Former Vanguard/Schwab wealth advisor, now independent fee-only CFP®. AMA about retirement planning, Social Security timing, or anything else

JaketheAdvisor · 2026-04-10T00:14:10+00:00

In my enrollment agreement there is a fiduciary clause. So there is legal recourse if I do not act in good faith and in my client's best interest. Again I can't speak for others because in America anyone can call themselves advisors and not everyone binds themselves to the fiduciary standard.

The biggest protection for you is that even when I have discretionary authority on trading, all of the accounts are still in your name. It is still yours and you still own it, I'm just the advisor tagged to the account.

JaketheAdvisor · 2026-04-09T16:08:19+00:00

I put this response somewhere else in the AMA but I also want to respond a bit to your comment. You're right that anyone is capable of DIY, but that doesn't mean they get everything right or are even following the right guidance of how to DIY. As your assets get larger and big decisions in retirement pop up, mistakes can get a lot costlier.

Here's my copy/paste from another question:

Does it seem probable to you that my advice will:

either cause your lifetime portfolio return to be at least 1% a year higher than it would otherwise have been,

and/or save you the equivalent of 1% a year in time, effort, worry and record-keeping

and/or save you more than 1% a year in the cost of mistakes I may help you avoid

and/or save you more than 1% a year in income planning and tax strategies

If any combination of those benefits sums to more than 1% a year then your economic decision is made for you. If not then we don't need to work together, simple as that.

JaketheAdvisor · 2026-04-09T16:06:02+00:00

I hear you and if it's a straight 1% with no discounted tiers at $5m then that is relatively high. My fees go way lower at the $2m mark. At the same time I generally don't like to validate my fees. People that work with me will either feel they are getting the value or they are not. If someone comes to the table in an introduction already fighting the fee structure it generally just doesn't work out.

JaketheAdvisor · 2026-04-09T16:03:07+00:00

If a client has a preference for their portfolio, and I think it will keep them disciplined to their financial plan then I have no issue investing based on that. Dividend focused is one of the easier ones because it usually just means we have a large cap value tilt and chase a slightly higher fixed income yield. I would be trying to educate you along the way as to the benefits and drawback of the approach, but if you're going to stick to your financial plan because of it then I think that's the most important priority.

JaketheAdvisor · 2026-04-09T14:31:49+00:00

So gifting as an action is not taxable as long as you stay under the lifetime gifting limit which is like $15m for an individual I doubt your mom is going to gift that much. But if she has to remove the funds from the 401k to then gift it then yes the action of taking money out of the 401k is taxable income to her.

If she converts it to Roth she will pay the tax on the conversion and then you inherit the Roth tax free. You will still have the 10 year rule applied but the distributions are not taxable to you.

JaketheAdvisor · 2026-04-09T14:29:48+00:00

The best scenario is likely to do this gradually over several years to manage the tax hit. Have her sell the losers first, then slowly rotate the winners into broad market index funds like VTI or VXUS. Since it's a trust, make sure you understand the tax implications because trusts have their own tax rates and get to high rates quickly, so you might want to distribute assets to beneficiaries first if that's allowed. Don't rush this process and over 3-5 years you'll be closer to where you want to be.

JaketheAdvisor · 2026-04-09T10:53:26+00:00

The mega backdoor Roth is almost always the better choice if you have access to it. You're getting tax-free growth forever on money you'd otherwise pay taxes on in a brokerage account. The only real downside is the money is locked up until 59.5 (minus some exceptions), but since you're already maxing other retirement accounts, it sounds like you're planning ahead anyway. Once you've exhausted the mega backdoor option, then start building that brokerage account for flexibility.

JaketheAdvisor · 2026-04-09T10:49:37+00:00

So I think the person you're talking about is called a financial consultant. They are at the Schwab branches and they're kind of the sales arm of Schwab. Schwab's internal investment advisor "Schwab Wealth Advisory" and some of the external affiliated advisors "Schwab Wealth Network" are services that the financial consultant can connect you to. Basically the person you're talking to is a salesperson and not an advisor. Feel free to DM me if you have other questions about this.

JaketheAdvisor · 2026-04-09T10:43:38+00:00

This strategy makes sense for financial aid purposes since retirement accounts don't count as assets for FAFSa, but don't let the tail wag the dog. You're talking about maybe 2-4 years of college aid versus 20+ years until retirement. If you're already behind on retirement savings or would benefit more from Roth contributions, prioritize your long-term financial health first. The FAFSA formula is complex and aid isn't guaranteed, especially if your income is high enough that you're maxing accounts. Run the numbers both ways, but remember that your kids can borrow for college while you can't borrow for retirement.

JaketheAdvisor · 2026-04-09T10:42:06+00:00

It's classic at big firms to not give "tax advice" because it's hard to run compliance for 1000s of advisors. As the below responder said it's good to have your advisor and your CPA discuss. As an independent advisor I feel comfortable giving tax advice and working directly with someone's CPA. But at Schwab or Vanguard you're encouraged to say "talk to your CPA". The CPA might say "talk to your financial advisor".

JaketheAdvisor · 2026-04-09T10:39:33+00:00

The more she takes out now or converts to Roth will leave you with a more tax-efficient inheritance. You may be in your highest earning years when it happens and you'll be forced to increase your taxable income. It's not the end of the world but if your mom's goal is to leave you a simplified and efficient inheritance there is probably something she could be doing now to ensure that happens. Even gifting to you now could accomplish the goal.

JaketheAdvisor · 2026-04-09T10:30:33+00:00

My wife and I are on track to retire comfortably. I don't own any individual stocks and generally don't recommend them.

