Thread regarding AT&T layoffs

OP my take is you want to know if the advisor is a fee only fiduciary. They have to work in your best interest in exchange for a fee. Most likely have to make the changes to accounts yourself. Other advisors can sell you investments that make them money, which you have to hope is in your best interest as well.

For 0.3%, it may just be a "cookie cutter" asset mix based on age and stated risk tolerance. As someone stated, you may get more personalized advice with some firms, including Vanguard, based on the portfolio amount they are managing.

Some say to manage yourself, but if you are not educated enough (most people I know are not), then paying someone at least for a while is a good idea until you are comfortable. I don't work on my car because it would probably not end well :)

Financial Engines will actually make the changes/trades in a 401k, at least while employed if you are paying them. Otherwise they just give you a recommended asset mix for you to do yourself.

The fact that you are asking probably means you should meet with advisors. Meet with a few, see who makes you comfortable, be sure to know how they are paid (and if a fiduciary or not), and go with who makes you comfortable.

You can always change later on.

Keep your money in the Fidelity as a rollover IRA. Buy and sell whatever stocks you want for free. Fidelity has no management fees for a brokerage account. Why pay others a penny. They never beat the market anyway.

My guess is the international funds are used as a contra account against the domestic funds in your portfolio. If the domestics fall the international might go up.

I’ve been told they don’t reallocate everything all at once. The funds will be adjusted over a time period to reach the optimum mix.

Re: Financial Engines

"Only they can make changes, not you, like you can now do yourself on Fidelity website"

That is incorrect. They do not take control of your 401K account. They are making recommendations only, based on your feedback to them re: your risk tolerance, etc. You have to make the recommended changes in your 401K account.

@1jbm
Re: Edelman Financial Engines

They had an offer that expired yesterday (12/4) for free professional management for 6 months. I have been on the fence about Financial Engines for years, mainly because i have done pretty well myself and I have a good basic understanding of diversification and how I want those funds invested (I prefer being a bit more aggressive than what most may recommend for someone my age (51)). Anyway, given their offer and the fact that I have nearly 7 figures in there now, I thought it would be a good time to try them out. You can cancel it anytime with no penalty. We will see how it goes. Their retirement planning tool is pretty neat. I found in interesting that their recommended changes to the way I had my investments allocated was minimal. They had me shift about 18% into the International Stock Index fund (I had taken everything out of international a while back as they just have made NO money)...that was the most significant change. The rest of their recommended allocations were very similar to what I had in place, but I rebalanced according to their exact recommendations for fun, and we'll see how it goes.

If it proves to be worthwhile, to me it will be well worth the .17% of the balance ($1.42 per month per $10,000).

[quote]
(b) there's a tax savings opportunity to sell an EFT and invest that money in a nearly identical ETF [this sounds weird, but it's 100% legal and can save you significantly on your taxes without impacting the overall investment mix].
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It's called Tax loss harvesting, and only available in taxable accounts, I'd assume the OP is talking about rolling into a tax advantaged account.

https://www.investopedia.com/articles/taxes/08/tax-loss-harvesting.asp

As far as the statement "only having 20 investments available" in your 401k, I would argue that you only need 3 or 4 of them. Total stock market(tracks Russell 3000 IWV) Total international(tracks ACWX), Total Bond(BND), and Stable value. This is exactly the mix Vanguard PAS will use. Determine your Risk Tolerance, Set your asset allocation, rebalance quarterly/annually.

There are advantages to keeping your 401k, one example is, it can't be garnished, an IRA can.

Also, there's allot to learn about retirement, RMD's, Taxes, IRMAA etc. and they don't teach it in school. I'm just getting up to speed the last few years. Wish I would have studied this stuff 30 years ago!

Edelman Financial Engines has an agreement with AT&T to manage your portfolio through Fidelity for a new rate of .17%. The only problem is that the only funds available are the same ones offered to employees, which are 20 or so funds. They will make recommendation and set up the funds for you. Only they can make changes, not you, like you can now do yourself on Fidelity website. I don’t see the benefit of using them when I can do the same myself

Thanks for the reply’s so far. One other thing about Vanguard Advisor services, you will need $50k for their basic service, $500,000 will get a personal advisor assigned to you.

Has anyone used the Edelman Financial Engines service on your AT&T 401k ?

"I have a significant amount of money with Vanguard Personal Advisor Services. "

Pay attention to what this person wrote. It's golden.

