After doing my first free Empower monetary skilled overview again in 2014, 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 belongings, and my monetary state of affairs has modified so dramatically since then, I figured, why not spend a little bit time uncovering potential optimization alternatives?
I additionally wished to expertise the method firsthand once more, in case any of you wish to reap the benefits of their free monetary overview as effectively. Total, I discovered it to be a worthwhile and academic expertise. You may enroll right here if as soon as you have opened up a free account and linked your belongings.
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 at the very least $100,000 in investable belongings, you may schedule a free monetary overview. The method consists of 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 id and achieve a primary understanding of my monetary state of affairs, objectives, and needs. Notice: you could have linked at the very least $100,000 in investable belongings to qualify for the decision.
The dialog lasted about 17 minutes. I informed him my age (48), my plan to begin withdrawing from my rollover IRA after 60, and my purpose 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 manner, issues have been extra sensible 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(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 have been much like how I make investments my general 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 might stroll me by his suggestions by way of slides. No video or in-person assembly was wanted, which was handy.
Primarily based on my $1.5 million in belongings, he launched Empower’s Personal Shopper service, for individuals who have a minimal of $1 million in investable belongings. As a Personal Shopper, 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 following slide broke down my IRA allocation. I discovered that 99.6% of my holdings are in U.S. belongings, full home-country bias. About 97.5% is in U.S. shares, with the remaining in money, alternate options, worldwide shares, and bonds. I assumed I used to be 99.9% in shares.
Sector-wise:
- 34.4% in Communication Companies (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 Companies. So, my IRA is roughly 70% tech-heavy, a focus I’m comfy with given my outlook.
Private Technique Allocation Advisable 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 as a result of company governance issues and political dangers. Apart from Taiwan Semiconductor (Ticker: TSM), I’ve stayed U.S.-focused. Happily, that labored out effectively. 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 general internet price is already in actual property. I didn’t ask which international markets they meant. Value asking in case you take the overview.
A 20.9% gold allocation would’ve been good, given gold’s file 2025 efficiency.
At solely 13.6%, the bond allocation appeared mild for somebody retiring in 12 years. Nevertheless, in case you view actual property as bonds-plus kind of funding, 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.
Good Weighting: Empower’s Core Technique
Empower’s Good Weighting technique has been round since my consulting days there. It’s their proprietary technique of establishing portfolios by evenly weighting throughout fashion, measurement, and sector, as an alternative of following a market-cap index dominated by the most important names.
The concept: diversify away from bubbles and cut back focus threat. You find yourself with a extra balanced portfolio that doesn’t lean too closely on a single sector like tech.
Good Weighting is a rational, disciplined strategy. Nevertheless, I’m primarily based in San Francisco and am a sturdy believer in tech, so I’m superb staying chubby. Nonetheless, if this have been my solely portfolio at age 48, having 70% in a single sector can be thought-about 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 residing bills gone in a single yr, if my $60,000 annual residing bills are true. If the exuberance of 1999 is really again, my tech-heavy portfolio might simply lose 40% of its worth through the subsequent bear market.
Subsequently, getting an expert overview of your investments is perhaps extra necessary than ever.
Good Weighting Might Outperform The S&P 500 Throughout Troublesome Occasions
This under chart tries to emphasise how Good 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). Nevertheless, in a raging bull market, Good Weighting would underperform given Empower would promote your winners to be able to preserve their goal weightings.
The nearer you’re to conventional retirement and the extra cautious you’re in regards to the inventory market, the extra Good Weighting is sensible. Personally, I believe the ideally suited return situation in retirement is gradual and regular returns. I don’t wish to see greater than a ten% downward swing in my internet price in a yr, which is why my internet price is so diversified.
In your name with the Empower skilled, ask:
- What’s the drift threshold (%) per sector / fashion / measurement that triggers a rebalancing commerce in Good Weighting?
- How do you steadiness tax penalties vs. drift correction (particularly in taxable accounts)?
- Is there a grace band or “buffer zone” to stop 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 purpose. The slide under exhibits how Empower will help with broader financial savings and withdrawal methods, 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 to your youngsters’s schooling is one other large problem, particularly given the relentless rise in faculty prices and the unsure impression of AI on future careers. I’ve explored this intimately in my publish on 529 plan financial savings quantities 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 general portfolio threat.
Property Planning Is Necessary However Typically Uncared for
Lastly, property and legacy planning will be the most neglected but important space of economic 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 totally different eventualities will help you reduce property taxes and guarantee your wealth is distributed as supposed.
