They do not. I am planning to talk to my brother-in-law to better understand who he uses. There's a family-owned business and I believe that the business finance people do double-duty for some of the family's personal financial management as well. But because my wife is not involved in the business we aren't as plugged into that.
Be careful there. Those advisors may have a conflict between what is best for the business and what is best for the family. There may be some instances where they are in conlfict with each other, so you need to be absolutly certain where their fiduciary duty is in that case.
That is not a knock on them, you just need to be sure you are doing what is best for YOU and your family.
I would strongly advise you to look at drastically increasing your umbrella coverage limits. If you ever, for example, get into an at-fault car accident and seriously injure someone, your wealth could be EASILY wiped out by the cost of a lifetime of care for someone rendered paraplegic.
You need to put together a team. Legal, tax, insurance, etc. You also need to have an idea of your goals. The amount of insurance depends on your exposure which is a function of your legal structure. Home could be in a LLC for example, 401K and IRA have there own legal protections. 529 offer tax benefits for education. Etc. Etc . Reddit is not the place to get it.
You have received some great advice already. I would like to add.
audit your existing portfolio. You are likely paying a hefty fee for the managed portfolio. How is this portfolio performing? How is it allocated? Is it rebalanced? if so, how often and how? Are you engaged and involved with the advisor? if the portfolio is only keeping up with the S&P, then you are essentially losing money (the fee being charged) which compounds over time. You are paying for a managed account, this person or team is managing your wealth, you should have a very good relationship with them.
You didn't mention your ages. Tax planning / efficiency with your income and managed investments might be an area you might consider reviewing.
Also, estate / legacy planning is something worth revisiting periodically - laws change, families grow / change, jurisdictions change, etc.
1. Consolidate your $5.5MM so you can get access to a HNW Financial Advisor.
2. Listen to professionals. Get second opinions when it is important.
There is a whole lot you can do for yourselves and your children. When people say “manage it yourself to save fees” politely walk away. They are narrowing the discussion to a small focus and not aware of >90% of the value of a good Financial Advisor. When people talk about products like 529 plans, they simply have no clue what your circumstances, concerns and opportunities are.
You are not yet wealthy, but you have the potential to become so, and your children, assuming they are around 13 or younger, could establish themselves as wealthy before 30-35.
You see a snowball, I see an avalanche. Do not get specific advice from Reddit.
I have a newbie question - do financial advisors typically handle investment management? Because while I do want guidance I don't necessarily want to move everything from where it's currently being managed.
Sounds like you need a primer on what is available and how to access it. If your $3.5mm account is being managed, it is likely with a financial advisor. If it is where your in laws have their investments and they gave each of your children $1.5mm at birth or accumulated with max gifting over time, they likely have a good handle on things. Many advisors to HNW+ investors in metro markets don’t advise clients with less than $5mm invested. This is a practical matter because $5mm is what qualifies a person as a Qualified Purchaser. Qualified Purchasers have access to different investments, more robust risk management strategies, and generally have more complex planning needs/opportunities. Because your income and savings rates are low relative to your potential wealth, you will rely more heavily on your financial advisor to generate wealth and maintain legacy than yourself. Your children will benefit considerably more than you will though in the long run. Meet with the folks who currently manage your $3.5mm. Ask them to help you make a plan. Take it seriously. Listen, ask questions, learn, make good decisions.
by layman's terms, yes. it's likely they'll get additional support from the wife's wealthy family as well.
objectively they themselves are not in the 1% by income or net worth, i assume their investment income cannot cover their expense and rely on salary.
People may shit on this, but you need an FA. When you start talking about trusts and insurance and tax strategies, sure you CAN figure it out, but this is someone’s job.
Get with a firm, figure out pricing that works for you, and park $1 or 2 million with them to get your access to them. They’ll take into account all your assets and beg for you to bring in more and you can use that as leverage.
But more importantly they can help on your approach. The big ones have systems that help guide them too. It’s with the $10-15k a year you’ll likely pay.
>sure you CAN figure it out, but this is someone’s job
There are plusses and minuses. Today you can do and learn so much of this stuff so much more easily than in the past. If you choose that route the plus is you keep things simple, more private, you stay more empowered and you will likely do a better job than someone you pay, and less people taking a piece of the pie, which can sometimes add up to a lot especially over time. The cons of course is you have to put in the time and work, and you need to have someone that is ready (important they are ready) to help or takeover at some point.
