After doing my first free Empower monetary skilled overview again in 2013, I made a decision to do one other funding portfolio overview with them. Given the portfolio overview is free for anybody with over $100,000 in investable property, and my monetary scenario has modified so dramatically since then, I figured, why not spend somewhat time to uncover potential optimization alternatives?
I additionally wished to expertise the method firsthand once more, in case any of you need to reap the benefits of their free monetary overview as nicely. General, I discovered it to be a worthwhile and academic expertise. You possibly can sign up here if interested as soon as you’ve got opened up a free account and linked your property.
For background, I have been utilizing Empower’s free wealth administration instruments for the reason that finish of 2012. I even consulted with them part-time of their San Francisco workplace in 2013 and 2014 once they had been nonetheless referred to as Private Capital. Lastly, Monetary Samurai is a long-time affiliate accomplice.
Empower’s Free Skilled Overview of My Retirement Portfolio
When you join a free Empower account and hyperlink at the least $100,000 in investable property, you may schedule a free monetary overview. The method contains two calls—a brief discovery name, adopted by a suggestions name.
The First Name: A 17-Minute Discovery Chat
After scheduling my appointment, an Empower skilled referred to as to confirm my identification and acquire a primary understanding of my monetary scenario, objectives, and wishes. Be aware: it’s essential to have linked at the least $100,000 in investable property to qualify for the decision.
The dialog lasted about 17 minutes. I instructed him my age (48), my plan to begin withdrawing from my rollover IRA after 60, and my objective of sustaining a snug retirement with about $60,000 a yr in gross earnings/withdrawals, supplemented by Social Safety.
I didn’t inform the Empower skilled that I run Monetary Samurai or that I’m a private finance junkie. This fashion, issues had been extra lifelike for retirement to assist extra individuals.
For the aim of the overview, I solely shared my rollover IRA with about $1.5 million. This was my 401(ok) that I maxed out from 1999 to 2012 earlier than leaving my job. I transformed it to have extra flexibility in my investments and scale back charges. I haven’t contributed a greenback to it since.
I used to be curious to listen to whether or not their suggestions had been just like how I make investments my total public funding portfolio.
The Second Name: A 40-Minute Advice Session
Every week later, we had the follow-up cellphone name. I logged into my Empower dashboard so he might stroll me by his suggestions through slides. No video or in-person assembly was wanted, which was handy.
Based mostly on my $1.5 million in property, he launched Empower’s Personal Consumer service, for individuals who have a minimal of $1 million in investable property. As a Personal Consumer, you get two devoted advisors, precedence entry to their Funding Committee, retirement and wealth planning specialists, and even non-public fairness funding choices. Sounds fairly good.
My Rollover IRA’s Present Asset Allocation
The subsequent slide broke down my IRA allocation. I discovered that 99.6% of my holdings are in U.S. property—proof of my home-country bias. About 97.5% is in U.S. shares, with the remainder in money, alternate options, worldwide shares, and bonds. I assumed I used to be 99.9% in equities.
Sector-wise:
- 34.4% in Communication Companies (Google, Meta, Netflix)
- 35.2% in Tech (principally Apple)
- 12.2% in Client Discretionary
- 5.5% in Financials
- 3.9% in Well being Care
- 3.7% in Industrials
- 2.1% in Client Staples
In my thoughts, I simply lump Google, Meta, and Netflix into “Tech,” however technically they’re Communication Companies. So, my IRA is roughly 70% tech-heavy, a focus I’m comfy with given my outlook.
Private Technique Allocation Really useful By Empower
Empower really useful a portfolio of:
- 75.6% Shares
- 10.1% Options
- 13.6% Bonds
Inside shares:
- 69.9% U.S.
- 21.8% Developed Worldwide
- 8.3% Rising Markets
Though I labored in worldwide equities for 13 years, I’ve averted them for years resulting from company governance considerations and political dangers. Apart from Taiwan Semiconductor (Ticker: TSM), I’ve stayed U.S.-focused. Happily, that’s labored out nicely. U.S. shares have outperformed for over a decade (although 2025 has been a uncommon yr of worldwide outperformance).
Inside Options, about 64% was in actual property (together with international actual property), which caught my eye since ~40% of my total web price is already in actual property. I didn’t ask which international markets they meant. Price asking in case you take the overview.
A 20.9% gold allocation would’ve been good, given gold’s document 2025 efficiency.
At solely 13.6%, the bond allocation appeared gentle for somebody retiring in 12 years. Nonetheless, in case you view real estate as bonds-plus type of investment, the general portfolio roughly resembles a 75/25 shares/bonds combine, which feels proper for somebody in my place. That’s about my allocation in my taxable accounts too, so Empower’s suggestion made sense.
