Are We Paying Too Much in Fees

Updated : Sep 15, 2019 in Articles

Are We Paying Too Much in Fees


it’s the weekend and you have financial
questions that need answering that can only mean one thing
it’s time for Jill on money the show that takes the mystery out of your
finances here’s your host Jill Schlesinger welcome welcome
it is the Jill on money show we are broadcasting live from the Capital One
Bank studios in New York and we are saying goodbye to April where I don’t
know about where you live but here in the East Coast it has been a very
traditional April filled with rotten weather where the the flower part April
showers May flowers that’s what we’re looking for anyway we are delighted that
you are here we’re delighted that you are taking control of your financial
life by tuning in and joining us and remember if you have a financial
question we always want to hear from you and the easiest way to get in touch with
us is to send us an email ask Jill at Jill on money.com
ask Jill at Jill on money.com and we’ll do our best to get ahold of
you and get you on the air and if not we’ll try to throw in some emails all of
this but you know it is I think a really good time of year to take stock your
taxes are done hopefully unless you’re on extension now is a great time to kind
of check in and see what’s up so that’s a good thing to think about hurry up
before the summer suck see when you know you’re not doing this in the summer
right I mean we’ll be here all summer long but we just don’t think you’re
gonna want to do this in the summer we start every show with a call at least we
try to and our first caller today is calling from Seattle his name is Michael
Mike welcome to the program how are you thanks Joe great to talk to you I
appreciate the opportunity of course tell me how I can help you out today
well my wife and I have 401k plans we have with their employers but also I
rolled over a 401k from a prior employer of about 800,000
and that my wife has equal amount and hers and she’ll be retiring next year we
also have an investment account where we have about a million and some other
investments and we use a financial advisor for one part we have another
part in personal capital which is Robo investment partial Romo investment funds
and the fees of both the financial advisor and the cap personal capital
will run you know we’re looking about $25,000 a year and then in fees for
advisory fees then one gives like point charges point eight and one charge is
one point two I guess my question is can we is it can we save money by just
taking it all on ourselves and just working with EF T’s and other investment
vehicles ourselves and save that 25k well I like of course you can hear let’s
ask some more questions so let’s just go back for one second make sure that I
understand all the different pieces so your wife currently has eight hundred
thousand in her retirement account that’s her active account then you said
you’ve got a rollover is that with a broker it’s with a financial advisor
right and that’s and how much is the financial advisor charging what 1.2 and
the so what’s at personal capital the million yes okay got it
all right now what else does the advisor do for you besides manage the $800,000
rollover just looks at everything all together and you know looks at what
we’ll you know puts it in the Monte Carlo scenario things and gives us some
nice-looking pictures and tells us what we should have at certain points of time
and as he we mean has he run actual retirement scenarios for you and
the words do you feel comfortable that you said your your your wife’s thinking
about retiring I mean do you feel at least in your in in the advisors
estimation or in the way you’ve run your numbers that this a two point six
million dollars is enough sufficient for your retirement needs
yes okay great that’s fabulous that’s really the most
important part here so it sounds more like the adviser is doing just classic
money management as you said with nicer charts probably than you and I could
create right so that so I mean hey kudos to those charts but if you will
sometimes an adviser can be incredibly helpful when you are facing these
transitions but if this person isn’t actually doing that and really kind of
hasn’t rolled out a good playbook for you
then I think you are very smart to reconsider what your options are so
let’s let’s talk about this let’s say that you took I’m gonna pretend the 2.6
million is now available to you how do you feel about managing that yourself
well with the good advice of the internet I think it’s possible to do an
okay job you know getting you know four to four to eight percent returns right
even four to five you don’t need to do for you don’t need eight you need four
or five that’s all you’re gonna need you don’t need it okay so basic choices um
it’s funny about personal capital because I think they’re a little
expensive for what they do so let’s say that you took the 2.6 million and here’s
what the choices are I do it myself and you can either use exchange-traded funds
but you could use just low-cost index funds you don’t even have to do any TF
you could literally just say I’m gonna put this entire 2.6 million dollars so
it would then be your roll over your wife’s roll over and then the investment
account you can take all of that money and go to Vanguard fidelity zero price
you could go to Charles Schwab TD Ameritrade you could do it you could
literally do that yourself and you’ll get yourself an allocation and you won’t
be too crazy and I think that that’s something that is perfectly reasonable
and it will cost you even if you chose some more esoteric indexes we’re talking
about I don’t know 10 to 20 basis points point 1 to 0.2 percent annually versus
as you know let’s call it about 1% because I’m sure that the if the advisor
got all the money they would probably drop the the fee down to 1% so what’s
the difference the difference is that 1% that you say the 25 grand falls to you
now if you wanted a tiny bit more help than what you could do is you could go
to a robo that has more advice and that would be a place like betterment which
now has advice its Vanguard that now has advice I believe Schwab just rolled out
a new model that has advice and that would cost a little bit more but maybe
it would be like a quarter to a third of a percent a year and maybe that’s the
the idea here is that you try that first look at the allocation see how that goes
and then if you want to take the whole thing on yourself you could so hang on
one second I want to go to a quick break we’re gonna come back to you and I just
want to get your feeling about that I want you I want to hear your reaction to
those different scenarios so hang on Mike because when we come back we’ll be
able to chat with you a little bit more and you know gang you always have
choices but those choices come at different costs right and all we’re
trying to do is weigh what those costs might be so if you’ve got a question
just like this give us a holler ask Jill at Jill on money.com during the break
hop onto the website Jill on money.com sign up for our free weekly newsletter
okay we’ll be right back with the rest of our answer to Mike back to Jill on money where Jill
Schlesinger helps you take the mystery out of your finances your back it’s Jill
on money have you read my new book yep you own it if you don’t just go to the
