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Old 01-14-2015, 08:43 AM   #21
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The best defense is a good offense, and the FA is very good. Look how he has changed the focus from "why did my portfolio not do better" to "why doesn't he want to work with me". He still didn't give you the courtesy of even a boilerplate answer to your real question. You are lucky--he could have said you wanted low management fees but you really should allow him to churn your funds to take advantage of market swings and here is how much better he would have done if you had (presto, a chart with cherry picked timing results) blah blah blah

Good riddance.
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Old 01-14-2015, 08:46 AM   #22
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Originally Posted by FIREmenow View Post
Yikes! I misread the post! I missed the "tens" part. No, not "tens".
Even if you have $1 million with Vanguard or Fidelity, they will give you a lot of free hand holding.
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Old 01-14-2015, 08:52 AM   #23
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We'd have to hear the FA's side of it to know for sure.

But maybe he can't justify the under performance, and he's anticipating you were about to fire him/her, so he's gone on the offensive and made it all about your attitude.
+1

It would nice to see the other side and the longer story. The other possibility is that the 2% difference from the 60/40 balanced has wound up in your FA's pocket and if he allows you to persist in looking into things with him and/or his firm that there is not going to be a happy ending for him and/or is firm. Much better to dump you and erase as many traces of reports and communications as possible. Hope that you will be 'embarrassed' or whatever enough to just drop it. Neither this FA nor his company has a fiduciary responsibility to you so writing letters to the firm is unlikely to have much effect. AFAIK, the overseeing bodies are not much more effective at dealing with misdeeds if there were indeed any. Certainly your FAs response seems out of proportion to someone asking 'what happened?'. Good luck.
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Old 01-14-2015, 09:16 AM   #24
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+1

It would nice to see the other side and the longer story. The other possibility is that the 2% difference from the 60/40 balanced has wound up in your FA's pocket and if he allows you to persist in looking into things with him and/or his firm that there is not going to be a happy ending for him and/or is firm. Much better to dump you and erase as many traces of reports and communications as possible. Hope that you will be 'embarrassed' or whatever enough to just drop it. Neither this FA nor his company has a fiduciary responsibility to you so writing letters to the firm is unlikely to have much effect. AFAIK, the overseeing bodies are not much more effective at dealing with misdeeds if there were indeed any. Certainly your FAs response seems out of proportion to someone asking 'what happened?'. Good luck.
It appears that the FA had the right to make changes is the OPs accounts at Fidelity and Schwab. This eliminates most opportunities for issues unless they purchase assets their firm benefits from their purchase. The best example I can use is proprietary mutual funds from the firm. These are notorius dumping grounds for dog stocks the firm wants to get rid of for big clients.
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Old 01-14-2015, 09:24 AM   #25
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I am paying to have someone "manage" my accounts better than I would be able to!
I don't think this should be the right expectation. You are paying to have someone take care of a chore. You are *able* to do it just as well but you don't want to because you want to spend your time elsewhere. A FA doesn't have the crystal ball to beat the market, not year-by-year or over multiple years.
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Old 01-14-2015, 09:29 AM   #26
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The best defense is a good offense, and the FA is very good. Look how he has changed the focus from "why did my portfolio not do better" to "why doesn't he want to work with me". He still didn't give you the courtesy of even a boilerplate answer to your real question. You are lucky--he could have said you wanted low management fees but you really should allow him to churn your funds to take advantage of market swings and here is how much better he would have done if you had (presto, a chart with cherry picked timing results) blah blah blah

Good riddance.
+1 Rather than explain his actions he went on offensive to deflect having to do so.
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Old 01-14-2015, 09:38 AM   #27
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It isn't all that uncommon for an advisory firm to "fire" a client. The circumstances are really different in every case, and it likely also hinged on how the relationship was prior to the email you sent.

Managing expectations is critical to providing good professional services any any field, and I would imagine that the FA felt that it is better to terminate the relationship in your particular circumstance. I wouldn't be embarrassed, as it is strictly a business decision for him.
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Old 01-14-2015, 09:40 AM   #28
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I don't think this should be the right expectation. You are paying to have someone take care of a chore. You are *able* to do it just as well but you don't want to because you want to spend your time elsewhere. A FA doesn't have the crystal ball to beat the market, not year-by-year or over multiple years.
I agree with you. Perhaps the words are wrong. I expect someone to do better than I would with the time I am able/willing to devote to it. I am paying for their time to do the research, etc. which would be better than I could do without spending the time on that.

I do, however, expect that one would be able to get in the ballpark with some of the benchmarks available, and, if not, offer potential reasoning/decisions why it did not.

I didn't/don't expect a crystal ball. Explanation of a decision that didn't work out along with with rationale, and a plan for moving forward is just fine with me.
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Old 01-14-2015, 09:51 AM   #29
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A FA doesn't have the crystal ball to beat the market, not year-by-year or over multiple years.
I agree that they don't, but some promise (or imply) that they will.
To the OP: Yes, the FA did you a big favor. If you've done the math on the amount that the .5% fee amounts to, and realize that it will only take you about 3 hours per year to do this yourself, you already know that doing it yourself earns you quite an hourly rate. Tax free.
Some FAs (like docs, lawyers, and many other specialists) resent an informed client. I'll bet your FA just doesn't get many calls/emails like yours, and doesn't want to deal with the hassle.
If I were in your boots, I'd get a target allocation set up and transition out of the hodgepodge of funds into a simpler set of funds/ETFs that you picked and understand. Five years from now, send your FA a Thank You card on the date of your "breakup" comparing the balance of your account with your allocation compared to the balance if you'd stayed with his picks. And send him a photo of what you bought with the money saved on fees. >Then< let it go.
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Old 01-14-2015, 09:53 AM   #30
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Three-fund portfolio - Bogleheads
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Old 01-14-2015, 10:04 AM   #31
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Wow, sounds like you dodged a bullet. Your financial leech, er I mean adviser, just unlatched himself from you on his own. Rarely does this occur so easily in the wild.

