Leaving Financial Advisor

[TexasDoc]

Just wanted to say thanks for all of the good information on this site.  I'm 2.5 years out of fellowship and I wish I would have found all of this good info in med school or residency.  But, better late then never and luckily I did start some things right out of training.  I started max contribution to 401K, Backdoor Roth, and taxable account.  I had a financial advisor right out of the gate managing Roth and taxable account,  and although they were good guys and didn't do anything outlandish, I felt like it was time to become a diy investor and branch out.  I also did the math of 1% for the next 20-30 yrs and I was ready.

So, now the reality of making the move.  The accounts were through fidelity so I will probably leave them there.  My question is, with the market being up should I just leave the assets alone and work toward by desired AA and from this point on add premium shares, or sell everything and start over with the premium class shares I would prefer.  I'm currently in ishares total market and s&p (which is the bulk), but also in a few mutual funds...fidelity contra fund, moat, and a few others.  Would hate to pay cap gains when I sell but also would like to move towards a simpler more organized portfolio.

Also I know everyone prefers muni bonds in a taxable account, does anyone know what that preferred fund would be in fidelity?  If I'm still working on student loan payoff should that be considered my bond allocation and have all stocks?

Thanks for all y'alls help and really do appreciate all of the good people and info on this site!

[VagabondMD]

Nothing wrong with the ishares total market and S&P 500 (though not sure why you need both)--0.03% and 0.04% ERs, respectively. Hard to improve on that!

One way to get out of your Contrafund and others is to not reinvest dividends and cap gains. Later on, if there is a drawdown, and you are underwater, you can sell it. Otherwise, consider it part of your "large core" allocation.

I use FLTMX (https://fundresearch.fidelity.com/mutual-funds/summary/31638R204) as my core muni bond fund in my Fidelity account.

[Hatton]

Vagabond MD wrote:

Nothing wrong with the ishares total market and S&P 500 (though not sure why you need both)–0.03% and 0.04% ERs, respectively. Hard to improve on that!

One way to get out of your Contrafund and others is to not reinvest dividends and cap gains. Later on, if there is a drawdown, and you are underwater, you can sell it. Otherwise, consider it part of your “large core” allocation.

I use FLTMX (https://fundresearch.fidelity.com/mutual-funds/summary/31638R204) as my core muni bond fund in my Fidelity account.

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I agree with vagabond.  In a taxable account the best way to get rid of a not terrible but not perfect mutual fund is to let it distribute dividends and cap gains and do not reinvest them.  If over the years you have some carry forward losses from tax loss selling you can sell off a chunk.

[TexasDoc]

That's a great idea, it's not a huge position but overtime will divert those dividends elsewhere.  Thanks for the responses!

[RogueDadMD]

TexasDoc wrote:

I had a financial advisor right out of the gate managing Roth and taxable account,  and although they were good guys and didn’t do anything outlandish, I felt like it was time to become a diy investor and branch out.  I also did the math of 1% for the next 20-30 yrs and I was ready.

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Kudos on this.  I started using an advisor during fellowship and we parted right after fellowship, primarily over their fee structure, inability to justify their fees, (and some shady interactions with my advisor).

Managing investments in training and early as an attending is the EASIEST part of financial planning and where they generally add the least value to anyone willing to spend even 30 minutes learning on their own, but it's where they make their money and try to hook you in.  Estate planning and other things such as disability insurance are less sexy but far more valuable and can be harder to figure out on your own at the beginning.  That's where they added value for me.

[PhysicianOnFIRE]

Wise move. Those investment fees can cost you millions over a lifetime.

I helped someone in a similar situation. Like you, we decided to leave the money at Fidelity. We made the drastic changes we wanted to make (from 28 funds to 3 funds) in the IRA. In taxable, we had to leave a couple funds in there, but were able to sell some funds that had gains and offset them selling funds that had losses. If you have any funds with losses in taxable, you should sell those and buy what you want with the proceeds (or sell additional funds whose gains offset the losses).

Best,

-PoF

[TexasDoc]

Great points, thanks again.  Fortunately in the taxable I'm only in a few funds that I'd like to shed.  Some I can get rid of quickly, but I'll hold on to one or two as needed for a little while.