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Old 12-06-2012, 01:47 PM   #61
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In any case, a 1.25% fee for managing an equity portfolio is not out of line. Sure, it's more than the 0.1% than the index funds cost, but it's not outrageous.
12.5 times more expensive doesn't seem outrageous to you?

To be fair, I am paying closer to 0.20% in my indexed portfolio, but I'm captive to my crappy 401k for a small part of the portfolio and I'm getting significant (and slightly more expensive) exposure to asset classes you most likely aren't.
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Old 12-06-2012, 06:01 PM   #62
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Is Fisher Investment worth the additional expense? They missed the big one in 2008. I looked into Rick Ferriís company as Nords suggested. Although their fee is 0.25%, this fee is computed at one million dollars. Thatís $2500 on one million invested. Anything less than one million is still $2500. Fisherís minimum is half-milllion at 1.25%, or $6250. Thatís a sizable difference.

Rick Ferriís personal investment portfolio that he posts online uses dirt cheap index funds, average expense ratio around 0.17%. Add that E.R. of $850 to your $500,000 investment and you get $2500+$850=$3350. Fisher buys individual stocks, about 60 I think, with no MF expenses. But if you assume a buy and a sell for each stock every year, thatís another $960 of commissions to your broker for a new total of $6250+$960=$7210. Thatís over twice as much as Ferri, but Fisher is trying to pick worldwide winners. Maybe that costs more.

But Ferri doesnít select individual stocks. He buys a tiny bit of everything, the good and the bad, based on market cap loading. So the real question is whether Fisherís guruís can cull out the best performers going forward. Now Nords mentioned Buffett (in his mid-80s now) and his success at picking the winners on average. Buffett at one time questioned indexing and why anyone would think investing in every company on main street made more sense than choosing the two or three best ones in town. I think he has since agreed that indexing makes more sense than selecting poorly.

And there is the inherent overlap and duplication between funds. But Ferri did a pretty good job of avoiding duplication by picking the whole world. At least you canít say he picked all the wrong companies to invest in.

I understand Rayvtís theory about diversifying investment methods. But Iím not sure if Fisher is the right one. I received another phone call from Fisher today. They wanted to send that pleasant fellow back out to meet with me again. (He didnít close the deal the first time.) I told them no, I could work out the facts myself. Iím sure he will call again. Heís my new friend.
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Old 12-07-2012, 05:45 PM   #63
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Hmmph. These debates sometimes become useful, when they get you to do some investigation and looking around. Different people bring in all sorts of different perspectives & viewpoints, and that too is often useful.

People have mentioned a number of useful links. I'd never heard of Rick Ferri, but after looking at his site, I wondered just what he brings to the party. His forte is as a writer rather than investment adviser -- although he now has a company to do investment management. But why should you pay anything -- even 0.25% -- for somebody to put your money into index funds? Just buy them yourself. He wants a minimum account of $1 million. Heck, for far less than $1M Fidelity or Vanguard will be happy to set you up in good cheap index funds without an additional annual fee.

Poking around other links, there are plenty of FA's who will put your money into DFA funds. But again, there's nothing special here. There is simply no need to pay somebody a fee to put you into index funds. And most of them want a minimum of $500K to $1M, and/or their minimum fee is based on that amount.

The whole idea of having somebody else manage a portion of your money is to diversify among strategies & methods. Well, going to a FA who puts your money into a basic index fund strategy is no different that the basic index fund strategy that you do yourself. So that's not diversifying strategies, it's just running the same strategy in 2 different accounts. That's dumb and defeats the whole purpose.

Most FA's seem to want to manage your entire portfolio. Fisher certainly does, and the links to other FA's that people have posted all seem to want to, what with their talk about 60/40 or 80/20 equitys-to-fixed-income. No thanks, it's trivially easy to do fixed income myself, without paying any fee to a FA.

Actually, the more I think about it, and the more I look at it, for an actively managed fund, Fidelity Contra is working out better than Fisher. Currently I have money with both. Maybe I'll just switch it all to Contra.
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Old 12-07-2012, 06:06 PM   #64
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But why should you pay anything -- even 0.25% -- for somebody to put your money into index funds? Just buy them yourself.
And, I think Rick Ferri has as much as said so in his books. But there are many folks (not you or me) who don't/can't do the limited amount of management required by a "buy index funds and rebalance" approach, so Ferri opened his business to do that for them, if they want. It makes a lot more sense than paying someone 4-6 times more so they can put you into even higher ER actively managed funds (that probably won't do as well).

