My 1st Million At 33 – yes, you can do it too

When you have 100K investable asset, some doors are beginning to open for you (although where these doors lead to may not be necessarily better). For example at both Bank of America and UBS, you can buy into some of their managed asset accounts using mutual funds as the vehicle starting at the minimum of $100K. In fact, some smaller financial advisors are willing to take an account starting at $50K. But to get into a slightly more specialized institutions such as Puplava Securities, often you will need $250K. At $250K, many doors in the brokerage world are open to you. If you’re willing to go to $500K, pretty much everyone is willing to do business with you. There are some extremely selective institutions that will only take account for not less than 1 million, such as Pring Turner management, but those are rare birds. Certainly, if they are able to sustain and expand their business with a minimum opening balance of 1 million dollar, it most likely means that they are not bad at all.

Despite the availability of these money managers to you at such money level, you should ask many questions about the money managers before you give them your money for management. I have an article Money Manager: Things You Should Know & Ask, if you don’t know how to select your managers. Besides all those questions, you should ask yourself two things before rushing into this newfound world:

1. How many money managers are you going to use? It may be simply too risky to put all of your money into a single big account. One obvious risk is certainly the possibility of fraud at smaller firms. You want to make sure that they are properly registered at NASD, and SIPC account protection against theft of your money. The other risk is related to performance. If this particular firm or money manager screws up, then you are screwed up too. Often it is better not to put all of your eggs in one basket. If you employ more than one money manager, you can observe their performance and continuously evolve your allocation between managers in time.
2. Is it worth the fee or commission to let others managing the money for you?
   If the money manager is not adding any additional values, but simply doing asset allocation and portfolio rebalancing based on some preset percentage, I think you probably could consider doing it yourself. Following asset allocation is not that complicated. My partner ML has an asset allocation series, which should be very helpful. If the money manager has a good track record either beating index and/or have the same performance but with less volatility, I think it should be worthwhile what you are paying. There are also specialized portfolio managers only concentrating in certain trading strategies which you could consider.

Certainly, you don’t need to all DIY or all managed by other people. I would advise to have your core portfolio managed by your own asset allocation model, while having 2 or more money managers to manage some 20% to 40% of your money. Some exposure to money managers should be good since you will have some Wallstreet insiders to keep you up-to-day on how markets are doing. But your liquid asset probably needs to be at closer to $1 million if not more for you to do that.

If your liquid asset is less than $500K, you could still follow my previous advice for $10K to $100K portfolio, and continue to work on your asset allocation faithfully. One improvement upon your previous allocation that you could make is that with a bigger portfolio, now you can afford easily to have some smaller percentile positions in various kinds of assets such as foreign bonds, commodity funds, precious metals, etc. Or you can start to experiment with some professional money management services that have a lower minimum of some $100K. Personally, I think if you have $500K, opening an account of $250K with one single manager probably is a little bit risky in terms of concentration. Unless you are quite sure about the manager and the company, I wouldn’t advise you to give up control of half of your money to a single person or a single company. I will probably only try one or at most two managers with $100K each, if I have $500K.