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Old 01-15-2015, 11:43 AM   #101
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Congratulations - and I think you're significantly underestimating your annual savings.
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Old 01-15-2015, 12:11 PM   #102
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I had a broadly diversified portfolio, 53% equities, with 47% fixed income mostly in intermediate bond funds although I do have 5% in cash and 5% in short-term bonds. Equities are diversified among US large, mid, and small-cap, international large and small, and REITs. Our portfolio gained 5.1% in 2015. I underperformed portfolios that were more focused on US large caps, as many balanced funds and popular funds are. That does not bother me, because some years I outperform the popular funds because US large lags.

I think that is a good measure of a well-diversified portfolio with a lower equity exposure than yours, that still outperformed what your FA invested in, and so I think you are right to question his 0.5% annual cost to your portfolio.

I don't think you should expect to have made 7% without being concentrated in US large. But 4% is definitely lagging.
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Old 01-15-2015, 01:22 PM   #103
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We made 4% in 100% equities, but have half the portfolio in international. the 4% figure for OP isn't a bad number on its own. Maybe there is a reason.
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Old 01-15-2015, 01:46 PM   #104
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....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 owedyou a couple hours of discussion.....
I think the difference was that clifp's money manager knew why and could explain it and was professional whereas the OPs money manager is probably clueless as to why the OPs portfolio underpreformed.
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Old 01-15-2015, 02:50 PM   #105
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I think the difference was that clifp's money manager knew why and could explain it and was professional whereas the OPs money manager is probably clueless as to why the OPs portfolio underpreformed.
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Old 01-15-2015, 02:55 PM   #106
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Our portfolio gained 5.1% in 2015.
I am in complete awe at your predictive abilities.

Pray tell, what were the best investments in 2015?
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Old 01-15-2015, 03:53 PM   #107
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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.

I agree with this 100% as this is my experience as a CFP as well.


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Old 01-16-2015, 01:00 PM   #108
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My guess is your account was too small to matter. If you had tens of millions with him, he would have kissed your azz.
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Actually, I had more than that with him.
Wow. I'm surprised that anyone would kiss an account that big "goodbye" over an email, regardless of the contents.

But judging from the structure of the portfolio you posted, you can now substantially pare that down, save yourself a ton of money, and realize much better results if you're willing to ask yourself (and answer) the same question you posed in your email.
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Old 01-17-2015, 04:57 AM   #109
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"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"
THIS has the makings of a great annual thread: Post Your "January Letter to Myself"
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Old 01-17-2015, 07:21 AM   #110
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A lot of people here advocate Vanguard Wellesly or Wellington. They made 8% and 9.8% respectively last year despite their fees.

Your FA did you a favor.
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Old 01-17-2015, 10:19 AM   #111
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He wrote this to you: "tone" of my email was "unprofessional, condescending and disrespectful." He said that apparently I had taken a "adversarial approach to our engagement". Then he dumps you, in an email, no less! Wow!

Then you get quite embarrassed & write him a very apologetic response. You were second guessing yourself. He really missed an opportunity to finesse you, it seems. I would have been immediately upset at his total lack of professionalism. My FA positively groveled when I let him go. (Not that I consider that professional either.)

I am glad you posted this situation. You will get the support you need to make your own way. You're fortunate to be rid of this FA, who sounds like a shyster to me.
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Old 01-17-2015, 10:34 AM   #112
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One should keep emotions out of investing as much as possible. Having a relationship with an advisor is fraught with emotions.

That's what I like about DIY. You just look in the mirror and resolve to do it better the next year.
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So I guess I accidentally fired my FA yesterday....
Old 01-18-2015, 02:18 AM   #113
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So I guess I accidentally fired my FA yesterday....

VTSAX ER .05%
VTIAX ER .14%
VBTLX ER .08%

That's about $710 per million on a 60/40 AA - or an average ER of .071% (I used 50% total stock, 10% international, 40% total bond. Not a recommendation - just easier mental math).

Call Vanguard, set up account ( they're great), transfer funds ( expect transfer fees), cc copies of your email and the FAs response to any superior or partners he may have. They may not be happy with him. You may well be doing someone else a favor.

