Reasonable to have just one wealth management company?

InTheWoods

New Member
Location
Maryland
I know it's unwise to put all your eggs in one basket by having all the investments in one stock or other vehicle, and my tax deferred investments are pretty well diversified.

But do we need to also diversify the wealth management companies that handle the investments?

I am retiring in July and am setting things up. My investments have always been mainstream vehicles (not like the poor nice fellow I worked with who retired and got talked into catfish farming as his investment strategy, who lost so much he had to go back to work). They've all been professionally managed with large wealth management companies, except for my employee stock ownership program (no choice on that one). I've spent the last 42 years with one employer who has pretty good automatic investing and matching benefits I've always taken advantage of, and I've never touched any of this until less than a year ago when I cut back to a 3 day work week.

I have my largest block of investments with a wealth management company (UBS), including individual stocks, stock funds, bond funds, and even a small annuity (<10% of my total). I've dealt with them for maybe 15 years now, had regular meetings, and kept an eye on their reputation on the web. They've been in the same fancy office in the rich part of a nearby city for years, and have little staff turnover. They have serviced me very well as far as I can judge, and seem reputable.

I also have a target fund with another company (Vanguard), a 401K with a third company (Fidelity), and a bunch of stock in my employer's stock ownership program (which is too much stock in a single company and I am going to move it elsewhere quickly as soon as I'm allowed).

I think it makes sense to do some consolidation while I am moving things. Of course my largest company is suggesting it would be more convenient for me, no surprise there.

I'm also wondering if I could get some management fee reductions from them, because what I'm considering is moving much more wealth into the accounts they already manage (roughly tripling it), but not necessarily increasing the number of those different accounts they manage or the amount of service I require. I think I'm a pretty low-touch customer. They already send me monthly payments since the work week reduction. I don't think they would have to do any more work or spend any more time on me (other than transacting the consolidation once), they'd just get bigger fees because the amounts would go up. I did get some fee reductions from them a few years ago. Therefore I anticipate a specific financial benefit from the potential consolidation itself.

So, with that in mind -- is it unwise or irresponsible to have a well diversified portfolio managed by just one wealth management company? Is normal best practice to deal with multiple companies? Or is dealing with just one a mainstream approach?

Thank you!!!
 

For what it's worth, I also asked this in a different forum, and the consensus was that it's fine using just one wealth management company (as long as it's a major company with a good reputation).
 

+1. And yes, you should ask for and receive a sizable discount for tripling the size of your investment portfolio with them.

You also need to make them work for you. Have they talked to you about your long-range plans, or discussed estate/inheritance issues with you? Have they looked at your current insurance policies to see if you're adequately insured (altho your broker can do so, if you have one)? Have you talked about long-term care issues with them, or if you have any concerns about relatives who may have future needs? Do they work with your tax adviser to ensure your distributions taken are handled in the most tax-efficient manner?

I assume you are working with UBS to be reminded of those employee stock sale dates - even if UBS is not managing those assets yet, sometimes it helps to have someone else keep those calendar reminders. When I worked for an independent CFP there were several clients we handled this way; sometimes life just gets a little crazy and a date like that will just slip your mind for a while, LOL.

It will make it much easier for your heirs if your assets are all in one place.
 
i would use two firms .

we already had an issue where fidelity’s internal team of hackers found my wife’s info on the dark web .

they shut us down and it took about ten days to get new accounts , checks , cards and links …
 
I started out with 3 Financial advisors. 2 local advisors and one national.
Although they all seemed capable of managing money, I found only one that could; 1) Manage wealth, 2) understand Social Security and all the 'ins and outs' of when and how to retire, and 3) understand and plan for taxes in retirement, including RMS, when to convert to Roths, etc.
Someone that can bridge where you are now, and transition you through retirement as well as plan for once you are in retirement was very helpful.
Given the current markets, I've moved alot of funds (80%) into a Fixed Annuity for 7 years at 5.60%, interest payable monthly. DO NOT do variable annuities. Fixed acts much like a CD, only you have the option of withdrawal either monthly or yearly without penalty.
In an up equities market, I built a portfolio of dividend paying stocks. I looked for dividends in the 4-6% range. The down side of that is the initial capital stock price could go up or down, putting principal at somewhat of a risk.
Right now, we have still not felt the brunt of a rescission and market indicators are pointing to a downturn late 2023, early 2024.

