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Old 06-18-2017, 10:49 AM   #41
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I think the issue is that scale can create problems. I can sell 100 shares no problem but I cannot sell 500k shares without impacting the market, requiring multiple trades et al.
You can easily sell $500,000 from a large AUM mutual fund with no problem. So I don't get your thinking about scaling problems.
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Old 06-18-2017, 11:40 AM   #42
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Since retiring 10+ years ago. my mantra has been simplicity. Adding a FP to my mix would just make the whole deal more complicated. Gonna keep it so that my hand alone is on the tiller.
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Old 06-18-2017, 11:58 AM   #43
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You can easily sell $500,000 from a large AUM mutual fund with no problem. So I don't get your thinking about scaling problems.
You are using $ and I was using number of shares. So try to sell 500,000 APPL shares in one transaction!
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Old 06-18-2017, 01:36 PM   #44
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You are using $ and I was using number of shares. So try to sell 500,000 APPL shares in one transaction!
Well that is approaching $75,000,000... and since you should not have over 5% in one stock that would suggest a portfolio of $1.5 BILLION....

Yes, I would say that if you happened to own 500,000 share of APPL you might need a FA....

BUT, I will also say that it is pretty liquid and you could sell those shares without much fuss... it is less than 2% of the avg daily volume... so now you are back to NOT needing a FA....
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Old 06-19-2017, 06:25 AM   #45
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You might need a pre-emptive lawyer though - in case the stock moves down right after and people start coming after you for perceived insider trading ..
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Old 06-19-2017, 07:01 AM   #46
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You are using $ and I was using number of shares. So try to sell 500,000 APPL shares in one transaction!
Keith, you raise a good point but your example is a little exaggerated as Texas pointed out. I have found it's sometimes a little difficult to sell much smaller lots without moving the market but it's generally only a cent or two and not much of an issue if you are careful and use limit orders.
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Old 06-19-2017, 01:41 PM   #47
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Well that is approaching $75,000,000... and since you should not have over 5% in one stock that would suggest a portfolio of $1.5 BILLION....

Yes, I would say that if you happened to own 500,000 share of AAPL (fify) you might need a FA....

BUT, I will also say that it is pretty liquid and you could sell those shares without much fuss... it is less than 2% of the avg daily volume... so now you are back to NOT needing a FA....
The only reason I mentioned it is that when we were raising money for a venture, the guy we were dealing with at Bear Stearns on Park Avenue was occupied with selling 1,000,000 shares of amazon for his client and he had to keep ducking out to make sure they were not driving the market down before making the next trade...

(I think I can manage a cottage but would require help with a 100 room lodge even though it is doing all the same stuff. Similarly scale also applies to trading.)

On a smaller scale, I trade convertible debentures, and they suffer from lack of liquidity, so the same issues arise at much lower $ values!
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Old 06-19-2017, 03:36 PM   #48
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The only reason I mentioned it is that when we were raising money for a venture, the guy we were dealing with at Bear Stearns on Park Avenue was occupied with selling 1,000,000 shares of amazon for his client and he had to keep ducking out to make sure they were not driving the market down before making the next trade...

(I think I can manage a cottage but would require help with a 100 room lodge even though it is doing all the same stuff. Similarly scale also applies to trading.)

On a smaller scale, I trade convertible debentures, and they suffer from lack of liquidity, so the same issues arise at much lower $ values!

I understand what you were saying... but I also think that there are not a lot of 1 million share trades going on by individuals...

If you have $100 mill, then you are going to (more than likely) buy some market ETFs and hold... I doubt anybody here at least would invest it all in individual stocks... but even if they did they would hold and not trade huge amounts at a time...


Also, if you do have a lot of money to invest you will get the phone number of the head of your favorite funds... when I was a trustee I would get some big chunks of cash in every month... sometimes north of $200 mill... I would call the head of the MM fund I was going to invest into and let him know a few days prior to getting the money so he knew it was coming... he was appreciative of the heads up...


I also think that whichever brokerage firm you were with they would assign people to cater to you and do this kinda work for free.. no need for a FA to help you sell your million shares...
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Old 06-19-2017, 04:16 PM   #49
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Yeah, I figure I could get Fidelity to help me gradually sell a very large position. But I can't imagine needing to sell 500K shares of some stock all at once. This is not something I'm going to have to worry about anyway.

We own few stocks. Most of our positions are mutual funds. These scale easily. Most funds have over a billion in AUM. The largest funds are over $100B AUM. I figure the strategy is to simplify and own highly liquid investments - something I am doing already, because it makes things easier!!!