From reading your posts, it's clear you believe there are managers who can add value >>and<< that it's possible for a mere mortal to identify these managers in advance. I (and lots of studies) disagree with you, but let's say that you are right. You wouldn't want to hamstring such a gifted seer by telling him to just use mutual funds--he'd be able to make even more money by dealing in individual stocks. But rather than go to such an individual stock picker yourself, why not band together with others and pool your money and put it under his management. In short, why not just buy an actively managed mutual fund . . .
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Actually, the more I think about it, and the more I look at it, for an actively managed fund, Fidelity Contra is working out better than Fisher. Currently I have money with both. Maybe I'll just switch it all to Contra.
And it looks like that's the way you are leaning. Of course, there are many hundreds of other actively managed funds out there. And most will do worse than their respective indexes on a risk-adjusted basis in most years. But, hope springs eternal.
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Old 12-07-2012, 11:56 PM   #65
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People have mentioned a number of useful links. I'd never heard of Rick Ferri, but after looking at his site, I wondered just what he brings to the party. His forte is as a writer rather than investment adviser -- although he now has a company to do investment management. But why should you pay anything -- even 0.25% -- for somebody to put your money into index funds? Just buy them yourself. He wants a minimum account of $1 million. Heck, for far less than $1M Fidelity or Vanguard will be happy to set you up in good cheap index funds without an additional annual fee.
The whole idea of having somebody else manage a portion of your money is to diversify among strategies & methods. Well, going to a FA who puts your money into a basic index fund strategy is no different that the basic index fund strategy that you do yourself. So that's not diversifying strategies, it's just running the same strategy in 2 different accounts. That's dumb and defeats the whole purpose.
50 military servicemembers contacted Jason Hull at HullFinancialPlanning.com last month for two free hours of advice (each) from a qualified financial advisor. But the life of a fee-only advisor (as opposed to "fee-based" or "assets under management") is a career you usually have to save up for.

We used to have a poster, Saluki, who's a financial advisor. He had two types of clients:
1. "I earn $250K/year + company stock options and I work 100 hours/week. 95% of my asset allocation is my company stock, and I might be laid off next month. My accountant says that I gotta get me something called "asset allocation" and another thing called "diversification", but my time is far better spent in the office than it would be doing whatever it is that you guys do. Where do I sign?!?"
2. "OMG I saw on CNBC that the markets are falling and we're all gonna die!!!!! I can't take it anymore, and I just pulled all my money out of the market. Where do I get gold bars to bury in my backyard? Help me help me!!"

So you're right. You don't need a financial advisor. But there are plenty of those two types of customers out there, so the advisors don't need you either. In fact they need to lower the advisor standards some more so that they can create more advisors to handle all the demand.

I don't need an advisor either. But if I decided that I didn't want to (or couldn't) manage my money, then I'd rather have it in passive index funds than have it subject to the 70% probability of lagging the averages.
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Old 12-08-2012, 05:35 AM   #66
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Good explanation, Nords. But Saluki's designation is CFA, and I'm pretty sure their standards are getting raised, not lowered! There are only 110,000 in the world, I think, with the CFA. Rarely do those guys work directly in client relationships, because of their value is in analysis rather than hand-holding. CFPs do a fair bit of that.

The sky is falling is especially popular right now.
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Old 12-08-2012, 09:30 AM   #67
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The whole idea of having somebody else manage a portion of your money is to diversify among strategies & methods. Well, going to a FA who puts your money into a basic index fund strategy is no different that the basic index fund strategy that you do yourself. So that's not diversifying strategies, it's just running the same strategy in 2 different accounts. That's dumb and defeats the whole purpose.
I guess where you've been losing me is, what makes you feel that Fisher is providing you any significant diversification of your stock AA?

Since you've got only your stock AA with them, if we plotted Fisher versus SPY or VTSMX, would we see similar overall returns, but a significant reverse correlation of the dips and peaks? That seems unlikely to me, but if you aren't getting that, what does the diversification buy you?

