What Type of Personal Finance Support Makes Sense For Me?

Dear Finding My Personal Finance Fit,

That's a great question! You're not alone. A lot of people out there are wondering the same thing: where do I even begin? But the fact that you're taking action, and not just keeping the thought to yourself is extremely admirable, so pat yourself on the back. In this post, we're going to dive in to what personal finance options are out there and what makes sense for you depending on what's going on in your life. Let's get started!

What type of personal finance support makes sense for me?

‍It depends on where you are and where you’re going in your wealth journey. The complexity of your financial position will likely increase as you move through the phases of your wealth journey. In turn, you may want to consider greater levels of support.  

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Your investable assets—investment accounts + saving accounts—are the simplest proxy for complexity. However, there are a few other factors that increase financial complexity:

• business ownership
• complex compensation (e.g., stock options)
• involvement in inheritances / trusts
• approaching divorce 

If you have some of these, you may want to consider “leveling up” on your support even sooner. Extra support does come with costs, but the most expensive cost in financial planning is the opportunity cost of doing nothing or missed opportunities.

‍Disclaimer: Steward’s in the “hybrid”  bucket. We’ll be the first to say—we’re NOT for everyone. The most important thing is to find the right fit for you and your family!  Regardless of whether we’re a fit, happy to point you in the right direction.

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The Phases

Creator

‍Assets: $0-500K

Demographics: Percent of US households: 64% ; Percent of US assets held: 3%

‍Priority Financial Needs: 

How do I have enough for today?

• Budgeting
• Tackling debt: when and how to pay    it down (credit cards, student loans)
• Saving: building up an emergency fund 
• Starting personal investing: portfolio allocation, rebalancing, tax loss harvesting. Note: robo-investment apps offer this solely for personal investing (vs. employer-sponsored retirement plans like 401(k)s, education 529 plans)

Best Served By:

• Robo-Investment App
• Do-it-yourself (DIY)  
  

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Builder

Assets: $500K-5M

Demographics: Percent of US households: 35% ; Percent of US assets held: 60%

‍Priority Financial Needs: 

How do I have enough for tomorrow?

All the “Creator” needs plus…

• Tax optimization strategies 
• Financial independence - modeling when you’ll have the option not to work 
• Decision support - run numbers and tee up pros/cons to navigate trade-offs (e.g., home purchase, family/job change) 
• Advanced investment guidance: how much/ when /where to invest integrated with your life milestones and taxes, and holistically across all your assets (including retirement, personal, kids accounts, real estate etc.)
• Equity Guidance - RSUs/options/carry

‍Best Served By:

• Hybrid Wealth Advisor 

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Protector

Assets: $5M – 50M

‍Demographics: Percent of US households: 0.90% ; Percent of US assets held: 22%

‍Priority Financial Needs:
I know I have enough, how do I protect it? 

All the “Protector” needs plus…

• Proactive estate tax strategies to transfer wealth out of the taxable estate (currently triggered at ~$12M)
• Lifetime giving and family support strategies for surplus wealth 
• Alternative asset investment strategies (e.g., private equity) 
• Coordination: directly quarterback and coordinate other advisors (estate planning attorney, accountant, insurance agent etc.)‍
• Business owner tax planning (if applicable)

‍Best Served By:

• Ultra-High-Net Worth Wealth Advisor

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Legacy-Maker

Assets: $50M+

Demographics: Percent of US households: 0.10% ; Percent of US assets held: 17%

‍Priority Financial Needs:

How can I optimize my impact over multiple generations?

All the “Change-Maker” needs plus…

• Multi-Generational Education 
• Advanced Estate Tax Planning across multiple entities/trusts
• Gift tax management
• Philanthropic foundation management, including charity due-diligence 
• Family office management 
• Private banking
• Bill-payments (including for capital calls for alternatives, real estate management)
• Business Succession Planning (if applicable)

‍Best Served By:

• Multi-Family Office (~50-300M AUM)
• Single Family Office (~300M+ AUM)
  

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A few additional players to have on your radar 

Many families hire a few additional players alongside personal finance support. Here’s what they do vs. don’t do, and when they’re worth it.  

We are often asked for recommendations for tax preparation (actually doing the forms) to complement the work we do with families on tax strategizing (planning in advance to lower future tax bills.) We were frustrated that no "Yelp" existed for accountants/CPAs/tax preparers, despite the fact that wealth advisors so often traded recommendations amongst themselves!  So we put together this list based on recommendations from various advisors in the XY Planning Network (XYPN)—a leading organization of fee-only financial planners around the US. Check out our crowdsourced list of accountants/CPAs here!