website Jill on money.com click on the link that says the book you can get it
from lots of different book sellers love you to read the dumb thing smart people
do with their money alright before we went to the break we were talking to
Mike in Seattle and Mike first of all I forgot to like give the big lead which
is you and your wife have done an amazing job at saving for retirement so
kudos to you thank you you had to take a moment I really let
you take that moment so I so we outlined the choices that you have in front of
you I mean obviously you could consolidate all of this money send it on
over to the advisor and and I would even venture to say it you know more than two
million dollars total as a relationship the advisor might drop the fee down to
even I don’t know three-quarters of 1% or 0.8 percent something like that is my
guess and so then the differential isn’t as big but again if someone is just
managing money versus really feeling like you’re your overall financial coach
mentor then I think you have a different choice and and so I guess I’m wondering
from you how you feel about the choices of either just doing it yourself with
no-load mutual funds that are index funds or exchange-traded funds then the
middle option being going to a robo that’s cheaper and also might have a
financial advice component and the third being consolidating everything with the
advisor and trying to negotiate the fee down so the difference being let’s call
it about 0.8% for full service 0.25 or 0.3 for a Robo
with some advice and probably 1/10 of 1% point 1 for just doing it yourself which
one sounds appealing to you at this point well I think that you know if you
look at it in percentage of management cost it probably runs it down to about
$12,000 a year if I put everything in one bucket right oh I mean that is not
as unpalatable as 25k so having somebody else take a look at that and managing
like tax loss harvesting or taxing side of things it may be worth it for my
comfort since I’m not a whiz at it to have somebody else keep an eye on that
if I can get the percentage down like 0.6 or something in that neighborhood
right and I mean I think that it’s worth do you like the person who’s managing
your money right now that’s the other question that doesn’t sound like a
ringing endorsement to me my man I think it I think it okay let’s just be
let’s be clear you should talk to him anyway and just say I’d like to talk to
you about really you know the nature of our relationship and you know and and
say that I am you can even say like I am considering consolidating everything but
I just want you to know I’m putting this out to bid that’s what you should say to
him and say right I’m putting it out to bid this is my shot at coming back and
saying to him cuz you know what the guy’s probably not he doesn’t sound like
he’s like a horrible person or anything you want to give him a shot and you say
I’m gonna put this out to bid I’ve been I’ve been satisfied but not overwhelmed
by what you know how where you where we stand with you I am seeking some more
retirement advice and really a strategy about how you would say I should like
handle the next year before my wife retires and then when you ultimately
retire I also want to know what your game plan would be to create income from
this portfolio so I can leave my retirement accounts alone for a long
time and just live off of the non retirement investment account I want you
basically work for your money darn it and so see what he comes back with
at the same time I also might talk to some other folks in your area I might go
and interview a naptha advisor a national association of personal
financial advisors naphtha you may want to go talk to somebody who is maybe a
flat fee advisor maybe you say to someone I got 2.6 million bucks and I
would like to for the firt you know I want to pay you 10 grand to give me a
kick-ass retirement plan an asset allocation plan that I can put into
place and maybe that’s and it could be a one-time only thing and then you should
start looking at these different robos that have a an advice component and see
what you think about those and you let me know what you come up with a lot of
this is just about your comfort level that’s why I said how do you feel about
it I have to believe that if you could get yourself to about as you said 50 or
60 basis points with a real adviser not someone who’s just managing money that
could really be worth it especially for the first few years of retirement where
you’re you’re making a lot of these key decisions I think that’s the way to do
it and it’s a good moment to just it it to check in with this advisor
I wonder I’m really going to be interested to hear what his reactions
gonna be because if he’s a class act he’ll just take this in stride and be
like you know what you’re right I I want to get I I’m gonna do better for you but
if he’s kind of a jerk he might be like tough luck our fee is this and screw you
I mean you know he won’t say that but you’ll get that feeling and that’s gonna
be instructive as to whether or not you stay there yeah I think we’ll go the
other way yeah with that that’s that’s really good advice all right well other
than that you got your estate documents managed you got that handled I do I read
your book and recommending it to everyone so I’m tasked with that so well
like you are fantastic thank you so much thank you so much for calling and let us
know how it turns out I’ll be really intrigued to hear what what happens in
all of this and what your decision is so I want to I want
hear back from me okay very much appreciate your help all right take care
of Thanks oh man that I think that’s really good interesting think about this
when you’re at a transition in your life this may be a time when you re-evaluate
your relationships with your advisor and it could be a time also where you say
what exactly have I been paying this person to do how what am I getting out
of this and it could be that when you drill down and talk about it maybe
Mike’s gonna go back to the advisor and the adviser is going to be really a good
person and say almost own it and say yeah I think I got to do better for you
we’ll say but there are so many choices now so many opportunities that I think
this is the the true test of whether an advisor is worth his or her fee and that
is not just doing money management because as we talked through this what I
we we really learned that money management is a commodity right now you
can manage your own money for a tenth of a percent a year you can hire a robo
advisor with some help by the way and you know what they are
they’re out there a quarter of a percent a year maybe it’s betterment maybe it’s
Vanguard maybe it’s the Schwab service that they just launched these are
unbelievable opportunities to get some advice and it may not be a dedicated
person I get that and also money management and then you’re at the point
where you say well what would I be willing to pay for a full-service
dedicated advisor who can walk me through this and in Mike’s case I think
that the idea of 1% is not cutting it right he doesn’t want to pay 25 grand a
year 26 grand a year for that but would he pay half of that
maybe he would that’s what he just said maybe if it’s 12 grand here maybe I
