After doing my first free Empower monetary skilled evaluate again in 2014, I made a decision to do one other funding portfolio evaluate with them. Given the portfolio evaluate 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 uncovering potential optimization alternatives?
I additionally needed to expertise the method firsthand once more, in case any of you wish to make the most of their free monetary evaluate as nicely. General, I discovered it to be a worthwhile and academic expertise. You’ll be able to sign up here if interested as soon as you have opened up a free account and linked your property.
For background, I have been utilizing Empower’s free wealth administration instruments because the finish of 2012. I even consulted with them part-time of their San Francisco workplace in 2013 and 2014. Lastly, Monetary Samurai is a long-time affiliate companion.
Empower’s Free Skilled Evaluate of My Retirement Portfolio
When you join a free Empower account and hyperlink a minimum of $100,000 in investable property, you possibly can schedule a free monetary evaluate. 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 known as to confirm my id and achieve a primary understanding of my monetary scenario, objectives, and wishes. Notice: you will need to have linked a minimum of $100,000 in investable property to qualify for the decision.
The dialog lasted about 17 minutes. I informed him my age (48), my plan to start out withdrawing from my rollover IRA after 60, and my objective of sustaining a snug retirement with about $60,000 a yr in gross revenue/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 reasonable for retirement to assist extra folks.
For the aim of the evaluate, I solely shared my rollover IRA with about $1.5 million. This was my 401(okay) that I maxed out from 1999 to 2012 earlier than leaving my job. I transformed it to have extra flexibility in my investments and cut back charges. For the reason that conversion, I haven’t contributed a single greenback.
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 Suggestion Session
Every week later, we had the follow-up telephone name. I logged into my Empower dashboard the place I linked my IRA so he may stroll me by means of 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 Non-public Consumer service, for individuals who have a minimal of $1 million in investable property. As a Non-public Consumer, you get two devoted advisors, precedence entry to their Funding Committee, retirement and wealth planning specialists, and even non-public fairness funding choices.
My Rollover IRA’s Present Asset Allocation
The subsequent slide broke down my IRA allocation. I realized that 99.6% of my holdings are in U.S. property, full home-country bias. About 97.5% is in U.S. shares, with the remaining in money, alternate options, worldwide shares, and bonds. I believed I used to be 99.9% in shares.
Sector-wise:
- 34.4% in Communication Providers (Google, Meta, Netflix)
- 35.2% in Tech (largely 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 Providers. So, my IRA is roughly 70% tech-heavy, a focus I’m snug with given my outlook.
Private Technique Allocation Advisable By Empower
Empower really helpful a portfolio of:
- 75.6% Shares
- 10.1% Alternate 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 prevented them for years because of company governance considerations and political dangers. Aside from Taiwan Semiconductor (Ticker: TSM), I’ve stayed U.S.-focused. Happily, that labored out nicely. U.S. shares have outperformed for over a decade (although 2025 has been a uncommon yr of worldwide outperformance).
Inside Alternate options, about 64% was in actual property (together with overseas actual property), which caught my eye since ~40% of my total web price is already in actual property. I didn’t ask which overseas markets they meant. Price asking if you happen to take the evaluate.
A 20.9% gold allocation would’ve been good, given gold’s document 2025 efficiency.
At solely 13.6%, the bond allocation appeared mild for somebody retiring in 12 years. Nevertheless, if you happen to 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 advice 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 methodology of developing portfolios by evenly weighting throughout fashion, measurement, and sector, as a substitute of following a market-cap index dominated by the most important names.
The thought: diversify away from bubbles and cut 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 method. Nevertheless, I’m based mostly in San Francisco and am a robust believer in tech, so I’m effective staying obese. Nonetheless, if this had been my solely portfolio at age 48, having 70% in a single sector could be thought of extreme.
As an illustration, my IRA fell from $1,115,000 to $827,000 in 2022, a 26% drop. That’s almost 5 years of dwelling bills gone in a single yr, if my $60,000 annual dwelling bills are true. If the exuberance of 1999 is truly back, my tech-heavy portfolio may simply lose 40% of its worth throughout the subsequent bear market.
Due to this fact, getting an expert evaluate of your investments is likely to be extra essential than ever.
Sensible Weighting Could Outperform The S&P 500 Throughout Tough Instances
This beneath chart tries to emphasise how Sensible Weighting outperformed the S&P 500 throughout two troublesome time spans (12/31/1999 – 12/31/04 and 12/31/07 to 12/31/12). Nevertheless, in a raging bull market, Sensible Weighting would underperform given Empower would promote your winners in an effort to preserve 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 smart. 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 call with the Empower professional, ask:
- What’s the drift threshold (%) per sector / fashion / 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
In fact, 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 beneath exhibits how Empower will help with broader financial savings and withdrawal strategies, an space even essentially the most disciplined FIRE lovers usually battle with. Having skilled steering right here could make a significant distinction.