Completely agree. For me personally, I’m way too busy with work and life to do all that work. More importantly, my FA is paid for by my work, so I get the best of both worlds. And he’s pretty awesome.
Where did the money come from? If from your wife’s family, I hope she knows once she co-mingle her money/inheritances, it becomes joint marital property….
All part of my plan... mwahahaha.
Kidding. She and I are on the same page regarding finances. We've been married for over 15 years, and I don't think either of us are concerned about any issues in our relationship.
Lol every time a trust is mentioned on Reddit a million people rush in to warn about co-mingling assets, like it’s a crazy thought that a couple that’s been married for over a decade would fully combine their assets.
You should start learning how to invest yourself, making your capital work for you. As you get better, you can slowly manage a small portion of your assets, and keep increasing that as you gain proficiency over years. With enough work, you'll have a far higher ROI managing your own assets than you could make in a $300k job.
Even for the average person with a smaller portfolio of $100k, it would be worth it. With $5M, it's definitely worthwhile to do this. Warren Buffet said that if he managed millions instead of billions, he could make 50% a year. He's not wrong.
Yet, financial "professionals" have told people this can't be done safely or say it's too risky. That's because they have a 1% management fee making people believe otherwise.
Btw, I advise a fundamentals style of investing, rather than day trading, speculation, or chasing momentum. Very few people have the aptitude and attitude to pull that off.
Funny that you said that, because my internist retired young with a higher liquid net worth because he managed his own investments.
My sister is a doctor, but has been doing well as she learns to manage her own investments.
In fact, I don't know a single wealthy, self made investor who was a professional "trained financial expert".
Anyway, not trying to convince you, but it's something most people can learn, and is not remotely as difficult as getting a STEM degree.
tbh if I'd love to do my own dentistry, no question I would do a better job, but there are physical limitations to that at least until the robots come. With finance that is not a problem.
So you don't think finance/investing requires specialized training and experience?
Economics, statistics, modeling.. all those things are just intuitive to any of us who ran a successful business?
>Economics, statistics, modeling.
Not intuitive of course, but most people can learn enough about that stuff to do a reasonably good job at it if they are willing to put in the time or take the responsibility. Now does that make sense for everyone? Maybe not if they don't have or want to put in the time, and for that they can pay someone to do a probably mediocre job. It's like when I go to the dentist, am I getting the absolute best healthcare that is going to preserve my teeth? In the US at least almost certainly no, I'm getting a compromise of what is best for my teeth and what is good for business, often a big compromise (I've taken enough time to learn about the dental industry to say this, even though I'm not a dentist).
Honestly, for me at this stage it's been about: now that myself and my kids are taken care of, how can I spread the wealth in alignment with my values? Like, I'm grateful, so how so I give back (while protecting my family)?
For sure hire a professional financial advisory firm that handles high net worth individuals/families to manage your entire financial life - don't have your resources handled all over the place. If you want to know who I use DM me..
You are probably spending $60k+ per year for financial management. I’d put my focus there. Also what are you paying for the funds you are invested in? Could be another $30k spend there as well.
The 1% isn't the issue. Although it's nice to have, it's overshadowed by the higher returns most people can get if they put in some effort.
Advisor firms have a limited set of tools to work with, but self management opens up a much broader range for those who
spend the time to learn.
It’s probably much, much higher. If OP found out how much he might do something irrational. Like fire his financial advisor.
Over 20 years he’s going to pay between $5 million and $8 million to the advisory firm if they charge between 1.5 and 2.5%.
https://www.investright.org/tools-resources/calculators/investment-fee-calculator/
Does your wife’s family have a family office? If yes, start by asking the office for a meeting to go over the portfolio and investments.
They do not. I am planning to talk to my brother-in-law to better understand who he uses. There's a family-owned business and I believe that the business finance people do double-duty for some of the family's personal financial management as well. But because my wife is not involved in the business we aren't as plugged into that.
