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Thoughts on Fees ??
Old 11-21-2017, 09:38 PM   #1
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Thoughts on Fees ??

We are into our 4th year of retirement, have rolled our 401k into IRA's with Fidelity Investments ......

While we worked I always picked our funds from the cafeteria that was available and now 30 years later we I find myself not very educated, as well as I wonder if I should be paying Fidelity (Private Client Group) extra to manage our IRA's

Your Thoughts .......
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Old 11-21-2017, 09:52 PM   #2
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I feel like this roller coaster is ready to depart the station again!

Check out the Another Financial Advisor Question thread that is flaming away currently.
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Old 11-22-2017, 04:37 AM   #3
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Educate yourself to manage your $ and keep the fee in your pocket.
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Old 11-22-2017, 06:32 AM   #4
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It depends. If you never had interest in becoming a do-it-yourself investor, it is unlikely you would now.

Choosing lowest cost advisor is not a bad idea:
- Vanguard PAS service costs 0.3% of assets
- Robo Advisors (such as Schwab Intel Portfolio) are available for no cost
- Robo Advisors (such as fidelity Go) are available at cost
- Set and Forget simple portfolios like 2-fund or 3-fund available

So...choose whichever method works best for your time/energy/emotions.
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Old 11-22-2017, 06:46 AM   #5
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Originally Posted by LakeRat1 View Post
While we worked I always picked our funds from the cafeteria that was available and now 30 years later we I find myself not very educated, as well as I wonder if I should be paying Fidelity (Private Client Group) extra to manage our IRA's
It sounds like some of your investments are under asset management. Is that correct?

Picking from a cafeteria now sounds like a good idea. First, you need to establish what you have. Take various accounts, list each fund or investment within each area. Identify the category for each investment. Then make calculations to find present allocation percentage of each fund.

Do you have a spreadsheet program? Familiar with its use? If so, it is worth your time to make an analysis of what you have invested, in cash, etc.
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Old 11-22-2017, 07:00 AM   #6
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Once your total fees are under about 0.08% of your total portfolio value including the underlying expense ratios of your investments, the fees you pay to any advisor, the fees for commissions, etc, then it really doesn't matter what you do.
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Old 11-22-2017, 08:31 AM   #7
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Once your total fees are under about 0.08% of your total portfolio value including the underlying expense ratios of your investments, the fees you pay to any advisor, the fees for commissions, etc, then it really doesn't matter what you do.
+1
You won't get an advisor at .08

Going forward the consensus is about 4% real for the next 10 years. Those that give up 1% to fees are giving up 25% of their living withdrawals.

The less you pay, the more you keep. A simple 3 fund portfolio of a US total stock fund, a Foreign Stock fund, and an intermediate term total bond fund will beat 87% of the portfolios out there. If you want to be in the 13% that outperform, it is never the same fund each year, good luck.

VW

p.s. I do mix in a little Wellesley Income fund(active) just for fun.
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Old 11-22-2017, 08:43 AM   #8
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I sat in a Fidelity pitch on Private Client. Very expensive and they loved expensive managed funds. I thought all the fees made it almost 2%!
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Old 11-22-2017, 08:47 AM   #9
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Why didnít anyone mention a fee only advisor. Flat rate per hour for a few hours maybe every other year if all you are doing is picking stocks and getting a gut check.

Assuming you can manage SWR and weather market fluctuations without panic selling.
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Old 11-22-2017, 09:21 AM   #10
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No matter what you do, you should track the performance of your portfolio against a benchmark. Otherwise, you will not know how you are doing and whether you are falling way behind something simpler and less expensive.
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Old 11-22-2017, 09:30 AM   #11
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Why didnít anyone mention a fee only advisor. Flat rate per hour for a few hours maybe every other year if all you are doing is picking stocks and getting a gut check.

Assuming you can manage SWR and weather market fluctuations without panic selling.
This is a good idea too..
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Old 11-22-2017, 09:41 AM   #12
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Originally Posted by Clone View Post
I feel like this roller coaster is ready to depart the station again!

Check out the Another Financial Advisor Question thread that is flaming away currently.
+1 on this other thread....

Basic info on this...

Most people on this board do not think a FA is worth the money...

Most people on this board are smarter than the avg person and can handle their own affairs with some outside help...

Some people think they do not know enough about investing and other aspects of finance that a FA is well worth the money...

The question is where do you fall?


As someone else said, I would go fee based if I thought I needed help... get the help and be done... I just do not think that I need any, but I have a finance background...
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Old 11-22-2017, 11:59 AM   #13
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Most people on this board do not think a FA is worth the money...