would be okay with that let’s see what the advisor says mark what he what do
you think he’s gonna pick what do you think the the that of the three do it
himself Robbo with some advice full service
advice for a lower fee what do you think he’s going for mark thinks he’s gonna go
for three all right I’m intrigued I’m totally intrigued I
would very I I will must I really got to say I’m gonna be really intrigued as to
what the outcome is going to be all right if you have a financial question I
would love to hear from you and so would mark send us an email ask Jill at Jill
on money.com and hey check out our podcast you can
get it on Apple’s stitcher radio comm Google Play anywhere else you find your
favorite podcasts coincidentally the name of the podcast is Jill on money
okay we’ll be right back back to Jalan money where Jill
Schlesinger helps you take the mystery out of your finances you’re back with
Jill on money Marcus has me chained to this desk hmm well let me out of the
studio how long we’ve been here now five hours five hours with a few television
hits in between maybe when we create our own studio whenever that is what’s going
on in your apartment maybe the will put the studio in with a kid right a big
problem I’ll come down to your apartment be like get me down off the Upper West
Side all right let’s see we do have to get to your questions and thank you so
much for all of you who have written in our email address is ask Jill at Jill on
money.com and if you’re on the web site poking around maybe you are reading some
previous blog posts maybe you are listening to old shows maybe you’re
watching some videos maybe you are buying the book the dumb thing smart
people do with their money if you’re there and you’ve got a question
something kind of creeps into your mind all you have to do is click the contact
us button okay Helen writes that she will turn 70 at the end of the year
she’s got five hundred thousand dollars inside of a retirement account and wants
to move it into an IRA then paid the tax that’s due and roll it into a Roth and
then she would do it sort of halfsies so she would I guess
move it out half in 2019 half in 2020 before I’m 71 and a half can I do that
if it’s an I an IRA can I rolled over into a Roth over time or must it all be
done before I’m 71 70 and 1/2 right now between my house taxes and minimum
required distribution I’ll be paying over a thousand dollars a month as a
widow I can’t afford that seems like a lot going on here huh
mark I mean you can do it I don’t know if you should do it because I don’t know
if you I mean it doesn’t seem to me I mean how it doesn’t seem to me that
this is necessarily the best decision for you I I can’t I don’t quite
understand why you feel like you have to convert it what’s the what is what’s the
motivation there because you can take your required minimum distributions and
and so what I mean you’re to make the tax one way or the other I just don’t
know why you’re gonna pay it all at once and I don’t know if you have the money
to pay for the taxes outside of the account if you do that’s one thing if
you don’t then you can’t do this I need more information Helen I really do okay
so don’t do anything yet jim says he may be leaving his company
for another one he needs to know what to do with his pre-tax 401 k it’s got about
two hundred twenty two thousand dollars he’s got 401 K in equity funds he’s got
another fun so why not just so couple things the pre-tax 401 K can you move it
into your new company’s plan that’s the most efficient thing to do so I think
that would be to me the best thing I’m if you can’t do it immediately you may
leave the money in the old plan and then wait until you can roll it all into the
new plan what might be kind of good thing and I’d I guess the the
alternative would be you could roll it into an IRA rollover where you could put
that anywhere you want any investment company or Robo advise or anything but
sometimes it’s just easier to keep it as from
one 401k to another so let’s find out what your new 401k is gonna look like
that would be so you and and for a lot of plans by the way you could just leave
the money there indefinitely many plans just alight is stick around don’t
discount that as an option Teresa’s dad recently passed away hmm stinks left mom
with about a half a million dollars four hundred grand in CDs his lawyer who
handled the probate suggested she opened an irrevocable trust she has enough
monthly income to cover her expenses she’s very nervous about doing the trust
I don’t know why you need an irrevocable trust is that is that because they want
to put that money over into a trust so that she could potentially qualify for
Medicaid if she needed nursing care the problem with putting it into an
irrevocable trust the reason why your mom probably feels nervous is that I you
can’t really touch the money it’s tied up and she loses control over those
assets I need to know more about if she has any other money that would be kind
of interesting because if this is all the money she has in the world I don’t
know if she really needs to do this there’s a lack of control and with an
irrevocable trust so you just have to be careful for that so I need a little more
info this is the segment of info we need more info judy is wants to know about
the state university retirement system in Illinois hmm the question is I have
the opportunity to pull out my money and call it a day
with the state but I think I might receive more money if I took the pension
with all the talk about the pension system in Illinois and deficits I need
someone else’s opinion yeah Mark’s just hopped on the line he said to me cash
out there I mean Illinois is a rough has a rough state of finances right now and
I know you probably could have more money but I might take the money out and
play it safe and forego that extra amount I don’t I don’t think that it’s
going to be I don’t think that that’s worth the risk
I just don’t so I hope that helps yeah okay how much time man one minute can I
do this fast John says his daughter she can get a 403b in her school system my
immediate reaction is good idea if you’ve got one what investment vehicles
depends what her choices are sent us her 403 B choices she’s got a credit card in
her name 30 grand problem is our husband charges on the car he makes payments
against the card the total never goes down she was putting their savings
together get it to 15 and cap it or husband doesn’t want to cap it it would
look bad she works in the school system okay don’t put money in this 403 B just
yet I want to know what the choices are because maybe it’s better if she just as
a Roth IRA second thing about these these kids get a handle on this credit
card debt and yes if you can I wouldn’t put all the savings down because I don’t
want her to get rid of all the emergency reserve fund but she’s got to get this
she and her husband got to get some religion on this and make a change here
okay it’s Jill on money give us a holler ask Jill at Jill on money comm we’ll be
right back if you’ve missed any part of the show or
want to check out a pass she’ll go to jail on money.com for more great
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so you can bookmark it and then look stuff up when you need to sound good
good excellent we are going to answer some questions we are very busy plowing
