Do I need a financial advisor to manage a $450K inheritance?

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  • #136892 Reply
    ‎‎USER

      I inherited $450000 in cash from my late husband’s life insurance. I am 40 years old with two young children (ages 9 and 7).

      I will not need to use this money for about 10 years, when the Social Security checks stop, but I want to make sure it is managed wisely.

      Fidelity and Citi are offering to manage the account for a 1 percent annual fee. (Assuming an 8% return thats 61,939.58 in fees over 10 years)

      I am very risk averse. All my retirement savings are currently in a target date fund.

      My retirement is on track to be fully funded by age 57, with a pension, 2 million projected in retirement funds, lifetime health insurance, and no debt.

      For those who use financial advisors: how do you justify the cost? And at what point does it make more sense to manage the money yourself?

      Do I need a financial advisor?

      #136893 Reply
      Thomas

        Id consider just putting it into an etf like VOO which tracks the s&p 500. Hard to do much better for long term holds.

        You could choose 2 to 3 more diversified etfs and just let it sit without being charged the annual fee.

        #136894 Reply
        Drew

          No need for a financial advisor, they can’t beat the market. VTI and VOO would be your best bet.

          #136895 Reply
          Josh

            Do not pay the 1%. It’s the worst deal in history.
            Put it in vangaard s&p 500 and leave it alone.

            If you need financial help. Use a fee only planner.

            Ie like a one time $500 fee. Nothing percentage though.

            #136896 Reply
            Nelly

              I wish I could give you some advice but I am learning myself. What comes to mind though, that if you should get remarried, you need to protect all these assets so that they only belong to you and your children.

              #136897 Reply
              Ada

                Most financial advisers don’t out perform the S&P. If they are actively managing your money and can out perform the S&P then the justification is because after fees you’d still be further ahead….

                Or look for a fee based advisor rather than a commission based advisor.

                #136898 Reply
                Spencer

                  My advice:
                  You are already set. Put this in an account with a safe mix of bonds and index funds.

                  When your kids are of age, you will almost have enough to cashflow their college (assuming you make 5% annually from now until then).

                  Then, once it makes sense (maybe when they get married), help them buy a house. You should have $600k to do so with.

                  EDIT: if you go less conservative and achieve 8%, you will have $830k before college starts.

                  That would make it easier to cashflow tuition.

                  #136899 Reply
                  Rob

                    Vanguard has managed accounts for only .3%. They assess risk and automatically rebalance for you.

                    I would definitely go that route.

                    #136900 Reply
                    Lauren

                      The reality is that financial advisors are going to serve as a support system in your financial decision making.

                      I would argue that in my role as CFP, my divorces and widows interact with me on a more regular basis for financial decision making than married clients who have a partner to bounce ideas and make decisions together.

                      A good financial advisor may also be able to help you confront your risk aversion which could lead to better growth year-over-year.

                      Given that you’ll have a pension and Social Security, you should be able to look at this money as a good place to increase risk and reward.

                      But a good financial advisor is also helping you with estate planning, working with your children when they come of a formative age, getting you with right tax partner for filing and tax planning.

                      It sounds like you may need to look at asset location very deeply based on expected future values and income to start working on implementing a plan to reduce income taxes in retirement.

                      #136901 Reply
                      Payton

                        Fee based planners would be a great option. Don’t pay someone for assets under management. Aptus Financial is fantastic.

                        I used them for a few years for a yearly check-in and plan update, and they set me on the right track.

                        #136902 Reply
                        Dan

                          Raising 2 young children and your job probably demands all of your time currently, so if you’re not comfortable managing it on your own at this point I don’t think it’s unreasonable to pay an advisor 1% until life slows down a little and then you can always reevaluate the situation and take over your finances then if you’re not happy with the advisor.

                          #136903 Reply
                          Alyson

                            The simplest thing to do with the money is to open a brokerage account (Vanguard, Fidelity, or Schwab) and put the money in Target date funds like you have your retirement in.

                            If you really don’t “need” the money, be brave and put it in index funds as others have recommended.

                            Best of luck

                            #136904 Reply
                            Ben

                              An advisor can be a value add, especially for people who get very emotional with investing and panic sell on bad news and then sit on the sidelines.

                              There are flat fee advisors that could be a better value.

                              #136905 Reply
                              Paige

                                If you are going to be safe you don’t need a financial advisor but if you want to be a little risky (which you have time) might be worth it if you don’t want to read the books, watch the YouTube videos, look at the market.

                                Same reason why people hire people to do a lot of things – not because you couldn’t do it yourself but because of the time it takes to do it and gain the knowledge.

                                For example this thread has tons of ideas, if you aren’t financially savvy with the lingo you may have to start researching until you understand all these options.

                                #136906 Reply
                                Crawford

                                  I’m retired 7 years now with 66% still in equity and 34% fixed income.
                                  All our equity is a total market index fund.

                                  You will pay 1/3 of portfolio at 1% a year.

                                  Our portfolio is up 40% since retirement. The fund is 3900 companies, I sleep well at night.

                                  #136907 Reply
                                  Rebecca

                                    You could use a one time fee advisor, just don’t let them talk you into an annuity or a whole life insurance plan.

                                    You could also use a passive setup like acorns or betterment You just select a level you want like aggressive etc.

                                    we pay 5 dollars a month and it’s spread between vanguard funds.

                                    Heck even ask chatgpt. Also, some banks offer financial services like Wells Fargo.

                                    #136908 Reply
                                    Hubbard

                                      What do you need a financial advisor for? Why not just invest this money into a well-diversified ETF and get a Revocable Trust set up, if you don’t have one?

                                      Max out investments into retirement accounts every year and maybe also set up 529 for kids.

                                      #136909 Reply
                                      Shelly

                                        Please seek out a financial advisor who listens to you and your needs. Find someone who you like and feel comfortable. I’m sorry for your loss.

                                        There are options out there that don’t charge annual fees and are risk adverse.

                                        #136910 Reply
                                        Andrew

                                          If you are risk adverse, and have a longer time frame, look at using life insurance to create generational wealth. Find an advisor in your area that can help you with this.

                                          Your earning are tax free, and if set up properly, you will make money, even in a down turn in the market, plus, the money is shielded from college financial aid questions, 529 are great, but everybit helps.

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