Quick update:
1. Refinanced remaining balance ($107K) of student loans via SOFI for a 2.20% variable rate with a solid plan to repay quickly with extra payments. Will likely payoff within 14 months. Thanks to WCI for the $300 bonus.
2. Currently contributing the maximum to 403b/403b SRA/Government 457b. I will be able to contribute a total of $36K this year. After 1 year, the employer provides a 2:1 match (5% employee contribution to 403b/ 10% employer contribution to 401a). Doing some research on selecting the right funds for the portfolios. There are 200+ funds to choose from including some of the more popular low expense ratio fidelity and vanguard funds.
3. In the process of leaving Northwestern Mutual and their products behind. Will move investment products Trad-IRA and Roth IRAs to Vanguard in the near future. Once transferred, will utilize the backdoor Roth for both myself and the wife.
Thank you for your collective advice! The more I read and learn, the more I feel vindicated in running quickly away from our current financial advisor.
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Sounds like you are on the right track gkeep. I will echo what others have said - get away from NML. I mean any and all products they have sold you. You can find quality insurance at a lower price and should not even consider their financial services. Look for an independent insurance agent that can access different companies and is familiar with physician disability. There are some good ones listed on the site.
Seems like you could refinance the student loans and save some money there thought I am no expert on that.
I would quibble with your decision to buy a house in residency and use an ARM, but what's done is done.
Congrats on completing your fellowship.
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If you are not going for PSLF and plan to pay aggressively you should refinance your loans. 6.8% is terrible.
https://www.whitecoatinvestor.com/student-loan-refinancing/
We went with sofi but you have several options.Leave a comment:
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Thank you to everyone for your thoughts and advice.
My wife and I are not happy with our NM agent's fees and we will be moving my accounts on to a low-fee provider (Vangaurd) in the near future. I found the blog article about firing your financial adviser especially helpful and will start the process of transferring accounts once we develop our own financial plan (I have some reading to do).
As far as the insurance products, I have started to shop around again for both term life and DI and I will jettison the NM policies once I find better options.
After replenishing our rainy day fund (used for recent family medical expenses) and maximizing my retirement, we are going to aggressively pay down the 6.8% student loans. With a balance of $107K at 6.8%, I could conservatively pay it off in 36 months (2 years short of PSLF). Consolidating the loans would not be an option given the PSLF clock restarts (I missed the window after graduating med school) and the rate drops to 6.3%.
I am extremely grateful for the guidance of this blog, the forum and the WCI book.
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“I recently starting using the spouse of an attending in my department as our financial advisor. She is a representative for Northwestern Mutual…”
I visibly winced when I read that. Do what you want with the rest, but get the ************************ out of the NWM products ASAP!
Agree with this comment 100%...wow, all kinds of conflicts of interest inherent in that statement...run away!!Leave a comment:
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"I recently starting using the spouse of an attending in my department as our financial advisor. She is a representative for Northwestern Mutual..."
I visibly winced when I read that. Do what you want with the rest, but get the ************************ out of the NWM products ASAP!Leave a comment:
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Agree with most above but also think about refinancing your student loans. Check this site for info.Leave a comment:
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You need a well-diversified equity index fund portfolio, allocated as follows: LC Growth, LC Value, SC Growth, SC Value,
Doesn’t:
Large cap growth + large cap Value + small cap growth + small cap value
= Total market index fund ??
If it’s not exactly the same, it’s close enough, and the ER will be lower. If you want a tilt, add on what you want.
Similar, but we get to control the allocations, which is important to our investment model.Leave a comment:
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You need a well-diversified equity index fund portfolio, allocated as follows: LC Growth, LC Value, SC Growth, SC Value,
Doesn’t:
Large cap growth + large cap Value + small cap growth + small cap value
= Total market index fund ??
If it’s not exactly the same, it’s close enough, and the ER will be lower. If you want a tilt, add on what you want.
Similar, but we get to control the allocations, which is important to our investment model.Leave a comment:
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You need to be cordial to the insurance agent from NWM but DO NOT buy any more of those products. I have gotten a financial plan from Vanguard when I transferred my nest egg to them. It was very useful and easy . They do not offer advice on taxes, estates etc. The AUM advisory service is new and I believe they do offer tax planning to some extent. The 0.3 AUM is very reasonable if you are too scared to do it yourself. You can easily learn what you need to know by reading this blog however.Leave a comment:
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You need a well-diversified equity index fund portfolio, allocated as follows: LC Growth, LC Value, SC Growth, SC Value,
Doesn't:
Large cap growth + large cap Value + small cap growth + small cap value
= Total market index fund ??
If it's not exactly the same, it's close enough, and the ER will be lower. If you want a tilt, add on what you want.
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Before you switch to Vanguard look at the expense ratios of Fidelity index funds. They are slightly lower than Vanguard (see Fidelity homepage today).
I keep it simple with a 3 fund Fidelity portfolio - Total Market Index, Global Ex-US Index, and US Bond Index funds.
Yes, fire your NM mutual financial advisor.Leave a comment:
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Thank you for the responses. I will read the fine print on the DI but I do know that it is their version of Medical Occupation. Looking more and more, I realize we made the move a little too quickly to NM and that a one-stop shop is not necessarily the best for investments, insurance and financial planning. Does anyone have any experience with the financial management services at places like Vanguard? The rate for planning is somewhere around 0.30% of total AUM after the breakpoint (not 100% sure though).
Unfortunately, our NM rep is very well-connected within my department and uses her husband's (an attending anesthesiologist in my department) colleagues/residents as an easy feeding ground for high-priced insurance and poor investment strategy. I will definitely look at other options as well as continue more financial/investment education on my own.
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Certainly look at the options that are out there and in my space of expertise you can probably find better definition disability contracts at lower prices and if history repeats its self if you bought term from Northwestern it is probably an annually increasing premium contract to age 70 instead of a level premium contract. If it does happen to be a level premium then typically they are priced about 20% higher than the competitive market for the term life insurance so you know.Leave a comment:
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Agree with moving your Roth IRAs to Vanguard and out of the fees.
Your 403b investment choices would be better assessed if you had a planned asset allocation with a list of the funds available and corresponding expense ratios. Simplistically select the cheapest index fund in a class that you want and balance out the rest of the asset allocation with your IRA.
Additionally to your list, I would reassess your disability insurance if you obtained it as a Northwestern Mutual Product. WCI had a good post on their insurance product a few years ago:
https://www.whitecoatinvestor.com/why-not-northwestern-mutual-physician-disability-insurance-friday-qa-series/
In particular, pay attention to the details regarding the definition of total disability and "own occupation" that is highlighted in the article.
I had met with a Northwestern Mutual Insurance agent out of recommendation from an attending at my institution. Though the guy did sell other products, he definitely pushed the Northwestern Mutual product. I ended up going to another agent for a different disability insurance product that had better terms at the same cost.Leave a comment:
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