So for some background, I’m a VP at a small boutique IB in my late-20s. Recently married and been giving more thoughts around planning for the future financially. I do plan to have a child (hopefully only 1). While my wife works, her income will likely remain in the $100 - $150k pre-tax range conservatively for the long-run (soon going to exit out of banking after her analyst years). My TC pre-tax is around $500k right now.
I’ve saved decently since I started IB post-undergrad and currently, combined, my wife and I have ~$1 million in net worth. ~85% is invested in SPY (~$200k or so is unrealized gains so need to factor in tax also). We don’t have property yet and still rent in NYC where we will remain for the foreseeable future.
With all the volatility in the markets, I’ve been getting nervous about having so many eggs in one basket (SPY) but it seems like there’s turbulence in the bond markets also. I do not have a great history of investing…and I know admittedly very little about trading (I basically only know M&A).
Just wanted to check if anyone has any thoughts on how I should proceed. Am I at a point where it’s worth hiring a small wealth manager or financial advisor? If we had the $1 million completely in cash, I probably would, but I’ve been hesitant to sell out of SPY.
Only have ~$50k liquid right now, so not sure what a wealth manager would do for me. Another $50k is in a convertible note from participating in an angel round for my friend’s start-up (which unfortunately may or may not be cooked lol…) Maybe it’s worth selling out of SPY and consulting an advisor to diversify a bit but not sure.
Above numbers exclude ~$100k sitting in 401k.
Any thoughts appreciated! Thanks!
You don’t need a FA. My NW is $6mm and I’m self directed. Go post on fatfire or long angle and you’ll see most people self manage.
I know this is an unhelpful opening comment, but I think this depends on you.
Firstly, I'm British and live in the UK, and we have one of the most complicated tax systems in the world, so your own circumstances in the US might be very different. Secondly, I'm really dumb / lazy with a lot of my own financial planning (ironically but I'm glad I have the self-awareness enough to know that). I didn't grow up around the kind of wealth I have in IB so don't have any experience or anyone to ask, and frankly that's not an excuse as I'm a fairly capable guy and could figure it out if I really wanted to.
That said...
I do think that getting a personal financial advisor has been helpful for me. I was definitely not aware of a lot of the tax rules that I could have been (for instance the huge tax savings from over-contributing to my UK pension, the limits of that, etc.). I'm well aware that I could avoid the fees which I end up paying throuh contributing to the funds directs that portion of my pension to (by simply directing everything to low cost index funds), but I by no means have all of my wealth with that advisor (only a small amount in fact), and I see it as fair compensation for paying for advice (by the way, paying for advice is pretty much IB).
You definitely, that said, don't need a Financial Advisor. Depends on how much you think you know and how interesting you find doing a lot of the tax planning and investment yourself.
Honestly I get inbounds all the time from financial advisors who give me their full pitch. Maybe I havent been pitched by anybody relevant, but I honestly was underwhelmed with their sophistication.
After like a month of studying through various publicly available information and properly promoting ChatGPT, I felt like I captured 90% of value from they would have provided. Based on at least what I have observed, lawyers/advisors with specialization around tax and estate planning (most notably around trusts if you have real assets like a portfolio of properties which doesn’t seem like you do) are worth the money but not weak financial advisors. Would really welcome one here to succinctly explain their value and with realistic math, walk me through their ROI for someone who is actually somewhat financially sophisticated.
For your situation, I would do some ChatGPT prompting around diversification of your ETF strategy based on your risk tolerance as well as various % of buckets (international exposure, gold, bonds etc.). Given the high net worth in ETFs and cash, I would make sure you have you beneficiaries designated in the event you/spouse pass to ensure smooth transition of wealth in a rare event of death.
For software, leverage you brokers software to manage holdings/trades, use empower for networth dashboarding and cost review, lifelock for some downside protection (insurance, security, and password manager), freewill to draft estate documents, turbotax for filings. As things get more complicated, bringing in a tax person to replace turbotax may be helpful.
Not financial advice of course.
In terms of investments, they will generally have much more to offer in terms of alternatives and approaches aside from buying index ETF’s. Ultimately, most advisors should have a PM on staff who focuses on investments.
The real advantage to financial advisors is in planning. Things like setting up 529s, insurance, estate planning to minimize tax impact, etc. The reality of wealth management is not related to your portfolios returns each quarter, but how you preserve your net worth from one generation to the next.
Found the financial advisor
Warm but no. Had a lot of exposure to PWM earlier in my career. In a congruent space now though. I will stand by it absolutely making sense to get a financial/wealth advisor with zero skin in the game. That being said, not all shops are created equal. Quality is very important as the matters at hand can lead to one’s assets going on for generations to come.
Quick response here, you dont need alternative investments for a $1M portfolio here honestly, setting up a 529 is like opening a savings account, and you really want a lawyer not an advisor on estate planning documents. Can also leverage ChatGPT to educate on tax strategies, struggling to see the value in anything you mentioned.
Wealth shops worth their salt have attorneys on staff and the estate services are included in the fees. Think of it in the same view as a family office. There is a reason why people use them and it extends past a single lifetime and can help ensure that wealth persists for multiple generations. Everyone’s circumstance is different, but high level they can take care of a lot for someone.
You're basically at the "optimization" stage now. You've done the hard part (saving/investing), but getting a professional to map it all out can save you a lot of stress later. I'd at least have a free consultation with Covenant Wealth Advisors or a similar fiduciary firm, they handle people in your exact position
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