And we also made one for estate planning attorneys—check out our list of recommendations here!

Recommended Providers

‍If you’re going…Do-it-Yourself (DIY): 

1. Read books, blogs, and articles to write your own financial plan. Implement it yourself. See more recommendations on reliable sources of information at the end of this document. 

2. To support your self-study, you’ll need three basic building blocks to DIY. A budgeting tool, an account aggregation tool, and a personal investment account to actually make investments beyond your retirement savings.

Budgeting Tool: As a paid option, you could consider EveryDollar for simple and focused. Try YNAB (You Need a Budget) for more detailed and comprehensive… with an almost cult-like following! 

• ...but what about Mint? A little too “ad-filled” for my tastes; sort of like trying to start dieting while at a Vegas all-you-can-eat-buffet. 
• Take all these with a grain of salt. I find “reverse budgeting” = paying your future self first by automatically investing and then having less leftover to spend in your day-to-day accounts, is an approach that’s much easier to stick with, than the “fad diet” approach of budgeting.

‍Account Aggregation: Personal Capital’s free version works very well. It takes about 10 minutes to get a picture of your collective checking accounts, IRA, 401(k) accounts, and brokerage accounts in one place. A couple added benefits:

• analysis of your current investing portfolio, including 401(k) fees to see if you’re overpaying ‍
• a net worth and cash flow calculator. 
• a slick app with good visualizations. 

• ‍A note of caution: This is their “lead-gen” to try to upsell you onto their paid advice offering. I’d recommend against upgrading, given their questionable “equal sector weight” investment strategy. If you’re considering this, skip to the hybrid section below.

‍Personal Investment Account: Vanguard or Fidelity are good bets for their low fees and strong performance track-record. This investing account will supplement any employer-sponsored retirement savings accounts. Also goes by the name, “brokerage” account.

‍The “catch” of DIY

DIY is FREE…but it rests on having 3T’s - Time and Tenacity and Talent. I have no doubt you’re tenacious and talented (that’s what got you to having savings to invest in the first place!), but those two unfortunately go hand-in-hand not having much Time = the main bottleneck here.

‍What that looks like: 

• getting started (woot!)
• getting overwhelmed since you’re already  time-strapped (oof)
• not moving the ball forward consistently (woof). 
• an ad-hoc approach that leaves a ton of money on the table (womp womp womp)

If you want to go this route, do two things to “check yourself before you wreck yourself”:

• Make a list of what you want to get done on your personal finances. That’s the “fun” and easy part!
• Set a calendar reminder for 6 months from now to see if you’ve made the progress you  wanted to. If you haven’t, it might be time to call in some support. Th “cost” of doing nothing or doing ad-hoc personal planning, very much outweighs the “cost” of getting support.

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If you’re going…robo-investment app:

A robo-investment app is a “robot” – software program - to whom you outsource the time required to manage a personal investment portfolio. 

They’re focused on 3 things:

• automated portfolio allocation – sending your investment money into the right diversified buckets (stocks vs. bonds, international vs. US etc.)
• tax loss harvesting – minimizing your taxes by selling investments that have gone down and then buying a similar asset to replace them. Allows you to “harvest” the loss…offsetting taxes on your gains on other investments.
• rebalancing - monitoring your portfolio and making shifts if any “bucket” of your diversified portfolio is overweight (too much in stocks, too much in US given price changes etc.)

‍Why I’m a big fan:

• low-cost: rooted in using low-cost passive investing strategies
•  takes grunt-work of your plate: software will do the nitty-gritty work of asset allocation, rebalancing, and tax-loss harvesting for you
• disciplined: software (unlike humans) don’t have emotion

‍You could consider:

(1) Vanguard Digital Advisor, for its strong track record, large size (their robo handles 10x the assets of either Betterment or Wealthfront), and lowest fees = .15 bps (plain-English: basis points = 0.15%).  Con: no tax-loss harvesting

• Fees: If you have 250K in the account, you’ll pay them $375 a year. 

(2) You could alternately go with Betterment and Wealthfront at .25 bps. 

• These offer a slightly higher annual fee, in return for a slicker user interface and tax loss harvesting built in.
• They’re quite similar both in size and in largely investing in a mix of low-cost passive funds (largely Vanguard as it turns out, with a few Schwab, iShares, and State Street funds also thrown in). 
• I have a slight preference for Betterment, given Wealthfront (a) has started to experiment more with more expensive active funds, and also has been fined by the SEC for making false statements about investment products and publishing misleading advertising.  ‍
• Fees: If you have 250K in the account, you’ll pay them $625 a year. 

