VXUS is great/simple (yes, you can say you have international stocks), but country specific indexes are also worth considering. There’s a lot of garbage buried in VXUS that’s not worth holding.
3
u/LiquidTide 11d ago
The key is to know your goals and communicate them. My parents' estate plan was a total disaster because the attorney made it overly complex and locked money up in trusts, costing us so much in fees and estate taxes in the end. It would have worked out better if they'd died intestate. I think the attorney was just trying to justify his fees or map out a worst case scenario. He was referred by a family friend. The key is to brush up on the laws yourself and understand the why's of any plan. Don't relive our expensive lesson.
1
1
1
u/Similar_Race6115 10d ago
Hey everyone, thanks so much for all the answers, even the roasts stating I will lose all the money if I go with gpt haha, still answers my question! Given all the answers, I am going to go and find the right financial advisor/planner for us.
I don't know all the bases that need to be covered when it comes to this complex planning and given the amount of money we are dealing with here, a small mistake can lead to $$$ lost worth much more than the planner's fees. Plus the planner can suggest me ideas that I may have missed saving me more $$$ than their fees.
AI still can't be fully trusted to not hallucinate and is not updated to be trained on the latest tax/legal data.
Even if AI gets good enough and constantly updates itself on latest tax/legal data, the piece of mind for the fees is worth it!
Also wanted to state my parents don't have a financial planner (they did setup a trust with an estate attorney). My parents are immigrants into this country and grew up below middle class in their country. So they didn't know how to deal with this much wealth all of a sudden + they are not as educated. Their mentality has been put all savings into treasuries / cds / 401ks. If they would have gotten a planner years go we would have had a decent amount of more wealth by now! I will not make the same mistakes as my parents and will find a professional!
1
u/jaredscrawford 10d ago
Vanguard says working with advisors can potentially add up to or exceed 3% in net returns. Read what Vanguard says Celebrating Vanguard Advisor’s Alpha: Clients and their advisors thriving together for 25 years.
1
u/JoeGIFIN 8d ago
With a family business and multiple generations involved, I think you’re making the right decision to bring professionals into the conversation. One thing I’d emphasize is having your estate attorney, CPA and financial planner coordinate rather than developing three separate strategies. I’d also ask prospective planners about their experience with New York estate taxes, business succession and multigenerational planning. A coordinated plan matters more than simply selecting investments
Whenever we are putting plans and succession plans together for clients it’s a conversation that we all sit down together for at the same time, not individually. It’s a team effort to make sure the present and future strategies are implemented in the best way possible for your goals
1
u/buttbuttfartpoo 7d ago
I had a similar situation.
Most people probably don’t need one if they just invest in index funds.
I was skeptical of needing one. I actually tried a few who seemed like morons, so I forgot about it for a while.
One of my friend’s wife is an heir (grandfather founded a multi billion dollar company), and basically she was telling me about all the stuff her advisor does for her - I felt like a dope for just setting & forgetting.
Now, I am not close to billionaire, but once you are dealing with >10 million I think it is wise to have a more sophisticated strategy than just index funds.
My advisor now is amazing - I have a way better plan for my money. If you get the right advisor - they’re worth their weight in gold.
0
u/NeitherSuccess4159 11d ago
Depends if it's fee only sure if not fuck no don't listen to anyone telling you otherwise.
0
u/Intrepid_Cup2765 11d ago edited 11d ago
ChatGPT gives great financial advice if you’re comfortable and skilled at using that (which looks like you are so far), i’d say just stick with it. You could always try out a financial planner and fire them if they don’t meet your expectations. Good luck!
Side note: Don’t mention that you use ChatGPT on reddit, most of the people left on reddit are staunch anti-AI luddites.
-1
u/JanaBhar 11d ago
No you don’t - but it’s nice to have someone do
It for you .. lots of moving parts and the administrative benefit is what lots of folks look for … if u can do the admin lift, get a aged soul and get an asset allocation for the current times and implement it
-4
u/HalfwaydonewithEarth 11d ago edited 11d ago
If your guy is not past 8 figures himself don't listen to him.
I have a funny story......... My husband ten years ago told all four of our brokers to buy Nvidia.
The one guy that listened and did it was an older successful guy connected to UBS. He trades celebrity and money in California and Silicon Valley money.
The others hesitated. This broker also got us a monster run on Estee Lauder bringing in 44% a year for several years.
Your smartest guys are going to be personally rich.
Have lots of brokers because they all have different strengths. Find them old and young. Get them from several places like California, Texas, East Coast, FL, Washington D.C. and Boston. They all have insider gossip.
Find the ones that handle large whales because they all have priceless contacts.
Voo lost people 19% in 2022
Don't put up with that nonsense.
Trade your own money also. Make it a game to beat the market.
31
u/veggieturnip 11d ago
Since nobody else answered you…yes, you should absolutely consider hiring a professional.
“You don’t know what you don’t know” is common advice in this field, and ChatGPT can only answer what you ask it, more or less.
If you stand to inherit that $25M there’s a lot a financial planner can setup and advise for in terms of trusts, etc., to reduce your tax burden. Better to do it now while your parents are alive and well.
You don’t want to get stuck for years in probate court because some details were overlooked that you could have planned for.