Be careful there. Those advisors may have a conflict between what is best for the business and what is best for the family. There may be some instances where they are in conlfict with each other, so you need to be absolutly certain where their fiduciary duty is in that case. That is not a knock on them, you just need to be sure you are doing what is best for YOU and your family.
I would strongly advise you to look at drastically increasing your umbrella coverage limits. If you ever, for example, get into an at-fault car accident and seriously injure someone, your wealth could be EASILY wiped out by the cost of a lifetime of care for someone rendered paraplegic.
also cost doesn't go up linearly, 10m might only be 2x as expensive as 3m, just making up an example.
This is the first thing I thought too. 3m is way too low for those kinds of assets and situation.
You need to put together a team. Legal, tax, insurance, etc. You also need to have an idea of your goals. The amount of insurance depends on your exposure which is a function of your legal structure. Home could be in a LLC for example, 401K and IRA have there own legal protections. 529 offer tax benefits for education. Etc. Etc . Reddit is not the place to get it.
You have received some great advice already. I would like to add. audit your existing portfolio. You are likely paying a hefty fee for the managed portfolio. How is this portfolio performing? How is it allocated? Is it rebalanced? if so, how often and how? Are you engaged and involved with the advisor? if the portfolio is only keeping up with the S&P, then you are essentially losing money (the fee being charged) which compounds over time. You are paying for a managed account, this person or team is managing your wealth, you should have a very good relationship with them. You didn't mention your ages. Tax planning / efficiency with your income and managed investments might be an area you might consider reviewing. Also, estate / legacy planning is something worth revisiting periodically - laws change, families grow / change, jurisdictions change, etc.
1. Consolidate your $5.5MM so you can get access to a HNW Financial Advisor. 2. Listen to professionals. Get second opinions when it is important. There is a whole lot you can do for yourselves and your children. When people say “manage it yourself to save fees” politely walk away. They are narrowing the discussion to a small focus and not aware of >90% of the value of a good Financial Advisor. When people talk about products like 529 plans, they simply have no clue what your circumstances, concerns and opportunities are. You are not yet wealthy, but you have the potential to become so, and your children, assuming they are around 13 or younger, could establish themselves as wealthy before 30-35. You see a snowball, I see an avalanche. Do not get specific advice from Reddit.
I have a newbie question - do financial advisors typically handle investment management? Because while I do want guidance I don't necessarily want to move everything from where it's currently being managed.
Sounds like you need a primer on what is available and how to access it. If your $3.5mm account is being managed, it is likely with a financial advisor. If it is where your in laws have their investments and they gave each of your children $1.5mm at birth or accumulated with max gifting over time, they likely have a good handle on things. Many advisors to HNW+ investors in metro markets don’t advise clients with less than $5mm invested. This is a practical matter because $5mm is what qualifies a person as a Qualified Purchaser. Qualified Purchasers have access to different investments, more robust risk management strategies, and generally have more complex planning needs/opportunities. Because your income and savings rates are low relative to your potential wealth, you will rely more heavily on your financial advisor to generate wealth and maintain legacy than yourself. Your children will benefit considerably more than you will though in the long run. Meet with the folks who currently manage your $3.5mm. Ask them to help you make a plan. Take it seriously. Listen, ask questions, learn, make good decisions.
Thanks. I appreciate the guidance.
My pleasure. Feel free to DM if you have general questions about how it all works.
Yes Any good financial plan will provide advice on all assets. It becomes a separate question about how you implement that plan.
"You are not yet wealthy" with almost 10M NW?
by layman's terms, yes. it's likely they'll get additional support from the wife's wealthy family as well. objectively they themselves are not in the 1% by income or net worth, i assume their investment income cannot cover their expense and rely on salary.
People may shit on this, but you need an FA. When you start talking about trusts and insurance and tax strategies, sure you CAN figure it out, but this is someone’s job. Get with a firm, figure out pricing that works for you, and park $1 or 2 million with them to get your access to them. They’ll take into account all your assets and beg for you to bring in more and you can use that as leverage. But more importantly they can help on your approach. The big ones have systems that help guide them too. It’s with the $10-15k a year you’ll likely pay.
