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Old 01-15-2015, 08:05 AM   #81
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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 cares 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.
And prepare to buy your own birthday cards.

But seriously, don't let them throw a scare into you about what might happen if you do it yourself. You can do it.
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Old 01-15-2015, 08:25 AM   #82
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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,
The funds you listed for your portfolio were quite a lot better than I expected from a 0.5% AUM-free advisor. Lots of index funds, but some clunkers, too. But maybe they had less than 5% of the portfolio in the index funds and the rest in the other funds. For instance, isn't that Capitol World fund a front-end load fund?

Also, the point in time when one invested in such a portfolio was also critical in 2014. The market dipped into February, then rose, then lost the whole gain for the year in early Fall, then recovered. If the portfolio was set up in March to September, it would be trivially easy to be below the expected averages.

Here are some numbers from the Vanguard LifeStrategy Moderate Growth fund of index funds allocated in a 60/40

Return Months to December 31, 2014
7.1% 12 months (full year)
5.2% 08 Apr-Dec
1.4% 06 Jul-Dec
2.3% 03 Oct-Dec

Take away 0.5% from those returns for the extra fees, too.

Folks who did better than 7% usually had more US large caps, more REITs, less foreign, and/or more longer duration bonds. Your portfolio has some short-term bonds which would cause a drag.

So a 60/40 portfolio could be all over the map in 2014 from about 2% to 15% performance based on what was in the 60 and what was in the 40 along with when the money got invested.

Perhaps that was the explanation you were seeking from your sales rep. Send me via a message the e-mail you sent to them, so that I can also "fire" you!
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Old 01-15-2015, 09:07 AM   #83
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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.
Well. . .I did it. It really wasn't all that bad.
That just saved me 40+k/year!
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Old 01-15-2015, 09:22 AM   #84
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Well. . .I did it. It really wasn't all that bad.
That just saved me 40+k/year!
Congratulations - and I think you're significantly underestimating your annual savings.
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Old 01-15-2015, 09:23 AM   #85
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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.
I think the emphasis of this thread is entirely directed in the wrong direction. OP, be thankful you were dumped. But, now learn from the experience. Your statement above is , IMHO, your most pressing problem . Unless you are buying unusual investments /limited partnerships that require expertise to determine their suitability, etc. the idea that a FA will do better than you is a fallacy. It shouldn't take you anytime to manage a well diversified portfolio.

Good luck
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Old 01-15-2015, 09:29 AM   #86
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I think the emphasis of this thread is entirely directed in the wrong direction. OP, be thankful you were dumped. But, now learn from the experience. Your statement above is , IMHO, your most pressing problem . Unless you are buying unusual investments /limited partnerships that require expertise to determine their suitability, etc. the idea that a FA will do better than you is a fallacy. It shouldn't take you anytime to manage a well diversified portfolio.

Good luck
I could not agree more. OP, please read Bogleheads Guide to Investing. It will change your outlook on the investing issue.

The financial services field has a vested interest in making you believe it's too complicated or too labor intensive to do it yourself. Do a little bit of reading and you will be quickly enlightened. It is not that difficult and there are plenty of FREE resources to assist you: here and bogleheads.com
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Old 01-15-2015, 09:33 AM   #87
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However, I still think the FA deserved the courtesy of a face to face or phone call first.
Not me. In a situation like this I prefer email. I can take my time when composing the message (and cool down if I am upset). And, I can take my time when reading the response so that I can think and do some research if necessary.

If the FA felt a face to face would have been a more effective way to communicate, there was nothing stopping him/her from suggesting it.
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Old 01-15-2015, 09:46 AM   #88
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Well. . .I did it. It really wasn't all that bad.
That just saved me 40+k/year!
And that's tax free--and will compound. Congratulations! Cha-CHING!
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Old 01-15-2015, 09:56 AM   #89
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Not me. In a situation like this I prefer email. I can take my time when composing the message (and cool down if I am upset). And, I can take my time when reading the response so that I can think and do some research if necessary.

If the FA felt a face to face would have been a more effective way to communicate, there was nothing stopping him/her from suggesting it.
I'm with you. I prefer email as a form of communication, especially if I'm angry or upset. I tend to write pretty inflammatory emails, then as I proofread them I edit them into a more acceptable form. This allows me to vent my spleen without anyone else having to be subjected to it. I tend to put my foot in my mouth verbally.
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Old 01-15-2015, 10:08 AM   #90
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I'm with you. I prefer email as a form of communication, especially if I'm angry or upset. I tend to write pretty inflammatory emails, then as I proofread them I edit them into a more acceptable form. This allows me to vent my spleen without anyone else having to be subjected to it. I tend to put my foot in my mouth verbally.
I personally don't see anything wrong with email, phone call or whatever method you are most comfortable with. After all it is a business relationship and they work for you not the other way around. As harley pointed out better to try to take the high road even when being firm.
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Old 01-15-2015, 10:15 AM   #91
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I thought OP's email was fine, but some people are super-sensitive about the whole all caps thing. They take it as if they are being yelled at, so perhaps a different way of providing emphasis would've worked better without irritating him/her.

No matter. It seemed to me like his/her response had a lot of "how dare you question me?!" underneath it, in which case you're way better off now.
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Old 01-15-2015, 10:38 AM   #92
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Not me. In a situation like this I prefer email. I can take my time when composing the message (and cool down if I am upset). And, I can take my time when reading the response so that I can think and do some research if necessary.

