So;
Another few weeks of deep reflection have yielded some movement in the retirement investing arena. I'm moving back to personally managing my retirement assets. Incrementally, I might add.
The why's; I have always been somewhat uncomfortable with the cost of professional advisors under either commission or AUM methods of compensation. I just can't get comfortable with how much of the asset performance they charge. Recently, one of my advisors spun out of control, in my assessment. He blurred the lines between advisor, friend, potential business associate; began "pitching" a new set of relationships, dangled a potential business proposition hidden behind an NDA, making me increasingly uncomfortable. In addition, he became difficult to pin down to an actual meeting. I scheduled and rescheduled, couldn't seem to capture his time. I looked carefully into what I was receiving in the way of management expertise, became convinced that I can duplicate this easily without a broker/dealer relationship and initiated transfer of my assets, notified him of my decision. Now, I'm just waiting for the funds to show up in my Fidelity account. The other half of my retirement assets are with another adviser, but with the identical AUM format. It's much easier to schedule time with him, but I'm not sure I am receiving any more value for the fees. So, we'll meet and review the whole situation in a week or two.
Behind the why's; in a few short years, I went from short on time/long on income to short on income/long on time. Asset management fees are costing at least 10% of my prior take-home pay after taxes and retirement account deferrals. I can no longer offset those costs with additional contributions, at least for the time being.
What will I do with those assets? I intend to remain fully invested, with a bias towards dividend/distribution paying investments, diversification across sectors, a modest, focused micro/small-cap exposure, tilt towards value versus growth, exposure to real estate investment. I'm going to look very hard for alternatives to a big position in bond funds to anchor the value against market corrections. I want an average of 3% dividend yield, reinvested via DRIP, 12% total yield if possible, although I'll be satisfied with 7-8% with high quality companies. I have several reliable sources of research; it won't be difficult to sleep well at night, and I'll be paying myself between 10-20k in expense reduction. That's worth 80-160 hours of labor at my prior earnings capacity. We'll see if I actually spend that many hours managing/monitoring the accounts in the next 12 months. I'll do my best to avoid simply comparing total yield to big market benchmarks as a means of measuring performance. If I'm to have an income producing "business" whose capital assets are equities, I need to deliberately build that business and manage it according to capital value, income generation, expense control, reinvestment for growing income. I will have to become comfortable trading "advisory expertise" for investment of my own time/labor in running the business.
Am I being prudent? Am I being impulsive? Am I responding to frustration/boredom? Is this "right" for me and my family? All good questions... right now, I'll engage with 50% of our retirement portfolio and reserve judgement on the other adviser pending our upcoming meeting.
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