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Old 05-03-2013, 10:03 AM   #61
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Like anything you buy, it is about how much you want to Pay for what you get, if you can get the same for less.
Or personal choice. If braumeister wants to use an FA, that's his business. It is still a free country..........

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If you can buy a car from one dealer for 2% less than another dealer, all other things being equal you probably buy the cheaper car. If the more expensive car is sold by the nice guy, I don't think I would pay up for that. And that is just 2% over a relatively low number for a one time purchase.
I know some guys like that. They are willing to drive 300 miles all over the place from dealer to dealer and city to city in a big SUV that gets 16mpg to save $100...........
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Old 05-03-2013, 11:46 AM   #62
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Originally Posted by urn2bfree View Post
what kind of a nice guy takes that kind of money out of my pocket?
I think he was making reference to himself . same guy I use
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Old 05-03-2013, 11:54 AM   #63
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I think he was making reference to himself . same guy I use
Yes, I thought so too. DH's FA charges whatever she feels like, sometimes 100 % of the annual withdrawal, because he likes to keep her happy and for no extra charge she pays the bills out of it.
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Old 05-03-2013, 07:02 PM   #64
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Or personal choice. If braumeister wants to use an FA, that's his business. It is still a free country..........

I know some guys like that. They are willing to drive 300 miles all over the place from dealer to dealer and city to city in a big SUV that gets 16mpg to save $100...........
Wow, where can I go where there are car dealers selling cars for $5000!? (2% savings = $100)

Of course braumeister is free to use a FA, what to pay for that choice was the point.
IF using a FA one should asses what you get for what you pay. If you can get that service (or any service or product you buy) for hundreds of thousands of dollars less, why wouldn't you? Some one being a nice guy is hardly worth that kind of difference in cost.
What seems to be little known or appreciated (besides the wide range of fees one can be charged for no added returns) is how huge the sums are that can be generated by fees that appear to be small numbers. Even fractions. Imagine a portfolio of $2 million -one advisor charges 0.8% and another 1.2%. And all else is equal, except Mr 1.2% is a nice guy. That extra 0.4% fee will cost about a quarter of a million dollars $250,000!!!
Might be worth driving around a bit to save that kind of dough.
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Old 05-03-2013, 07:42 PM   #65
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My apologies. I was apparently a little too subtle.

In my post above, what I actually meant was that my financial advisor is me. His 2-3% "fee" represents my withdrawal rate.

Sorry for any misunderstanding.
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Old 05-03-2013, 07:51 PM   #66
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My apologies. I was apparently a little too subtle.

In my post above, what I actually meant was that my financial advisor is me. His 2-3% "fee" represents my withdrawal rate.

Sorry for any misunderstanding.
Sorry I missed the gag.. Unfortunately it is so close to the sorts of highway robbery some of these guys do charge that the reality was all too plausible.
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Old 05-04-2013, 01:02 AM   #67
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How I might realistically review/critique my current fees??
Take the fees as a percent and divide by 4% (or your SWR). That's the percentage of your portfolio you're giving up to pay for the advisor.

E.g., if your fee is 0.5% then 0.5% / 4% = 12.5% of your portfolio which is effectively lost. Only you can decide if your advisor is worth that much.
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Old 05-04-2013, 03:57 AM   #68
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Take the fees as a percent and divide by 4% (or your SWR). That's the percentage of your portfolio you're giving up to pay for the advisor.

E.g., if your fee is 0.5% then 0.5% / 4% = 12.5% of your portfolio which is effectively lost. Only you can decide if your advisor is worth that much.
It is only lost if one can equal or better the performance of the manager.

Actually I've just gone through the process of analyzing the performance of my financial advisor (USAA Wealth Management) at the three year anniversary. During the three years I've done a lot of research (including joining this forum) which has given me the confidence to take over management of the portfolio.

My actively managed, not tax deferred, portfolio with USAA is conservative with a 60% bond, 40% equity allocation. Over three years the actively managed portfolio has generated an average annual return of 6.28% after fees but before taxes. In contrast Vanguard's Conservative Lifestrategy fund has delivered a 7.3% average annual return after fees for the same period with a 60/40 bond to stock allocation. Looking at USAA's own fund family it's Cornerstone fund with the same 60/40 asset allocation has outperformed my managed portfolio by 150 basis points after fees.

My fees for this actively managed portfolio have averaged 0.7% per year. Fees have consumed 28% of the interest and dividend income over the period and 10.7% of the total return. This is significant when one is fully retired and living on the portfolio (too young for SS).

Looking at my IRA accounts, they have an average annual return of 2.6% after fees for the same period. Asset allocation is the same. In looking at performance by asset class, the equity potion of the portfolio has delivered a negative 18% annual return over a period in which the US equity markets have performed well. The USAA managers have overweighted foreign stocks during this period plus picked US equities poorly.

I sent my analysis to my advisor who has set up a telephone conference for next week with the portfolio manager. At this point I believe I can do better by simply moving my assets to either a balanced fund, such as Vanguard's Conservative Lifestyle fund, or to minimize risk, a portfolio of low fee index funds from 3 or 4 different investment companies,
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Old 05-04-2013, 03:28 PM   #69
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Three years ago I signed on with one of Schwab's advisory network money managers. I went from reluctance to satisfaction and am now back to questioning why I am paying someone nearly 20k a year to do what I can do myself and possibly better. In my taxable account he has done well for me adding more than 36% after fees to my net value after 3 years. In my IRA he has done poorly, a little over 12% after three years. I got a lot of attention when we first signed on and then I think he's been coasting. Also, I was promised some help with overall financial planning and he is not providing that. I'm planning to pull out and transition to a three index fund account on the Bogle model. I wish I had made the effort to learn more about that kind of investing when I was reviewing my options 3+ years ago.
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Old 05-04-2013, 08:49 PM   #70
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Actually I've just gone through the process of analyzing the performance of my financial advisor (USAA Wealth Management) at the three year anniversary. During the three years I've done a lot of research (including joining this forum) which has given me the confidence to take over management of the portfolio.
NC,
I think it's great that you've gathered enough knowledge to enable you to manage your investments yourself, and I think you'll do better that way. But still, you are probably kidding yourself if you are trusting the results of your small sample as a reason to do this. It would take many, many years across many market cycles and many types of investments to statistically determine to a high level of confidence that an advisor does/doesn't add value. And by the time the data becomes information, the advisors have changed.
Over the last 3 years your advisors might almost as easily have produced results well ahead of the market--just by chance. Most academic research shows you'd nonetheless be well advised to dump them.
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Old 05-04-2013, 09:07 PM   #71
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I have a buddy who got me to use Edward Jones in the past. I have just now switched to Vanguard. I KNEW when I started using EJ that I was going to pay an upfront load on the things that I bought because I checked....and asked.....before I knew better. I have talked to him a number of times about this and the fact that he was paying an up front load/payment on what he gave them. He still believes that he hasn't payed it....no matter how many times I have told him that he has....he just won't believe that he has paid it. He just states that he has never seen it on his statements. I tell him to look online to see what the payments are for buying at different $ amounts.....he won't do it. Still believes he hasn't paid it. He NEEDS a financial adviser, and luckily for him the guy he uses is pretty trustworthy and has recently quit EJ because he didn't like EJ forcing him to push things on people. But......
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