Ever had one of those things where you're making major changes, and you know that its a good idea, but still, in your gut you're thinking Oh man, I wish we weren't doing this, what if it doesn't work right? Yeah, one of those. We're doing that now.
When my wife decided to accept the early retirement from her company, it came along with an offer of financial plans from the massive company that administers the 401k and god knows what else. We were pretty sure that things would look good, because we have enough money that - if my spreadsheet is right - we won't have to work again so long as we keep to the spending pattern we have now. Since both of us are likely to do that, and since we have forecasted major expenses for the next fifteen years, and have insurance in place for the unexpected, we think yeah, we're probably ok.
So when we spoke to the financial planner, we were pleased to have him affirm that yeah, we looked to be in pretty good shape, and here was what he thought we should do -- which was, basically, take our 401ks, roll them into IRAs administered by the company, and start taking Social Security right now until I was eligible for Medicare. It sounded fairly impersonal to us, though, as we reflected, our life savings seem like a lot to us, but to a billion-dollar company, its not such a big deal. Still, we wondered. So we went to the guy who had drawn up our estate plans two years ago and essentially said What do you think -- does this sound good to you? I'm not entirely sure that he started shaking his head before we finished the question. His bottom line was look, this is a major company, they do this all the time. They're not going to spend a lot of time on you. He strongly recommended that we talk to a local financial planner - someone we'd see face to face, someone we could reach easily. We liked the sound of that, but, to be honest, we did wonder if perhaps he was just pimping for people he knew and dealt with. Still, we asked for recommendations, and he gave us three. We went to see the first one two weeks ago. It's a relatively small bank - it might just be located in this state - with about twenty branches. They -- one of the bank vice presidents and a local branch guy -- spent about 90 minutes with us, talking about our goals, our spending patterns, what we wanted to be able to do. And then, yesterday, they gave us the high level plan for income and spending for the next twenty years, as well as the assumptions and goals that underlaid the plan. They'd looked at it all -- all of the options we have for pension pay outs, when each of us could take Social Security, the major expenses that we anticipate, the plans we have for the future. They ran analyses on all of this, and came up with a plan that meets our goals, gives us enough, but not too much, cash in a ready bank account, and invests the rest for the long haul.
I'm not sure which we liked more -- the personal attention or that they gave us about ten times the amount of detail that the guy from the big company did. So we told them that it sounded good, and what now. The what now is: we transfer our 401ks to them, our Roth and traditional IRAs, our small investments. They track and manage it all according to the standards they set to meet our goals and our way of approaching things (financially, we're not too comfortable with risk). Any time we have a question, need extra cash over and above recurring withdrawals, we call them, they handle it and the money is there within about two days. Once a year, more often if we want, we meet with one of the bank officers to go over how things are going, what we like, what we don't like.
It sounds really good to me. It also sounds scary.
6 comments:
Its what I did. Well, part of it. However...because of how I work and think...I have a wrinkle or two.
I have two types of money. The "touchy" money and the "no touchy" money. The "no touchy" money is like mortgage, rent, property taxes, which is mostly covered by my military pension.
I built a nest egg out of a paid back demand loan way back when I was a corporal which was managed by a financial planner. It ballooned at a time when interest rates were high, and even after gutting it to purchase a house, it is still more than that insurance policy I picked up at around the same time. So I am sold on "bank based financial planners". Our only worry would be if the bank goes under. I don't mind putting this money into higher risk mutuals in order to get the higher returns, and there were times when it was quite volatile. But it sprang back in the long run. This is also "no touchy" money, and is there in case I need lawyers, guns or money to get me out of trouble. (or an operation)
The "touchy" money is what I sink into my business. If my business is successful, I get to eat. Running a small business is not just fun, but it keeps me sharp as well. All the thrill of the casino except you have a little bit of control over the roulette wheel. I cannot begin to enumerate the benefits...they are legion...and I do not know why more people don't do this! Guess they LIKE to pay taxes...grin!
What a ride eh!
Life is not defined by the breaths you take, but by the moments which take your breath away. I hope you made provision for an uber-vacation (say, to gay Par-ee) in there before you get too old for it.
You don't want to end up like Lucy Jordan.
Years ago we went with a smallish investment firm that was very personal and only a few miles from our home. They had gotten a good write-up in one of the financial magazines as an excellent firm. Years passed, they handled our accounts well, we moved further away, the son of our investment advisor has taken over, we retired, the small firm was bought out by Morgan Stanley...and now we are wondering if we should review our approach once again!
Its an odd feeling, having someone 'manage your money'. I will admit that there are times when I have to remind myself that we are NOT wealthy, just very fortunate.
When we spoke with the financial planner from the big company, he proposed what he called a 'waterfall' approach, where the bulk of the money was in long term investments that, over time, would generate interest and such that became our day-to-day cash. That is essentially what these folks are doing. Your touchy/no touchy (which would NEVER work as a financial term, because its much too clear) is the same idea. That makes sense.
Of course, they don't like to pay taxes...its just that most people have neither the gumption nor the insight to do other than work for other people. I have had the same thought, but I am one of those without gumption.
I had to look Lucy up.
My approach to the idea of 'who is better, big or small', is illogical. I like these people. They use the same words, but they are right there, not on the phone, and that means something. We have some money invested with Ameriprise, and although I like the guy who manages it, I don't get the feeling of competence from him that I do from these fellows. (Part of their plan is that we move the money from Ameriprise... not sure we will. Not immediately, anyway. We want to be sure they don't have Bernie Madoff working there. )
We switched from our accountant in NYC when he went from a small company to a medium sized one. The service wasn't personal, it was all phone calls, emails and large envelopes in the mail (containing our 1040's and an invoice for services rendered).
Likewise, our local bank here was fine until it got swallowed by a larger concern.
I prefer dealing with the smaller firms - if for nothing else than you know they have a stake in your success!
I like what you say, CA.
Overall, I'm getting the idea that everyone likes a bank/dealer who is available to you. And I bet that its proportional -- the more money you have, the more the organization is willing to give that personal attention. The word that comes to mind is 'proportional' -- X amount of money buys you level 5 in a big company, level 2 in a small one. (I want to write that as an equation, but i don't feel like thinking. )
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