Should spouses move retirement plans to same investment adviser?

Hi, Terry. Didn’t have a chance to ask this when you were at GSU this week. My wife and I are both retired but have not yet begun withdrawals from our IRAs. My IRA (about $400K) is with a Morgan Stanley adviser (with full investment discretion) in Chicago. My wife’s (about $560K) is in an account that we control with T. Rowe Price, spread over about a dozen mutual funds. (Both IRAs have done well over many years.) My MS adviser is developing a “retirement income plan” (or perhaps it’s really a spending plan) for us as a couple. He says he can develop a plan covering both mine and my wife’s assets; though it is a bit more complicated with her IRA in the Price funds and him unable to directly control those and us having to let him know if we make any significant changes. As I see our options, we can either keep the current arrangement and take responsibility for coordinating the Price accounts as best we can with my adviser’s recommendations, or we can transfer my wife’s IRA to an account with Morgan Stanley and give our adviser discretion over both accounts. Taking the second option would probably be much easier for us (in no longer having to take responsibility for those investment decisions), and would allow our adviser to have better coordination of both our accounts. It also would qualify us for a slightly smaller advisory fee with Morgan Stanley (possibly 0.8% on the combined funds instead of 1% on just my IRA). I do have a slight concern about “putting all (or most) of our eggs in one basket.” What are your thoughts about these options, or do you possibly have any other suggestion of how best to coordinate two retired spouses’ retirement funds?

Terry Says:  Great question!  They are called INDIVIDUAL retirement accounts for a reason! During the years you save and invest, there is no guarantee that you will wind up together!  But you have done the most important thing — stuck it out together for all these years.  And yes, you need to make sure your financial advisor is aware of the total amount and investment of your assets.

Without casting aspersions on your Morgan Stanley advisor, I am wondering why you haven’t posed the same question to T. Rowe Price.  They have, without doubt, one of the best Retirement Income Modeling services I have researched — and their advice is FREE when you have assets there.  They use the Monte Carlo modeling that I described at my speech last week.  So just to compare, contact them and ask for the full service of retirement income planning, working with one of their financial planners.

Then COMPARE the results!  And compare the discussions you have had at the two places.  And compare the overall investment costs, including commissions (if any), management fees, and incentives.   Oh, and if you are not yet collecting Social Security, be sure to use the T. Rowe Price calculator about how to maximize benefits over two lives!

It is entirely possible that you will continue to use BOTH sources of investment advice.  Or you may switch to one or the other.  BUT you should NEVER give your advisor discretion over your accounts!  This is your money — all of it.  So plan to pay attention.  It has been “easy” to make money in the past five years.  After all the Dow went from 6700 to 17,000!  Past performance is never a guarantee of the future.   And it should never be “too much trouble” to tell your advisor that you have either taken withdrawals or changed investments in either plan, should you decide to keep things status quo.