Do-It-Yourself Retirement Planning

September 27, 2019

I’m taking a break from France-blogging to discuss a subject that is near and dear to me.  That is: whether to manage your own money (obviously using a bank or a discount brokerage firm, but making your own investment decisions) or to turn the management of your money over to a financial adviser of some sort, be it a broker, insurance agent or money management firm.

When you turn 60 or thereabouts, you start getting invitations to what we call “plate-licker” evenings.  These are events — usually at a steakhouse or a fairly high-end Italian restaurant — sponsored by a broker or money manager.  That person feeds you a nice dinner and then presents you with his or her case for why you should turn your money over to this particular firm to manage.

We have been to a few of these.  In each case, we have been impressed with the honesty and straightforwardness of the presentations.  No one has promised anything unrealistic.  If anything, the presentations focus on how unsettled the world is and how important it is to preserve and, if possible, grow one’s retirement capital.  The sales follow-up has been low-key and polite.

Of course, there are many other options in terms of money management.  Some individuals at some brokerage firms have a presumably well-earned reputation for working with affluent or “mass affluent” individuals.  Some firms take on couples with $500,000 in retirement savings while others have ceilings of $10 million and higher.

For four major reasons, we are going it alone for now.

These are:

  1. We know something about the markets.  In our pre-retirement careers, W. worked as a stockbroker and I worked writing earnings releases, annual reports and the like.  As an investor relations person, I shepherded CEOs and CFOs to meetings with investors and listened to scores of presentations.  The operative word is “listened”; I tried each time to learn something, to listen to the questions, and to figure out whether my clients were making a credible case for themselves and their companies.  W. passed a tough series of exams and loves to think about, read about, and talk about stocks and other investments.  (So do I).
  2. We like the process.   We track our portfolio, follow its ups and downs closely, and stay on the lookout for new ideas.   When things change, we discuss the situation and make joint, considered decisions about whether to buy, sell or hold.  It’s something we enjoy doing and we are happy to spend time on it.
  3. We are wary.  I once met a guy who was a client of Bernie Madoff.  Let’s just say it was not a pleasant experience for him.  I’ve known other people who have been swindled or cheated by money managers.  In the New York suburb in which we used to live, there were several upstanding citizens who went to jail (or should have gone to jail) for mishandling client money.  Most people who manage money are honest and professional;  a few are not. But the risk of running afoul of someone is not zero.  And that is not to mention the conflicts of interest that remain rife in the money management industry.
  4. We are stingy.  Let’s say, for argument’s sake, that you have a million dollars.  Someone managing that money for you is going to want roughly $15,000 per year for doing that.  That’s $15,000, every year.  If that person is successful, that person’s fees will increase, as they should.  But the fees still come out of your pocket.  We trade infrequently, and we pay $6.95 per trade or thereabouts.  Think about it:  many money management experts will tell you that you should plan on taking four percent per year from your retirement funds.  That’s $40,000 on a million dollars.  But they want $15,000 of that.  Is that before or after the $40,000?  Either way, we think we are better off investing the money ourselves.

I’m not going to get into how we invest.  It’s boring, and it’s our own business anyway.  Let’s just say we are reasonably happy with the results.  We make mistakes sometimes, but we hit enough singles and doubles to be satisfied with our returns.

Is there a case for having someone else manage your money?


Find someone trustworthy and turn your money over to him/her if:

  • You don’t know anything about money, don’t know a stock from a bond, and find the whole subject distasteful.  (But I would urge you to learn about investments and keep an eye on things, even if you hate the subject).
  • You don’t have the time to do it yourself — to research companies, to track your portfolio, to follow the markets and listen to what informed people are saying.
  • You have a whole lot of money and want access to the types of investments — venture capital, initial public offerings, real estate partnerships, private equity — that aren’t available to “mass affluent” people.
  • Maybe, just maybe, you know someone with an outstanding track record of managing money (no, not your brother-in-law).  You can always entrust part (not all) of your portfolio to that person and see if you are happy with the results.

Your call.  We do it one way and so far it has worked for us.  But that is just one couple’s perspective.

Update:  We have finished French school.  What a great experience!

Tomorrow, on to the next phase of the trip, through the Massif Central, the Dordogne and on to Bordeaux.








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