I have trouble seeing how your stock AA can get significantly more diversified than SPY or VTSMX?

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Old 12-08-2012, 09:42 AM   #68
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I think rayvt believe that there is some advantage to diversifying among different investment approaches/strategies. But there are no studies that I am aware of that demonstrate any such advantage. In addition, if paying someone to run a certain strategy costs more than other strategies, that would seem to count against the approach.
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Old 12-08-2012, 09:54 AM   #69
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Good explanation, Nords. But Saluki's designation is CFA, and I'm pretty sure their standards are getting raised, not lowered! There are only 110,000 in the world, I think, with the CFA. Rarely do those guys work directly in client relationships, because of their value is in analysis rather than hand-holding. CFPs do a fair bit of that.

The sky is falling is especially popular right now.
There must be a sizable minority of CFAs who work directly with clients and do a fair bit of hand holding given the volume of continuing ed and other stuff I see from both the CFA Institute and my local society. Its actually something I have thought about as a second career since I have done a bit of it pro bono and I like to think I have done a pretty good job of it. However, this first career seems hard to get rid of.
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Old 12-08-2012, 10:31 AM   #70
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Not Fisher, but another hot shot is calling me today. He has REITs at 6.8% yield, and potential for pretty decent capital appreciation.

Can't imagine how many calls and emails I'd be getting if he actually managed my money.
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Old 12-08-2012, 12:08 PM   #71
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There must be a sizable minority of CFAs who work directly with clients and do a fair bit of hand holding given the volume of continuing ed and other stuff I see from both the CFA Institute and my local society. Its actually something I have thought about as a second career since I have done a bit of it pro bono and I like to think I have done a pretty good job of it. However, this first career seems hard to get rid of.
Yes, I think that would be a great choice for you after this career, Brew. The ones we know are running boutique money management firms, not doing lower level stuff, which I think is/would be far more satisfying. I'm encouraging our new hire who has a Masters in Finance to start for the CFA instead of the CFP, because I think it will offer her a lot more choice in what she does and where she does it. So many CFPs are basically in sales. Ugh! And as you know, I consider the CFAs to be the rockstars of our world. I know I'd not make it through level one!
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Old 12-08-2012, 08:51 PM   #72
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Yes, I think that would be a great choice for you after this career, Brew. The ones we know are running boutique money management firms, not doing lower level stuff, which I think is/would be far more satisfying. I'm encouraging our new hire who has a Masters in Finance to start for the CFA instead of the CFP, because I think it will offer her a lot more choice in what she does and where she does it. So many CFPs are basically in sales. Ugh! And as you know, I consider the CFAs to be the rockstars of our world. I know I'd not make it through level one!
The CFA taes a permanent toll. Lets just leave it at that.

Many of the potential employers local to me are wealth management firms and they seem to have a steady appetite for CFAs. That might be a way to manage client money again if I decide to move on.
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Old 12-08-2012, 09:26 PM   #73
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This and similar topics are the gift that never stops giving. Good for incessant debate, and of course completely non-resolvable.

I have never met anyone who I would prefer managing my money to me managing it myself. If I did want to farm management out, I would just buy Loews or Berkshire, plus some vehicle for fixed income, and some sort of emerging market equity vehicle.

Ha
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Old 12-21-2012, 05:41 PM   #74
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Thanks, Everyone!

Last month, I was the one to ask the first question about Fisher. Haven't responded until now because my husband and I have been discussing your responses. We've decided not to choose Fisher; instead, I will continue reading/researching and working with our Vanguard funds.

Some of the rationale I've posted in the "Hi, I am..." forum.

Bottom line: Wellington and Wellesley Income have been a nice balance with Star Conservative and Moderate Growth. We're not winning races, but are staying a healthy distance ahead of inflation. Vanguard has so many useful tools on their website; I'm learning a lot. Plus Dan Wiener's Investment Adviser and Scott Burns' articles have been helpful.

And thanks for all of your input.

Merry Christmas!
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Old 12-22-2012, 12:49 AM   #75
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I also requested. Info. Many yrs ago. And get nothing but phone calls.
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another way to pay .25%
Old 12-22-2012, 08:06 AM   #76
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another way to pay .25%

I think that few on this forum want to pay someone else to do what they can easily do with ETF's or index funds, re-balancing periodically, or some version of the couch potato strategies.