through the emails and here we have from Doug who is an employee with about two
hundred thirty three thousand dollars in his 401k and the 401ks held at Vanguard
and he said that for 401k participants there is a charge of 0.4% for investment
management is it a good deal and is it tax deductible easy thing first is it
tax deductible no absolutely not because no longer are your investment management
fees deductible even if you itemize is it a good deal well it depends and
here’s what I mean by that if you are just looking to throw this on autopilot
the question really is could you simply put a allocation into your 401k and have
it just update automatically or rebalance and if that’s the case then
you don’t need to pay them but if you are maybe there there’s two reasons why
really look at this kind of a plan one is maybe when you retire you don’t want
to have to deal with it you get access to a financial planner and that’s that
can be a good deal but if this is just Investment Management
I just think Doug that you you probably don’t really need this we can help you
with your allocation if you want to follow up with us so let’s try that okay
Kent says his wife is retired he’s got five more years until his retirement
she’s 59 he’s 58 they don’t have kids and he says I think we’re gonna have
enough money for our retirement 1.4 million dollars we have a simple
lifestyle so here’s the issue I want to keep what we have and avoid paying one
and a half percent annually to our financial planner can you suggest a
low-cost no risk investment mix that we can manage ourselves so here’s a great
example so here’s Kent who’s asking this question this is a great example where
you might want to choose a Robo advisor and I think that Kent’s question may be interesting in that they the charge
might be 0.3% at Vanguard and you can also choose to go to another investment
platform you might be able to go to say betterment they were they used to be the
sponsor of our podcast and you pay a quarter of a percent or or you can just
do it yourself you can go to index funds which are basically gonna cause you less
than a tenth of a percent and put together an allocation that’s kind of a
simple allocation you know little stocks a little bonds a little cash little
international and maybe you want to be 50/50 50 percent safe stuff 50 percent
more aggressive stuff so I think that’s one that’s really what I would say is a
good low cost but you ask for a low cost no risk investment mix guess what
everything has risk that’s really important that’s really important final
question from Kent how do you how do we start taking or arranging for
distributions from our retirement account you can actually set that up
wherever the money will end up being held they can send you the money that
you need they can do it on a monthly basis they can do it annually and all
you need to make sure is as a if when you’re managing this yourself is to
leave enough money in cash to make those distributions okay a Jill writes not me
Jill I was wondering why you recommend putting money into a Roth than a
long-term CD both are for post-tax money what’s the advantage of a Roth over just
a savings account well the difference is that a long-term CD the interest that
you get is taxable and in a Roth it’s not and if you’re using a Roth for
retirement and you wait until you’re 59 and a half when you pull the money out
there’s no tax to at all so the advantage is it’s all about taxes and
that’s why a Roth is so fabulous I do love that really okay Marc just keeps
sending me more and more emails okay let me see here my uncle is in charge this
is from Michelle my uncle is in charge of my mom’s money she gave each child
$10,000 each my uncle told us we have to give it back when she goes into a
nursing home leave a all seven promised our dad at his deathbed we will not put
our mom in a nursing home do we have to give it all back we have more money
coming from our mom after she passes well you don’t have to give it back
there’s no I mean unless there was some sort of legal document this is gonna be
nasty though I wonder who holds the health care proxy that would be very
important to understand okay so if somebody has that document hopefully
that will outline what your what the the person’s wishes are and if not that
needs to happen so time to have a conversation with your siblings and have
a discussion about it okay um yeah yeah we’re done okay we’ve got Marc’s giving
me that like let’s move it on all right when we get back we’re gonna have a
question about a safe deposit box which safe-deposit box just aren’t in vogue
anymore you know we’re gonna talk about it it’s Jill on money go to the website
Jill on money.com during the break and why are you there why don’t you buy the
new book the dumb thing smart people do with their money 13 ways to write your
financial wrongs hey it’s so much fun promoting this and I can will continue
to do so forever okay we’ll be right back you’re back with Jill on money and
we are broadcasting live from the Capital One Bank Studios here in New
York this is an interesting question that we got from Donald who interesting
his mom opened had a bank account and associated with that bank account there
was a safe deposit box and Donald said that he was the secondary account holder
and this is dates back probably decades he said then the bank was shut down the
bank was called the central bank for savings in Meridian Connecticut now his
mom is in assisted living dementia Stage three dementia she of course has no idea
where the box and its contents are and so the question is can you point me to
someone that might be able to assist me what can I do okay he thinks that he
says he feels like he’s gonna lose the bonds and EE savings bonds and all this
stuff so here’s what I did I went to the state of Connecticut portal CT gov and I
went to bank information and what it looks to me like is yes you’re right
they closed Meridian trust in 1994 July 1994 but here’s what happened they sold
the operation the FDIC shut it down and then sold the operations to people’s
Savings Bank of New Britain so that’s your best bet
go to the people Savings Bank of New Britain and track down that safe deposit
box I mean I’m sure it’s still there it’s just a question of how you’re gonna
get it this is one of the problems with safety
at bucks but I just want to tell you you’re going I be diligent look for it I
think you can get it Nick wants to know about 401k investments he said I want
some safety I want to make some good money help options large mid small cap
real estate that’s it that’s all I remember
okay Nick listen send us a list of the account of what’s available and then
we’ll help you out because we do not want to we absolutely positively want to
make sure we give you the best options that are available to you all right that
is it for our number one so exciting if you missed any part of this show you can
always listen to it on the website Jalan money.com
also on our website you can subscribe to our podcast you can get it on the
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else you find your favorite podcasts ok we will be back more of your questions
in the next hour stay tuned it’s the weekend and that can only mean
one thing you’re listening to Jill on money the show that takes the mystery