Sensible Weighting: Empower’s Core Technique
Empower’s Sensible Weighting technique has been round since my consulting days there. It’s their proprietary technique of setting up portfolios by evenly weighting throughout model, measurement, and sector, as an alternative of following a market-cap index dominated by the largest names.
The concept: diversify away from bubbles and scale back focus danger. You find yourself with a extra balanced portfolio that doesn’t lean too closely on a single sector like tech.
Sensible Weighting is a rational, disciplined strategy. Nonetheless, I’m primarily based in San Francisco and am a robust believer in tech, so I’m effective staying chubby. Nonetheless, if this had been your solely portfolio at age 48, having 70% in a single sector can be thought-about extreme.
As an example, my IRA fell from $1.115 million to $827,000 in 2022, a 26% drop. That’s practically 5 years of residing bills gone in a single yr, if my $60,000 annual residing bills true.
Sensible Weighting Might Outperform The S&P 500 Throughout Troublesome Occasions
This under chart tries to emphasise how Sensible Weighting outperformed the S&P 500 throughout two tough time spans (12/31/1999 – 12/31/04 and 12/31/07 to 12/31/12). Nonetheless, in a raging 1999-like bull market, Sensible Weighting would underperform given Empower would promote your winners to be able to keep their goal weightings.
The nearer you’re to conventional retirement and the extra cautious you’re concerning the inventory market, the extra Sensible Weighting is sensible. Personally, I feel the ideal return scenario in retirement is sluggish and regular returns. I don’t wish to see greater than a ten% downward swing in my web price in a yr, which is why my web price is so diversified.
In your name with the Empower advisor, ask:
- What’s the drift threshold (%) per sector / model / measurement that triggers a rebalancing commerce in Sensible Weighting?
- How do you steadiness tax penalties vs. drift correction (particularly in taxable accounts)?
- Is there a grace band or “buffer zone” to forestall fixed churning?
Holistic Monetary Planning
After all, for most individuals, a retirement portfolio like an IRA is only one piece of the monetary puzzle. Neither is optimizing it the one objective. The slide under reveals how Empower will help with broader financial savings and withdrawal strategies, an space even probably the most disciplined FIRE fanatics usually wrestle with. Having skilled steering right here could make a significant distinction.
Figuring out how a lot to avoid wasting in your kids’s training is one other large problem, particularly given the relentless rise in school prices and the unsure influence of AI on future careers. I’ve explored this intimately in my publish on 529 plan savings amounts by age and whether or not or to not superfund the 529.
For these working in tech with a big portion of compensation tied to inventory choices, consulting with an advisor on tax-efficient promoting methods might be invaluable. Correct timing and diversification will help scale back tax drag and decrease total portfolio danger.
Property Planning Is Vital However Usually Uncared for
Lastly, estate and legacy planning stands out as the most ignored but important space of economic administration. Most of us don’t like considering too far forward, not to mention considering our personal mortality. However having an property planning specialist stroll you thru totally different eventualities will help you decrease property taxes and guarantee your wealth is distributed as meant.
Should you’re lucky sufficient to die with an property price greater than the federal property tax threshold (set to return to round $15 million per individual in 2026), you’ll need to plan fastidiously to scale back the 40% property tax on each greenback above that restrict. A method is thru an irrevocable life insurance trust.
With the ability to discuss to an Empower property planning skilled as a part of its service is an enormous worth add.
A Retirement Forecast
Lastly, we wrapped up the decision by reviewing what my retirement might appear like beginning at age 60, simply 12 years from now, if I adopted Empower’s suggestions. You possibly can mannequin comparable eventualities your self utilizing their free wealth management tools by adjusting your individual enter assumptions.
Typically, you need to goal at the least a 90% chance that your portfolio will help your retirement objectives. Ideally, you intention for 99% to construct in an additional cushion for surprising occasions or lower-than-expected returns.
Based mostly on my assumptions – spending $60,000 a yr, receiving $37,416 yearly in Social Safety, and having $1,519,000 in my IRA invested per Empower’s suggestions – I’m comfortably on observe.
The truth is, if I dwell to age 92, the projection reveals I’d cross away with practically $4 million left over. This consequence, ending up wealthier in loss of life than at retirement, is definitely fairly frequent when following the 4% secure withdrawal rule.
That’s why, when you formally retire, it’s nicely price conducting an in depth monetary evaluation of your scenario and working a number of withdrawal price eventualities. Doing so will help make sure you strike the precise steadiness between residing nicely at this time and never working out of cash tomorrow.
Given I don’t need to die with a web price 2.5X larger than once I retired, I made a decision to bump up my annual spending from $60,000 to $96,000 and YOLO a little. Even at that degree, $96,000 nonetheless represents only a 4% secure withdrawal price if I retire at 60 with a $2.35 million portfolio.