Figuring out how a lot to avoid wasting in your kids’s schooling is one other massive problem, particularly given the relentless rise in school prices and the unsure affect of AI on future careers. I’ve explored this intimately in my put up 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 cut back tax drag and decrease total portfolio danger.
Property Planning Is Essential However Typically Uncared for
Lastly, estate and legacy planning often is the most neglected but important space of monetary administration. Most of us don’t like pondering too far forward, not to mention considering our personal mortality. However having an property planning specialist stroll you thru completely different eventualities will help you decrease property taxes and guarantee your wealth is distributed as supposed.
For those who’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 wish to plan rigorously to cut 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 a giant worth add.
A Retirement Forecast
Lastly, we wrapped up the decision by reviewing what my retirement may appear like beginning at age 60, simply 12 years from now, if I adopted Empower’s suggestions. You’ll be able to mannequin related eventualities your self utilizing their free wealth management tools by adjusting your individual enter assumptions.
Basically, you wish to goal a minimum of a 90% chance that your portfolio will help your retirement objectives. Ideally, you purpose 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 ~$1,500,000 in my IRA invested per Empower’s suggestions – I’m comfortably on observe.
In reality, if I dwell to age 92, the projection exhibits I’d cross away with almost $4 million left over. This outcome, ending up wealthier in dying than at retirement, is definitely fairly widespread 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 operating a number of withdrawal fee eventualities. Doing so will help make sure you strike the suitable steadiness between dwelling nicely right this moment and never operating out of cash tomorrow.
A Extra Luxurious Retirement Assumption
Given I don’t wish to die with a web price 2.5X greater 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 stage, $96,000 nonetheless represents only a 4% secure withdrawal fee 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 evening whereas having fun with life extra alongside the best way. That stated, my chance of this retirement situation coming to fruition is simply 81%. So possibly I “solely” die with $1-$2 million as a substitute of $2.4 million. That is effective by me.
The Course of Of Hiring Empower
General, I believed the 40-minute free monetary session was worthwhile for understanding the place my IRA portfolio stood. It feels nice figuring out that if I could make it to age 60, I shouldn’t have any drawback spending a minimum of $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 if you happen to determine 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 fee, I do know the method is easy. You simply fill out a permission type on-line and it takes at most two weeks.
Capital Positive factors Taxes Due To Rebalancing
My fundamental concern was the tax hit from rebalancing. Paying capital beneficial properties 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.
Due to this fact, if you’re contemplating hiring Empower, I like to recommend beginning along with your tax-advantaged accounts. Alternatively, you may have them handle a smaller taxable brokerage account, ideally near the $100,000 minimal. This method helps decrease your tax liabilities.
Empower Administration Charges
Empower’s charges are aggressive for a full-service wealth administration agency.
- 0.89% AUM for funding or wealth administration shoppers with lower than $1 million
- Non-public Shoppers:
- 0.79% on the primary $3 million
- 0.69% on the subsequent $2 million
- 0.59% on the subsequent $5 million
- 0.49% on property over $10 million
Whereas no person enjoys paying administration charges, these charges are decrease than massive 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 in addition needed to half methods along with her ex-husband’s cash administration agency.
Who Advantages Most From a Monetary Advisor
For those who don’t like managing your portfolio, aren’t assured in investing, haven’t got the time, and need holistic monetary steering, Empower is price contemplating. You’ll be able to strive them for a yr, be taught from their method, after which determine whether or not to proceed paying or return to managing your cash your self.
Many traders have missed out on large beneficial properties this cycle as a result of they stored 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 they’d relative to their web price. Hiring a disciplined advisor may’ve helped them steadily make investments and construct wealth.
On the flip facet, some traders are too aggressive, buying and selling too usually, promoting close to the underside, and leveraging close to the highest. These of us may additionally profit from Empower’s structured, unemotional method to portfolio administration.
For these of us who’re private finance fanatics, we will handle our personal cash simply effective. Nevertheless it’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 straightforward 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 possibly uncover a number of methods to optimize your wealth alongside the best way.
Grateful For My Free Monetary Evaluation
Even after a long time of managing my very own cash, I discovered worth in getting a recent, skilled perspective. Empower’s free monetary evaluate gave me better 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 vitality isn’t what it was once, however my duties have solely grown with two younger children and a stay-at-home spouse relying on me. The stress to get our funds proper has by no means been better. That’s why I’m grateful I went by means of one other free monetary evaluate with Empower. It gave me peace of thoughts and I hope it does the identical for you.
Readers, if you happen to’ve had your individual free monetary evaluate, what are some belongings you found about your portfolio and your total funds? When was the final time you had a evaluate of your funds and what did you alter 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.
