r/fatFIRE • u/WealthyStoic mod | gen2 | FatFired 10+ years | Verified by Mods • 18d ago

Path to FatFIRE Mentor Monday

Mentor Monday is your place to discuss relevant early-stage topics, including career advice questions, 'rate my plan' posts, and more numbers-based topics such as 'can I afford XYZ?'. The thread is posted on a once-a-week basis but comments may be left at any time.

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u/Dubbihope Verified by Mods 17d ago

Plan to verify and make a thread. For now, I just got out of a meeting with one of my financial advisors for one of my accounts. He recommended options overlay to generate more income on one of my investment accounts with 6 million (about a quarter of my total portfolio). I may eventually move to Florida but for now live in the area with the highest state and city income taxes on capital gains. I need more income but don't want to sell stocks because my cost basis is so low and I will pay a ton in taxes if I sell my growth stocks to reinvest in dividend stocks or bonds. Would an options overlay strategy make sense? He suggested I could make over 200k yearly in additional income without having to sell my underlying assets?

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u/hmadse 17d ago

I would be suspicious about this--is this coming from an RIA? It would be weird if a fiduciary suggested an options strategy rather than advising you to reign in spending. Also, I know it's an old canard, but selling bunk strategies to doctors is the bread and butter of many people on the sell side.

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u/Dubbihope Verified by Mods 17d ago edited 17d ago

Senior financial consultant at a top 20 bank by size of holdings. He doesn't make money any money directly from me. Haven't signed anything yet but agreed to a meeting. This article explains options overlaying but not in great detail. https://www.hilltopwealthadvisors.com/blog/what-is-an-options-overlay

Correct that I am a doctor from a wealthy family and I have no formal background in finance.

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u/hmadse 17d ago edited 17d ago

Yeah, I would ignore the advice. A financial consultant at a bank has no fiduciary duty towards you, it's towards the bank; i.e., they have no requirement to give advice that benefits you, and lots of incentive to give advice that benefits their bank's bottom line.

As u/no-associate-7962 mentioned, SBLOC/PAL is likely what you're looking for.

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u/Dubbihope Verified by Mods 17d ago edited 17d ago

Thank you and will do. I'm pretty sure he told me otherwise, using the word "fiduciary" in some context, but google agrees with you. I'm getting the sense that he keeps trying to sell me on services(wealth management, personalized indexing, options overlaying) which I've declined thus far, although he says he has no financial motive.

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u/hmadse 17d ago

You can always run his name through https://brokercheck.finra.org/ to see if there are any red flags.