Did it - dropped my advisor

[Rich_by_the_Bay]

It may not seem like a big deal, but for the few of you who knew how financially naive I was when I first made the scene here, you'll appreciate that I officially dropped my AllianceBernstein money manager this week. My initial weaningplan was to leave about $200k under his management for large value stocks while I took back the rest. It was odd:

Me: Brian, I think I've decided to take a more active role in managing my retirement money.
Brian: You wanna pick stocks.
Me: Well, no actually, I want to create a diversified group of investments in indexed mutual funds at Vanguard.
Brian: I know that our growth portfolio lost 2% in the last 6 months but that's because we are positioning for growth stocks to really take off this year.
Me: Lost 2%? I hadn't realized that - the web reports don't sort it out in that way... Anyhow, I'd like to leave about $200k with you in value stocks, and I'll roll over the rest.
Brian: We require a $400K minimum balance.
Me: Really? Sorry to hear that. Guess I'll have to roll over the whole thing.
Brian: That's fine, but at least don't make a decision until I send you some reports. We're confident that growth funds will make a big comeback this year.
Me: Thanks, Brian. I'll think it over. Bye.

Paperwork is done, funds just waiting to be fed. In all fairness, they did well by me - beat most of the indexes, but not after their 1.6% management fee (that wasn't clearly laid out on their web site, either).

It felt like a big step but strangely enough, I have absolutely no worries over this decision.

 

[dex]

Rich,
Let me be the first to say you made the right decision.
Pick your mutual funds - average into them and put it all on autoglide - enjoy

 

[73ss454]

Rich, good for you!

I did the same thing last year and never looked back. It's a great feeling when it's all over and everything is at Vanguard. You can actually see what's going on with your money any time you want to. With my so called advisers everything was a mystery and now I feel so liberated.

 

[CCdaCE]

Heh, afterall, you could put a portion of your wad into Vanguard growth funds and/or indexes.

"Not to get off on a rant here... "

I've been lapping up growthy VTSMX (Vanguard Total Stock Market Index) since it's been out of favor for the past five or so years.

Costs a whopping 0.19% ER. $3k min. for retirement accounts, no where near a $400k min.

1.6% ER at $400k is $6,400/year. 0.19% is $760. Go buy yourself a steak/crab/lobster/etc dinner and still be thousands ahead every year.

-CC

 

[youbet]

I officially dropped my AllianceBernstein money manager this week.

Advisor gona be alright?

 

[youbet]

I've been lapping up growthy VTSMX (Vanguard Total Stock Market Index) since it's been out of favor for the past five or so years.

Why do you say that VTSMX is "out of favor?"

 

[cute fuzzy bunny]

It wasnt doing too well 4-5 years ago, but I dont think its been out of favor.

 

[sgeeeee]

Did it - dropped my advisor

Did he bounce? or splat?

 

[CCdaCE]

Why do you say that VTSMX is "out of favor?"

Maybe I should've said large cap growth. Specifically SP 500 Growth.

Or so says Callan

But, to me, the difference is minimal between VFINX (Vanguard's SP 500) and VTSMX (Vanguard Total Stock Market).

Am I wrong in saying it's "out of favor"? I'm asking. Maybe it's "returning to the mean".

-CC

 

[lswswein]

Hey Rich
Congrats! every 6 months you should remind me and I will generate some random pretty graphs & numbers for you. I think that is all that you are going to miss - when you are buying us all steak?

-h

 

[cute fuzzy bunny]

Did he bounce? or splat?

He experienced a dead cat bounce, which was influenced by upward pressure on the dow while investors sought to flee rising inflation and shelter their assets from further erosion due to extensive collection of long term debt by foreign nations. In other financial news that we'll repeat three months from now to explain the exact opposite situation...

Congrats Rich, you're a free man!!

 

[audreyh1]

Brian: I know that our growth portfolio lost 2% in the last 6 months but that's because we are positioning for growth stocks to really take off this year.

My God! How could anything have lost 2% in the last 6 months? We've had a tremendous rally in all equity classes!

Audrey

 

[lswswein]

My God! How could anything have lost 2% in the last 6 months? We've had a tremendous rally in all equity classes!

Audrey

Let me assure you it took a lot of work!
-h

 

[bssc]

Congratulations. You are now ahead of the game by at least 1.6% a year.

 

[Nords]

"Your portfolio lost money but we think it's about to gain money. We'll let you know."
and
"I'm sorry, you don't have enough money to stay here."

Geez, Rich, if this is his customer-service technique then I wonder how he sold you his portfolio planning in the first place. Were they trying to get rid of you?!?

My God! How could anything have lost 2% in the last 6 months? We've had a tremendous rally in all equity classes!

Congratulations. You are now ahead of the game by at least 1.6% a year.

Hmmm... I'm not a CFP but I think I can see where 80% of that -2% came from.

Hey, lookie there, he's right-- your portfolio just gained 1.6% (annualized) in a few minutes. Those large-cap growth stocks really must be taking off!!

 

[ladelfina]

"Your portfolio lost money but we think it's about to gain money. We'll let you know."
and
"I'm sorry, you don't have enough money to stay here."

