Q&A: Investment Advice in Retirement
A reader wants to know: Who should manage his money in retirement?
Q – My wife and I are retiring this year and we have been fortunate to be in a good position financially. I have a government pension that is indexed and will pretty much replace my take home wages, since I will be taxed at a lower rate and not paying into the pension upon retirement. We also have substantial savings.
I would like to be able to invest this nest egg in a fashion to attempt to replace as much of my wife’s take home wages as possible without taking on very much risk and without drawing down on the capital. We have been savers and never invested in much more than GICs.
I have read some articles on getting the services of an investment counselor. I have gone to see one from RBC and one from TD. They will do discretionary management for a fee of 1.33% of the monies invested. I have also seen an investment adviser who will manage the funds on a non-discretionary basis for approximately the same fee and no commissions charged. Could I have your opinion on comparing these options? – Mike
A – Generally, my inclination would be to set up a non-discretionary account. This gives you a veto over any recommendations that you may not be comfortable with. With a discretionary account, the manager can act without any reference to you as long as he/she stays within the agreed-upon parameters.
However, before you make any decision you should ask the candidates for a detailed plan on how they would set up the account and some of the specific securities they would buy. Compare the three and see which one gives you the highest comfort level.
Another possibility is to divide the money between two advisers and tell each this is what you have done. Compare the results over three years. If one does significantly better, move all the money to that person. – G.P.
Do you have a money question you’d like to ask Gordon? Find out how to submit it here and then check out our Money section regularly to see if it was chosen for a response. Sorry, we cannot send personal answers.