What about Ellevest?

A bunch of great things, unfortunately overwhelmed by more not-so-great things.

Pros:

• Mission to help close gender gaps
• Fees: $108 a year (very competitive!), for the account type that allows for rollovers + IRA access, allocation advice on 401(k)s (where bulk of your assets likely are), and multi-goal planning (vs. just retirement). Note: they largely use Vanguard ETFs.

Cons:

• Black boxy goal-setting, occasional busts in their investment return projections (e.g., estimating a 3% return on a 25-year 95% equity portfolio)
• Slow customer service “concierge”
• Shady cash policy: They offer 0% APY on cash that you hold with them (and actually encourage you to hold cash, I'm guessing that's in part how they make money - by taking the interest rate you should be earning!). You could work around this by setting up a separate high-yield-savings account for your emergency fund.
• No tax loss harvesting
• Tricky to use if you’re married, since they don't allow you to hold joint accounts.

What about Schwab Intelligent Portfolios?  

I really like that they offer free retirement planning software (recent development) but I’m a bit cautious. They’re receiving fees on their own proprietary ETFs, forcing you into an 8% cash allocation at their bank that has much lower yields than competitors, and they receive revenue for all your trades….that’s three major conflicts of interest.

The “catch” of robo 

Robo-advisors are solely focused on personal investment management. As you progress on your wealth journey and your financial situation becomes more sophisticated, your needs will likely expand beyond their capabilities. Specifically in 3 areas (some or all of which may start to apply for you):

1) Income tax reduction strategies to lessen the hurt of higher income tax brackets

2) Capital gains tax reduction strategies (e.g., HSA, Mega/Backdoor Roth IRA) as your investment assets grow

3) Advanced investment strategies: how much/ when /where to invest that’s

• integrated with your upcoming life milestones (e.g., home purchases, having kids, RSU vesting, funding college for kids)
• beyond just personal investing (e.g., employer-sponsored retirement plan, education saving). The robos only help you with your personal accounts, not with retirement accounts like 401(k)s or education accounts like 529s.

These are the gaps hybrid wealth advisors aim to fill. More on that below! 

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If you’re going…hybrid wealth advisor: 

This has historically been a no-man’s land, with families looking for accessible and comprehensive financial planning stuck between 

(a) going it alone entirely, potentially with limited help from robo personal investment apps

(b) paying fees north of $10,000 a year (the industry standard for financial advisor fees is 1%, with a minimum asset amount of $1M) to work with a white-glove wealth advisor. 

That’s what got us so fired up to start Steward. So full disclaimer—we’re in this category! 

We’ll be the first to say - we’re NOT for everyone. The most important thing is to find the right fit for you and your family, and find one of the subset of “good guys” in this space!  

The chart below shows players worth considering, depending on:

• your needs (e.g., tax strategies vs. help on just investments) and 
• your preferences (get on the phone with a human vs. tech that allows you to self-serve). 

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The Niche Hybrids:

Vanguard Personal Advisor Services (PAS) human advisor helps you do goal-planning for 2 milestones only  (a) retirement and (b) college funding and automated investment management. Advice only on investments with Vanguard vs. other assets or other money questions.

• Customers love the very low fees but have four chief points of feedback (a) no ability to self-serve on adjusting data (b) long wait times for advisors (c) low focus on mid-career professionals vs. retirees (d) old-school tech
• Fees: 0.30% AUM
• Need served: Advanced Investment Strategy (integrated with your upcoming life milestones (e.g., home purchases, having kids, RSU vesting, funding college for kids)

Betterment  offers hourly access to a remote advisor on 3 specific milestones (a) retirement (b) college funding (c) combining finances 

• Fees: $400 per hour  
• Need served: Advanced Investment Strategy (integrated with your upcoming life milestones (e.g., home purchases, having kids, RSU vesting, funding college for kids)

Blooom offers “robo-advising” for your 401(k): personalized portfolio suggestions for your employer-sponsored 401(k) plan, with tiered extra levels of support to (a) place the trades for you (b) give you advisor access via email, or live chat 

• Fees: $45 per account/yr - $250/yr.
• Need served: Advanced Investment Strategy (Beyond just personal investing  (e.g., employer retirement plan). 

