should I go it alone

[seraphim]

My Vanguard account averages .10%. That's total cost. No other costs whatsoever. I could get it down to .08 with a little shifting - like getting rid of international stocks.

$1000 a year vs $7500 a year. That's $130000 over 20 years which could have been reinvested. Or paid for several cars. Or one very nice car.

Your choice.

And that doesn't include your current funds' ERs. That may be doubling your cost.

Roll them over into Vanguard Admiral accounts. Your FP us doing nothing to earn that $7500 a year. He's merely pocketing your potential returns.

 

[crispus]

Just checked there is a Charles schwab office five minutes from our house here in the Villages FL.
My financial advisor wants to keep us and has offered to fall on his sword and give us something to make up for their mistake. A year or two with no fees.

 

[braumeister]

My financial advisor wants to keep us and has offered to fall on his sword and give us something to make up for their mistake. A year or two with no fees.

With the assumption that once your free period of underperformance is up, you'll stay with him and go back to paying his fees out of sheer inertia and a misguided sense of appreciation.

 

[Tortoise]

Do you really want to stay with someone who has been sucking $7500 from your portfolio each year, messed up your 72t (which is causing you hardship), and now says, "Here's a deal for you."?

Drop the salesman and handle your own portfolio. Don't get suckered by his fall on my sword appeal.

You might want to post your funds and percentages of your portfolio, as well as types of accounts the funds are in, to get advice on further reducing costs. As someone else mentioned, several Schwab ETFs have no trading commission and are very low expense, as can be seen in the charts posted by rbmrtn.

It's nice that the Schwab office is nearby, but it shouldn't really matter. It is fairly simple to handle your accounts using the schwab.com website.

 

[growing_older]

My financial advisor wants to keep us and has offered to fall on his sword and give us something to make up for their mistake. A year or two with no fees.

Even your FA knows what a bad deal you have been getting.

 

[Bestwifeever]

Just checked there is a Charles schwab office five minutes from our house here in the Villages FL.
My financial advisor wants to keep us and has offered to fall on his sword and give us something to make up for their mistake. A year or two with no fees.

Oh, sure. Then you will be last on his list when you have a problem vs the client paying his fees. Stop in at the Schwab office this week and discuss your goals with them.

 

[crispus]

Here are my current holdings.


DFA Intl Core equity 20.93%
DFA Real Estate 2.42%
Schwab S&P 500 index FD 15.17%
Vanguard Short Term Bond 32.43%
Vanguard Total BD mkt 27.85%
Total $664,000

DFA Emerging MKTS Core 12.98%
DFA US Core Eqty 2 Port 48.41%
DFA Small Cap Port Instl 16.04%
DFA US Targeted Value 21.76%
Total $203,000

DFA US Core Eqty 1 Port 100%
total $29,000

DFA Emerging Mkts Core 100%
total $21,000

Wellesley Incom Fun Adm 100%
total $72,000
the Wellesley fund is independent of my managed stuff.

 

[69supabee]

I'm new here, so I won't comment on the numbers aspect.

One thing you mentioned is the screw up on their part. Sounds like it burnt your trust with them as a firm, and the FA as an individual. Business in general is largely dependent on trust. If you've lost that, it's time to move on. Giving someone $5 that you don't trust or think deserves it, creates a negative situation for you.

 

[ducky911]

Just checked there is a Charles schwab office five minutes from our house here in the Villages FL.
My financial advisor wants to keep us and has offered to fall on his sword and give us something to make up for their mistake. A year or two with no fees.

I would still change to manage yourself at schwab. I was in one of their managed deals and would not go back for free. They do not do well with tax management....and they are a bit of market timers....the best thing I have done has been to get rid of timing.

 

[clifp]

Here are my current holdings.


DFA Intl Core equity 20.93%
DFA Real Estate 2.42%
Schwab S&P 500 index FD 15.17%
Vanguard Short Term Bond 32.43%
Vanguard Total BD mkt 27.85%
Total $664,000

DFA Emerging MKTS Core 12.98%
DFA US Core Eqty 2 Port 48.41%
DFA Small Cap Port Instl 16.04%
DFA US Targeted Value 21.76%
Total $203,000

DFA US Core Eqty 1 Port 100%
total $29,000

DFA Emerging Mkts Core 100%
total $21,000

Wellesley Incom Fun Adm 100%
total $72,000
the Wellesley fund is independent of my managed stuff.

First of all let me give you the good news. You FA has you in some fine funds. DFA is arguable the only fund family that historically has outperformed indexes. The only way to get access to DFA fund is through an adviser. Most adviser who have been certified to sell DFA charge 1% so the .75% is actually on the low side.

My guess is you are part of the Schwab managed portfolio service, which I'll say I've heard mixed things about.


If he is really going to waive the fees for the next two years, I'll be in the minority and say that maybe you should stick with for the next couple of years, while educate yourself a bit more. (I.e. read the forum and some of the suggested books.)

Now having said this what doesn't add up is his 2013 performance. I could basically replicate your portfolio (which I think is properly allocated assuming your comfortable with stock market risk) with 4 Schwab ETFs.
SCHB broad stock market
SCHZ bond market
SCHF international stocks
SCHE emerging markets.