Without going into too much detail, I have insight into the Federal Reserve and can get a pulse as to where things may be going.

If I can lock in solid gains without touching principal, thats what I'm looking for.
Reading the WSJ daily, you notice more layoffs are happening. Not only will those laid off impact consumer spending, but those reading those articles will likely cut back. When consumers cut back, companies revenue get reduced, meaning stock prices suffer, leading to a downturn in the markets. Which some say is still overpriced.

I think staying clear of stock at this juncture is a wise move, especially when your portfolio needs to adjust from wealth accumulation to wealth preservation.
 
I have the bulk of my investment money at two different firms. I guess I look at having money managed by two different firms as peace of mind diversity, if one firm goes to hell for some reason I won't lose everything. I also have cash savings in two separate banks for the same reason.

Personally I would never trust any firm or individual with every dollar I have, that's how people lose everything.
 
the failed retirement grave yard is filled with those retirements that had to take pay cuts not because they were invested but because they weren’t .

anyone who thinks they know whats next is fooling themselves and that includes the federal reserve who admitted they have no idea how things are going to land
 
One time when I visited my insurance agent, he wanted me to talk to this guy in a back room who could "help me with wealth management". I sat down and listened to his spiel which was about pulling my money out of one place and investing it in something else. Finally I said something to the effect that I was satisfied with my financial outlook and added, "Do I really need wealth management if I already have so much you need to tell me what to do with it? You might best help people that need poverty management." About the same thing happened when I made a bank deposit at a branch that I usually don't patronize. When I handed my passbook to the teller, her eyes got so wide, I thought they were going to pop out of the sockets. She suggested I talk to their wealth management advisor. I repeated what I told the guy in the insurance office.
 
I am sorry, but I moved all my wife's investments from UBS because I did not like the way they do business. The bigger question is what percentage are they charging you for their "wealth management" and is it worth it.
In retirement, the rule of thumb is to withdraw 4% annually. If their fee is 1%, they are taking 20% of your retirement every year.
 
Here is an interesting story about Financial Advisors:
RUN FORREST!! RUN!!

Years ago I worked with a guy who left our company and got a job as a financial advisor with what was then Shearson-American Express and has since moved to Ameriprise Financial. Nice enough guy although we weren't close, I always thought him to be above-board and basically ethical and honest.

So some time had passed and I bump into him at a business after hours social gathering hosted by the local chamber of commerce. He hands me his card and invites me to get a "free consultation" for retirement planning. I was in my late 30's and thought it couldn't hurt so why not? Now I had started IRA investing in the mid-1980's with the typical 65/35 mix of stock & bond mutual funds with low fees. Not setting the world on fire but they were pretty much matching the decent market performers. I was slowly getting good returns.

THREE-CARD MONTY WITH LUNCH PROVIDED
We meet at his nice offices and he brings in coffee and lunch...does a Q&A about my current investments, future retirement goals, horizon, visualize what I expect at what age, etc. Then he tells me he'll take my current account info and compare it with his products and tells me his market resources will find "better options" to help me get to FIRE sooner and safer.

A couple of weeks go by and he calls to set up lunch and presents me with this custom 3-ring binder with my name on the front and it has tabbed sections with my goals and wants and needs. Then shows the amount I'll need for FIRE and outlines how to get there with Shearson-AE investment products ONLY. I get a tiny notation disclosing annual administrative and management fees along with a total balance fee based on a percentage of my total accounts and then other "possible fees" for update consultations, etc.

A quick add-up showed me I was looking at paying 3 to 4%+ before paying upfront loads on Shearson-American Express products, no mention of any other product outside their fold.

Keep in mind I had been using no-load / low cost mutual funds performing at decent levels. I then asked for the page that compares my current holdings with Shearson-AE products he was recommending. He sort of froze and said "Well I didn't really find anything that stood out worth mentioning here OR there was very little information on my holdings out there." HUH? What happened to all his "vast data resources on all financial products available" pitch?

