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Old 10-06-2013, 11:57 PM   #81
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Just skip this, but I have to comment.

I'm not sure if you understand fees. I see others talk about you paying every year 1% of your savings to your financial advisor, perhaps you might not know what that entails. So if market only went up 2% for the year, your FA gets 50% of what your money made. And if you lost money, she still gets 1%.

Why would you act as though it's too stressful taking a couple of hours to see how much your paying in fees, and compare it to having it in a simple index fund? As my friend always says, do it for shits and giggles. Though you might not be giggling too much after you realize how much you could really have.
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Old 10-07-2013, 06:02 AM   #82
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I want everyone to know that I've ordered books from Amazon, and DH and I went into the local library and checked out even more today. Doing my research!
That's good but please don't turn it into a full time job. It takes some time to digest the concept of index investing.

Your opinions will evolve over time. Also, don't get bushwacked by a lot of hucksters that write books about great financial approaches that are really only advertisements for their FA practices (Ray Lucia, Ken Fischer, etc.). They can be interesting reading but only after you realize them for what they are.

I have been unsuccessful in converting very many people that are still employed to index investing. They are "too busy" to do it themselves and defend their FA. Right after retiring, I've had many of these same people ask me about index investing because with all their free time they suddenly realized how much the FA was costing them.
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Old 10-07-2013, 07:32 AM   #83
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.............I have been unsuccessful in converting very many people that are still employed to index investing. They are "too busy" to do it themselves and defend their FA. ......
In my experience, there is a resistance to dropping a FA because it implies that the person who chose the FA somehow screwed up and wasted a lot of money. Of course, this is not an accurate representation but it is an incentive to dig in their heels. I've only had one true conversion and she is now my wife. I'm now the FA.
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Old 10-07-2013, 10:02 AM   #84
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Cheryl,

Change is hard, someone once told me 'we chage when the pain of staying the same is greater than the pain of change'.

Good luck,

MRG
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Old 10-07-2013, 10:51 AM   #85
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In my experience, there is a resistance to dropping a FA because it implies that the person who chose the FA somehow screwed up and wasted a lot of money. Of course, this is not an accurate representation but it is an incentive to dig in their heels.
I've encountered this in our family. One family member is very enthusiastic about her FA and honestly thinks everyone else in the family should be using that FA. When we beg to differ, and it's taken as a personal attack.

I guess some FAs are just very good at convincing people of their value.
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Old 10-07-2013, 11:51 AM   #86
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Just skip this, but I have to comment.

I'm not sure if you understand fees. I see others talk about you paying every year 1% of your savings to your financial advisor, perhaps you might not know what that entails. So if market only went up 2% for the year, your FA gets 50% of what your money made. And if you lost money, she still gets 1%.

Why would you act as though it's too stressful taking a couple of hours to see how much your paying in fees, and compare it to having it in a simple index fund? As my friend always says, do it for shits and giggles. Though you might not be giggling too much after you realize how much you could really have.
I do understand fees, and my overall results have been in excess of market results (indeed, more than 1% better, thus I am very happy with the financial advisory services I have utilized for the last 34 years. Believe me I have been monitoring this closely for a very, very long time.

I am open to reconsidering the DIY option after being fully retired for a year or so, because I am in a transition to a new financial advisory service that , and I also understand that the past is not necessarily predictive of the future.
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Old 10-07-2013, 12:15 PM   #87
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I do understand fees, and my overall results have been in excess of market results (indeed, more than 1% better, thus I am very happy with the financial advisory services I have utilized for the last 34 years.
Just curious, in general what kind of allocations / investments has this FA put your money into? It would be unusual to beat the market average returns over 34 years with a 1% fee plus possibly more load or fee heavy type investments.
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Old 10-07-2013, 12:35 PM   #88
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Just curious, in general what kind of allocations / investments has this FA put your money into? It would be unusual to beat the market average returns over 34 years with a 1% fee plus possibly more load or fee heavy type investments.
You beat me to it. If this FA had been beating "The Market" for 34 years she'd be on the cover of every financial magazine in existence. This would be especially true if she was limiting her investments to classical, high-fee mutual funds. She'd be too busy managing Harvard's endowment or CALPERS to worry about trivial $2.5 MM accounts.

