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Old 04-28-2010, 06:37 PM   #21
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Its his job to make you comfortable there. We have no skin in this game but you are getting consistently expressed concerns about someone giving you expensive financial advice. I seriously doubt any significant portion of his earnings is tied to good performance of his accounts. The "fact" is that the unbiased academic research has consistently shown that costs matter and that the cheaper funds will, in the long run, outperform their more expensive brethren. Spend some time to learn about saving and investing and put your hard earned dollars to better use then funding some VALIC guys retirement rather than yours. If you must use an adviser, and that can be appropriate for some of us, then use a fee based one who charges by the hour - not one who skims a large portion of your retirement earnings every year.

I'd suggest starting here: Getting Started - Bogleheads
For books here: Books: Recommendations and Reviews - Bogleheads or here : An updated FIRE recommended reading list (with a military twist)

Good Luck

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Old 04-28-2010, 08:14 PM   #22
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C'mon folks why dump all over the OP when they love their VALIC guy? Sure we don't want to pay through the nose for our investments because we would rather read up and understand what's going on. But for folks who don't understand and want to have a real, live person do their investing for them, well, that's gonna cost some big bucks.

Of course, maybe if they took the time, they could find another real, live person who cost much, much less to talk to. I don't see that happening though.
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Old 04-29-2010, 08:15 AM   #23
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Well, that's why they call them salesmen.
Not sure what you're are suggesting I DO. There is a reason why there are financial advisors -- it's b/c not everyone can or has the inclination to b/c a complete expert on this stuff! I am going WAY out of my comfort zone to educated myself a bit re: this stuff, but there is no way I'm going to b/c a financial whiz. I'm way too busy being an expert in several other fields.

Do all of you just ignore your financial advisors' advice and just do whatever the hell you want? Seriously
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Old 04-29-2010, 08:20 AM   #24
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Its his job to make you comfortable there. We have no skin in this game but you are getting consistently expressed concerns about someone giving you expensive financial advice. I seriously doubt any significant portion of his earnings is tied to good performance of his accounts.
Again: He makes NO money when I transfer b/t funds, change allocations, etc.

He makes most of his $$ by bringing in new accounts (as when he got me to switch to VALIC from the useless TIAA-CREF).

He makes the rest from the performance of his accounts.
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But for folks who don't understand and want to have a real, live person do their investing for them, well, that's gonna cost some big bucks.
So tell me what YOU do, huh? If you have a work-related account, are you really making ALL the decisions about every aspect of it w/ no input from a financial advisor? B/c if so, I think you're the ones who are going to be in trouble eventually, not me. Unless, that is, you are actually financial advisors yourselves.
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Old 04-29-2010, 08:33 AM   #25
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The point is WHO is your advisor, someone that you pay by the hour or per visit,, OR someone who gets a cut of your investments. Like it or not, his actions are always oriented toward what maximizes their income and not necessarily what is best for you. He can't help it, it's the job and it's human nature. He may be nice (indeed HAS to be nice) but he is first and foremost looking out for himself. An independent financial advisor, on the other hand, gets no cut of the action but usually wants to do best by you and you alone so you will return next year.

What to do? Find a book written for you, there are plenty around. Check out the suggestions above (Bogle) or the list herein:
An updated FIRE recommended reading list (with a military twist)
Then, contact Vanguard, Fidelity or one of the other low-cost mutual fund firms and tell them to invest your money in a moderately aggressive way e.g. my prior example of 2 simple index funds. OR if you are too shy for that, use google to find an independent financial advisor in your area. If you are still gun-shy, you could perhaps split your investments 50:50 (Valic vs. the above) and see how each pot does after, say, 5 years.
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Old 04-29-2010, 08:49 AM   #26
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The point is WHO is your advisor, someone that you pay by the hour or per visit,, OR someone who gets a cut of your investments. Like it or not, his actions are always oriented toward what maximizes their income and not necessarily what is best for you.
What part of what I told you about how he makes his money suggests this? He does better when I do better--that is how he's paid. I'm not sure why you think otherwise.
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An independent financial advisor, on the other hand, gets no cut of the action but usually wants to do best by you and you alone so you will return next year.
So you hire an outside financial advisor and then just go to the firm you use for work and tell them what to do based on that? Hell, I can do that. I can do that for free, and already DID. The friend of the family who is a financial advisor looked at what I was doing a few years ago and thought it looked fine--he thought I should be a bit more aggressive, but so did my VALIC guy--I was just too scared to do that. I am now getting over that--hence, the new allocation.
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Then, contact Vanguard, Fidelity or one of the other low-cost mutual fund firms and tell them to invest you money in a moderately aggressive way e.g. my prior example of 2 simple index funds. OR if you are too shy for that, use google to find an independent financial advisor in your area. If you are still gun-shy, you could perhaps split your investments 50:50 (Valic vs. the above) and see how each pot does after, say, 5 years.
I don't know how it works at YOUR job, but splitting is not possible at MY job. You choose one of the firms they offer and that's it. I am not about to leave a guy who has put in WAY more time than I can EVER be worth to him, given my income, for people I don't know. And why would l take the advice of people on the internet who most CERTAINLY don't have my best interests at heart since they don't even KNOW ME? I'm astonished, honestly.
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Old 04-29-2010, 08:50 AM   #27
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LOL -- for all WE know those of you pushing Fidelity or Vanguard WORK at Fidelity or Vanguard. The internet is a wonderful place to be anonymous, after all.
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Old 04-29-2010, 08:54 AM   #28
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Is this a great thread or what!
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Old 04-29-2010, 08:54 AM   #29
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I give (nope, am retired but have all my savings with Vanguard and love it)
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Old 04-29-2010, 09:03 AM   #30
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And why would l take the advice of people on the internet who most CERTAINLY don't have my best interests at heart since they don't even KNOW ME? I'm astonished, honestly.
If you really feel this way why did you start a thread asking for our advice?
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Old 04-29-2010, 09:07 AM   #31
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I do not have a financial advisor. They do not know more than I know. They will not be helpful to me. I am not afraid to read books on personal finance, investing, retirement, etc. I know what I know. I also have a good idea of what I don't know. I do not find it hard to understand and to implement.

