Capital Gain Tax Strategy

[JRB]

Wow, that is a lot of money and worth a consultation with a fee only advisor + great CPA.

Rick Ferri is who i have used for specific advise.

https://rickferri.com

WCI has some recommendations.

https://www.whitecoatinvestor.com/financial-advisors/

I think you need some professional advice.

Tax IED.

Definitely agree and thanks for the rec. I've been in process of working with one fee-only fin advisor (recommended through WCI site) but I've been notified they are too busy to keep up with demand and may need to release me as a client before finishing my plan. I am all ears if any other recs for fee-only financial advisor or CPAs. My current CPA told me we would discuss tax planning in December. In the past all I really got was conservation easement option as a W2 employee but that has not been an option the last 2 years.

[billy]

I don't believe this is possible as this USAA account was transferred to Schwab where it is currently housed and my advisor tells me I can sell out to cash position before it can go into either my self-directed account or another portfolio like a roboadvisor portfolio.

I would call schwab itself and see if you can transfer in kind to a self directed regular old taxable account held at schwab. If you can, just do that and dump the advisor asap. I cant see why one schwab taxable account allows holdings that another wouldnt unless those funds were DFA types that require an advisor. Ishares and vanguard do not, which I see are some of them. Direct all this through schwab, not your advisor who is likely lying to you, or just doesnt know.

"hey Cschwalb, I want to open my own brokerage acct. Yeah can I also move the EFTs I have in my other account with you into this new one, transfering in kind? IEFA from that account to IEFA in my new account without having to sell anything? Same for the rest of my efts? I can, great yeah please do that"

[CordMcNally]

Your expense ratios are actually all pretty good. I also don't see a current legitimate reason why these can't be moved in kind away from your advisor.

[Tim]

I don't believe this is possible as this USAA account was transferred to Schwab where it is currently housed and my advisor tells me I can sell out to cash position before it can go into either my self-directed account or another portfolio like a roboadvisor portfolio.

Based on your holdings, I view this as a clear indication that your FA is not a fiduciary. I would deal with Schwab directly. I want a self controlled account. Get your FA's statements in writing. FYI, this would piss me off to the point that I would consider filing a complaint with FINRA. There are FA accounts and personal accounts. All he needs to do is waive any wording. He seems to be trying to use a tax penalty to retain the account. There is nothing wrong with the investments, it is the FA, not Schwab. They are the custodians and should help you get out.

[Larry Ragman]

good points. Thank you. Holding these funds would carry the 0.78% management fee which I'm trying to avoid unless you are also suggesting I can move holdings to a self directed account without selling the positions.

You can either transfer in kind (no tax due) or, more commonly, by cashing out, which is when the capital gains are incurred. Here is a link that might help explain. https://www.mybanktracker.com/blog/i...account-303243

[Larry Ragman]

[QUOTE=Dewangski1;n304409]75k in capital gains at 20% = 15k. Doesn’t seem impossible to manage using strategies listed above like donations or tax loss harvesting. You’re paying ~4K per year in ER. I’d do half now and half in early 2022, but I’m someone who is OK with paying a premium to get something done so I don’t have to worry about it anymore.

Though it would actually be 23.8% when the ACA and NIT are tacked on.

[Tangler]

IEFA, IEMG, IVV, IJH, IJR, MUB, SHM, HYD, VIG, VNQ, VT, Cash position of $10K. I believe the portfolio ratio is approx 60/40.

You have a lot of good info here in this thread.


You likely want to get this stuff away from the advisor if he is actively trading on them and generating capital gains.

He is basically “churning” if he does this and it is tax inefficient and he likely is doing worse than buying and holding a simple portfolio of low cost index funds.

I looked up the first few of your funds and they look like relatively low cost (low expense ratio) funds that are probably ok and easy to incorporate into an overall plan moving forward if you want to avoid capital gains taxes.

If you are young 60:40 is probably too conservative and he has you in a lot of funds (Unnecessarily complex) IMO.

The reason I say I would pay a low cost fee only advisor for help is just to ensure you don’t make a regretful preventable mistake(s).

500k is a lot of money. You want to do it intelligently.

You might end up keeping many (all) of these funds as part of a portfolio (as legacy holdings) as suggested by some posts above.

You may keep them with the idea of donating them to charity in the future?

You may want to sell some or all of them and simplify?

If you are unfamiliar with things like TLH and not a seasoned WCI forum critter (like some of the smart people who responded) I would just get a pro to walk you through it to alleviate anxiety and help you get started.

There is no huge rush.

Also, good for you to have the courage to learn more.

Most/All of us have made money mistakes, continue to make mistakes and fave friends / family who make mistakes and we try to learn from them.

Welcome aboard and Happy Thanksgiving!