The only valid comparison is to an equivalent basket of index funds with dividends reinvested. I've seen annuity sales pitches that compare their pre-fee returns against the S&P500 without dividends. I haven't paid much attention to FA literature.
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Old 10-07-2013, 12:39 PM   #89
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You beat me to it. If this FA had been beating "The Market" for 34 years she'd be on the cover of every financial magazine in existence.
Or convicted along with Bernie Madoff.

For FAs to do better than market averages, they have a high hurdle to overcome, because just earning 1% more only gets them to the breakeven point of index funds. So to do better they have to make 1% to cover their annual fees, another .5 - 1% or so to cover the load, sales charges and/or separate fees on the funds or whatever you are invested in, and then X% more to actually beat the market.
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Old 10-07-2013, 12:42 PM   #90
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$25k a year is a lot of money.

If the financial advisor delivered better than market returns, better than what you'd have gotten by putting it in low-cost index funds, then maybe she deserves the $500k she's gotten over the years.

But if not, your portfolio could be $500k higher.

Also, what is the obsession about not touching those assets? Do you plan to leave a lot of money to someone?
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Old 10-07-2013, 01:23 PM   #91
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$25k a year is a lot of money.
And it is 1% on after tax money. To earn an equivalent after tax salary you might have to earn 1/3 to 1/2 more, depending on your combined tax rates, after SS, state, federal and any local taxes are taken out.
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Old 10-07-2013, 01:36 PM   #92
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Folks the OP has said they are willing to consider a change to DIY. The OP has ordered books and reviewing information. They got the many points made, lets get on with addressing the OP's question "afraid to retire".

Geez this is the same as every DR. I ever had telling me to stop smoking. I've been tobacco free for 13 years thanks to one wonderful DR. that made one point and I listened. The DR's that gave me 100 reasons, by the time they spit out 2, I was done listening.

MRG
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Old 10-07-2013, 02:04 PM   #93
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Folks the OP has said they are willing to consider a change to DIY. The OP has ordered books and reviewing information. They got the many points made, lets get on with addressing the OP's question "afraid to retire".

Geez this is the same as every DR. I ever had telling me to stop smoking. I've been tobacco free for 13 years thanks to one wonderful DR. that made one point and I listened. The DR's that gave me 100 reasons, by the time they spit out 2, I was done listening.

MRG
Thousands of people often read these forum threads years into the future, while searching for this type of advice. It is a good discussion topic that might benefit many more towards ER in addition to the OP.

The OP has stated in various paces that she has made more money with her adviser fees than she could have with index funds. If this is true, it would be interesting to know how that is done. I would consider changing my AA. If it is not true, then she could be convincing other readers who stumble onto these threads to stay with their FAs when it is not in their best interests to do so.
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Old 10-07-2013, 02:41 PM   #94
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Folks the OP has said they are willing to consider a change to DIY. The OP has ordered books and reviewing information. They got the many points made, lets get on with addressing the OP's question "afraid to retire".
MRG
Thank you MRG for making this point, you get it! And so did I!

Thank you to everyone for spending time and sharing your advice. I wouldn't have turned to a discussion forum if I didn't want to hear different ideas and I appreciate it all! But after spending some time on the site, I think there are other threads that are more useful to me now so I'm going to drop off this thread.
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Old 10-08-2013, 03:57 AM   #95
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Cheryl,

Change is hard, someone once told me 'we chage when the pain of staying the same is greater than the pain of change'.

Good luck,

MRG
I am certainly getting to that point!
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Old 11-01-2013, 03:41 PM   #96
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I'll recommend you read Millionaire Teacher by Andrew Hallam. I gave a copy to my wife and she feels totally on board. It's about $11 on Amazon. You've already learned the Chapter 9 lesson.
Thanks for the recommendation. I've just bought the book after reading all the positive reviews on Amazon. It sounds like just what I need as although I love my financial advisor to bits (I've been with him for 20 years) I think he's on an easy earner as I'm pretty risk averse so my portfolio is heavily in cash and safe investments.

I just hope the book is applicable to the UK.
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