That does not mean that everyone has to be like me. Some folks need a person to help them. They need to find a person that can do it without charging an arm and a leg. The issue with VALIC is that they have a history of charging an arm and a leg. I am not sure that you realize how much you are being charged. You have told us
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3 ways: (a) from when he gets someone to roll over to VALIC (as I did from TIAA-CREF 4-5 years ago b/c they sucked); (b) he gets a small % of the % I put into the accts every month; (c) he is compensated by VALIC based on how well my accounts do. Hence, his main motivation is to make sure my accounts do as well as possible, b/c that's how he makes $$.
That already shows that you are paying way more than you need to. He "gets a small % of the % I put into the accts every month;" that's a front-end load. However, did he tell you what VALIC gets from you in addition to what he gets? Did he tell you what the funds get from you in addition to what he gets and what VALIC gets?

Suppose you found another financial advisor unrelated to VALIC, TIAA-CREF, Vanguard etc who you could pay one-twentieth or one-tenth that you paid to your VALIC guy, to VALIC and to the funds that VALIC offers you. Suppose they recommended you used low-cost Vanguard funds. Would that not be a better deal than the VALIC guy. From your posts, you really have almost no idea how much you are paying to VALIC. What if over the long haul, you could have twice as much money in your 403(b) because you did not pay so much of your hard earned money to VALIC?

There must be something nagging you in the back of your mind because if your advisor is so great, why did you come here and ask for a double-check, then blow off almost all the responses?

Here is a youtube video on fees for your watching enjoyment:
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Old 04-29-2010, 10:49 AM   #32
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I asked, got some paperwork, and I am paying an average of 1.19% in fees on my portfolio. The average mutual fund has a 1.34% expense ratio. Unlike a non-employer-based fund, I don't have to pay any additional fees when I invest, make changes, etc. (i.e., no sales charge). I'm sure some of you can find "cheaper" funds out there, but this is the one I choose.

And I ASKED not "is VALIC good" or "should I trust the guy who has been very helpful to me" but "is this allocation good"? That question has been answered, and thanks to all who DID answer it.
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Old 04-29-2010, 11:18 AM   #33
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I asked, got some paperwork, and I am paying an average of 1.19% in fees on my portfolio. The average mutual fund has a 1.34% expense ratio. Unlike a non-employer-based fund, I don't have to pay any additional fees when I invest, make changes, etc. (i.e., no sales charge). I'm sure some of you can find "cheaper" funds out there, but this is the one I choose.

And I ASKED not "is VALIC good" or "should I trust the guy who has been very helpful to me" but "is this allocation good"? That question has been answered, and thanks to all who DID answer it.
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Old 04-29-2010, 11:25 AM   #34
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And I ASKED not "is VALIC good" or "should I trust the guy who has been very helpful to me" but "is this allocation good"? That question has been answered, and thanks to all who DID answer it.
But fees and expense ratio are part of the answer to that question. Let's say someone asked if an allocation of X% to international equities was good. On the surface, that might seem peachy.

However, many retirement programs don't have a wide choice of funds to invest in. For example, my 401(k) is with Fidelity. Fidelity itself has lots and lots of funds. But with my employer's 401(k) I get a limited choice of funds. Only one of the funds is international equities.

Let's say that fund had a front end load or that it had a high expense ratio. Even though an allocation of X% in international equities might be a good thing, in my case, I might not want to invest in it through my 401(k) given that the particular fund available wasn't great.

So, in your case, maybe the allocation on the surface looks good. But can you invest your money in the entire range of funds out there or are you limited to specific ones?

Even if you can invest in the full range, if your VALIC guy recommends X% in international equities what is the expense ratio of the particular fund? You have to factor that in and that is a large part of what people are addressing.
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Old 04-29-2010, 08:42 PM   #35
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What part of what I told you about how he makes his money suggests this? He does better when I do better--that is how he's paid. I'm not sure why you think otherwise.