Geez, Rich, if this is his customer-service technique then I wonder how he sold you his portfolio planning in the first place.

Rich.. congratulations!!!!

I wish I could get my mom away from her 'broker' (was with Advest, not sure if he has moved.. in which case he would take her account with him). She mostly has T-bills and muni bonds.. but has also given him a pot to play with in the "managed-account" style. If I were physically nearby I'd try to get her set up with Vanguard and/or Treasury Direct (prob. not TD as she is not a computer person) since I could hold her hand through it all. Right now, he's the hand-holder, and she likes him because he seems like a "nice guy" and comes to her house and drinks coffee with her once a year.

 

[Rich_by_the_Bay]

My God! How could anything have lost 2% in the last 6 months? We've had a tremendous rally in all equity classes!

Funny thing is, the portfolio overall did 15%! They rode a good/lucky selection of value equities for at least 18-24 months, and it did well enough to absorb the stagnant growth stocks.

Too much volatility for me, though it came out OK in the end.

 

[tryan]

LET THE HEALING BEGIN !!

Congrats!

 

[REWahoo]

...I officially dropped my AllianceBernstein money manager this week.

"Physician, heal thyself"

Done!

 

[youbet]

Maybe I should've said large cap growth. Specifically SP 500 Growth.

Or so says Callan

But, to me, the difference is minimal between VFINX (Vanguard's SP 500) and VTSMX (Vanguard Total Stock Market).

Am I wrong in saying it's "out of favor"? I'm asking. Maybe it's "returning to the mean".

-CC

I guess I'm just not accustomed to your terminology.

I don't categorize the Wilshire 5000 (VTSMX) or SP 500 (VFINX) as "growth" focused. I usually refer to them as large cap blend.

Also, I think you are using the term "out of favor" to mean not performing well in relation to other equity classes. I usually associate "out of favor" with popularity. Some "popular" investment classes have rewarded their advocates with poor performance.........then they become "out of favor."

When you said that VTSMX was "out of favor," I thought you were saying that the Vanguard brand of Wilshire 5000 index fund had become unpopular or "out of favor" with investors for some reason. Maybe because the ETF Wilshire 5000 offering seemed more attractive. Or because the Fidelity brand of Wilshire 5000 fund had a lower ER......or whatever.

 

[Sarah in SC]

Good job, Rich! You can do this yourself! Minimum of $400k <snort> in an effort to run you off completely!

Timely for me, as I'm girding my loins to have a talk with some very close friends that have taken some HORRIBLE financial advice from some guy they refer to as "their CFP". Okay, this guy is not a CFP, not a registered advisor, just some stock jockey they know. She's leaving a job and rolling out some 401k money, and I swear I am not going to sit idly by while they get screwed yet again. I don't exactly know the right approach, but I'm thinking (she's an RN) something like--if I was having surgery, I'd ask your opinion of the doctor, and I really think you should look hard at this guy before you take any more of his "advice". And hand her a list of nice mutual funds to please consider instead of this @$$clown's high commission picks.

Rich, it is a GREAT thing you've done! Congratulations!

Sarah

 

[Rich_by_the_Bay]

..before you take any more of his "advice". And hand her a list of nice mutual funds to please consider instead of this @$$clown's high commission picks.

Just a thought is she's timid about investing, allocating, and rebalancing: maybe a target retirement fund would be a soft landing for her.

Personally, I like at least a little slicing and dicing, but not a lot.

 

[Sandy]

Congratulations, looks like all of the ranting and raving advice on this board does work. One question not asked, will you have significant tax consequences for this shift (maybe the loss in the value end will offset taxes)? And do you care?

I ask because we have an inherited brokerage account with Schwab. Fee at 1%, but I still consider that high compared to MF. However most of the funds were in a trust under control of FIL after MIL passing. The stepped up basis on MIL share was already significant when we recevied it. We pull bits annually, but a full scale shuffle would be painful in the short term, though I recognize probably wise for the long term.

 

[elroy]

Rich,

Congratulations! From some of your posts I always thought you were a natural do it yourself investor. If you dont mind let us know your AA.

Elroy

 

[youbet]

Congratulations, looks like all of the ranting and raving advice on this board does work. One question not asked, will you have significant tax consequences for this shift (maybe the loss in the value end will offset taxes)? And do you care?

I ask because we have an inherited brokerage account with Schwab. Fee at 1%, but I still consider that high compared to MF. However most of the funds were in a trust under control of FIL after MIL passing. The stepped up basis on MIL share was already significant when we recevied it. We pull bits annually, but a full scale shuffle would be painful in the short term, though I recognize probably wise for the long term.

Sandy,

Can't you just switch from the Schwab managed account feature to a Schwab brokerage account keeping the same holdings and thus have no tax consequences?

Schwab doesn't charge a "management fee" for their borkerage accounts. But I noticed they do have a managed account offering that charges about 1% to do the so-called FA thing and manage your money for you. It sounds like this is what your inlaws had. Can't you just switch to a regular brokerage account with no tax consequences?