Dave is no longer happy with his financial advisor, but he’s nervous about switching over to self-management after being completely hands-off for so long. What should he do?
An anonymous caller keeps hearing about the benefits of Cost Segregation for investment property. What is it? And should he apply this strategy to his recently acquired duplex?
Another anonymous caller is eagerly anticipating a windfall from his employer’s upcoming IPO. How should he prepare for this, and what happens if it fails?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
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Dave asks (at 2:33 minutes): How do you know when it’s time to leave a financial advisor you’ve been happy with?
My wife and I have worked with a financial management firm since 2021. They use an assets-under-management (AUM) model with a flat annual membership fee. We’ve had a positive experience and made steady progress toward our retirement and financial goals.
But recently, the firm changed its customer service model in a way that doesn’t work as well for us, and now we’re wondering if it’s time to move on. We’re exploring the idea of self-managing our investments and hiring a Certified Financial Planner (CFP) on an hourly basis when needed.
But it’s a big shift. We’re used to having someone handle asset allocation and all the moving parts, and we’re worried we might overlook something important if we manage things on our own. What should we be thinking about as we weigh this decision?
We’re both 44, working 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 when we do. The pensions will be our main income stream in retirement.
We max out our Roth IRAs, contribute $10,000 a year to the brokerage account, and I max out the 457. We pay $2,400 a year for the firm’s services. We have $410,000 in invested assets—$205,000 in Roth IRAs and a brokerage account, and $205,000 in 457 plans.
Anonymous asks (at 29:07 minutes): What exactly is cost segregation, and should we use it for our new duplex?
My wife and I recently bought a duplex as a rental property, and I keep hearing that cost segregation can accelerate depreciation and boost near-term tax savings. I’m not familiar with how it works, what it costs, or when it makes sense.
Could you give us a Cost Segregation 101—how it’s done, who qualifies, the pros and cons—and help us decide whether it’s worth pursuing for this property?
Anonymous asks (at 44:32 minutes): How do I prepare for my employer’s upcoming IPO? I work at a privately held company that’s planning to go public in the next few years. As part of my compensation, I’ll be receiving equity in the company. I have two questions.
First, can you walk me through how this works operationally? For example, if the company IPOs at a $1 billion valuation and I have a one percent stake, does that mean I hold $10 million in equity?
How does that equity appear—would it show up in my brokerage account after the IPO? Are there taxes or fees I should expect that might affect the value or amount? Also, I’ve heard of “failed IPOs”—what does that mean, and how could it impact my equity?
Second, what should I consider from a financial planning standpoint? I’m currently investing aggressively in real estate and mutual funds to become work optional with my wife. If the IPO is successful, that goal would be met.
Should I adjust my strategy now in anticipation? And post-IPO, what should I be thinking about? Should I sell immediately, hold long-term, or something in between? What are the tax implications? Can I retain the shares if I leave the company?
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