If the FA felt a face to face would have been a more effective way to communicate, there was nothing stopping him/her from suggesting it.
You can't take your time and think through what you want to say before you make a phone call?

I'm NOT defending the FA in this example, his conduct was inappropriate. But if you were a conscientious FA, would you rather have the client try to speak with you directly first (a follow up email with more detail, specifics or just to document the conversation is fine). Or consider whatever your line of work was/is - was direct discussion ever preferable? Undoubtedly you and others will say email is fine, but it's not unreasonable for a professional to prefer starting with the courtesy of direct communication, face to face or phone. Believe me I don't enjoy yakking on the phone, and reasonable people can disagree.
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Old 01-15-2015, 10:55 AM   #93
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You can't take your time and think through what you want to say before you make a phone call?

I'm NOT defending the FA in this example, his conduct was inappropriate. But if you were a conscientious FA, would you rather have the client try to speak with you directly first (a follow up email with more detail, specifics or just to document the conversation is fine). Or consider whatever your line of work was/is - was direct discussion ever preferable? Undoubtedly you and others will say email is fine, but it's not unreasonable for a professional to prefer starting with the courtesy of direct communication, face to face or phone. Believe me I don't enjoy yakking on the phone, and reasonable people can disagree.
I can take my time and think through what I want to say, but I need time to process new information, especially if there is math involved or if someone is trying to spin something.

I prefer email exchanges unless something is extremely time sensitive. I do not believe a phone call is more courteous than an email. Even if it was, I would opt for what I consider to be a more effective form of communication over a (subjective) courtesy, especially when I am the customer and we are dealing with my investments. JMO.
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Old 01-15-2015, 10:57 AM   #94
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You can't take your time and think through what you want to say before you make a phone call?
I can see that a call would be more courteous and personal. OTOH, this is a business relationship, and the FA is going to be ready and waiting to respond to the points made in a call--he's got talking points ready at hand and this is a numbers-heavy discussion. This is his home arena, and I need time to work through the numbers--a fast-paced to-and-fro over the phone isn't going to work for me. But mostly, this type of fact/numbers-oriented exchange cries out for the clarity and deliberate formulation that is best done via written communication..
If, as a customer, my mind is already made up (which was >not< the case in the OP), then an email saves both of us time and hassle. I'm not breaking up with a girlfriend or firing an employee. If I'm looking for an explanation, then an email is fine, with a "please call me at your convenience" at the bottom after all the facts are laid out in the email. At most (if I'm worried about hurt feelings), maybe a heads-up call to the FA ("I had some questions about the performance of my portfolio last year, I'll send you an email with details") would be appropriate, but I don't think it is required in this case. And I would have left out the ALL CAPS.
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Old 01-15-2015, 10:57 AM   #95
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Yeah, your email is completely reasonable and to the point. Citing concrete sources of data is a good way to put objectivity into the discussion.

I think your FA knew he F-ed up and didn't want to spend any more time trying to explain away crappy performance. If there was a legitimate explanation (the benchmarks don't match, for example, and you were more heavily in international investments), he would have given it immediately.

His proper response should have been to get an answer ready, send you an email saying "hey, I took a look at what you're asking about. Let's set up a phone call or in person sit down and go over your numbers. I can see you are very concerned and I want to make sure everything is transparent." In reality, it would come down to admitting high management fees and crappy funds with high fees probably ate away the spread between your performance and the benchmarks.
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Old 01-15-2015, 11:09 AM   #96
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As the customer you are always right. So whatever type of communication method you choose, it's right. If the FA wanted to call you discuss so be it, he choose to inform you via email so he must have been comfortable with that media.

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Old 01-15-2015, 11:11 AM   #97
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I want to see the e-mail you send to yourself next year.
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Old 01-15-2015, 11:31 AM   #98
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I want to see the e-mail you send to yourself next year.


"Dear Financial Advisor:

I noticed you performed excellently this last year. It's as if you read my mind. Although we came up a bit short of the index averages, I still wonder why we bought that stock in Benihaha's.

Let's do better next year.

Happy 2016!

Self"
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Old 01-15-2015, 11:32 AM   #99
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I've been following this thread with great interest. I agree with the consensus view here that the OP is better off without his FA and the FA reacted unprofessionally. True, e-mail communication can--and often is--misinterpreted. Best solution would have been for the FA to pick up the phone and clear the air/answer the question. His failure to do so invites speculation about his motive, I suppose. Bottom line, the client deserves an answer.

There does appear to be a fair amount of antipathy, if not hostility, directed at FAs in general. DW is a CFP (among an alphabet soup of designations) and manages money for high net-worth clients. Her firm does not manage our money as I ascribe to the DIY methods advocated here. However, I've come to understand that a conscientious FA is essential for many, many people. I've asked DW how it is possible for someone to amass an 8-figure NW and not have a basic understanding of asset allocation and portfolio management. She correctly points out that the 2 skill sets are not necessarily linked in any way. She argues that one of the most important services her firm offers clients is the ability to talk clients out of doing stupid things when the market swings. I suspect we all could have benefitted from that sort of service at one time.
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Old 01-15-2015, 11:33 AM   #100
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I want to see the e-mail you send to yourself next year.
Something like...

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