So, if you own primarily stocks, I can see how managing a portfolio of $20M in stocks might be harder than $2M, if you increase the number of stocks you own. But if you keep the same number of stocks, and trade infrequently, what is the practical difference? If you put in a limit order to sell 1000 shares of something rather than 100 shares, the brokerage will break it up into smaller share amounts unless you tell them not to.
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Old 06-20-2017, 08:47 AM   #50
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I also think that whichever brokerage firm you were with they would assign people to cater to you and do this kinda work for free.. no need for a FA to help you sell your million shares...
Well the guy doing the selling was pretty negative on the trade so you might be right! Not acting like an FA at all.
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Old 06-22-2017, 10:07 PM   #51
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[S]aying that someone with a $50 million portfolio (for example) shouldn't retain a trained, qualified FA to help manage their vast fortune just because that FA isn't himself/herself a multimillionaire is kind of like saying you shouldn't take advice from your doctor because he's overweight and has high blood pressure. It could be that his medical knowledge and skills are unparalleled but he simply lacks self-control and discipline with his own personal habits. That doesn't mean he can't diagnose and treat your medical condition with his extensive knowledge and expertise.
I would suggest choosing another doctor ... there are plenty of good physicians available, and one might as well employ a cook who eats his or her own cooking.
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Old 06-23-2017, 05:13 AM   #52
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A long time ago, I read a story about Bill Gates vetting and choosing a manager for his money. The guy eventually picked had a record so clean that he never had even a parking ticket.

I will never have that problem with my money. If my stash somehow growed to 10 times its current size, I simply scaled my trades to 10x. I am so diversified that even if I were 100x richer, trades 100x larger than what I do now would still be drops in the ocean, although I would be more careful to do limit orders only. I never buy or sell all shares of a position at one time. Right now, trading a few hundred shares at a time, I tend to watch the bid/ask and do a quick market order, then I am done.

It's a non problem, really, as I do not see how I can get that rich to worry about it.
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Old 06-23-2017, 05:33 AM   #53
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FAs are not estate planners even if you find one who thinks he/she is. Find an attorney in your state that specializes in estates.

Re portfolio, my impression is that it takes $1m to interest a true Registered Investment Advisor. These guys are legally fiduciaries and that is what you want. I think sticker prices for FAs like this start at 2% for $1M and slide down from there. I just helped select an FA for a nonprofit and at a $4M level, we were quoted prices ranging from 40 to 75bps from the 8 firms we sent RFPs to. Obviously, they knew they were in a competition and came with sharpened pencils.
Attorneys can manage your estate from the legal side.. but in general their financial knowledge is minimal.. an FA that specializes in estate planning might be better .but like everything you have to vet them.. financial education for FA's is lacking outside of investment education .. a CFP does not make you an estate planner.

I would get information from all sources .... attorneys , FA's , tax guy and insurance guy as well .. and study as much as you can .. it's your money. paying one person 1-2% of your asset when he's not necessarily an expert at everything is quite expensive.

There are FA's who charge flat fees .. it's not a great deal for the average person but for someone with a lot of cash /asset it could be the a great solution . if the fee is a tiny percentage of their portfolio
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Old 06-23-2017, 05:50 AM   #54
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Even though my portfolio's value has tripled in the last 15 years, I have actually simplified it over that time in terms of the number of funds I am spread out in.


In the early 2000s (when I was still working), I liquidated some of the dogs and consolidated my holdings into fewer funds, both in my old 401k and taxable account. Today, as an early retiree depending on the investment income from the taxable portion of the portfolio, it is mainly on autopilot with only occasional tweaks for rebalancing purposes.


Having internet access to the portfolio, unlike many years ago, has made it a lot easier to monitor it and make transactions. If my portfolio were to double or triple again, I would probably branch out a little more into a few more funds, but it wouldn't be too tough to keep an eye on things. The autopilot nature of it would remain unchanged - some investment earnings get automatically transferred to my local bank's checking account which then automatically pays most of my bills.


The time I don't spend on financial activities like those I can spend reviewing my portfolio. I don't need any paid FA. I have an unpaid Account Executive at Fidelity I can bounce ideas off once in a while.
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Old 06-23-2017, 10:15 AM   #55
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That's what I do. Our portfolio keeps getting bigger (knock on wood) but I keep simplifying.
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Old 06-23-2017, 12:46 PM   #56
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I think you reach a point where DIY just doesn't cut it anymore. One can personally take care of a 4 bedroom home but a 12 bedroom, 14 bath house would be another matter altogether.

