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Old 04-20-2010, 11:10 PM   #41
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There's no one who will look after your money as well as yourself. When there's a bull market, everything is ok, but when the bear comes will the pro be there to look out for you or will he/she say, well, that's just the risk of investing?
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Old 04-21-2010, 10:37 AM   #42
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Originally Posted by ERD50 View Post
Oh yes, a friend of mine said the biggest investment loss he ever took was the money he handed over to an Ameriprise adviser. He specifically told him he was concerned with capital preservation, and he got most his money put in a single company bond that.... defaulted. He lost 80% of his money.
-ERD50
I didn't think Ameriprise handled trading in individual bonds.......
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Old 04-21-2010, 10:49 AM   #43
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He also asserted that if I went with Vanguard I would be invested 100% in one fund family, and that would be risky. As there are so many Vanguard champions here, I encourage you to tell me if that is BS, and why.
You seem to be confusing "brokerage" with "fund family." Don't combine the two. You want your brokerage to allow you to invest in a broad sprectrum of instruments: funds from any fund family, stocks, corp bonds, gov't bonds at auction and in the after market, options, etc., etc.

For example, I use Schwab as a brokerage but more than half my holdings are Vanguard funds.

Even if you think today that you'll never go beyond investing in MF's, remember you may expand your horizons later as you gain experience. So pick a brokerage, then pick funds from the fund families, such as Vanguard, that you prefer.
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Old 04-21-2010, 11:07 AM   #44
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It is also worth noting that transferring assets from one brokerage to another (or from a mutual fund company to a brokerage) is not that big of a deal. There is a little paperwork up front, but after that the receiving brokerage handles the asset transfer on your behalf.

So, if you started all at Vanguard, and later you decided you wanted a little more flexibility, you could always transfer some or all of your assets to another (discount) brokerage. And importantly assets can be transferred "in kind" - meaning nothing gets sold, just moved.

For example, many years ago I opened an account at Oakmark Funds (a fund company - not a brokerage) to buy into Oakmark Balanced Fund. I did this because at the time it was closed to new investors unless you invested directly with Oakmark. Several years later, I transferred the asset over to Fidelity. I just had to give Fidelity the paperwork with instructions - the account, the fund, and to transfer all shares "in kind". A couple of weeks later, the direct Oakmark account was closed, and the fund showed up in my Fidelity account where I now can access it.

Just to make you aware of the future flexibility you have.

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Old 04-21-2010, 11:45 AM   #45
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He was using the term "fund family" to refer to the fact that Vanguard only offers Vanguard funds, so all my investments would be in Vanguard funds, which is one fund family (at least in his parlance). The implication being that something could affect all those funds (which appears to be BS). Hence he was suggesting I get a broker that has more fund options, either full-service like Fidelity or Schwab, or online like E-Trade or TD Ameritrade.

I currently have SEP IRA and brokerage accounts with TD Ameritrade, where I own mostly index ETFs and Vanguard funds, and am pretty happy. I also have an old 401k with Fidelity, which I should roll into a Roth. My wife has a poorly-allocated Roth which needs some work, and needs a money market account or something for short-term savings. The real issue is that investment stuff makes my wife's head hurt, and she wants someone else to deal with it -- and preferably have it all under one roof so that (especially if anything happened to me) she would only have to go one place rather than chasing down and trying to understand all of our now-separate accounts.

Just to make implicit assumptions explicit: everyone who is pointing out the large difference 1% in commissions will make over the long term is assuming that the Ameriprise guy is hopelessly wrong/optimistic/lying about his ability to beat the indexes (or whatever fund choices I would make on my own) by more than 1% plus any ER differential on the funds chosen. I've certainly read and heard plenty to support that assumption, but do you agree with it wholeheartedly?

Thanks!
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Old 04-21-2010, 11:52 AM   #46
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Originally Posted by mickeymao View Post
He was using the term "fund family" to refer to the fact that Vanguard only offers Vanguard funds, so all my investments would be in Vanguard funds, which is one fund family (at least in his parlance).
It is possible to purchase other fund families through Vanguard.
See this page:
https://personal.vanguard.com/us/funds/other
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Old 04-21-2010, 12:19 PM   #47
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Aha! Thanks. I missed that, though in retrospect it was glaringly obvious.
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Old 04-21-2010, 12:47 PM   #48
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Just to make implicit assumptions explicit: everyone who is pointing out the large difference 1% in commissions will make over the long term is assuming that the Ameriprise guy is hopelessly wrong/optimistic/lying about his ability to beat the indexes (or whatever fund choices I would make on my own) by more than 1% plus any ER differential on the funds chosen. I've certainly read and heard plenty to support that assumption, but do you agree with it wholeheartedly?

Thanks!
Not sure I understand completely what you are saying but when I invest in a Vanguard index fund, I am guaranteed to get market returns minus a small ER. At Ameriprise, the financial advisor would have to consistently beat the index by 2-3% to get the same result (which means taking more risk). I personally prefer to go for the guaranteed market returns and lower risk rather than hope that my financial advisor is good enough to beat the market year in and year out (studies have shown that the odds are stacked against him).

You should read this blog:
Wise Investing - CBS MoneyWatch.com
Very good commentary by an insider on the ability of advisors and fund managers to beat the market (you may have to dig up a bit to find the good stuff).