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The Comprehensive Hybrids:

Facet Wealth:

• Pairs you up with a remote advisor, supplemented with a tech platform.  
• Focused on clients (a) under $1M in assets, and (b) nearing retirement 
• Adds guidance on areas like retirement distribution strategy, navigating social security
• Fees: flat fee of ~$3,700/yr ($1,800-$6,200), based on your level of complexity 
• Need served: (1) Income tax reduction strategies (2) Capital gains tax reduction strategies (3) Advanced investment strategies (integrated with your upcoming life milestones e.g., home purchases, having kids, RSU vesting, funding college for kids AND beyond just personal investing e.g., employer retirement plan)

Steward: 

• Pairs you up with remote advisor, supplemented with a tech platform.  
• No cost, no-obligation one-time financial plan to optimize your investments and save on taxes, and model out when you can hit financial independence.
• Upgrade to ongoing “do-it-for-me” investment management, proactive tax strategies, and decision support with human advisor
• Focused on clients with (a) $250K-$5M in assets (b) mid- career (late 20s - late 40s) 
• Fees: Free one-time plan, upgrade to ongoing advisory for 0.50% AUM
• Need served: (1) Income tax reduction strategies (2) Capital gains tax reduction strategies (3) Advanced investment strategies (integrated with your upcoming life milestones e.g., home purchases, having kids, RSU vesting, funding college for kids AND beyond just personal investing e.g., employer retirement plan)

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What about Personal Capital’s paid planning service?  

While I highly recommend the free version of Personal Capital, their paid version has a questionable investment strategy. They use "smart weigh›ting" to invest equally in all sectors vs. in line with market weighting (i.e., equal stake in oil as in tech). This strategy has fared very poorly in the last four years as tech and healthcare took off. I don’t love that Personal Capital hasn’t been forthright on this, and instead uses wonky end dates whenever they share historical investment returns, to paint a rosier picture!

The catch of various hybrid wealth advisors:  

• Remote advisory - These models are built to be remote, so if you want to be in a physical office or hitting the golf course with your wealth advisor, not a great fit.

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If you’re going…ultra-high-net-worth wealth advisor:

‍This is a "buyer beware" type of space! Who really is an ethical professional can help:

There are 200 designations around "financial advisors" now available to consumers. Everyone under the sun is calling themselves one, including folks who are actually salespeople for products (e.g., pushing particular insurance products or investment vehicles – beware of the word “proprietary”…that generally means high fees).

The good news is there are 3 bright lines in the sand to figure out who’s a good actor:

1. Finding an advisor who is "fee-only": they'll only charge you based on the actual advice they give you, typically as a % of your assets under management (aka. how much money you have in the bank or your investment accounts) or hourly vs. per trade (which automatically is a bad incentive that sets them up to try to sell you as much as possible). They won’t have extra hidden fees that appear as you progress your conversations with them, or be pushing their own proprietary products. Super confusingly, some advisors call themselves “fee-based” but that means they take fees...and also still take commissions!
2. Finding an adviser who is a Certified Financial Planner (CFP). Only 1 in 5 (shockingly) people who call themselves "advisors" actually have this designation. It’s the gold-standard (think of it like the CPA for accountants) in the field. 
3. Finding someone who specifically states they are a fiduciary. This means they are putting your interests first, vs. the interests of their firm. Yes, CRAZILY, there are many players out there who are financial advisors who are not fiduciaries. That would be like going to a pharmaceutical company for medical advice vs. a doctor. 

‍Non-fiduciaries to keep your antennae up around:

• Big insurance companies offering investment advice - the answer to every question with an insurance company is going to be insurance. Insurance and investing often marry up into a “worst of both worlds” combo.
• Big Banks (Goldman, Merrill, Morgan Stanley etc.) offering advice – often means you’ll get traded off amongst junior analysts often, pushed proprietary products or insurance products, charged 150 or even 250 vs. 100 bps. 

I say the above, with respect to anyone working at other types of firms since:

• There are always terrific exceptions!  
• This is quite close to home for me. My father spent his whole career at Goldman Sachs, leaving as a partner. It just always struck me that so few of his colleagues were using Goldman Sachs wealth advisors for their own families. They knew the rub.

Where to find a fee-only wealth advisor:

• Search on NAPFA , the trade association of specifically fee-only fiduciary planners
• Check out the website XY Planning Network. This has “next-gen” younger planners focused on Generation X and Y. You can use that site to search for specialized planners in your location (like planners that specialize in millennials, entrepreneurs, freelancers etc.)
• Check out Garrett Planning Network - which focuses on fee-only hourly planners.

‍The Catch (which in this case, is also “the cost!) of a fee-only wealth advisor:

This more white-glove service and dedicated attention, and deeper expertise, will come with fees. You should aim to pay no more than 1% for an advisor. Given that most fee-only wealth advisors worth their salt only accept clients with over $1M in assets (and the best, often with over $3M in assets), you’re paying $10,000-$30,000 minimum per year to work with them. 

