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Should You Let Your Advisor Manage Your Whole Portfolio?

Apr 15, 2016 12:11:44 PM
Author: Hanson McClain

Retired state worker, Donna, asks if she should have her longtime advisor manage all her investments, or just a few.

Read Full Audio Transcript:

Scott: And we're talking with Donna. Donna, you're with Hanson McClain.

Donna: Hi there.

Scott: Hi, Donna.

Donna: I am a retired state employee and my husband's also retired, and currently...

Pat: Did he retire from the state, as well? I'm sorry.

Donna: No.

Pat: Okay.

Donna: He retired from the railroad.

Pat: Okay.

Donna: So I get Social Security, he doesn't, and we're doing fine as far as financially, and we aren't anticipating a need to touch any of our investments. And I do have a financial advisor who's a oversight of one large fund and another one.

Pat: Okay.

Donna: But I also have three other investments, two banks, and let's see, where's the other one? Two banks and...I can't remember all of a sudden. Oh, my work, my old work, I have a 401(k).

Pat: Okay.

Donna: 457. My question is, do I need to roll...he's suggesting I roll it all under his, control's not the right word, but oversight. Is that something I should do?

Pat: Well...

Donna: They're all doing fine. And is there a fee that I will get?

Pat: Oh, yes.

Scott: Yes.

Pat: Yes, but that isn't...

Scott: It might be worth it, I don't know.

Pat: That might not be the drive-in. That might not be the drive-in. So one of the things you said was two banks. What are those two products? Are they bank CDs? Are they annuities? Are they mutual funds that you purchased through a bank?

Donna: No. One is a rollover IRA from a parent that passed away.

Pat: Okay.

Donna: And the other one is some mutual funds.

Pat: Okay.

Donna: And then, I have some in cash there.

Pat: Okay, so...

Scott: Is the advisor...is the money basically held in one institution like Charles Schwab, or Fidelity, or TD Ameritrade, something like that?

Donna: Yes.

Scott: Okay.

Donna: Well, two, but the large amount is with one fund.

Pat: Is it one fund or is it a custodian, like Charles Schwab, or Pershing, or Fidelity?

Donna: TD...

Pat: TD Ameritrade.

Scott: TD Ameritrade, okay, so it's an independent advisor, it sounds like, and you're paying a fee?

Pat: Are you paying a fee?

Donna: Uh-huh. Um-hum.

Pat: Okay, so here's probably what...and you're taking a distribution from the IRA, at the bank, that you inherited.

Donna: No.

Pat: Correct?

Donna: No, no, I'm not taking anything.

Pat: And you inherited it from a parent?

Donna: A parent that passed away.

Scott: How long ago?

Pat: And how long ago?

Donna: Two years.

Pat: And how much was it? How much money was it?

Donna: Oh, it's not very much. It was like $39,000.

Pat: Okay.

Scott: You're going to have to fully distribute that within three years.

Pat: You know that.

Donna: No.

Pat: Okay, so here, you just answered the question for us. You should probably...if you have a competent advisor...

Scott: That you trust, those are two big assumptions.

Pat: Right. One is that they're competent. You could look at their regulatory record by going to brokercheck.com, and you could look at their education, and you could look at their regulatory. So go to brokercheck.com.

Scott: Or as yet, moneymatters.com, we've got a webinar on Lies, Lawsuits, and Levies: What Your Broker Doesn't Want You to Know. It lays out other ways you can do a background check on your advisor.

Pat: So watch that video...

Scott: moneymatters.com.

Pat: ...and then follow the steps in the webinar, and one of those steps is go to brokercheck.com.

Scott: Yeah, but the thing is, beneficiaries' IRAs, they need to have...the distribution needs to begin no later than December 31 following the year of death in order to stretch it out over your lifetime. If the distributions don't begin by that date, it must be distributed within five years.

Pat: So you've gotten bad advice.

Scott: Well, or you didn't get advice from the bank and you didn't let your advisor in on what was happening at the bank.

Donna: Okay.

Pat: So...

Donna: So...

Pat: What this tells...and the reason I asked the question is to see if you were actually getting competent advice.

Scott: And I don't expect the bank to give you advice.

Pat: Or competent advice. And the 457 or 401(k), what's the account balance there?

Donna: It's about $70,000.

Pat: Okay. And do you know how it's allocated, like how much is it in percentage, in stocks, or in bonds?

Donna: No.

Pat: Okay, you need to get all of this into one spot, but make sure it's the right spot. How long have you worked with the advisor?

Donna: For years, years.

Pat: Okay, do go to our website, moneymatters.com, watch the webinar, Liars, Levies, and Lawsuits, follow through that, which means do a background check on the advisor even though you've used him for years. If they check out and the advisor's competent, then you absolutely...

Scott: Yeah, I think it will be your benefit.

Pat: ...should move every dollar over to that advisor, and your advisor will actually add value because you don't know what you own and you've already actually probably made mistakes, not big ones, but little ones.

Donna: Okay. Okay.

Pat: And it's worth paying for in your situation if the advisor is competent.

Donna: Okay.

Pat: So, appreciate the call.

Scott: All right.

Donna: So I will incur some fees for moving out?

Pat: No, no, no, it's an ongoing fee. You're going to pay the advisor a little bit every year based on the size of the account because it's a fee-based advisor.

Scott: But he'll probably save you a lot of money, which just happened here. We're up against the clock. We've got to take a break. This is Hanson McClain.


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