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How to manage my Dad's IRA account

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  • How to manage my Dad's IRA account

    Here's my situation...

    Mom is deceased. Dad is 70 yo w multiple health problems and unable to manage even simple finances on his own. There are 4 children currently keeping the ship afloat for him.

    Since Mom passed a few years ago we have left the management of our parents' IRA to their local broker that they used for decades. As a diehard WCI follower this is NOT how I choose to manage my personal accounts and I have wanted to break away from this setup for my Dad's assets. Luckily this broker recently notified the family he will be leaving his firm to take a position elsewhere.

    My question:

    Any advice on how to structure the ongoing management of my Dad's retirement IRA account? It's currently worth ~1.2M.

    For my own money I have a 100% DIY approach. No financial planner. However I am reluctant to go that route for a retiree with a larger net worth. Besides this being a specialized area of financial knowledge that is unfamiliar to me there is the family politics aspect to consider if I take the reins on his nest egg: (How did you not see the market crash coming? Why did you lose all Dad's money?)

    I know the big firms like Vanguard and Schwab offer some free or very low cost planning services for higher net worth accounts.

    Or I could use some of the recommended WCI planners and do the management of the accounts (trading, etc) myself.

    Any thoughts, advice or personal stories would be helpful. Thanks.

  • #2
    Age based targeted retirement fund perhaps? Very simple and fairly low cost.


    • #3

      Any thoughts, advice or personal stories would be helpful.
      Click to expand...

      The first obvious concern is this: does your father have a Durable Power of Attorney? With his health problems, it would be highly advisable to make sure he has someone appointed as his agent who could handle his financial affairs in the event he becomes incapacitated.

      As for the ongoing management of his accounts, my advice would be to find an advisor your father likes and trusts. Make sure they have experience in decumulation strategies and tax planning. And, finally, make sure the fee is reasonable.

      If your father needs to take income from his nest egg, I don't think you want to simply implement a reverse-collar-cost-averaging withdrawal plan, especially if we experience another prolonged market decline. Doing so could do a lot of damage to his portfolio. So, don't be afraid to ask a potential advisor to describe their decumulation strategy.




      • #4
        I wouldn't do anything crazy since you're walking a treacherous path.  I'd definitely run everything you do by your siblings and keep them updated. Even if they don't know much about investing, transparency is always a good thing in situations like this. If there are any big differences of opinions, then you'll probably need a third party. It sounds like life expectancy isn't that high, so between RMDs and social security, I don't think it needs to be a risky portfolio.  A simple balanced conservative fund might be OK.


        • #5
          sorry to hear this.  good luck.

          been dealing with similar issues since my dad passed.  lots of opinions. 

          hopefully your family is at least on same page.  that helps a lot.



          • #6
            Honestly I’d just let it be. With multiple siblings involved I think you need a neutral party. Maybe establish a good relationship with the current manager now and try to get on same page.
            If anything agree with above get good estate planning and POA in place.

            We have similar situation with my MIL. It’s just worth outsourcing. I don’t want to be bothered with the responsibility of someone else’s RMDs


            • #7
              Vanguard management. 0.3%.


              • #8






                It's psychosomatic. You need a lobotomy, I'll get a saw.


                • #9
                  My oldest brother is 75.  He is a retired IBM engineer.  He has always managed his own money.  He recently told me he was thinking of getting a second opinion on his finances from a local planner.  Guess who?  Edward Jones.  I told him to run.  I mentioned the Garret Financial network and Johanna (if I begged her).  So sometimes no plan is better than a really bad plan.


                  • #10

                    There are 4 children currently keeping the ship afloat for him.
                    Click to expand...

                    Not to mention you have your Dad!

                    The first question is always "What does your Dad want"?

                    The second is "Can the assets support it"?

                    a) daily living

                    b) asset management and paying the bills.

                    c) his wishes and distribution at the end.

                    Before doing anything, get all four siblings in a room. Financial power of attorney, Healthcare power of attorney, will, bank accounts (signatures and right of survival), IRA (beneficiaries) etc. Four people can't make every decision, so it really needs to be decided and agreed.

                    If they choose you for the IRA manager, so be it. They may want to stay with the advisor. You have 1/4 vested interest and one vote. Assisting your father and protecting his interests is your role. If you get 4-0 agreement on everything, great. Not much chance of that. Most times, one ends up with the thankless burden and the others either don't realize or don't care. Communicate and have expectations. It won't be easy for anyone. Good luck.



                    • #11
                      I would find out what the local broker is costing your father. You have to be very careful that the new advisor doesn't come in and churn the account with a lot of load mutual funds or transaction costs.

                      I would have you father or your through a POA place a freeze on all transactions within his account. Make sure you meet the brokerage's POA requirements. Many of them have very specific requirements and sometimes a standard durable POA is not sufficient.

                      Also, you immediately need to verify that his inheritance wishes are reflected in named beneficiaries on the IRA account. It would be very bad tax wise if the the estate or no beneficiary is named on the IRA.

                      When and only when that is done should you be worried about where to move the IRA. I'm with @birddog on this. Move it to Fidelity, Schwab or Vanguard and put it all in a target date 2015 index retirement fund. You can't get more defensible than that to your siblings.


                      • #12
                        Thanks to everyone for their thoughts and advice. I will repost in a few weeks with how this is going.