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got a financial question we really would love to hear from you all you have to do
is send us an email ask Jill at Jill on money.com Oh or alternatively if you’re
on the website Jill on money.com click the contact us here button i’m here’s
someone who actually responded to our free weekly newsletter and her name is
linda but if you wanted to actually sign up for our free weekly newsletter with
all sorts of chock full of interesting information all you have to do to is to
go to Jill on money comm I think as soon as you go there you’re asked to sign up
for that newsletter isn’t that so mark has it all set up Linda wants to
know how do I report that I donated my required minimum distribution as a
qualified charitable distribution on my tax return
I’ve been issued a 1099 are for the distribution it doesn’t indicate that it
was a QCD so here’s what I did I went to the IRS website irs.gov and this is what
it says to report a qualified charitable distribution on your form 1040 you
report the full amount of the charitable distribution on the line for IRA
distributions on the line for the taxable amount enter 0 if the full
amount was a qualified charitable distribution enter QCD next to this line
and also you have to file Form 80606 non-deductible IRAs if you made the
qualified charitable Bhushan from a traditional IRA in which
you had a basis and received a distribution from the IRA during the
same year or it was the distribution was made for my Roth IRA although why would
you would make that from a Roth IRA I don’t know Roth IRAs are not subject to
the required minimum distribution so there it is
easy go for it Linda uh so much if you really want to know where your tax
dollars are put to good use go check out IRS gov it’s fantastic
actually John writes a new financial adviser that I may select to manage my
investments wants me to sign a limited power of attorney agreement what steps
should I take to protect myself against misconduct I have no reason to suspect
but I have no experience with him except to meetings and the adviser I wish to do
business with is a member of the Schwab advisor Network I guess is it is the
reason I mean first of all the question is why does he need a limited power of
attorney is this so that you he can trade on your behalf if that’s the case
not sure that you you need to do that but you might and if it’s just because
you’re giving him discretion seems fine to me that that would be my general I
think I think that’s sort of the general progress their progression rather uh and
if he doesn’t have I guess he there’s no reason that you would sign a limited
power of attorney if if he were were not on discretion so a discretionary person
probably needs that but you can always check in with Schwab about it you know
okay this is anonymous I’m a 71 year old widow and have managed my money
conservatively my late husband managed also managed the money conservative okay
my pension and Social Security one hundred twenty one thousand dollars a
year I’ve got five hundred fifty grand in a Roth for mortgage free rentals for
ladies and gentlemen worth about six hundred fifty thousand dollars
personal residence worth just about a million dollars as a $250,000 Mortgage
should I start gifting my two children my properties or cell rentals and gift
them money should I put the properties in a revocable trust for them to get
stepped up value upon my death well first of all I think you should talk to
an attorney and know you should not be giving anything to your kids do not give
any residence or gifting anything why why would you do that
definitely no on that said I think you should talk to an attorney and figure
out whether you actually need a revocable trust what are we trying to do
here you I mean if you needed to go into a nursing home you have a hundred
twenty-one thousand dollars a year I’m not sure why you want to start gifting
the kids so much money and I’m not sure if that makes sense for you but go see a
qualified estate attorney okay that’s very much more important than
anything else okay all right here we go this is from Joel okay I enjoy your show
and I think I’m sending you a question you have not received before I over paid
my taxes my state taxes by a total of a thousand bucks in 2009 and 2010 but I
didn’t discover it until July 2018 and pursued a refund and the State
Department of Revenue responded they were sorry but their statute of
limitations prevents them from returning my overpayment I contend the state
employee who processed my return didn’t catch my mistake they responded that the
Department of Revenue don’t have personal responsibility my error
I believe resulted from a faulty TurboTax calculation of my pension and what are your suggestions oh I don’t
know this one’s tough I guess that I might go
since you’ve already pursued the state I don’t know if they’re gonna be able to
do anything I mean I think I sort of given you
quite the answer to your question I guess you could go to like your your
State Department of Financial Services whatever that is and try to pursue it
that way but it sounds like they’re kind of holding firm ah boy Harvey wants to
advise about how to get out of a timeshare he says I realized from what
little I’ve read that I shouldn’t expect any money back I’m nervous about being
taken to the cleaners by a company that’s not rest reputable I looked on
the Better Business Bureau website noted some recommendations do you think these
companies are okay what price would I be expected to pay I’d love to talk to you any info would be helpful I would go
back to the company that actually I mean yeah you can do it I don’t know a lot
about the timeshare business I know that it’s to quote my mother-in-law
timeshares are for suckers is what she said but you might find some luck in
going to the company and trying to sell it back to them directly that’s a
possibility but I still think that this is you’re just not gonna get a lot of
money back so okay Dennis writes I’m tired of fees with no results I’ve
got 130 grand in an IRA I’m 64 what can I do to avoid fees poor results I’m not
going to talk to to avoid fees you’re gonna try some sort of Robo advisor and
that could be a vanguard has one personal you know services for about
0.3% betterment former sponsor of my podcast a quarter of a percent or you
can just open up an account at a no load index fund company like Vanguard zero
price you can go to fidelity Schwab any of these places and put half the money
in a in a stock index fund and half the money in a bond index fund good luck
Dennis all right during the break why don’t you go to
jail on money calm and there you can peruse through all the fun stuff that we
have you can read listen watch and again you can sign up for that free weekly
newsletter will be back back to Jill on money where Jill
Schlesinger helps you take the mystery out of your finances you’re back with
Jill on money if you’ve got a financial question we’d love to hear from you our
email address is ask Jill at Jill on money.com our website is Jill on
money.com and there we are trying to build a financial glossary so if you’ve
got a term or a word that you come across all the time and it just like
nags at you sometimes that happens to me with how to pronounce a certain word
that I’ve read a million times but then I had to say it out loud so I go to the