[Tim]

I would like to back off from the stated question, Capital gain strategy. Yes, taxes and fees are expenses, but what is the value and expenses you received and what did you expect?
•FA issues
•CPA that talks once per in December
•Your attempt at a fee only planner you were notified the might not “finish your plan” because they were too busy.

My question to you is “Do you have enough knowledge and are your expectations clearly communicated?

Your FA took an account and may have implemented exactly the plan you asked for.
Your CPA may only have agreed to prepare the tax returns, not really tax planning or advice.
The fee only planner may have had a different perception of the scope and timing.
My concern is the disconnect in ALL three. Your money, your taxes, your plan. You engaged them as advisors to perform tasks and give advice and fill in the blanks. The more you know about your plan, your taxes and your money the better questions and advice you will receive. The suggestion is to up your game to become a smart value shopper.
All three (FA, CPA, FP) all crapping out in one year is not comforting. Roll up your sleeves and do it yourself so to speak.
Don’t take it as a criticism, constructive suggestion is the intent.
I would not expect an AUM advisor to spend much time on moving to a self managed account. Just an example expectations. The silver lining is you have gains, not losses.

[Random1]

You don’t have to do it all at once. Sell some of the shares with the lowest capital gains, then wait until you have some tax losses to balance the gains

[JRB]

You have a lot of good info here in this thread.


You likely want to get this stuff away from the advisor if he is actively trading on them and generating capital gains.

He is basically “churning” if he does this and it is tax inefficient and he likely is doing worse than buying and holding a simple portfolio of low cost index funds.

I looked up the first few of your funds and they look like relatively low cost (low expense ratio) funds that are probably ok and easy to incorporate into an overall plan moving forward if you want to avoid capital gains taxes.

If you are young 60:40 is probably too conservative and he has you in a lot of funds (Unnecessarily complex) IMO.

The reason I say I would pay a low cost fee only advisor for help is just to ensure you don’t make a regretful preventable mistake(s).

500k is a lot of money. You want to do it intelligently.

You might end up keeping many (all) of these funds as part of a portfolio (as legacy holdings) as suggested by some posts above.

You may keep them with the idea of donating them to charity in the future?

You may want to sell some or all of them and simplify?

If you are unfamiliar with things like TLH and not a seasoned WCI forum critter (like some of the smart people who responded) I would just get a pro to walk you through it to alleviate anxiety and help you get started.

There is no huge rush.

Also, good for you to have the courage to learn more.

Most/All of us have made money mistakes, continue to make mistakes and fave friends / family who make mistakes and we try to learn from them.

Welcome aboard and Happy Thanksgiving!

Appreciate your comments & support! My honest hope was that the fee only FA would have been my solution to this and will look into your rec further. As I ran a side by side comparison with Schwab's roboadvisor and Vanguards basic funds: VTI, VXUS, BND my thought was going to be to transition it into simple index funds. I actually don't want to sell so the transfer in kind would solve the issue as these are low cost ETFs.

[JRB]

I would like to back off from the stated question, Capital gain strategy. Yes, taxes and fees are expenses, but what is the value and expenses you received and what did you expect?
•FA issues
•CPA that talks once per in December
•Your attempt at a fee only planner you were notified the might not “finish your plan” because they were too busy.

My question to you is “Do you have enough knowledge and are your expectations clearly communicated?

Your FA took an account and may have implemented exactly the plan you asked for.
Your CPA may only have agreed to prepare the tax returns, not really tax planning or advice. The fee only planner may have had a different perception of the scope and timing.
My concern is the disconnect in ALL three. Your money, your taxes, your plan. You engaged them as advisors to perform tasks and give advice and fill in the blanks. The more you know about your plan, your taxes and your money the better questions and advice you will receive. The suggestion is to up your game to become a smart value shopper.
All three (FA, CPA, FP) all crapping out in one year is not comforting. Roll up your sleeves and do it yourself so to speak.
Don’t take it as a criticism, constructive suggestion is the intent.
I would not expect an AUM advisor to spend much time on moving to a self managed account. Just an example expectations. The silver lining is you have gains, not losses.

Astute observation. I didn't strike gold on these 3 fronts. TLH is out of my league at this point. FA did implement a plan I deemed appropriate 3y ago after I maxed my tax-advantaged accounts. But now I know more and have seen some gaps where I may have been told the truth, but not the whole truth. This became more apparent with transition from USAA to Schwab. I expect FA to not just do what I ask for, but to advise me of my blind spots & not let me walk into a manhole. Once I realized I was paying nearly $5K in management of this account, I rationalized paying a similar annual fee to a fee-only FA who would be able to comprehensively review ALL my accounts & have less COI. Thus my plan all along was to get out from this AUM cost. Since my current FOFA has fallen flat, it is serving as another kick in the keister to start learning more. I only started a self-directed taxable account with monthly investing into VTI earlier this year recognizing that is a simplistic place to start.