I think once you hit $50MM+ (pick a number) there's just too much going on and too much risk to not have someone taking a second look at what you're doing. People in that realm of wealth often live quite differently, have different COL profiles and develop different needs and risks.
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Old 06-23-2017, 01:53 PM   #57
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I think you reach a point where DIY just doesn't cut it anymore. One can personally take care of a 4 bedroom home but a 12 bedroom, 14 bath house would be another matter altogether.

I think once you hit $50MM+ (pick a number) there's just too much going on and too much risk to not have someone taking a second look at what you're doing. People in that realm of wealth often live quite differently, have different COL profiles and develop different needs and risks.
Yes, but I think my threshold would be a lot higher than $50M. Maybe $500M.

Doing my own trades is not the same as cleaning a 12-bedroom house. Instead of entering 500 shares into an online order, I just enter 5000 shares. Or I can break it out into many orders. Right now, I do not trade everyday, so would think I still have time to manage a portfolio 10x larger.

If I had even more, say $500M, I might be occupied with other activities that are now open to me, and lose interest in investing and outsource it to a manager. Or maybe not. I may still be too interested in the stock market to give it up to somebody else. And I need something to do when I am not traveling or doing stuff like gardening.

I will never know, because the only way I could get a big pile of money is to win the lottery, and I do not play that game.
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Old 06-23-2017, 01:56 PM   #58
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At some point, I will stop doing my own trades, and divide my money into a few balanced funds.

That is about as much investing outsourcing as I will ever do.
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Old 06-26-2017, 05:19 AM   #59
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I think you reach a point where DIY just doesn't cut it anymore. One can personally take care of a 4 bedroom home but a 12 bedroom, 14 bath house would be another matter altogether.
An unpersuasive analogy. As NW-Bound implies, personally managing a 10X portfolio is not more physically demanding than personally managing an X portfolio.

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I think once you hit $50MM+ (pick a number) there's just too much going on and too much risk to not have someone taking a second look at what you're doing.
A higher value portfolio need not have any more complexity or risk than a modest one: sticking to two or three index funds is a strategy that works well for UHNW.

Nothing requires "(a lot) going on" … Warren Buffett has repeatedly suggested simplicity, even for huge investment portfolios:
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The goal of the non-professional should not be to pick winners – neither he nor his “helpers” can do that – but should rather be to own a cross-section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal…. Indeed, the unsophisticated investor who is realistic about his shortcomings is likely to obtain better long- term results than the knowledgeable professional who is blind to even a single weakness.

If “investors” frenetically bought and sold farmland to each other, neither the yields nor prices of their crops would be increased. The only consequence of such behavior would be decreases in the overall earnings realized by the farm-owning population because of the substantial costs it would incur as it sought advice and switched properties.

Nevertheless, both individuals and institutions will constantly be urged to be active by those who profit from giving advice or effecting transactions. The resulting frictional costs can be huge and, for investors in aggregate, devoid of benefit. So ignore the chatter, keep your costs minimal, and invest in stocks as you would in a farm.

My money, I should add, is where my mouth is: What I advise here is essentially identical to certain instructions I’ve laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife’s benefit. (I have to use cash for individual bequests, because all of my Berkshire shares will be fully distributed to certain philanthropic organizations over the ten years following the closing of my estate.) My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers.
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Old 06-26-2017, 05:48 AM   #60
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An unpersuasive analogy. As NW-Bound implies, personally managing a 10X portfolio is not more physically demanding than personally managing an X portfolio.

A higher value portfolio need not have any more complexity or risk than a modest one. Nobody says there has to be a lot "going on" … sticking to two or three index funds is a strategy that works well for UHNW.
Respectfully disagree. It's not the portfolio management that changes. Granted it's the same amount of work; adding an extra "0" to the number of shares is easy.

What changes at a certain level is the lifestyle and the risks, demands and focus. People in the $100MM+ level of NW just tend to live differently, have different tax, money management, spending, risk and estate planning profiles than someone with $5MM.

You're a bigger target to scammers, might have 3, 4 or 5 homes and a small staff. Tax laws change regularly and a good accountant might point out how and where one might be overpaying or, at risk of violating some obscure area of tax law.

At some point, serious philanthropy may come in, presenting a whole new set of risks and opportunities.

Do you need someone to run $100MM in an index fund? No. But there is a financial point where life can get a whole lot more complicated and a few lawyers and accountant or two become more critical in financial advisement.

Even my oft-mentioned miserly grand-dad (mid/high 8 figures), who hated paying for even a newspaper, reluctantly had a set of advisers who'd steer him in matters of estate planning, taxes and general management of his affairs.

YMMV, but to me anyone with $100MM+ who goes it alone without anyone looking over their shoulder would be out of their mind.
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