YouTube to see I always want to use some sort of you know the some article like
the Facebook Cathy writes my that her husband passed away a year and a half
ago and she hasn’t done anything with the six hundred thousand dollars or six
hundred dollars mark what do you think I’m guessing at six hundred thousand
dollars that she received him life insurance proceeds she’s I don’t know
who to trust I think I would like to put it somewhere I could earn about 5% take
out the interest every year and live on other funds I have available pension
savings social securities they’re a safe place to put these funds I do not like
market volatility if I don’t have to be involved in it preserving the principle
would be my goal I don’t think you’re getting 5% let me just start there but
let’s say that you wanted to try to build something like what we would call
a CD ladder and that really would require that you put some of the money
in for a 1 year 2 year 3 year 4 year 5 year 60 or CD and you can go to deposit
accounts calm and you can look it with the CDs so if you go to a longer term CD
say a 6 year CD you can get over 3% and then it’ll kind of squish back down to
you know down to the one-year CD rates which are more like two and a half to
change but your best you’re looking at about 3% so I don’t think you’re
get 5% the way that you could potentially try to earn 5% is that you
could take a bunch of the money and put it in CDs and then you can put some of
the other money and just maybe throw it into an investment account where you’ve
got some safe stuff like just maybe a money market account and then a little
bit in securities but that’s unfortunately right now just given where
we are in the interest rate environment Kathy you don’t really you don’t really
get that kind of juiced-up 5% that you’d like so give that a whirl let us know if
you need more help Walt writes that he and his wife are both 56 she’s worked
for a company for 20 years she’s got a pension and has approximately five
hundred grand in a retirement account it’s invested with fidelity
I am self-employed and I have approximately thirty thirty nine
thousand dollars in a Roth I make too much to contribute to it any longer and
then I’ve got about four hundred thousand dollars that’s liquid and I’m
looking to invest that for retirement we’re planning on retiring in about ten
years their primary residence got a mortgage on it a couple rental
properties and says all my rental properties gonna be paid off in seven
years my primary will be paid off in nine
years what should I do with this $400,000 that’s liquid at this time well
look I mean you could sort of go by what your wife has in her retirement account
and look at the fidelity investments that you’ve chosen and hopefully you’ve
picked an allocation that kind of matches what your risk tolerance is I
might look to that as a guide and if just to make it easy you may want to
just open the account directly at fidelity otherwise you can go into a
online investing platform and we’ve talked a lot about this this show but
you know one of these that just sort of does it for you go through a risk
questionnaire and I think that fidelity probably has something like this but if
not Vanguard has one betterment wealth front and go through that and try to
select a allocation that you can stick with
and you know I don’t know what the allocations gonna be because it really
depends on more of your financial life but that’s what I would be looking to do
okay um oh that is funny there’s um there’s a
quick follow up that I just realized that came in there’s another email that
came in from Kathy who’s the question before this one about the for the the
money the life insurance proceeds she says that her insurance agent says he
can guarantee 4% um which I’m guessing is that he wants to buy some sort of
annuity so no no don’t do anything with the insurance agent you don’t need that
okay just just do it yourself or go get yourself a financial planner
okay that’s a good thing to do here’s the other end of the spectrum a 29 year
old named Matt he’s maxing out his 401 K and his Roth IRA and his HSA debt
student loans will be paid off in a year mortgage has three hundred fifteen grand
left that’s my next target I make a hundred grand a year
I want to decrease my tax exposure where else can I put my money
life insurance no no life insurance um why do you want to get I don’t see why
you want to pay off your mortgage unless your mortgage interest rate is really
high I wouldn’t do that um you’re doing everything you should be doing that your
tax exposure I know I you know it shouldn’t have such a huge tax exposure
on a hundred thousand dollars of income and I I would open a I mean you’re doing
you’re doing the Roth IRA which is great and you keep doing that but I think that
at this point you start a non retirement investing account and you make sure you
don’t buy big tax generating assets that are in there okay Wanda is a dedicated
WCCO radio listener WCCO in the Twin Cities and she says we apparently did a
terrible job of educating our youngest daughter about all things financial and
I don’t see a way out of a near mess I’m hoping to get my grandson off to a
better start I don’t want him following and his mother
can you recommend in any online workbook based financial program that works you
know what go get my friend’s book worth it or not worth it isn’t that what Jack
auditors book is called mark worth it not worth it
that’s a great starting book you can also try what about Aaron Lowery’s first
book which is called millennial broke millennial try broke millennial that’s
another one that’s a good one to try there there’s a couple of good sources
for you all right here is a question from Agnes building a house in a few
months in lieu of maxing out my solo 401k would
it make sense sense to shift that money to the cost of the house that the need
arises I’ve got enough cash to get through
about three-quarters to 85% of the house building cost for the remainder I could
take a loan if my work if if my normal workflow cash flow can cover it but I
wonder if it’d make more sense to divert the retirement contributions that I
would have made for about a year or two for the finishing of the cost I’ve been
maxing out my retirement contributions for ten years and according to
retirement calculators I’m a little ahead of where I should be in my savings
uh what do you think mark I’m thinking it’s okay for Agnes to do that I mean I
know I don’t like that but I think that there’s a certain amount of risk of you
waiting to see whether your cash flow can actually absorb this so I think that
I would I would probably make that decision
Craig listens to the program on wben in Buffalo and so I heard part of your
program about Social Security survivors my dad passed away ten years ago my
mother’s only been collecting her small share of Social Security and does she
have some claim to his which would be much larger she should check with the
Social Security Administration yeah that’s absolutely of unfortunately can’t
go back in time you’re not gonna be able to go get what you should have gotten
but I would contact the Social Security Administration pronto and see what you
can do with that okay I’m hey Mark how about that
all through those right through all those emails my friend not bad right I