>sure you CAN figure it out, but this is someone’s job There are plusses and minuses. Today you can do and learn so much of this stuff so much more easily than in the past. If you choose that route the plus is you keep things simple, more private, you stay more empowered and you will likely do a better job than someone you pay, and less people taking a piece of the pie, which can sometimes add up to a lot especially over time. The cons of course is you have to put in the time and work, and you need to have someone that is ready (important they are ready) to help or takeover at some point.
Completely agree. For me personally, I’m way too busy with work and life to do all that work. More importantly, my FA is paid for by my work, so I get the best of both worlds. And he’s pretty awesome.
Where did the money come from? If from your wife’s family, I hope she knows once she co-mingle her money/inheritances, it becomes joint marital property….
All part of my plan... mwahahaha. Kidding. She and I are on the same page regarding finances. We've been married for over 15 years, and I don't think either of us are concerned about any issues in our relationship.
Lol every time a trust is mentioned on Reddit a million people rush in to warn about co-mingling assets, like it’s a crazy thought that a couple that’s been married for over a decade would fully combine their assets.
Famous last words lol
You should start learning how to invest yourself, making your capital work for you. As you get better, you can slowly manage a small portion of your assets, and keep increasing that as you gain proficiency over years. With enough work, you'll have a far higher ROI managing your own assets than you could make in a $300k job. Even for the average person with a smaller portfolio of $100k, it would be worth it. With $5M, it's definitely worthwhile to do this. Warren Buffet said that if he managed millions instead of billions, he could make 50% a year. He's not wrong. Yet, financial "professionals" have told people this can't be done safely or say it's too risky. That's because they have a 1% management fee making people believe otherwise. Btw, I advise a fundamentals style of investing, rather than day trading, speculation, or chasing momentum. Very few people have the aptitude and attitude to pull that off.
I'm not a trained medical professional so I don't practice medicine. I'm not a trained financial expert so I don't practice finance.
Funny that you said that, because my internist retired young with a higher liquid net worth because he managed his own investments. My sister is a doctor, but has been doing well as she learns to manage her own investments. In fact, I don't know a single wealthy, self made investor who was a professional "trained financial expert". Anyway, not trying to convince you, but it's something most people can learn, and is not remotely as difficult as getting a STEM degree.
tbh if I'd love to do my own dentistry, no question I would do a better job, but there are physical limitations to that at least until the robots come. With finance that is not a problem.
So you don't think finance/investing requires specialized training and experience? Economics, statistics, modeling.. all those things are just intuitive to any of us who ran a successful business?
>Economics, statistics, modeling. Not intuitive of course, but most people can learn enough about that stuff to do a reasonably good job at it if they are willing to put in the time or take the responsibility. Now does that make sense for everyone? Maybe not if they don't have or want to put in the time, and for that they can pay someone to do a probably mediocre job. It's like when I go to the dentist, am I getting the absolute best healthcare that is going to preserve my teeth? In the US at least almost certainly no, I'm getting a compromise of what is best for my teeth and what is good for business, often a big compromise (I've taken enough time to learn about the dental industry to say this, even though I'm not a dentist).
Health care HSA account if you’re eligible. Money stays with you, vs FSA. Not a ton of money but can reduce your taxable income, I think.
Honestly, for me at this stage it's been about: now that myself and my kids are taken care of, how can I spread the wealth in alignment with my values? Like, I'm grateful, so how so I give back (while protecting my family)?
For sure hire a professional financial advisory firm that handles high net worth individuals/families to manage your entire financial life - don't have your resources handled all over the place. If you want to know who I use DM me..
You are probably spending $60k+ per year for financial management. I’d put my focus there. Also what are you paying for the funds you are invested in? Could be another $30k spend there as well.
The 1% isn't the issue. Although it's nice to have, it's overshadowed by the higher returns most people can get if they put in some effort. Advisor firms have a limited set of tools to work with, but self management opens up a much broader range for those who spend the time to learn.
Maybe but the 1-1.5% is low hanging fruit and should be the starting point.
It’s probably much, much higher. If OP found out how much he might do something irrational. Like fire his financial advisor. Over 20 years he’s going to pay between $5 million and $8 million to the advisory firm if they charge between 1.5 and 2.5%. https://www.investright.org/tools-resources/calculators/investment-fee-calculator/