Go grab a vanguard balanced fund at 0.20% expense ratio or less and call it a day.

Oh, and what a jackass your FA was.
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Old 01-14-2015, 10:11 AM   #32
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Congratulations on being fired. I think that was the best thing that could happen to your portfolio.
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Old 01-14-2015, 10:19 AM   #33
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Wow, sounds like you dodged a bullet. Your financial leech, er I mean adviser, just unlatched himself from you on his own. Rarely does this occur so easily in the wild.
Comparing a FA to a leech is somewhat demeaning .... to the leech.
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Old 01-14-2015, 10:22 AM   #34
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Put it all in Wellington and go take a nap.
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Old 01-14-2015, 10:25 AM   #35
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Comparing a FA to a leech is somewhat demeaning .... to the leech.
As always, so nice to see these friendly faces and voices when I check in around these parts.
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Old 01-14-2015, 10:29 AM   #36
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I think you need to look at the psychology of the financial advisor.

Some are leeches that just want to set it and collect with minimal interactions.
Others want to have more discussions about strategy, debate, etc.

For a FA to succeed, they need to have the right type of clients and this one probably thought you were going to be difficult in the long run to work with.

Also, some advisors know that they aren't providing someone like you as much service as they are providing someone with a lower education financially.

If I'm a financial advisor, and my client is pretty knowledgable, I can assume long term that my 0.5% fee puts me at a disadvantage over the guy doing it himself.

Also, one more point, the financial advisor is not getting paid to do better than the market. (in some cases he's being paid to make money for a insurance company, etc.).
Unless he told you he would outperform the market, he's just there to do his best.

It's like hiring a property manager for a rental home. You probably can do a better job yourself because you care more about your own rental home, but you pay them so you don't have to worry about leaky faucets and bad tenants, etc.
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Old 01-14-2015, 10:34 AM   #37
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“…A society, or all mankind, should study the consequences that are likely to result from each decision that is possible at the present time. By making appropriate selections today, society can influence its future, rather than wait for the inevitable to occur. The individual, too, can consider what sort of person he wants to become, and what goals he wants to achieve, before making a choice between various alternatives. He can set out to produce a certain future for himself, instead of feeling that his life is completely determined by forces over which he has little control.” Allen Tough from The Adult’s Learning Projects

Yes, your email may have been provocative. Yes, his reaction was unprofessional. Yes, you now have to move on to the next FA or do it yourself.

Without knowing what space the funds are in, or knowing anything about you, it's hard to say what selections are appropriate. Suggest you pump that stuff through M* analyzer and see what it is really about. Then start simplifying while still hitting the right areas in the style box that's right for you.
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Old 01-14-2015, 10:37 AM   #38
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There is no excuse for unprofessional conduct or communication. Period.

However, allow me to just focus on the performance issue. As a disclaimer I do not use a FA and only buy individual stocks and individual bonds (mostly munis) for my own account. I own very few mutual funds because I do not see any reason to pay their fees when I can do it myself. I listen to CNBC and read the Wall Street Journal just like they do. I will not comment on allocation among funds because I do not purchase them. I am just focusing on performance 2% below a benchmark for 1 year.

The FA's performance was based on a single year. He apparently made some choices which resulted in below benchmark performance for the year. I get it. His choices involved a decision to allocate your money in a certain way that proved incorrect as compared to his peers. No one has a crystal ball. Had he made other choices (hopefully informed guesses really) you may have been 2% above the benchmark. To me, you cannot analyze performance of money management over a single year. He should be answering the question of how he has performed against the benchmark over the past 7-10 years. Hopefully you inquired before retaining him.

As stated I do not use a FA, but (except for his unprofessional conduct) his performance needs to be evaluated over a period longer than 1 year. If you did not ask the question and do not know the answer that is reason enough to switch because you do not know his history. Many money managers investing fixed income funds simply got 2014 wrong. They never expected interest rates to go down. Virtually all of them contemplated at least a 75-100 basis point rise from January, 2014. That view would have weighted them towards short term products to protect against perceived interest rate risk.

If you decide to retain another FA, get his/her history against the relevant benchmark for an extended period of time. Just my two cents.
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Old 01-14-2015, 10:42 AM   #39
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A

Here are the funds as of the end of the year:

Fidelity Balanced
Fidelity Four in One
Vanguard Total Stock Index
Vanguard Value
Pandora
Vanguard Mid Cap
IShares Russell 2000 Index
Scout Intl
Vanguard Total Intl Index
Pimco All Asset
Cap World Bond Fund
Met West TR Bond
Vangaurd S-T Bond
My gut impression is that this number and combination of funds is very similar overall to having just three index funds - Total US Mkt/Total Bond Mkt/ Total Intl Mkt.
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Old 01-14-2015, 10:47 AM   #40
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Congratulations.

Easier to just pull the band aid off quickly then in small parts .
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