So you hire an outside financial advisor and then just go to the firm you use for work and tell them what to do based on that? Hell, I can do that. I can do that for free, and already DID. The friend of the family who is a financial advisor looked at what I was doing a few years ago and thought it looked fine--he thought I should be a bit more aggressive, but so did my VALIC guy--I was just too scared to do that. I am now getting over that--hence, the new allocation.

I don't know how it works at YOUR job, but splitting is not possible at MY job. You choose one of the firms they offer and that's it. I am not about to leave a guy who has put in WAY more time than I can EVER be worth to him, given my income, for people I don't know. And why would l take the advice of people on the internet who most CERTAINLY don't have my best interests at heart since they don't even KNOW ME? I'm astonished, honestly.


I'll just sit back and eat popcorn now.

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Old 04-30-2010, 09:21 AM   #36
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I'll just sit back and eat popcorn now.

DD
I'm not surprised. Everyone that I have tried to help (that I know personally) would rather drink the Koolaid than invest in themselves by learning the basics. It also means admitting that the way they were doing it may have been a mistake, which is tough for anyone to do.

To the OP, I say, OK, you asked, we answered. Now act based on what you have decided.

To the other posters: Now, how can we drum up more kickbacks from Vanguard if we can't sell this guy?
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Old 04-30-2010, 10:24 AM   #37
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I'm not surprised. Everyone that I have tried to help (that I know personally) would rather drink the Koolaid than invest in themselves by learning the basics. It also means admitting that the way they were doing it may have been a mistake, which is tough for anyone to do.

To the OP, I say, OK, you asked, we answered. Now act based on what you have decided.
Perhaps. But it's funny how so frequently, the core question in a new thread is ignored and folks lock on to criticism over a side issue that's extremely unpopular here (whether it's financial advisors, annuities, actively managed funds or whatever else).
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Old 04-30-2010, 10:37 AM   #38
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Perhaps. But it's funny how so frequently, the core question in a new thread is ignored and folks lock on to criticism over a side issue that's extremely unpopular here (whether it's financial advisors, annuities, actively managed funds or whatever else).
I'll give you that, but sometimes the way a question is phrased indicates that they may not realize that other questions, not asked, may be important to know, as well. Like all good Evangelists, our hearts are in the right place.
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Old 05-01-2010, 07:05 AM   #39
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Fidelity and Vanguard are fine, he said, but are often better for people who already know what they want and don't need as much guidance
Vanguard Target Retirement 2010
Vanguard Target Retirement 2015
Vanguard Target Retirement 2020
Vanguard Target Retirement 2025
Vanguard Target Retirement 2030
Vanguard Target Retirement 2035
Vanguard Target Retirement 2040
Vanguard Target Retirement 2045
Vanguard Target Retirement 2050

If you can estimate a date you're pretty much done.
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Old 05-03-2010, 09:31 AM   #40
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There are three reasons "I" would not be comfortable with your allocation (repeating some of what has been said).

1) Assuming you are a ways off from retirement and given you are behind in savings, your bond/fixed income percentage is probably higher than should be if you trust historic data and if you can handle market volatility. For myself, I'd go with 80% equities then start slowly transitioning to my retirement allocation when I got to within 10 years of retirement, but this is a complex and controversial topic. Still, from where I'm sitting, 80% equities fits within your risk tolerance of a "motorcycle with helmet". Also, it is an exceptionally poor time to be in intermediate or long-term bond funds given interest rates can only go up (but 99% of the time you should ignore near-term market happenings).

2) I can't tell what the rational is for your particular allocation, but I'd be aiming for broader diversification adding REITS, emerging markets, and significantly more international in general (there is solid research for doing this). Remember, no one knows which asset classes will do best next year.

3) Your expense ratios are too high. You are paying over twice as much as you should if you want to be a savvy index investor. Over time this will add up to tens of thousands of dollars. The only way to fix this is to change funds.

Considering the above, the below is just one very quick pass using Vanguard funds. The point is not any specific allocation, but lower expenses, broader diversification, and accepting more market volatility (with less bonds) to boost your return to meet savings goals.

20% VFSTX -- Vanguard Short-Term Investment Grade Bond Fund
10% VGSIX -- Vanguard REIT Index
6% VIVAX -- Vanguard Value Index ($3000 minimum required)
6% VISVX -- Vanguard Small Cap Value Index ($3000 minimum required)
6% NAESX -- Small-Cap Index ($3000 minimum required)
6% VTRIX -- Vanguard International Value Index ($3000 minimum required)
18% VGTSX -- Vanguard Total International
28% VTSMX -- Total Stock Market

As a separate topic, the forum was trying to explain to you that your adviser's interests are not aligned with yours (allowing you into high-expense funds is already a result). No matter how great a guy your adviser may be, experience shows (over, and over, and over) this is a very bad arrangement to be in. If you feel you owe your adviser something, send him a "thank you" gift, but it is hard to argue with a recommendation to avoid advisers whose interests conflict with your own.
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