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Old 01-14-2015, 03:13 PM   #61
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Originally Posted by ERD50 View Post

For the FA, it looks better to say "I had a customer that I just couldn't work with", than to say "I am not worth 0.5% to anyone".

-ERD50
+1

Well said. Although, a good advisor is worth 0.5% to someone.
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Old 01-14-2015, 03:46 PM   #62
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So how terse were you? Can you cut snd paste a sampling of what you view was the most terse paragraph?


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Old 01-14-2015, 03:55 PM   #63
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So how terse were you? Can you cut snd paste a sampling of what you view was the most terse paragraph?
So I was really hoping to avoid this, for fear of dragging this on too long. Also, I am not one for tit-for-tat stuff, but to get a read on it, here is the email in its entirety (....donning flame suit):

---
Hi _____________,

Thank you for sending the net worth and performance updates for year end
2014.

I was quite dismayed to see a 4% overall return (although I suspected it
would be low as I have been monitoring the accounts). This seems
incredibly low to me.

With the Dow and S&P returning 10 and 13% percent, and a 65/35
allocation, I would have expected MUCH better than 4%.

There are numerous links on the web to 65/35 allocations (and 60/40),
both funds and portfolios, reporting 7-9% returns.
I even saw a couple of 50/50 allocation portfolios coming in at 6%.

Vanguard Wellington™ Fund (VWELX) | US News Best Mutual Funds
2014 Portfolio Review – What Strategies Worked & Didn’t Work | Pragmatic Capitalism
Global Allocation 60/40 Portfolio (I)
Early Retirement Portfolio Asset Allocation Update, Year-End 2014 — My Money Blog
Sungarden Investment Research | 2014 In Review

Nowhere did I see anything CLOSE to 4%.

Can you tell me what went wrong? What am I missing?
Why are short term bonds 16%?
I thought you said that was not one of your strategies?
There doesn't appear to be that much weight in internationals which took
a hit.

Can you tell me how we plan to recover this deficit in 2015?

Thanks,

----
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Old 01-14-2015, 03:58 PM   #64
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You flamed no one. Maybe the guy was having a bad day or tried to turned it around as ERD50 suggested.

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Old 01-14-2015, 04:01 PM   #65
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Thanks, I will likely be building a simple bogglehead 3- or 4-fund portfolio and managing myself after a bit more research.

I have to assess the tax consequences, however, of moving stuff around at different times and from different allocations and account types.

Best,
Is this all in one account, like IRA. Or is some in taxable?

Take each fund symbol and plug into Morningstar. Review the style map to help you eliminate the funds that just duplicate the same boxes. You can probably quickly cut the list in half. Combine these three, those two, and so on.

I think you may need more than three funds, depending on the number of retirement accounts you have.
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Old 01-14-2015, 04:18 PM   #66
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I see nothing inflammatory in your email. I suspect ERD50 is correct and the FA is annoyed that you had the unmitigated gall and arrogance to question his perceived superior money-managing ability. In spite of the fact that any of the DIY investments others have suggested here would have done better and cost you less.
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Old 01-14-2015, 05:49 PM   #67
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Whoops. Benchmarks are only meaningful if they are directly comparable. For example you mentioned duration differences. This can be a big deal. Last year longer duration bonds hit it out of the park.

The only way to avoid confusion and mixed signals is to do it yourself. I say do it yourself, and squawk only in the case of malfeasance.

Ha


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Old 01-14-2015, 06:04 PM   #68
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Whoops. Benchmarks are only meaningful if they are directly comparable. For example you mentioned duration differences. This can be a big deal. Last year longer duration bonds hit it out of the park.
Yep. Absolutely. However, I might have expected a bit of education/reasoning explaining my ignorance, instead of calling me "unprofessional, condescending and disrespectful." and an immediate cessation of our "relationship".

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Old 01-14-2015, 06:28 PM   #69
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Email doesn't seem too bad.
Financial advisor has thin skin I guess.

If he is doing well enough to fire clients, all the power to him.


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Old 01-14-2015, 07:36 PM   #70
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No loss there. There is no shortage of financial advisors.
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Old 01-14-2015, 07:44 PM   #71
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You are better off going it alone.

If I had been the advisor, not sure what I would have done but I wouldn't have liked the email, and I would have planned to lose you at my earliest convenience. The caps were a real clever touch. Also liked "incredibly low".

