At what point do you seek financial professionals (Wealth & Tax)?
At what break-point is it advisable to seek out a wealth manager to assist with your asset management, financial planning, risk management, and overall estate matters? I'm not talking about an Edward Jones rep, I'm talking about an independent fiduciary whom can help beyond selling products/funds.
$250k+?
$500k+?
$1M+?
Secondly, what was the turning point for you to hire a CPA for your taxes? I've been using Turbo-Tax for the last decade without issue, but now I'm starting to wonder if a CPA would be advisable with some of the contract work I do on the side where I get a 1099 in some cases, but not all cases.
As 2019 comes to a close, I am starting to wonder if my own biases are becoming blinders for my personal financial management.
I don't use a financial planner, but have access to lawyers and tax accountants through my regular bank. I probably wouldn't seek out help unless I had 5mUSD or more. I think that's the lowest net worth you need too to get proper private banking services.
Can I get the name of your bank? My institutions stick by, "Consult your tax professional for tax advice." Would be nice to get personal info for my specific questions that I can't get a straight answer on via google or TurboTax community.
tell me more about your tax situation, you likely just need to pay for a better version of turbotax/HRblock. 1099 consulting income if it's just you ain't complicated
the only reason to hire a financial planner is because you feel you are doing a sub-optimal job managing everything to the point where you need someone to help. this does not mean you're dissatisfied with your performance per se, because any good FA will not promise performance.
I will say you will have a hard time getting decent help unless you've got $1mm, geography dependent. and the whole thing about "an independent fiduciary" is marketing bullshit by the CFP board, being a legal fiduciary does not imply ethics, it implies longer legal disclaimers at the end of your paperwork and a lower likelihood you're entering into a ponzi scheme, that's it. the only way to really know unfortunately is to work with someone for years. the best way to shop is by referral, by interviewing multiple groups, and so on
would you still recommend turbo tax to somebody receiving a K1 for investing in a REPE fund? All other finances are pretty straightforward.
depends on the version. I have clients with private equity investments and equity compensation through work that use turbotax, just need the cadillac version I think. they don't allow certain forms on all versions, just check the website and see. you should be able to do your taxes yourself (just like you should be able to invest yourself). whether or not you choose to do so, your call
What I have found most common is folks will hire a FA when their life becomes too "complicated" to continue running it on their own; not necessarily a specific asset level (although the two might be dependent on the other). Obviously the actual financial planning advice is helpful, but busy affluent people having the ability to leverage a trusted professional to take something like wealth management off their plate is invaluable.
Also, I agree with thebrofessor with the CFP marketing bullshit. However, there is something to be said in the difference in working with a "business owner" at a wire house, or a FA at a RIA. Even though there are probably some stud CFP planners at some wirehouses; just seldomly found.
I'm biased because I'm at a wirehouse, but at various recognition dinners I've attended, good and bad brokers are pretty much independent of the firm. lots of scumbags use the RIA moniker to just sell overpriced insurance solutions or bill you for a financial plan for $10k and then charge you 1.25% to put your money in a model portfolio developed by american funds or some shit. there's good ones at all firms, just like there are bad ones at all firms, saying "only use a RIA" is not a panacea.
agree to disagree
Agreed. I think your advice on shopping by referral is most useful because it takes all that extra garbage out of it and narrows it down to "did this person i trust have a good experience" regardless of where the FA works.
Also biased because I left a wirehouse and did not have the best experience. But like I said, there are stud planners everywhere.
You forgot the 'dual listed' fun: "I'm a RIA, but I'm also a B/D, and you signed up to be a B/D client of mine, in addition, I'm getting the front-end load from the mutual fund shop, and churning your account to make even more!"
As a former CFP, (I let it drop since it's no longer relevant for my role) I'll say that most of the time it is when you feel like you're getting in over your head. Single? Rent? Retirement savings is all in the company 401K except the cash emergency fund? Comfortable with your investment decisions in the 401k? Don't give tons of (particularly non-cash items) to charity? You can probably save more in costs than you give up in benefits by buying a decent financial planning book and doing it yourself than you'd pay in fees, even if you make $200k/yr.
Common complexifiers that trigger needing to see someone for tax or advice are: -Non-W2 (salary) income. As Brofessor said, 1099 info isn't a killer but large amounts of different types can be a pain -Investment accounts outside of retirement vehicles, especially if they invest in things more complex than stocks/bonds -Working across state lines, especially if there is a mid-year move involved, for state taxes. (One year I lived in one state and worked in another, then I moved to that state and began working in a third. 3 state and 2 city returns. THAT year I paid a CPA) -Significant and varied types of deductions. What are you eligible for, etc.
There are tons of others, but those are the big ones. Oh, and even if you pay for somebody, particularly on the lower end of the scale, they can just mess your finances up further. My parents have an old-school B/D FA that has them in so many different accounts with different funds, and different structures, that it takes me 20 minutes to find ownership and legal structure for each, never mind the tax basis for the taxable ones. I've been begging them to fire him for years.
It is normally free to get a consultation from a wealth advisor at certain banks. I doubt it would hurt to go in and meet an advisor (probably someone who is referred by someone you trust) and just see how they can help you. If you don't think they can add value then don't buy in or vice versa. Obviously at a certain point of wealth (maybe $5MMish), you will likely need someone's help or at least someone that is a guiding hand on stuff you are unsure of.
you should if you own property or anything else that depreciates worth a shit
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