I have a significant amount of money with Vanguard Personal Advisor Services. While I consider myself a seasoned investor (I've handled my own investments for over 30 years), I nonetheless value what Vanguard brings to the table. I also manage my father's accounts, which are with a traditional financial advisor. So I've seen things from both sides. First, let me compare/contrast what a typical financial advisor brings to the table vs. Vanguard Personal Advisor Servies:

Typical Financial Advisor:

1.0 - 1.4% annual fee
Recommendations to churn investments on a quarterly or half year basis (after all, if they are charging you 1.0 - 1.4% to manage your money, they need to "do something" on a regular basis. If they just said "hey, you are OK as-is" for a year or two, why would you pay them this amount? Of course not...so as a result, they churn your investments regularly. And this churning often results in capital gains you need to pay.
Lots of talk about how they have access to special market knowledge that lets them outperform the market on a short term basis (note: not true).
Many act in a non-fiducial role. I had to read the fine print in my father's case to see that his advisor was allowed to make trades that were not necessarily in my father's best interest but could result in commissions for the advisor.

Vanguard Personal Advisor Services:

0.3% annual fee
Much more of a "set it and forget it" model. They set me up with a 65% equity / 35% bond mix. They invested across four super-low-fee ETFs. There is a quarterly check in over the phone. The only time we change investments are if (a) the 65%/35% mix needs rebalancing or (b) there's a tax savings opportunity to sell an EFT and invest that money in a nearly identical ETF [this sounds weird, but it's 100% legal and can save you significantly on your taxes without impacting the overall investment mix].
They do not claim they have any special short term insight as to where the market will go (note: this is true).
They act as a fiduciary. They suggest what is best for the client. The Vanguard Advisor draws a salary and earns no commission by moving you from investment A to investment B. As a result, there is very little churn in the investment portfolio.

Having seen how a traditional financial advisor compares to Vanguard Personal Advisor Services, I cannot say enough positive things about Vanguard.

Here is another way to look at things: If you pay an advisor 1.25% per year and your investments return, say, 5% overall (conservative), then a full 25% (1.25/5.0) of your earnings go to the traditional advisor. If Vanguard gets you that same 5% return at a 0.3% fee (0.3/5.0), then only 6% of your earnings go to Vanguard. The traditional advisor keeps almost 4x the earnings that Vanguard would.

1. 25% is really high, especially if you are a conservative investor. If you're hoping to gain 4-6% a year investment gain, you're looking at paying them 20-30+% of your profits. The costs are likely even higher than that since unless they are buying only stocks, whatever they are buying has it's own management fees

You could also consider going the simple route and buying ETFs on your own. You can buy ETFs that model a 60/40 or 50/50 or 70/30 or 80/20 stock/bond index composed of a portfolio of underlying equity and fixed income funds (Ishares core allocation funds for example - AOR - Growth, AOM - Moderate, AOA _ Aggressive, or AOK - Conservative ... pick the aggressiveness level you are most comfortable with).

If you really want to go the advisor route, a) Make sure they are a fiduciary (Your welfare comes before their profits) and b) Consider a fee only advisor - pay them for their advice and then you follow it, self managing your funds. Revisit them once every year or two to keep you on track.

DO NOT spend 1.25% on advice. That is way way too high!!!

My advice - use ETFs consisting of dividend-paying stocks in a self-directed account. I know what is said about free advice but you might want to research DGRO and VYM. With interest rates low and stock valuations relatively high expected returns by investment professionals center around 6% annually over the next 10 years. That 1.25% is actually about 25% of your total expected return.

Don't just walk away RUN away from those clowns!!!

I opened an IRA with Fidelity. We met with them, explained out goals and risk assessment level. We then allowed them to set up our investments for ONE month only. We took the investments they placed us under their managed portfolio and started managing it ourselves in similar funds. Not all the fund they had us in were available to us so it took a little research but well worth the time.
We allowed their expertise to set it up so we didn’t have to do all the legwork. We just didn’t have the depth of knowledge or time then.
Now we have sold about 25% of our mutual funds and put that money in a brokage account within our IRA to purchase individual stocks. This allows us to get much better rate on hot stocks like zoom or Amazon and not miss out on changing market trends. It’s more time consuming but retirement allows for it and it’s fun watching your money grow so rapidly.
Good luck and congratulations.

1. 25% is high. Most investment portfolios will mirror market movements unless you are very conservative or exotic (risky)

Vanguard is a very investor friendly firm. I have both mine and my wife's Roth IRA with them. Vanguard is considered a premier organization and an advocate for the individual investor. By all means meet with them to see what they have to say. I was thinking about using their Personal Advisor Services as well. Just haven't gotten around to it yet.

There's nothing they do that you can't do yourself ... it's not like they offer trust services or a home office at these levels.

The relevant question is whether you would prefer to pay someone 0.3-1.25% of your total assets annually, in exchange for a few minutes of their time

Edit typo on opening sentence.....I have met with a financial advisor.....