To make it clear. If this financial advisor promised you he can beat the market year in and year out (or even over the long term), then he is clearly lying to you or he is fooling himself. Nobody can possibly know what their future performance is going to be. Nobody. I hope it is wholehearted enough.
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Old 04-21-2010, 12:54 PM   #49
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I personally prefer to go for the guaranteed market returns and lower risk
Let me know where I can get those funds you just mentioned.........
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Old 04-21-2010, 01:00 PM   #50
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Let me know where I can get those funds you just mentioned.........
They are called index funds. Vanguard has some. Fidelity has some.
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Old 04-21-2010, 01:00 PM   #51
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I didn't think Ameriprise handled trading in individual bonds.......
No personal experience so that may be. That is the story as I recall it told to me. There could have been a mis-communication or memory fade on my part.

I may call and ask him to verify, but it'll just raise his blood pressure and I'll have to listen to a rant for 30 minutes!

-ERD50
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Old 04-21-2010, 01:02 PM   #52
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Just to make implicit assumptions explicit: everyone who is pointing out the large difference 1% in commissions will make over the long term is assuming that the Ameriprise guy is hopelessly wrong/optimistic/lying about his ability to beat the indexes (or whatever fund choices I would make on my own) by more than 1% plus any ER differential on the funds chosen. I've certainly read and heard plenty to support that assumption, but do you agree with it wholeheartedly?
With all my heart

Also, it seems that there are things coming out of his mouth that are less than sincere (however charmingly he delivers them)...

Why are you so attracted to this person's promises? Is it because it seems easier? Doesn't it feel too good to be true? You're already doing the leg work - just go all the way so you feel confident enough in your own abilities/understanding.
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Old 04-21-2010, 01:11 PM   #53
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Oh, at this point I'm committed to doing this myself, I just like to understand all the arguments, and in this case I need to understand them well enough to summarize them for my wife. She seems to feel that the argument that a professional can play this game 2-3% better than an amateur is NOT inherently ridiculous, so I'm just probing into the question a bit more.
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Old 04-21-2010, 01:21 PM   #54
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Also, going with another broker I will still have the option of selecting some of the funds he recommended -- which are more expensive than index funds but in some cases have quite good past performance -- and I'm thinking about whether I should consider any of those in the mix (for example, he recommended Oakmark Equity & Income at .85 ER, Permanent Portfolio at .84)
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Old 04-21-2010, 01:25 PM   #55
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Oh, at this point I'm committed to doing this myself, I just like to understand all the arguments, and in this case I need to understand them well enough to summarize them for my wife. She seems to feel that the argument that a professional can play this game 2-3% better than an amateur is NOT inherently ridiculous, so I'm just probing into the question a bit more.
Think about this: if he can REALLY beat the market by 2-3% a year and, during the course of his lengthy career, has demonstrated said ability, why is he marketing to small time retail investors? His proper seat should be at a trading desk of one of the large multinational investment banks or hedge funds (or even mutual funds) and he should be managing billions of dollars at a minimum.

Ask him to reduce into writing his promised 2-3% out-performance. Either he is a cheat and a liar and a crook, or he will be willing to stand by his word. At a minimum you should get him to agree to refund any fees in excess of 0.25% or so if he fails to outperform over a reasonably long period of time. When he gets done laughing in your face, come back and see us!
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Old 04-21-2010, 01:58 PM   #56
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Oh, at this point I'm committed to doing this myself, I just like to understand all the arguments, and in this case I need to understand them well enough to summarize them for my wife. She seems to feel that the argument that a professional can play this game 2-3% better than an amateur is NOT inherently ridiculous, so I'm just probing into the question a bit more.
I think a question to ask is would you feel comfortable and eager managing your money yourself?

If so, than you want to work on letting your wife know why that's the best route. Some examples, is that turning over your money to a professional doesn't guarantee a better performance (this brings the argument to look into indexing). I bet during the meltdown in 2008, those that hired pros didn't necessarily do any better than those that did not.

Another analogy is, as you mentioned you are planning of having kids. Do you and your wife plan on having a babysitter/nanny watch over them (they have the "babysitter/nanny" titles)? Or would you rather watch over your kids, protect them on your own? Maybe presented to your wife this way, the lightbulb will turn on that hiring a pro, even with good vibes isn't always the best bet.
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Old 04-21-2010, 04:16 PM   #57
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Write a check for 1 percent of your assets and show it to your wife. Ask her if she wants it made out to her or to Ameriprise. Remind her the payment will be repeated every single year. I bet she will come around.
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Old 04-21-2010, 04:36 PM   #58
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Oh, at this point I'm committed to doing this myself, I just like to understand all the arguments, and in this case I need to understand them well enough to summarize them for my wife. She seems to feel that the argument that a professional can play this game 2-3% better than an amateur is NOT inherently ridiculous, so I'm just probing into the question a bit more.
I like bestwife's answer - that's a good one!

Tell your wife that in this case, a "professional" is in it for his cut and that there is no guarantee that he will outperform enough to earn it and that it could get expensive for you both if you don't watch it. If you have to watch it that closely, then you might as well do it yourself.

I suspect she thinks - "but they know better". What they know better is how to line their own pockets.

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Old 04-21-2010, 04:55 PM   #59
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Let me put it this way: I am an investment professional with ample experience, a CFA charter and a finance MBA from a top 10 school. If I could consistently beat any index by 3% without taking more risk, I would be a billionaire. Maybe Warren Buffet can do it. Maybe. Maybe Bill Gross can do it (maybe). That is about it. Your tinpot Ameriprise guy cannot do it.
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Old 04-21-2010, 06:13 PM   #60
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Your tinpot Ameriprise guy cannot do it.


One thing I've noticed when discussing investment costs with others is that they think it's "just 1% or 2%" for "professional management". As others here have said, that is just a huge amount of money. If you are going to retire on 4% of your portfolio, you are going to be paying at least 25% of your income, every single year, to this guy.

The few advisers that I've met relied on their charm, fear or their overwhelming intellectual superiority to make their sale.
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