Keep in mind that .5% fee equates, over 25 years, to 12.5% of your returns being given to the FA. Hopefully you checked for FINRA complaints against the FA before you signed with him. Any signs of real possible misdeeds a FINRA complaint is an option. Any FINRA complaints can be checked online, and if one shows up on an FAs name, it's a big problem for me. The report will also mention of the complaint was found to be in the FAs favor or the investor's. I'm nasty. Helping DW get her inherited IRA moved, I mentioned FINRA (knowing the guy had 3 complaints, one found against him) on his record. He visibly paled. He had done nothing wrong with MILs accounts, but he was an arrogant type. Much like me lol. We not only ended up transferring the inherited accounts out his hands, but DW had considered staying with him and having him manage her accounts. She deferred to my ( strong) suggestion though and the FA - and his boss - watched a million dollar plus account slip through their fingers. Wonder if he still works there?

Anyway, Vanguard does have other options such as the Wellington and Wellesly blended funds, and you may prefer an actively managed bond fund. Some people do. They also have some nice muni bond accounts. We live in Ohio, and there is a muni fund for Ohio which offers tax exemptions. VG is really good being patient and discussing options. They'll even do a first time free analysis of your assets and suggest allocations, if you want. But it's hard to beat the big 3 lol.

Good luck


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So I guess I accidentally fired my FA yesterday....
Old 01-18-2015, 02:33 AM   #114
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So I guess I accidentally fired my FA yesterday....

And be thankful your former FA did you such a huge favor. I'd send him flowers - delivered to his office - (after the transfer of course) with a heart felt thank you note attached.

Hmmm...might even explain why I was thankful, written in large letters, and hoped the delivery man left the flowers somewhere his other clients could see.

"THANK YOU FOR YOUR ENCOURAGEMENT IN TRANSFERRING MY ENTIRE PORTFOLIO TO VANGUARD. THE TREMENDOUSLY LOWER ER AND SUPERIOR RETURNS ARE WONDERFUL."

Told you I was nasty...


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Old 01-18-2015, 02:54 AM   #115
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good... about time!
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Old 01-18-2015, 10:48 AM   #116
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Lots of great and thoughtful replies.

Reminded me of a discussion I stumbled into with a long term stock broker (the early full service by phone days) ....turns out he had long been very angry about not being able to shop at military PX system on a local military base ...I had been retired from the military for several years and thus asked him why he felt it was something he needed to do so badly ...it got increasingly heated and finally he said he believed the military had always had it soft ...I simply said, "OK, got it ..."

I considered the situation to ensure I wasn't overreacting ...about a week ...then I recreated the discussion as best I could remember, wrote it out carefully and sent it to his account manager, the office director and several levels of his brokerage company ...with directions to close my account and forward the balance to etc.

So, my advice is GET EVEN ...YOU are the customer ...his job is to service your needs. Write letters, include I is exact communication in them ...you need to include your communication to him so the story is complete.

GET EVEN.

Then smile and be happy you can now start afresh and do it yourself perhaps. Good opportunity to learn in The Era of the Internet.


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Old 01-18-2015, 11:18 AM   #117
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...
So, my advice is GET EVEN ...YOU are the customer ...his job is to service your needs. Write letters, include I is exact communication in them ...you need to include your communication to him so the story is complete.

GET EVEN.

Then smile and be happy you can now start afresh and do it yourself perhaps. Good opportunity to learn in The Era of the Internet.
Before he get's even, he should get out.

I would then consider a letter to the firm that proposes to raise the ethical standards of the FA. My own style is to just vote with my feet.
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Old 01-18-2015, 12:42 PM   #118
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So I guess I accidentally fired my FA yesterday....

My biggest concern is there is something he doesn't want you to know. If there are transfer fees, investigate them closely. I'd also take care of the situation quickly, and not leave the funds in his hands any longer than necessary. The guy may be above board, but then again... Don't give him time to mess with anything. Be polite, express sorrow he doesn't want you for a client any longer, get your money out, then the email to his boss and the flowers.


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Old 01-18-2015, 02:08 PM   #119
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Another problem with getting even. The FA has much of your financial info. Could be a security risk especially if he grows to hate you.

Once we were doing a new car buy and the financial guy at Honda was a complete ass -- probably because we were paying cash. I won't go into what he said. But I didn't report him because he had our financials.
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Old 01-20-2015, 07:55 AM   #120
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Sure, always a concern, but there will be such an audit trail, if the FA were to do anything illegal, you are very likely to become wealthy during the negotiations with their attorneys.


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