I didn't really react but took all this as a well-scripted sales pitch and told him I'd think about it. A week later he called and I told him that I decided to go a different route but thanks for the lunches and binder.

SUMMATION:
Now I don't begrudge someone getting paid for a service but the built-in fees and charges just to have an account were beyond reasonable IMHO. Besides I had enough knowledge to know I could do OK on my own if I do a little reading and listen to enough people who know more than I do on certain things. And considering the fate of Shearson-American Express, I think I did the right thing by declining their portfolio.
 
I also have cash savings in two separate banks for the same reason.
Personally I would never trust any firm or individual with every dollar I have, that's how people lose everything.
This is how it is for us as well, only it's 3 banks. I've always had a huge problem with that egg and basket thing and never wanted to take a risk with it.
 
IMHO, even one so called 'wealth manager' or 'investment advisor' is too many! All those guys do is charge big fees for doing basically nothing. I learned long ago how to use the Jack Bogle (founder of Vanguard) approach to manage my own investments and do a far better job than most of these so called professional managers do. The problem is that unless you are very very wealthy, you simply don't have access to the smartest financial people who really understand this stuff and who are skilled and motivated enough to actually benefit their clients. How do I know all this?

I used to be an investment advisor myself. I got my (FINRA series 65 exam) license just to see how all this stuff works. I also do volunteer income taxes for our local VITA/TCE program. We live in a fairly upscale community having many seniors like yourselves invested in various brokerage accounts that are being professionally managed. I get to see firsthand how all these so called wealth managers actually perform with their typical senior clients. Its definitely not a pretty sight!
 
I use advisors as just that, advisors. All my investment strategies are self directed. I go to them for advice, but they do not control any funds. We bounce ideas around with best guess projections into metrics that influence investment vehicles, but they do not have any control over where/how my funds get allocated.
 
I am sorry, but I moved all my wife's investments from UBS because I did not like the way they do business. The bigger question is what percentage are they charging you for their "wealth management" and is it worth it.
In retirement, the rule of thumb is to withdraw 4% annually. If their fee is 1%, they are taking 20% of your retirement every year.
they are taking 1% of not your draw but your portfolio.

if a million generates 40k they are not taking 400 dollars which is 1% of 40k .

they are taking 1% of 1,000,000 or 10k

being up 10% and them taking 1% is different then being up 4% and them taking 1% while you draw 4%
 
...Personally I would never trust any firm or individual with every dollar I have, that's how people lose everything.
A financial management firm does not hold "every dollar a client has". They manage, aka, direct the assets, but assets themselves should always be held at a financial institution. We use an independent CFP firm, but the assets themselves are at Schwab.

This was the Achilles Heel of Bernie Madoff and his scam. You NEVER make a check for investible funds out to the management firm. The check is ALWAYS made out to the financial institution that holds the actual assets (brokerage or bank). If his clients had known that one simple fact, they would never have been in danger of being scammed.
 
with all the easy to use lazy portfolios today i can only see using someone to manage their money if they themselves exhibit poor investor behavior …no reason to other wise
Yes, mathjak, I agree but let's face it - the number of people who exhibit "poor investor behavior" are LEGION - unfortunately. I even know someone who is smart and investment knowledgeable, but he never fails to give into emotional reactions that undermine his investment portfolio.

I can share fairly technical financial articles with him, but after watching him for do the wrong things for almost 45 years, I don't comment on his decisions any longer. No point in wasting my time or his. We've been good friends with he and his wife, and enjoy keeping in touch, but we stick to the points we have in common with them. Anything else gets left 'off the table', as the saying goes.
 
IMHO, even one so called 'wealth manager' or 'investment advisor' is too many! All those guys do is charge big fees for doing basically nothing. I learned long ago how to use the Jack Bogle (founder of Vanguard) approach to manage my own investments and do a far better job than most of these so called professional managers do. The problem is that unless you are very very wealthy, you simply don't have access to the smartest financial people who really understand this stuff and who are skilled and motivated enough to actually benefit their clients. How do I know all this?