Potential unhappy clients are good to lose earlier rather than later, when it may be in a flurry of charges and accusations.


Like my girlfriend sometimes says, Ha, if you want to work through something with me, put me on the defensive and you are going to lose, at least lose something that you may regret losing.

Ha
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Old 01-14-2015, 10:37 PM   #72
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No loss there. There is no shortage of financial advisors.
True, and while I am not a professional one, for the OP I will if he truly has tens of Millions run his portfolio for him at the low rate of .25% for my fee.
After all last year it was pretty easy to get over 14%.
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Old 01-14-2015, 10:46 PM   #73
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It was also an unusual year performance-wise. If you had a portfolio with typical asset allocation, you had money in international, specifically European funds, and those dragged everybody's portfolios down. Most portfolios underperformed by around 2 to 3% compared to the S&P due to that and so your figures don't surprise me that much. That doesn't excuse your FA's behavior, just suggesting that your portfolio may not be all that terrible.
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Old 01-14-2015, 11:10 PM   #74
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I think most FAs would have done a song and dance to explain your portfolios performance. Interesting he just cut it off.
What was your understanding of what he'd do for you when you set things up?


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Old 01-15-2015, 12:42 AM   #75
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A few thoughts. I am on the investment committee for a medium size non profit. The organization has 5-10 million investment portfolio, which is used to fund new initiative, benefiting historical sites primarily the Arizona Memorial. The fund is managed by a large bank, and they in turn select money managers are fees are roughly .75% plus often additional fee by managers in the ~1%. Historically the account performance unperformed the appropriate benchmarks by about ~1%.

The portfolio is 60/40 last year it returned 4.15% Which is the same as the OPs.
The investment committee chair had a very similar reaction as the OP , and communicated essentially the same thing. "How the hell did you only make 4%"

The reaction our money manager was considerable different. We meet with them Friday, and will have dinner meeting with them in a few weeks. The two primary reasons given for the underperformance is a 20 ish percent investment in international equities. Second, they bond portfolio was given to money manager who avoided long term bonds. I found it hard to fault them for avoiding long bonds. I feel rule #1 in managing a charities money is to avoid taking silly risk, and while long term bonds did very well last year, I think it was a silly risk to own them in 2014. I'm guessing they'll put in at least a 10-20 man hours in explaining how we only made 4%. So it seems to me that your money manager at least owed
you a couple hours of discussion.

Still when my 80/5/15 (long term CDs) portfolio was up 14.5% it was hard to bite my tongue.
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Old 01-15-2015, 12:47 AM   #76
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I don't see anything wrong with what you wrote to the advisor. If the advisor is clueless and if what you said totally went over his head, his reaction makes perfect sense to me. He cut you off to save his ego before cut him off. At least that is my take.


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Old 01-15-2015, 01:01 AM   #77
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As always, so nice to see these friendly faces and voices when I check in around these parts.
You make the large portion of FAs look bad.
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Old 01-15-2015, 06:02 AM   #78
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How ironic! I just received my 2014 report. I also made 4% after fees in a 60/40 split.

I have a call this am with them. I plan to terminate. I don't know why it took me so long! Having just read Bogleheads Guide sure helped give me the confidence.

No doubt the fees were a big drag. I pay about 0.7% but worse yet some of the MF have ERs of >1%. Ugh!
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Old 01-15-2015, 06:12 AM   #79
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The FA's response was wrong, and you are better off without him/her. However, I still think the FA deserved the courtesy of a face to face or phone call first. Nothing wrong with a follow up email to document your specifics/questions also. But many people would be more comfortable avoiding direct contact...
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Old 01-15-2015, 07:53 AM   #80
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How ironic! I just received my 2014 report. I also made 4% after fees in a 60/40 split.

I have a call this am with them. I plan to terminate. I don't know why it took me so long! Having just read Bogleheads Guide sure helped give me the confidence.

No doubt the fees were a big drag. I pay about 0.7% but worse yet some of the MF have ERs of >1%. Ugh!
When you finish the call, you'll probably wish you'd done this by email. Be strong, your FA will have a whole drawer full of explanations and reasons for how things turned out. Then they will bring out the pictures of their kids . . .

Nobody cars as much about your portfolio as you do. Remember how many hours of work that $$ represents, and how much your "hourly rate" will be when you manage the portfolio yourself. Pull the Band-Aid off quickly.
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