Schwab Private Client Program

[TommyOIB]

I have used Schwab for my margin account and IRA's for years. I have an acct at OptionsXpress (now part of Schwab) that I use for options trading.
As I have gotten older (67) I have thought that maybe someone else could do a better job making investment decisions than me. I recently spoke with Schwab and they recommend their Private Client Program. I was comfortable with that idea until I found a couple of online forums that were very critical of the program. I am now getting cold feet.
I have a good acct balance, still self employed with good income, plenty of life insurance, paid up long term care insurance and only debt is small mortgage on 2nd home. I'm very conservative in my investing and am probably 70% in cash (not good in 2013). The stocks I own are dividend stocks with long history of dividend increases.
My question simply is, what would you advise me to consider?
Many thanks!

[LOL!]

I suggest you become a private client of Bogleheads Investing Advice and Info

There will be no cost for that advice, too.

[rodi]

Schwab offers several tiers of managed accounts.

Private client is their most expensive one. Too rich for me. From their website:

Quote:

What are the minimums and fees? Investment minimum: $500,000 Annual fee: starts at 0.90% (equities) and 0.70% (fixed income) Subject to minimum quarterly fee of $1,000

I'm assuming you have at least $500k since that's the minimum for private client. At that rate you could get managed mutual funds or etf's (pick your risk level and they invest your money in a big pool with a bunch of other folks.) My sister does this. The fees are

Quote:

First $100,000: 0.90% Next $150,000: 0.70% Next $250,000: 0.50% Next $500,000: 0.30% Over $1,000,000: 0.20%

I had this briefly till I realized I was throwing away a portion of my money each quarter.
But my sister does not want to be bothered at all - she just wants quarterly statements and the ability to call the financial advisor person at schwab and chat about non-related things.

She's making money. I'm making more using a couch potato approach with Schwab funds.


I notice you mention your age - is there a concern about cognitive issues in your future? It might be reasonable to go with a low cost PASSIVELY managed account in this case - even if it costs more than DIY.

[TommyOIB]

Quote:

Originally Posted by rodi Schwab offers several tiers of managed accounts. I notice you mention your age - is there a concern about cognitive issues in your future? It might be reasonable to go with a low cost PASSIVELY managed account in this case - even if it costs more than DIY.

Thanks for the reply. I mentioned my age only to validate my reason to be be conservative with my investments.

[TommyOIB]

Thanks for the replies.
I mentioned my age only to show reason for being conservative with my investments.

[gcgang]

Quote:

Originally Posted by TommyOIB I'm very conservative in my investing and am probably 70% in cash (not good in 2013)... My question simply is, what would you advise me to consider? Many thanks!

70% cash?! Wow, that's a high cost right there.

How did you ever get to so hi a cash balance?

I retired last year, rolled my 401k into cash, and only got bout half of it reinvested last year, but still my overall cash is about 17%.

I'm feeling like if I get it invested now, whatever I invest in will surely go in the tank. Stupid on my part, in that I know that getting to my appropriate allocation ASAP is more likely to ensure my long term financial survival. But still, I can't pull the trigger, and rationalize that I don't need to take on the short term volatility, and probably deluding myself by believing I'll be smart enough to get it invested on a correction.

But 70%? Man, that's tough. But maybe you've got enough assets to not have to earn any returns and still be able to live your remaining days in your desired lifestyle. In that case, congratulations.

I'd advise that you spend some upfront time, or even money, to figure out what your appropriate AA should be, and then implement actions to get to that AA, either thru the aforementioned Vanguard type investments, or continuing your individual stocks, assuming you know what you are doing with those, ASAP.

[2B]

Quote:

Originally Posted by gcgang 70% cash?! Wow, that's a high cost right there. How did you ever get to so hi a cash balance? But 70%? Man, that's tough. But maybe you've got enough assets to not have to earn any returns and still be able to live your remaining days in your desired lifestyle. In that case, congratulations.

The OP said they were 67. If he is following the "100-age" rule of thumb, he's about right. Your comment about "enough assets" may also be the case. I have 60% in fixed income/cash because it is enough to live on for longer than I expect to live at near zero interest rates. I expect interest rates to eventually rise as the blatant manipulations of QE ends. The 40% in equities is there to protect against inflation.

[2B]

Quote:

Originally Posted by TommyOIB I have used Schwab for my margin account and IRA's for years. I have an acct at OptionsXpress (now part of Schwab) that I use for options trading. As I have gotten older (67) I have thought that maybe someone else could do a better job making investment decisions than me.

I'm more concerned with the "margin account" than anything else. If you've truly been beating indexing, good for you but the statistics say you've been lagging the performance of a balanced index portfolio. An index portfolio also doesn't need someone to manage it for you.

I recommend you read a few book on indexing. Bernstein's Investor Manifesto is a good read for someone with experience. Hallam's Millionaire Teacher is a good read for a beginner to the subject of indexing.

[Texas Proud]

Quote:

Originally Posted by 2B The OP said they were 67. If he is following the "100-age" rule of thumb, he's about right. Your comment about "enough assets" may also be the case. I have 60% in fixed income/cash because it is enough to live on for longer than I expect to live at near zero interest rates. I expect interest rates to eventually rise as the blatant manipulations of QE ends. The 40% in equities is there to protect against inflation.

I think there is a difference in fixed income and cash.... you normally get a better return with fixed income... not always...

[Texas Proud]

Also +1 on the margin account... has it paid off for you, and if so by how much compared to the 'work' involved...



My bigger question is why do you have any life insurance Is it for some estate purpose If not, I do not see a good reason to have it.

[ERD50]

Quote:

Originally Posted by Texas Proud Also +1 on the margin account... has it paid off for you, and if so by how much compared to the 'work' involved... My bigger question is why do you have any life insurance Is it for some estate purpose If not, I do not see a good reason to have it.

+1 And if the margin account is only 30% of funds, any superior performance might be offset by the drag down of 70% cash (making almost nothing). And is the 30% actually seeing superior returns - what benchmark is being used?

I wonder how the total portfolio return compares with a couch potato portfolio at 60/40?

-ERD50

[ERhoosier]

Quote:

Originally Posted by LOL! I suggest you become a private client of Bogleheads Investing Advice and Info There will be no cost for that advice, too.

+1

Then find some financially astute friends to periodically have dinner/drinks with and share stories & opinions. For some, this socialization seems to be a main function of their personal FA

[Texas Proud]

Oh yea, forgot to say that I would not go into private services... they will not provide enough extra to pay for their services (heck, they probably will not come close to a couch potato portfolio) so why use them...

[TommyOIB]

I appreciate the valuable insights.