But for those who want or need more hand-holding, here's yet another way to do that: https://www.wealthfront.com/

They use all Vanguard ETF's and, based on their measurement of your risk tolerance (for fun I took their quiz and it was pretty accurate of what I'd want to do), will invest in a package of ETF's and re-balance for you periodically (according to formulas about how far away from your target the funds get, not according to time--i.e. annually).

Frankly, if I was unable to do this myself, I'd see this as a better use of the .25% than Fisher, who invests in individual stocks. And I have some family members who are unlikely to be able (or want to) to handle their funds themselves, so it might be a good solution for them.
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more on wealthfront
Old 12-22-2012, 08:12 AM   #77
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more on wealthfront

An article on Wealthfront:
Wealthfront Debuts Customized, Intelligent Online Investment Advisor For The Tech Community | TechCrunch

and another about another service of theirs: "tax loss harvesting":
Wealthfront’s New Service Helps the Tech Set Easily Dodge Taxes | Betabeat

Again, I think few here would want to pay .25% each year for these services.
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Old 02-19-2013, 08:52 PM   #78
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An article on Wealthfront:
Wealthfront Debuts Customized, Intelligent Online Investment Advisor For The Tech Community | TechCrunch

and another about another service of theirs: "tax loss harvesting":
Wealthfrontís New Service Helps the Tech Set Easily Dodge Taxes | Betabeat

Again, I think few here would want to pay .25% each year for these services.
so I was wondering what did tightasadrum do? did he pick an investment company
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Old 02-19-2013, 09:15 PM   #79
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I was surprised to see him response to a review. LOL. Cracks me up.


Updated - 1/22/2013 Ken at Fisher responded to my review of Fisher Investments. I was with them for one year. I believe that is enough time to assess if a company is on the right track. Fisher Investments invites their clients to events during the year. We attended 4 such events and made a point of talking to as many investors as possible. Interestingly, not one person we spoke to was making any money with Fisher. In fact, one couple had been with them for 5 years and was still down nearly $25,000! They were waiting until they broke even before leaving Fisher...not a good idea in my opinion. Fisher does not even deserve one star, but I don't see where I can post 0.
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Comment from Ken S. of Fisher Investments 1/25/2013 ę Hide
Susan,

We are sorry to hear you were so disappointed with our services. There is no question short-term volatility can be uncomfortable, and we appreciate that even temporary declines can be difficult to undergo. However, brief--and regular--corrections are a part of every normal bull market. Timing them perfectly is simply impossible, and trying to exit the market at every pullback is usually devastating to long-term returns and is simply not compatible with a long-term growth strategy. Experiencing a correction does not mean we are not paying attention to portfolios or are ignoring economic conditions. On the contrary, we spend a great deal of time and effort determining which events are likely to have market-moving power, and which are more likely to be noise that is soon forgotten. More often than not, remaining invested through a short-term pullback is the best strategy for staying on a path to long-term growth.

While we wish we would have had a longer time frame to help you achieve your goals, we appreciate and respect that this is your decision to make. After all, it's your money, you earned it, and you ultimately need to do what you feel is best. We wish you the best in your future endeavors and hope you find a strategy that is what you are looking for.

As for our fees, they're always charged exactly as outlined in our letter of agreement, and fully disclosed in each quarterly statement. You're welcome to contact us if you have any questions on fees that were assessed on your account, and we'll gladly do what we can to help.

- Fisher Investments
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Old 02-20-2013, 11:07 AM   #80
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so I was wondering what did tightasadrum do? did he pick an investment company
Well, since you asked:

I told the guy with Fisher in CA not to call me again until after December. I wanted to think about it and was way to busy to bother with it until late January.

Right on cue, I received his call near the end of January as expected. I'll admit he's got good telephone sales skills, very good at delivering a message for using Fisher, but without giving out a lot of ways to back it up in my opinion. He insisted that if I would only let his local guy visit once more, I would finally see the light. I declined.

The two main reasons: 1) the minimum $500K to play at their table, and 2) the management fee, of course. But mostly it was #1. I just felt that was too much to pass to just one entity to manage.

I explained that if I ever changed my mind, I'd contact him. So please don't pester call me. I think he got the message. I hope so...Tight
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