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Feeling the pressure of larger accounts

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  • Feeling the pressure of larger accounts

    In the wake of the market last week, I have been feeling the pressure of getting a financial advisor to help me. I met with one that is well known in the community and works with alot of docs  locally. (Some in my group and my wife's group just to name a few)

    I have learned that just because my friends use someone to help manage their money doesn't mean the manager is worth their weight in...


    I have a good diversified portfolio and I am young (33). We contribute to Roths, 401k, 529s, and have started taxable accounts all while we pay off our medschool loans. Over time I have seen all of our accounts grow.

    Right now its easy to manage the 75k or so we have in retirement but as our loans get paid off more and more will go into the retirement and 529 plans as well as taxable accounts. I feel comfortable managing the account right now but I stress about managing that account into the 500k range or 1 mil + range.

    I know we are all smart, but does anyone else worry when they think about the livelihood/survival of their retirement being all in their hands when accounts get that big? Am I just scared because I am young and this is my first "downturn" in the market? Have I been brainwashed by the financial people?

    Hopefully this forum will be a great resource for all of us. I look forward to hearing from all of you!

  • #2
    No, I don't worry that a few more zeroes at the end make any difference. Use the same investing sense and you have won the game.  If you let others take your money and get caught up in how much you could make by taking unnecessary risk then you very well may lose.


    • #3
      NO NO NO.   Learn to have confidence in yourself.  I have been through 2000 and 2008 and a bunch of smaller drops, such as last year and this year.   You'll get used to it.  It's fun, like a roller-coaster.  Just like a roller-coaster, you end up back on top at the end of the ride.

      Stay away from these advisers.  None of these people know any more about investing than you do.  In fact, they probably know less.   What they do know how to do is to separate you from your money.   All that advisers will do is suck out an additional 1% to 1 1/2% in AUM fees, along with selling you their special funds that will do worse and cost you an additional 1 1/2% in expense ratios, plus commissions, and they  will-under perform your index funds.

      When you have millions, it will be the same.  Just stick with the same plan.


      • #4
        If you need someone to hold your money for you so you don't freak out, I'll do it for $100 cheaper than the other guy.  


        But I do think your question is legitimate. I think the one way I will deal with seeing my extra zeros fall in down markets will be to not look at the balances of the accounts at all but only look at contributions. This might even be more important in good years ("yay! I can work a year less due to this growth! oh wait, didn't see that correction coming..."). Set a reasonable plan and stick to it. This includes your plan to change allocation upon approaching retirement. This is another reason I'm a fan of Vanguard's reasonably priced Target Funds. With these funds and their automatic gliding to a more conservative holding, I don't have to factor in my market jitters and/or hypes into when I start shifting into more bonds or less labile investments.


        • #5
          Good advice above.  If you spend a little time on the Bogleheads forums, you'll see the same post again and again.  How would you invest $10,000?  How would you invest $100,000?  How would you invest $2,000,000?  The answer is the same.  Find an asset allocation that makes you comfortable, and stick to it.

          The size of your portfolio shouldn't make you any more or less likely to be successful on your own.  The more you have, the more you can expect the advisor's fees to grow (particularly if she is charging a % of assets under mangagement).



          • #6
            You can certainly do it yourself. It's great to go through your first bear market when you are young and your portfolio is still relatively small. You will learn a lot about your risk tolerance. Hopefully you have set your asset allocation right, but even if you haven't and you end up panicking and selling low, at least you did it early with a small portfolio. You are certainly capable of learning to invest on your own.

            That said, if you want an advisor to help, there's nothing wrong with that. It won't be cheap, but some options are cheaper than others.

            No investment plan will work if you don't stick with it in times like these. We're down what, 10% or so? In 2008 it was 50% for the overall market, and 78% in REITs. All 10-20% drops do now is make me glad I can buy a few shares at a discount.

            It'll come back up in a few months or years. Certainly before you need the money.
            Helping those who wear the white coat get a fair shake on Wall Street since 2011


            • #7
              No, really managing millions is just a matter of scale.  Your age is more of a factor.  Asset allocation should not change with the size of your portfolio.  You increase your bonds with age.  I am 58 and I try to maintain a 60/40 stock bond allocation.  I think based on family history and my personal health history that I will live into my 90s so I plan to keep stocks at 60% until maybe 75 0r 80.  I have been through both the 2000 dotcom bust and 2008 without panicking so you can do it.


              • #8
                Thanks for the advice and support! I dont really have a fear of selling when things get crazy but rather looking for help in places where I haven't looked before (i.e advisors). I frequent the bogleheads blog (and have read many of those books including the WCI book).

                Sometimes you just need a little encouragement and reassurance from your friends and people that are in the same boat. Glad I have you guys.


                • #9
                  The book Simple Wealth, Inevitable Wealth will do more to allay your fears and help you make the right decisions than any other book I know of. Be sure to get the 2013 (most recent) version, which is available only at Nick Murray's website. Yes, Nick encourages you to use a financial advisor, but that is not the point of the book and you can certainly DIY, but I wouldn't try it without this book.
                  Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087