I used to be an investment advisor myself. I got my (FINRA series 65 exam) license just to see how all this stuff works. I also do volunteer income taxes for our local VITA/TCE program. We live in a fairly upscale community having many seniors like yourselves invested in various brokerage accounts that are being professionally managed. I get to see firsthand how all these so called wealth managers actually perform with their typical senior clients. Its definitely not a pretty sight!
A John Bogle famous quote "stocks may go up and down but fees are forever"...lol.
 
there are so many parameters that go into returns ..

the day you buy , the day you sell and even tax planning can far outweigh not having lowest fees ….

vanguard went to market blowing fees way out of proportion in their campaign as the be all and end all .

under 1% is not going to effect things as much as the price you buy at or the price you sell at .

it reminds me of the boglehead buying a car .

he pounds the dealer in to the lowest price , then goes to work on the finance guy getting the lowest rate from him , then a few years later he buys another car and turns this car in to the dealer at wholesale .

grandma paid more for the car , got a slightly higher finance rate and sold the car privately near retail .

grandma won.

some of us will have lower fees but not buy as low , sell as high or exhibit poor investor behavior .
so fees are just another something in the mix which if reasonable may make the smallest difference .

it’s the combination of everything that makes up our returns
 
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W
there are so many parameters that go into returns ..

the day you buy , the day you sell and even tax planning can far outweigh not having lowest fees ….

vanguard went to market blowing fees way out of proportion in their campaign as the be all and end all .

under 1% is not going to effect things as much as the price you buy at or the price you sell at .

it reminds me of the boglehead buying a car .

he pounds the dealer in to the lowest price , then goes to work on the finance guy getting the lowest rate from him , then a few years later he buys another car and turns this car in to the dealer at wholesale .

grandma paid more for the car , got a slightly higher finance rate and sold the car privately near retail .

grandma won.

some of us will have lower fees but not buy as low , sell as high or exhibit poor investor behavior .
so fees are just another something in the mix which if reasonable may make the smallest difference .

it’s the combination of everything that makes up our returns
Well part of the Boglehead mantra is be sure you have the appropriate amount allocated when
investing. You need to know yourself - what risk you can take and still sleep well.
 
W

Well part of the Boglehead mantra is be sure you have the appropriate amount allocated when
investing. You need to know yourself - what risk you can take and still sleep well.
easier said then done ..

it’s no different then battle…it’s only after the fact we are in it do we learn our makeup …

know one knows in advance of a good bear market how they will react .

plus how we react and feel when we are younger when we have little accumulated can be very different when our fuel tanks are full and a mere 10% drop wipes out a decade of 401k contributions

in his book your money your brain jason zweig found there is no such thing as hypothetical financial reactions .

using brain imaging equipment jason and his research team found the human brain is flawed .

it hates losing money more then making it .

ourbrains give us good rational decision’s when we do thing’s hypothetically .

but when real money is involved the brain brings different sections of the brain in to play that cause poor investor decisions…they are not in play during hypothetical decisions.

once the thought of losing real money hit , our brains tell us to flee …

it was crazy jason found , as to how poor the brain functions under actual conditions vs in advance hypothetically .

when i was thinking about buying the real estate business i did my brain pounded me nightly with all the negatives .

but i knew from the book i was not being dealt even handed reasoning .

poor investor behavior is and always has been a major issue .

there isn’t one fund or etf that does not shows as a group that small investors get lower returns then the funds they were in got .

Morningstar tracks the money flow in and out on all funds to come up with investor returns vs the actual fund and etf returns
 
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I finally consolidated my investments so that they are all at Schwab. The last one was done for me when TD Ameritrade and Schwab's merger was finally completed and my assets were automatically transferred over. A few years ago, even though I wasn't crazy about TDA, I held out doing it myself because they wanted $75 to transfer. No other brokerage ever charged a fee for transfers and I've done a lot of transferring between different brokerages over the decades. My main reason for wanting to consolidate is so my son will have an easier time managing whatever I leave behind. Added benefit... it's now a lot easier to do my quarterly tallies.
 


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