In case 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 wish to plan rigorously to scale back the 40% property tax on each greenback above that restrict. A method is thru an irrevocable life insurance coverage belief.
Having the ability to speak 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 to be beginning at age 60, simply 12 years from now, if I adopted Empower’s suggestions. You may mannequin related eventualities your self utilizing their free wealth administration instruments by adjusting your individual enter assumptions.
Generally, you wish to goal at the very least a 90% likelihood that your portfolio will help your retirement objectives. Ideally, you goal for 99% to construct in an additional cushion for surprising occasions or lower-than-expected returns.
Primarily based 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 monitor.
Actually, if I reside to age 92, the projection exhibits I’d cross away with almost $4 million left over. This outcome, ending up wealthier in demise than at retirement, is definitely fairly frequent when following the 4% secure withdrawal rule.
That’s why, when you formally retire, it’s effectively price conducting an in depth monetary evaluation of your state of affairs and working a number of withdrawal charge eventualities. Doing so will help make sure you strike the precise steadiness between residing effectively right this moment and never working out of cash tomorrow.
A Extra Luxurious Retirement Assumption
Given I don’t wish to die with a internet price 2.5X increased than after I retired, I made a decision to bump up my annual spending from $60,000 to $96,000 and YOLO a little bit. Even at that degree, $96,000 nonetheless represents only a 4% secure withdrawal charge 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 effectively at night time whereas having fun with life extra alongside the best way. That stated, my likelihood of this retirement situation coming to fruition is barely 81%. So perhaps I “solely” die with $1-$2 million as an alternative of $2.4 million. That is superb by me.
The Course of Of Hiring Empower
Total, I assumed 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 at the very 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 anxious.
Empower makes use of BNY Pershing as its custodian, so in case you determine to have them handle your cash, you’ll merely fill out a switch type and transfer your current belongings to Pershing. Having transferred over $1 million portfolios earlier than to get a greater mortgage charge, I do know the method is easy. You simply fill out a permission type on-line and it takes at most two weeks.
Capital Features Taxes Due To Rebalancing
My important concern was the tax hit from rebalancing. Paying capital positive aspects 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 together with your tax-advantaged accounts. Alternatively, you may have them handle a smaller taxable brokerage account, ideally near the $100,000 minimal. This strategy helps reduce 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 purchasers with lower than $1 million
- Personal Purchasers:
- 0.79% on the primary $3 million
- 0.69% on the subsequent $2 million
- 0.59% on the subsequent $5 million
- 0.49% on belongings 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 assist handle a detailed relative’s account without spending a dime. She moved her seven-figure portfolio from Goldman to a web based brokerage account for me to handle. She was paying over 1% however was sad with their service and in addition wished to half methods together with her ex-husband’s cash administration agency.
Who Advantages Most From a Monetary Advisor
In case you don’t like managing your portfolio, aren’t assured in investing, do not have the time, and wish holistic monetary steering, Empower is price contemplating. You may strive them for a yr, study from their strategy, after which determine whether or not to proceed paying or return to managing your cash your self.
Many buyers have missed out on big positive aspects this cycle as a result of they saved an excessive amount of in money, paralyzed by indecision. I’ve met a lot of them and have been at all times shocked to see how a lot money they’d relative to their internet price. Hiring a disciplined advisor might’ve helped them steadily make investments and construct wealth.
On the flip facet, some buyers are too aggressive, buying and selling too usually, promoting close to the underside, and leveraging close to the highest. These of us might additionally profit from Empower’s structured, unemotional strategy to portfolio administration.
For these of us who’re private finance fanatics, we are able to handle our personal cash simply superb. Nevertheless it’s nonetheless good to get an expert check-up yearly or two to make sure we’re on monitor. Markets change, threat tolerances evolve, and it’s straightforward to lose perspective throughout bull and bear cycles alike.
A free Empower monetary session is a low-effort technique to get that second opinion, and perhaps uncover a couple of methods to optimize your wealth alongside the best way.
Grateful For My Free Monetary Evaluation
Even after many years of managing my very own cash, I discovered worth in getting a contemporary, 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: after I began Monetary Samurai at 32, conventional retirement at 60 or 65 felt like a lifetime away. Now at 48, it all of a sudden feels proper across the nook.
My power isn’t what it was once, however my duties have solely grown with two younger youngsters 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 general funds? When was the final time you had a overview of your funds and what did you modify in consequence?
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 right here to study extra.