Most people on this board are smarter than the avg person and can handle their own affairs with some outside help...

Some people think they do not know enough about investing and other aspects of finance that a FA is well worth the money...
The paradox with finding a good Financial Advisor is this-

If you know enough to be able to identify a good advisor from a bad advisor, then you probably can do it yourself.

If you don't know enough about the market to do it yourself, then you will be challenged to figure out if you have found a good FA or if you are going to get fleeced. It is kinda like sitting down at a poker table with a couple folks who are willing to teach you how to play.

In my corporate 401K account, I have about 30 funds that I can pick from. Here are the three that are usually the basis of a 'three fund portfolio':

S&P 500 Stock Index
Int'l Stock Index
US Bond Index

If you want similar funds from the retail side of Fidelity, these would work:

FSTVX (total market) or FUSVX (S&P 500)
FTIPX (International exUSA)
FSITX (Bonds)

Here is an article that talks about three fund portfolios. You need to figure out what asset allocation makes sense for you. If you want someone to tell you where to start, then use this:

50% FUSVX, 10% FTIPX, 40% FSITX
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Old 11-22-2017, 01:15 PM   #14
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Originally Posted by Clone View Post
The paradox with finding a good Financial Advisor is this-

If you know enough to be able to identify a good advisor from a bad advisor, then you probably can do it yourself.
That view is expressed so frequently on the forum that it needs its own name. How about...

The financial advisor quality paradox (FAQP)?
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Old 11-22-2017, 01:31 PM   #15
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This is a post I made to a similar question here. I don't know your fee particulars, so this is not exactly right, but the concept is the same. It shows how fees can dramatically affect your spending. It helps explain why most here recommend you manage your own money.

"IMO, fund and management expenses tend to get lost when compared to total returns (particularly in an up market). Here is another way to look at the expenses.

Current structure

Annual management fee 1.8%
Fund fees .5% (I used the low estimate from other posters)
Total annual costs 2.3%

If you are using a firecalc type SWR strategy of about 4% annually, these expenses have to be subtracted. So you are left with 1.7% to spend (4% - 2.3%).

OTOH, if you build a 2 fund portfolio with Vanguard total stock market index admiral shares (VTSAX .04% expense ratio) and Vanguard total bond market index admiral shares (VBTLX .05% expense ratio) your blended expense ratio will be around .045%. This would leave you 3.955% to spend (4% - .045%).

Summary: Current WR less expenses 2.3%
Vanguard WR less expenses 3.955%

The Vanguard structure would increase your net WR by 71% "
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Old 11-22-2017, 01:44 PM   #16
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Rather than focusing on %, always calculate the amount of dollars you are paying, both in the fund picker and the funds themselves. Don't forget to include trading fees too.

When I took over MILs portfolio, it was the actual money that got her. It was not worth the lunch and plant at Christmas. I told her that I would gladly take her out and not charge her.

I did charge her to manage it but my fee was less that 30% of what she had been paying. And I gave her a one page statement of how she did in the year, showing my fee. That was a big improvement over the ton of paper that she was getting.
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Old 11-22-2017, 02:45 PM   #17
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Originally Posted by flintnational View Post

...
Current structure

Annual management fee 1.8%
...
Who actually charges 1.8%? I know you said it wasn't the OP's actual number, but shouldn't it be a realistic one? The case against management fees doesn't need to be inflated.
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Old 11-22-2017, 04:05 PM   #18
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Who actually charges 1.8%? I know you said it wasn't the OP's actual number, but shouldn't it be a realistic one? The case against management fees doesn't need to be inflated.
Example only. This was from a previous thread where the OP was paying the numbers I listed. Follow the link for details. IIRC, it was an annuity with mutual fund sub-accounts. This poster is considering a FA. Many advisors charge 1% plus fund fees. This could get the OP to 1.5% to 2% if they are not careful.
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Old 11-22-2017, 04:32 PM   #19
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Originally Posted by flintnational View Post
Example only. This was from a previous thread where the OP was paying the numbers I listed. Follow the link for details. IIRC, it was an annuity with mutual fund sub-accounts. This poster is considering a FA. Many advisors charge 1% plus fund fees. This could get the OP to 1.5% to 2% if they are not careful.
Wow, so they did pay an 1.8% annual fee, in that other thread. That's so hideous I thought you must've made it up. My apologies.
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Old 11-22-2017, 04:37 PM   #20
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I think the 1.8% in the other thread was a 1% account level AUM fee + an estimated 0.8% fund expenses.... vs DIY of less than 0.2%.
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