This fee will step down as you increase how many assets you hold with them. Paying an advisor, as with so many things in life, is a trade-off.  

The cost benefit is that you’ll get more hands-on help reaching your goals and managing your investment returns. Vanguard – the kings of DIY, themselves have published a study called ‘Advisor Alpha’ showing that good wealth advisors deliver about 3% in extra return per year.

Note, Vanguard found that ½ of that extra return (1.5%) comes from behavioral coaching...so if that’s something you don’t think you need as much of, definitely something to factor into your cost-benefit trade-off.

‍What’s a wealth advisor vs. a financial advisor vs. a financial planner vs. a tax advisor vs. a stock broker?

Check out our blog post here where we explain the difference between the thousands of titles out there!

‍Questions to ask them:

We've compiled the top questions to ask your wealth advisor here. Use the guide to interview your advisor and to make sure they're the right fit for you!

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Multi-Family Office (~50M-300M in AUM)

For families who have amassed enough wealth that more expansive roster of investment choices and wealth management services, but not big enough to justify own, fully-integrated teams. 

A multi-family office shares financial planning resources across multiple wealthy families. 

Some argue that this model offers more objective advice, since there’s less "career risk" for the advisor in agitating the person who signs their paycheck!

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Single-Family Office (~300M+ in AUM)

For families that have amassed enough wealth to justify their own, fully-integrated team. 

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Reliable Sources of Information to Learn More

By the way, if reading this is making you feel excited—DIY is going to be a great bet for you! If it makes you a little leery… good sign to “outsource drudgery” and consider support.

Books for Creators

• Broke Millennial books (1 & 2) by Erin Lowry. Book 1 focuses on the basics of credit cards, student loans, tackling debt, and saving for retirement. Book 2 focuses on the basics of investing. 
•  Total Money Makeover – Dave Ramsey - no-nonsense, uplifting approach to getting out of debt. 

Books for Builders

• "If You Can, How Millennials Can Get Rich Slowly" (Bernstein) – only ~15 pages! Does that count as a book? This is for the “can we have a long article club vs. book club”/ TLDR among us! 
• I Will Teach You To Be Rich- Ramit Sethi – I know, I know…the title could have been workshopped a bit, but great content and an 80/20 approach to getting started if you’re young and ambitious in your 20s. Less of a good fit, if you’re no longer living the good life of being single or a DINK (dual-income-no-kids).
• The Simple Path to Wealth by JL Collins. Started as a series of letters to his teenage daughter. Great for the time-strapped, since the advice is highly practical and easy to execute.

Books for Protectors/Change Markers

I’ve organized this list around common financial traps, or “four horsemen of doom” these groups fall into:

Emotion taking the reins: A bunch on this one, since it’s the most damning and common. Our brains are literally wired for us to have fight-or-flight responses around money:  

• Your Money and Your Brain (Jason Zweig – The Wall Street Journal’s  main personal finance writer)
•  Thinking Fast & Slow (Daniel Kahneman) - frequent-flyer when the world's best investors get asked for their favorite investing book...even though it’s not, technically an “investing book”. Nobel-prize winning research on human psychology and behavioral economics, that’s at the heart of great investing.
•  The Psychology of Money (Morgan Housel) – bite-size observations, interesting ideas, translates complex concepts into easy-to-digest and practical takeaways

Never having had the opportunity to learn investing / personal finance 101:

• The little book of common sense investing (Jack Bogle) – by the founder of Vanguard, great argument to consider on why to buy low-cost index funds, if you’re currently actively managing your own selection of stocks.
• Ignoring Financial History:  Devil Takes the Hindmost (Chancellor) – a history of stock market speculation from the 17th century to today. A great way to talk yourself out of trying to time the market.
• Lifestyle creep: The Millionaire Next Door (Stanley) – how to amass wealth through frugality

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Not a book reader? Check out our financial resources post here to discover all of our recommended personal finance blogs, web content, tech tools, and more! In addition to our own due diligence, we’ve polled hundreds of people for their top recommended resources, so these sources are peer-checked, vetted by us, and reliable.

Steward ‘s mission is opening up the 1%’s wealth strategies to America’s up-and-coming families with a combination of 21st century tech and trusted advisors. We help families determine how, where, and when to invest and save on taxes in plain-English, with minimal time and effort. We're in the hybrid space and the first to admit—we're NOT for everyone. Steward can help determine if we're the right level of personal financial support for you. Give it a try here.

Reach out to me at ami@oursteward.com or schedule a free 15 min consultation to see if we’re a good mutual fit.

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