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 scenario has modified so dramatically since then, I figured, why not spend slightly time uncovering potential optimization alternatives?
I additionally wished to expertise the method firsthand once more, in case any of you wish to benefit from their free monetary overview as properly. Total, I discovered it to be a worthwhile and academic expertise. You’ll be able to join right here if as soon as you’ve got opened up a free account and linked your belongings.
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. Lastly, Monetary Samurai is a long-time affiliate companion.
Empower’s Free Skilled Overview of My Retirement Portfolio
When you join a free Empower account and hyperlink a minimum of $100,000 in investable belongings, you possibly can 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 id and acquire a fundamental understanding of my monetary scenario, objectives, and wishes. Notice: you need to have linked a minimum of $100,000 in investable belongings to qualify for the decision.
The dialog lasted about 17 minutes. I advised him my age (48), my plan to begin withdrawing from my rollover IRA after 60, and my aim 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 life like 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. Because the conversion, I haven’t contributed a single greenback.
I used to be curious to listen to whether or not their suggestions had been much like how I make investments my total public funding portfolio.
The Second Name: A 40-Minute Suggestion Session
Per 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 via his suggestions through 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 Non-public Shopper service, for many who have a minimal of $1 million in investable belongings. As a Non-public 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 realized 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 Shopper Discretionary
- 5.5% in Financials
- 3.9% in Well being Care
- 3.7% in Industrials
- 2.1% in Shopper 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 beneficial 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 prevented them for years as a result of company governance considerations and political dangers. Aside from Taiwan Semiconductor (Ticker: TSM), I’ve stayed U.S.-focused. Happily, that labored out properly. 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 for those who 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. Nonetheless, for those who 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 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 technique of developing portfolios by evenly weighting throughout type, measurement, and sector, as an alternative of following a market-cap index dominated by the most important names.
The thought: 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 based mostly in San Francisco and am a sturdy believer in tech, so I’m tremendous staying chubby. Nonetheless, if this had been my solely portfolio at age 48, having 70% in a single sector can be thought-about extreme.
For example, my IRA fell from $1,115,000 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 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.
Due to this fact, getting an expert overview of your investments is perhaps extra vital than ever.
Sensible Weighting Could Outperform The S&P 500 Throughout Tough Occasions
This under 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). Nonetheless, 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 in regards to the inventory market, the extra Sensible Weighting is sensible. Personally, I believe the perfect return situation in retirement is sluggish and regular returns. I don’t prefer 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 skilled, ask:
- What’s the drift threshold (%) per sector / type / 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 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 aim. The slide under reveals how Empower may help with broader financial savings and withdrawal methods, an space even probably the most disciplined FIRE lovers usually wrestle with. Having skilled steerage right here could make a significant distinction.
Figuring out how a lot to save lots of to your kids’s schooling is one other massive problem, particularly given the relentless rise in school prices and the unsure impression of AI on future careers. I’ve explored this intimately in my put up 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 may be invaluable. Correct timing and diversification may help scale back tax drag and decrease total portfolio danger.
Property Planning Is Necessary However Typically Uncared for
Lastly, property and legacy planning stands out as the most missed 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 completely different eventualities may help you reduce property taxes and guarantee your wealth is distributed as meant.
When 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 particular person in 2026), you’ll wish to plan rigorously to scale back the 40% property tax on each greenback above that restrict. A technique is thru an irrevocable life insurance coverage belief.
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 might appear to be 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 administration instruments by adjusting your individual enter assumptions.
On the whole, you wish to goal a minimum of a 90% chance that your portfolio will assist your retirement objectives. Ideally, you goal for 99% to construct in an additional cushion for sudden 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 observe.
The truth is, if I dwell to age 92, the projection reveals I’d go away with practically $4 million left over. This outcome, ending up wealthier in loss of life than at retirement, is definitely fairly frequent when following the 4% protected withdrawal rule.
That’s why, when you formally retire, it’s properly price conducting an in depth monetary evaluation of your scenario and working a number of withdrawal fee eventualities. Doing so may help make sure you strike the proper steadiness between residing properly right this moment and never working out of cash tomorrow.
A Extra Luxurious Retirement Assumption
Given I don’t wish to die with a web price 2.5X increased than once I retired, I made a decision to bump up my annual spending from $60,000 to $96,000 and YOLO slightly. Even at that stage, $96,000 nonetheless represents only a 4% protected 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 properly at night time whereas having fun with life extra alongside the way in which. That stated, my chance of this retirement situation coming to fruition is just 81%. So perhaps I “solely” die with $1-$2 million as an alternative of $2.4 million. That is tremendous 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 realizing that if I could make it to age 60, I should not have any downside 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 for those who determine to have them handle your cash, you’ll merely fill out a switch kind and transfer your current belongings 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 kind on-line and it takes at most two weeks.
Capital Positive aspects Taxes Due To Rebalancing
My foremost concern was the tax hit from rebalancing. Paying capital positive factors 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, in case you are contemplating hiring Empower, I like to recommend beginning together with your tax-advantaged accounts. Alternatively, you possibly can 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 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 belongings 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 prime of the charges from the funds they make investments your capital in.
I do know this firsthand as a result of I assist handle an in depth relative’s account at no cost. 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
When you don’t like managing your portfolio, aren’t assured in investing, haven’t got the time, and need holistic monetary steerage, Empower is price contemplating. You’ll be able to 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 large positive factors this cycle as a result of they stored an excessive amount of in money, paralyzed by indecision. I’ve met a lot of them and had been all the time 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 buyers 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 tremendous. However it’s nonetheless good 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 monetary session is a low-effort solution to get that second opinion, and perhaps uncover just a few methods to optimize your wealth alongside the way in which.
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 higher readability about my retirement plan and confidence that my present technique nonetheless aligns with my long-term objectives. Generally, an outdoor 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 all of the sudden feels proper across the nook.
My vitality isn’t what it was once, however my tasks 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 higher. That’s why I’m grateful I went via one other free monetary overview with Empower. It gave me peace of thoughts and I hope it does the identical for you.
Readers, for those who’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 right here to study extra.