When I plug in the numbers you gave I get 2013 return of 11.1% virtually the same as the 2015 target fund.

I think the FA owes you a detailed explanation of why your 2013 was only 7%, if I can't provide that. Then I'd join the crowd and say move.

 

[urn2bfree]

Most adviser who have been certified to sell DFA charge 1% so the .75% is actually on the low side.

My guess is you are part of the Schwab managed portfolio service, which I'll say I've heard mixed things about.

No, no, no. Do not accept this nonsense being peddled by these crooks! I agree that DFA may be worth using an advisor to get but with indexing there is no way an advisor earns or is worth ANY significant percentage of your money. It costs them no more time or effort to slice and dice up index fund portfolios,for $1million vs $2 million, but he will charge you double anyway.
Plan on firing him but as clifp said, I agree:

If he is really going to waive the fees for the next two years, I'll be in the minority and say that maybe you should stick with for the next couple of years, while educate yourself a bit more. (I.e. read the forum and some of the suggested books.)

I will add learn about DFA advisors who do not charge so much. Evanson and Cardiff Park are flat rate DFA approved advisors, FPL also is flat rate. Portfolio Solutions by Rick Ferri I believe is reasonable for a smaller portfolio like yours at ?0.37%.? But again as your portfolio gets bigger it is absurd to charge you more as a percentage. Look into one of those if you decide you want to stay with DFA.

Finally I obviously do NOT approve of paying these guys by percent of Assets because they absolutely do not earn it, these rates are a carryover from Active management which DOES take more rime the more money you give them...it is also why Active management does not work as well as passive, because it costs too much! Still It is NoT really accurate to claim that an advisor charging you 0.75% while you use a 3% SWR takes a fourth of your money. This is misleading because while it is initially true, as time goes on, the advisors 0.75% is fixed at the percentage of whatever your portfolio is, but the SWR is likely going to be changing up or doen as the amount is just theoriginal amount adjusted up for inflation...it is not fixed to always be 3% of your portfolio value. If you always plan to spend a fixed percent of your portfolio, then yes it is true. No matter what, passive indexing should NOT be tied to portfolio size ultimately.

 

[crispus]

How about if I ask FA to lower their fees to .375 %.

 

[REWahoo]

How about if I ask FA to lower their fees to .375 %.

Do you really think you can't DIY?

 

[travelover]

Do you really think you can't DIY?

I think we are nearing the point where the crowd shouts to the man on the ledge, "JUMP!"

 

[Bestwifeever]

How about if I ask FA to lower their fees to .375 %.

No.

 

[ERD50]

How about if I ask FA to lower their fees to .375 %.

What's the point?

Reminds me of the story of a man who threatened to burn down his neighbor's house. The neighbor said, "How 'bout we compromise, and you just burn down my garage?".

-ERD50

 

[growing_older]

Originally Posted by crispus
How about if I ask FA to lower their fees to .375 %.

Why? They still add no value, get lower returns than equivalent index funds at Vanguard and MESSED UP your 72t. Why do you want anything to do with these guys? Even if they were FREE, you would be better off without them.

 

[jollystomper]

How about if I ask FA to lower their fees to .375 %.

Is there some personal relationship you have, directly or indirectly, with the FA that you think will upset them if you drop them completely? After all, as others have pointed out, your simple portfolio really doesn't need any advisement, and there are better ways to spend $7,500 per year.

 

[crispus]

I am going to visit the local Charles Schwab office tomorrow. I want to thank you all who have replied.

 

[braumeister]

I am going to visit the local Charles Schwab office tomorrow. I want to thank you all who have replied.

One last bit of advice.
Go there with a firm intention of what you want to do, and not merely an attitude of "What do you advise me to do?"

Sounds as if maybe you're not 100% clear in your own mind right now about what your intention is, which could be detrimental to your financial future.

 

[Travelwanted]

I am using a FA but after reading all the good advice here I am going to change that.
I have used VG in the past and will switch to them. If it helps, there are some great articles on investment principles particularly regarding retirement. Our assets are rather high so we are paying like 40k/year!!! Not for long!

 

[powerplay]

I am using a FA but after reading all the good advice here I am going to change that.
I have used VG in the past and will switch to them. If it helps, there are some great articles on investment principles particularly regarding retirement. Our assets are rather high so we are paying like 40k/year!!! Not for long!

Good for you!
That 40k/year hurts to even read it. Imagine what that money could buy for you or help increase your portfolio.

 

[crispus]

Let's both do it. Thanks Travelwanted.

 

[Travelwanted]

Let's both do it. Thanks Travelwanted.

Indeed! The real question will be asset allocation. And, in particular, what time horizon for bonds given the low interest rate we are in!

Best of luck...keep of informed!

 

[crispus]

Went into CS office today. The salesman looked over my current portfolio and asked me why I was paying someone for such a boiler plate index portfolio. Same question I've gotten from this forum.

Meeting with current advisor tomorrow morning with 90% chance of firing him. Why the 10% chance. If he can convince me of the value he provides, other then not having to be active in my investment decisions.



Photo today in The Villages FL