Dave is feeling dissatisfied with his financial advisor, yet he's apprehensive about managing his finances himself after being hands-off for a long time. What should he consider doing?
An anonymous caller frequently hears about the advantages of Cost Segregation for investment properties. What does it entail? Should he implement this strategy for his new duplex?
Another anonymous caller is looking forward to a financial gain from his employer’s upcoming IPO. How can he prepare, and what if it doesn't go as planned?
In today's episode, former financial planner Joe Saul-Sehy and I address these three inquiries.
Enjoy!
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Dave asks (at 2:33 minutes): How can you tell when it's time to part ways with a financial advisor you’ve previously been satisfied with?
My wife and I have been clients of a financial management firm since 2021, operating on an assets-under-management (AUM) model with a fixed annual membership fee. We've had a favorable experience and have made consistent progress towards our retirement and financial objectives.
However, the firm recently altered its customer service approach in a manner that isn’t as effective for us, leading us to question whether it's time to move on. We're considering the possibility of self-managing our investments and hiring a Certified Financial Planner (CFP) on an hourly basis when necessary.
This is a significant transition. We are accustomed to having someone manage asset allocation and all its complexities, and we fear that we might miss something crucial if we take over management ourselves. What should we contemplate as we deliberate this decision?
We are both 44, employed in the public sector, and have defined benefit pensions. We plan to retire in 10 to 12 years, with 33 to 35 years of service by then. The pensions will be our primary income source during retirement.
We are maximizing our Roth IRAs, contributing $10,000 annually to the brokerage account, and I am maxing out the 457 plan. We pay $2,400 yearly for the firm's services. Our total invested assets amount to $410,000—$205,000 in Roth IRAs and a brokerage account, and $205,000 in 457 plans.
Anonymous asks (at 29:07 minutes): What is cost segregation, and should we consider it for our new duplex?
My wife and I have recently purchased a duplex for rental purposes, and I keep hearing that cost segregation can hasten depreciation and increase short-term tax benefits. I'm not familiar with how it operates, its costs, or when it is advantageous to employ it.
Could you provide a basic overview of Cost Segregation—how it functions, who is eligible, the benefits and drawbacks—and assist us in determining if it’s worthwhile for this property?
Anonymous asks (at 44:32 minutes): How should I prepare for my employer’s upcoming IPO? I work at a privately held company that intends to go public in the coming years. As part of my compensation package, I will be receiving company equity. I have two questions.
First, can you explain the operational process? For instance, if the company goes public with a $1 billion valuation and I own a one percent stake, does that equate to $10 million in equity?
How will that equity be reflected—will it appear in my brokerage account post-IPO? Are there taxes or fees I should anticipate that could affect the overall value or amount? I’ve also heard about “failed IPOs”—what does that entail, and how might it affect my equity?
Secondly, what financial planning aspects should I consider? I am currently investing actively in real estate and mutual funds to become financially independent with my wife. If the IPO is successful, that goal will be achieved.
Should I modify my strategy now in preparation? And after the IPO, what considerations should I keep in mind? Should I sell quickly, hold for the long term, or take a different approach? What are the tax consequences? Can I keep the shares if I leave the company?
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Dave is dissatisfied with his financial advisor, but he feels anxious about transitioning to self-management after being completely uninvolved for such a long time. What steps should he take?