In different phrases, I’d nonetheless be projected to die with round $2.4 million left over. That is loads of cushion to sleep nicely at night time whereas having fun with life extra alongside the way in which.
The Course of Of Hiring Empower
General, I assumed the 40-minute free monetary session was worthwhile for understanding the place my IRA portfolio stood. It feels nice realizing that if I could make it to age 60, I should not have any downside spending at the least $96,000 a yr from my IRA portfolio alone. The projection assumes I rebalance my present extremely aggressive portfolio, however since I’ve been semi-retired since 2012, I’m not too apprehensive.
Empower makes use of BNY Pershing as its custodian, so in case you resolve to have them handle your cash, you’ll merely fill out a switch type and transfer your current property to Pershing. Having transferred over $1 million portfolios earlier than to get a greater mortgage price, I do know the method is simple. You simply fill out a permission type on-line and it takes a number of days.
Capital Good points Taxes Due To Rebalancing
My predominant concern was the tax hit from rebalancing. Paying capital good points on roughly $1.2 million of a $1.5 million portfolio would sting. Fortunately, the Empower advisor jogged my memory that as a result of this was my IRA, there are no tax penalties from shopping for or promoting positions inside it.
Subsequently, if you’re contemplating hiring Empower, I like to recommend beginning along with your tax advantaged accounts. Alternatively, you might have them handle a smaller taxable brokerage account, ideally near the $100,000 minimal. This strategy helps decrease your tax liabilities. And in case your portfolio already follows a Sensible Weighting model diversification strategy just like Empower’s, the tax influence from rebalancing in your taxable portfolio could also be even decrease.
Empower Administration Charges
Empower’s charges are aggressive for a full-service wealth administration agency.
- 0.89% AUM for funding or wealth administration purchasers with lower than $1 million
- Personal Shoppers:
- 0.79% on the primary $3 million
- 0.69% on the following $2 million
- 0.59% on the following $5 million
- 0.49% on property over $10 million
Whereas no person enjoys paying administration charges, these charges are decrease than large names like Goldman Sachs or JP Morgan, which generally cost over 1%, on high of the charges from the funds they make investments your capital in.
I do know this firsthand as a result of I help manage a close relative’s account for free. She moved her seven-figure portfolio from Goldman to an internet brokerage account for me to handle. She was paying over 1% however was sad with their service and likewise wished to half methods along with her ex-husband’s cash administration agency.
Who Advantages Most From a Monetary Advisor
Should you don’t like managing your portfolio, aren’t assured in investing, haven’t got the time, and wish holistic monetary steering, Empower is price contemplating. You possibly can strive them for a yr, be taught from their strategy, after which resolve whether or not to proceed paying or return to managing your cash your self.
Many traders have missed out on large good points this cycle as a result of they saved an excessive amount of in money, paralyzed by indecision. I’ve met lots of them and had been at all times shocked to see how a lot money that they had relative to their web price. Hiring a disciplined advisor might’ve helped them steadily make investments and construct wealth.
On the flip aspect, some traders are too aggressive, buying and selling too usually, promoting close to the underside, and leveraging close to the highest. These people might additionally profit from Empower’s structured, unemotional strategy to portfolio administration.
For these of us who’re private finance fanatics, we will handle our personal cash simply effective. But it surely’s nonetheless sensible to get an expert check-up yearly or two to make sure we’re on observe. Markets change, danger tolerances evolve, and it’s simple to lose perspective throughout bull and bear cycles alike.
A free Empower financial consultation is a low-effort approach to get that second opinion, and perhaps uncover a number of methods to optimize your wealth alongside the way in which.
Grateful For My Overview
Even after many years of managing my very own cash, I discovered worth in getting a recent, skilled perspective. Empower’s free monetary overview gave me larger readability about my retirement plan and confidence that my present technique nonetheless aligns with my long-term objectives. Generally, an out of doors set of eyes helps you see what you’ve been overlooking.
It’s humorous to assume again: once I began Monetary Samurai at 32, conventional retirement at 60 or 65 felt like a lifetime away. Now at 48, it immediately feels proper across the nook.
My power isn’t what it was, however my duties have solely grown with two younger children and a stay-at-home spouse relying on me. The strain to get our funds proper has by no means been larger. That’s why I’m grateful I went by one other free monetary overview with Empower. It gave me peace of thoughts and I hope it does the identical for you.
Readers, in case you’ve had your individual free monetary overview, what are some stuff you found about your portfolio and your total funds? When was the final time you had a overview of your funds and what did you modify consequently?
The assertion is offered to you by Monetary Samurai (“Promoter”) who has entered right into a written referral settlement with Empower Advisory Group, LLC (“EAG”). Click on here to be taught extra.