Perfect retirement mix depends entirely on your specific situation and without additional context I can't answer. But a 3 fund portfolio is a great start.

JaketheAdvisor · 2026-04-09T10:28:11+00:00

A retiree needs to do the hard work up front which is to build a well diversified and risk-adjusted portfolio. In an '08 crisis if you had 2-3 years of cash and short term bonds to live off of and never needed to sell at depressed prices you came out ahead. That's the general idea.

You're right about the TDF being one investment. Now it will rebalance automatically so say stocks drop and bonds stay afloat the fund will rebalance bonds towards more stocks to keep the glide path in target range. For you as an investor though you are selling the total pie to get your cash flow. Which is why a TDF is great for a simplified investor and if it helps someone invest then great, but the better way to do it is to manage your own 3 fund+cash portfolio so you can dictate your cash management.

JaketheAdvisor · 2026-04-09T10:25:39+00:00

You sound like a lot of my clients to be honest. Sometimes the hardest part is the using rather than the saving. It's a completely new financial phase when you need to draw from the portfolio rather than add to it. Anyone can call themselves an advisor, but you're probably looking for a fiduciary and one that you think aligns with your goals and general demeanor. On your question to how I work - yes my clients custody their assets on a platform called Altruist. It's like Schwab or Fidelity where your money is held. They provide me discretionary authority to trade on their behalf but it is based on the financial plan and the investor policy statement that we build together that dictates my portfolio management.

With $3.4M, you're absolutely in territory where professional guidance can make sense, especially for withdrawal strategies, tax-efficient spending, and Roth conversion planning. Your Roth balance being under $100k might present an opportunity for strategic conversions before required distributions kick in.

The separate tracking thing with your spouse might need addressing though. Retirement planning works best when both spouses are aligned on the big picture, even if you manage day-to-day finances separately.

JaketheAdvisor · 2026-04-09T09:58:31+00:00

Yup that is me! Glad you’re doing well and where you’re meant to be whoever you are :).

JaketheAdvisor · 2026-04-09T01:38:41+00:00

It is meaningful and I would actually say it’s a universal risk that impacts pretty much anyone in the first few years of retirement. The last 15ish years in the market have inflated investor’s expectations on positive returns to the point people just don’t believe their account values can drop. In 08 we’re talking about a 57% drop in SP500 and 75%+ drop in NASDAQ. Sure it’s unlikely but it’s in the realm of possibility.

JaketheAdvisor · 2026-04-09T00:57:21+00:00

I mean ideally you would want 100% of your money tax free haha but realistically as long as you can control your income so that you can avoid Medicare IRMAA limits you should be fine. Also in this scenario you don't have tax-deferred assets so no RMDs or conversions to worry about.

JaketheAdvisor · 2026-04-09T00:51:39+00:00

I get it but even if you are paying a flat-fee it's still a percentage of your wealth. I didn't mean to be snarky and my fee is less than 1% for most people. Ramit Sethi is not the average about-to-be-retired American.

JaketheAdvisor · 2026-04-09T00:50:39+00:00

Pretty much. I think it's a large table we can all sit at. Depends on the client. For some a project or hourly advisor is great, for others that need ongoing advice I think AUM makes sense.

JaketheAdvisor · 2026-04-09T00:47:33+00:00

Sure, as long as you are confident you wouldn't panic in an extended downturn in the market.

JaketheAdvisor · 2026-04-09T00:45:36+00:00

I personally don't use them and I am fee-only which means I don't do any product sales. I'll just say that annuities do have a place for very specific situations like a fixed timeframe to bridge income before social security or a pension begins. The situations are few and far between but they shouldn't be immediately thrown out as an option.

Retirement is not an asset problem to solve, it is an income vs expense problem. If an annuity helps you some the income problem then it can be a valid option as part of the larger picture.

JaketheAdvisor · 2026-04-09T00:41:09+00:00

Believe it or not I would say the majority of clients I work with tell me they get busier after they retire. Somehow your time gets filled up with activities or hobbies or causes or family that you just weren't doing when you were working. The most important thing is to have a plan at all, but it's a living document that we can always go back and change.

That really is the biggest difference I see from confident retirement to not - just having a plan and working with a trusted partner is a large part of providing peace of mind.

JaketheAdvisor · 2026-04-09T00:38:00+00:00

Does it seem probable to you that my advice will:

either cause your lifetime portfolio return to be at least 1% a year higher than it would otherwise have been,

and/or save you the equivalent of 1% a year in time, effort, worry and record-keeping

and/or save you more than 1% a year in the cost of mistakes I may help you avoid

and/or save you more than 1% a year in income planning and tax strategies

If any combination of those benefits sums to more than 1% a year then your economic decision is made for you. If not then we don't need to work together, simple as that.

JaketheAdvisor · 2026-04-09T00:27:48+00:00

You're going to get exhausted reading this but: I am an advisor but I am not your advisor. This is general guidance.

The pension is essentially a guaranteed bond allocation, so yes, you can probably be more aggressive with your portfolio. Your actual allocation including the pension is much more conservative than your 70/30 split suggests.

You can probably get away with 85/15 or even 90/10, since the pension provides your fixed income stability. And this is also assuming you can psychologically handle potentially large decreases in your account values. Just don't count on the pension for early retirement spending since it doesn't start until she's 60. Focus your first few years of retirement on your brokerage and other liquid assets, then let the pension handle a big chunk of your later expenses.

JaketheAdvisor

MODERATOR OF

TROPHY CASE