know you want to just do more and more we’re trying desperately to catch up and
dig out but we’ve done a very good job especially considering that we got a ton
of emails about the book and all those appearances I did for the book and a ton
of emails about tax season so I am very grateful for all of you who write in
please be patient we do try to get to every single email and answer your
questions as quickly as we can they do sometimes pile up you are listening to
Jill on money and if you do have a financial question give us a call now
don’t give us a call give us a shout how about that drop us a line ask Jill at
Jill on money.com we’ll be right back do I invest here should I put my money
there Jill Schlesinger can help you back to Jill on money your back with Jill on
money if you have a financial question we totally would love to hear from you
okay just give us a holler our email address is ask Jill add Jill on
money.com okay so this is interesting I’m looking here at an email from
somebody and they’ve sent me the name of a new company and so basically here’s
the deal they have one advisor and the advisor they’ve had for a while they
liked but the problem is that the person they’re dealing with has gone to a new
firm and it’s called advice period have you heard of this Marc I haven’t either
so so they think that they really like the PERT so here’s that here’s a here’s
a critical question we’re comfortable with a current firm but the new the
person they dealt with at the old firm moved to this place called advice period
so I went on to this website and it’s kind of interesting we should let’s
check out these people let’s maybe find if we can get like their CEO on the air
so this is called advice period and it says we put our clients first okay and
they are they are fiduciaries so that’s good um and we’re gonna click I’m gonna
click on this button just to poke around and say hey what’s different
this is um basically that their fees look like what are they getting for
their fees getting rid if you haven’t asked your kind of either the fees you
pay I don’t know what fees they charge how about that and they’ve got a nice
website I don’t know I mean look I think that here’s what I would do I would look
at the current so the current advisor look at the fee or being charged there
and talked to your new person and find out you know your your person who used
to service you at that firm and then say hey what are the fees with your new with
the new firm and also find out from the person who you used to deal what’s the
difference between the way they manage money so that’s what I would do and I
hope that that’s helpful I think that that’s kind of the only choice you have
because otherwise I don’t know you’re sort of in this weird place where you
are trying to figure out like the difference between the two without
asking so let’s just ask all right this is from Jean who is single and works
full-time she makes about 130 hundred forty thousand dollars she contributes
the max with a catch-up option into her employers 401k and the question is can I
contribute to a Roth given my income level well let’s look at that retirement
plan contributions to a Roth are phased out for 2019 for single folks at one
hundred twenty two thousand dollars you said you make 130 to 140 but you say
that you’re putting away the max right now into your 401 K I think she can do
it it’s close so if you’re putting away 19 thousand plus the catch-up
that’s your 25 grand then essentially you’ve dropped your let’s say she makes
140 you’re right I think you could do it I think you should be able to do it you
might want to wait until towards the end of the calendar year just to see
whether or not you go higher than you think that way you don’t have to
recharacterize your Ross that’s what I would do
definitely okay here’s a note from Karen the subject is living trusts my husband
67 on 68 were retired we owned a farm in Minnesota 40 acres the estimated market
value 125 grand they’ve got their wills they’ve got a power of attorney they got
health care directives great we’ve also heard about living trusts were
considering that one lawyer I called said people don’t do that anywhere the
reason why he said that or she said that said that is that the the estate tax
rules changed pretty dramatically and so maybe you don’t need that to avoid
estate taxes however let’s see what the next sentence is our financial adviser
referred us to a lawyer who said he would help us with the trustees giving
us questions to go over with our kids the trust will be in their names then we
all met with him our concern is that we mentioned that we want to put a large
shed on our property as the outbuildings need replacement he said it wouldn’t be
a good idea to keep gifting to our kids there’s remodeling I don’t understand
how it all work the big question is we are wondering if a living trust is a
good way for us to plan for our estate I don’t know it seems like a little bit
unnecessary I’m not sure but I I’m guessing given the situation that maybe
you’re a little young maybe you’re great maybe what’s being suggested to you is
that you’re gifting a little too aggressively given your age and the
reason why you would use a trust at this point is to have better control over the
assets so maybe with the kids you don’t trust the spouses or you want things to
kind of flow in a very specific way no I don’t know if you need it doesn’t sound
like it but I’m not a lawyer okay Joseph has a fiance they’re getting married in
July they’ve already combined their finances
they’ve got minimal debt home mortgage to car loan
and her student loans okay they’re 32 and 28 years old respectively
they’ve got about $1,500 left after groceries and other bills every month
okay so what do we do with that money pay down debt invest at the savings 529
account we max our contribution to 401ks for the employer match we add two
supplemental retirement through Roth’s do we continue doing each of the above
things we better serve focusing on one thing I think it kind of depends on the
interest rate on the car loans and on the student loans if these are sort of
the the run-of-the-mill 6% dish student loans I’d pay those down first and if
the car loans are more than you know say three or four percent same goes there
and I would focus on that and I would take your foot off the gas on the 529
accounts I don’t think you need to do that ideally what I’d love for you to do
is accelerate the debt pay down the debt it gets paid down and then we can have
another conversation about how to put even more money into your retirement
account so check that out and if you are listening to us right now and you need
some help with some decisions priorities just send us an email ask Jill at Jill
on money.com we will be right back with many many
more of your questions stand by 401ks IRAs refinancing she covers it all
back to Jill on money with Jill Schlesinger she covers it all that’s me
Marc isn’t it nice when I come back from vacation I’m in a like cheery mood you
do like that and I’ve been getting a lot more sleep which is fantastic that said it’s really better to sleep
more than anything else okay so a few things little business you’ve
heard me talk about this through throughout the hour but I’m gonna remind
you that if you have a specific word or term in the financial lexicon that you
would like to find send us an email ask Jill at Jill on money.com
because we’re building the Jill on money financial glossary as we speak so do
that it would be great and you can always ask us questions two different
ways to get in touch with us ask Jill at Jill on money.com and then of course
from the website itself from the Jill on money.com
website just click on the contact us button and you can do that Marc did that
and he’s considering purging several active credit cards that he says he does
not use or need what’s the best way to do this without hurting my credit score
by the way he says he and his wife have credit scores of 8:30 and they’ve never
paid a dime of credit card interest that same with mark says that to my mark on
so here’s what I would do this is what I’ve been thinking about with these john
ulzheimer who’s a credit expert he’s been on the show many times says that
when you call to cancel the cards it does actually can I should say hurt your
credit score so what you may want to do is take those credit cards throw a
rubber band around them and put in your back of your desk drawer put it in a
lockbox somewhere and don’t use them and that’s it on that that’s kind of a safe
way to do you could literally them up if you wanted to but don’t
actually close the account necessarily okay here is a email that I love that
people are doing this they’re sending me the websites of the people that they’ve
been working with in terms of their firms he says I don’t see the word
fiduciary anywhere should I be concerned so here’s what I did I go to the home
page of this of this person’s website okay first of all the the funniest thing
about this website is here they have like an about they have living
confidently strategies and then they have a whole thing for dentists
that must be their subspecialty they’ve got resources hey they have a glossary
let’s steal some of their glossary mark check it out
client login and contact okay so let’s go to the about mission statement useful
links let’s look at useful links calculators stock information ah okay so
they have I I’m not sure they are fiduciaries they they are security
they’re sold through they they have some securities business and I I don’t know
if they’re registered as investment advisors so that’s I guess one thing to
ask you can say hey you can just ask them I know people get really kind of
freaked out about that I mean you can they have a link here to the SEC broker
check web site that’s a possibility you could just do that but interested I sort
of feel like let’s look at their team so they have investment advisor invested so
the guys are they’re not CFPs hmm I think these are
not fiduciaries that’s my guess you could ask them that’s one thing to do
but my guess is that they are not fiduciaries because what they and here’s
like the code words that I look at this one guy says that he’s got strategies
including insurance planning and that to me once they sell insurance they and
they have wealth protection planning sounds like annuities so I’m just
guessing they’re not fiduciaries I don’t know I I’m thinking no I’m but why not
ask them straight up wouldn’t that be better I think that’s a better way to do
it Nancy writes that quote I read your book
it was a straightforward easy read with clear concise informative tips that I
shall put to use so I’ve already put in place thank you for a wonderful
financial literary contribution can she put this whole thing right on the amazon
website please if you read the book and you like it give me a review I don’t
even know why but that the publisher says that it works anyway Nancy is
listens to us on WCCO in the twin cities on Saturday evenings she also loves the
conversations with Dave Lee on Mondays by the way Dave Lee all I do and the
first part of that conversation I talk about money and the last part a little
hockey I’m when she says that too often the show was preempted by basketball on
the weekends and so listen we have nothing to do with that I’m sorry and if
you want she says I’m sorry I didn’t buy by your book I borrowed it from the
library yeah that’s okay but hey if I’m a joy to listen to and you like the book
just put the review up on Amazon that’s all I ask Nancy thanks for writing those
a sweet one all right when we return we’re gonna talk about phone scams
that’s what Sanford wants to worry about this next bit you’re listening to Jill
on money hop onto the website where you can please please
please buy the dumb things smart people do with their money 13 ways to write
your financial wrongs okay you can borrow it from the library but maybe buy
it for yourself for your own library if you can that would be great
it’s Jill on money we’ll be right back you’re back with Jill on money if you’ve
got a financial question just send us an email ask Jill at Jill on money.com
Samford did that and he said he is a little bit worried about a phone scam he
got a call it was a recording he knew it was a scam he said I wanted to get more
information to report it I stayed on the phone it said press 1 no one ever said
anything so I hung up by pressing one could they have tapped into our computer
and gotten our personal or financial information or steal our identity should
we be worried because I mean basically I think everyone’s worried about that
because many people have their phone and cable and internet bundled I don’t think
you should be worried but look if you are go on to annualcreditreport.com flag
the report and if you’re really worried you could probably get someone to poke
around your computer to see if there’s any viruses on there ok James is
planning to retire in 2024 which is the year before the current tax rate tax
rate cuts expire so in 2025 I plan to have enough cash on hand to support what
we need to live on that year since I am convinced that tax rates are going to
increase big-time after 2025 I’m config of converting my $315,000 IRA
to a Roth and pay the 24% tax my Roth is for long term growth
blah blah blah do I think this is a good idea yeah I mean I love the idea of
converting I guess what you’re thinking is you do it all in 2025 I can’t
remember when the rate changes is it 16 or 15 2016 5 but yeah I mean if you can
do this that would be great and I think that that’s a great way to
lock in what your tax liabilities gonna be look you got time right so I wouldn’t
go crazy that sounds like a darn good idea and everyone should be thinking the
same way which is how do I lock in these lower rates last but not least Bob wants
to know how to borrow money I mean what needs about 30 grand to buy not just
first rental property not the second but his third rental property and he says
home equity some other loan he says I assume I shouldn’t borrow from my 403 B
no do not borrow from your 403 B yes you can get a mortgage go check out which
one makes the most sense for you whether on one of the rentals or maybe another
okay that’s it that’s all for the program you have been listening to Jill
on money live from the policy genius studios go check out policy genius it’s
the easy way to compare and buy insurance and check out our website Jill
on money.com there you can find all this great
content and also you can sign up for a free newsletter free and it’s weekly
fantastic all right thanks for listening we’ll see you next week you

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