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My Broker's Recommendations
Old 08-20-2018, 06:04 PM   #1
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My Broker's Recommendations

In my role as a registered professional guardian, I am responsible for the assets of my incapacitated clients. Most of them have more money than I will ever have. Recognizing that I am not real smart regarding money, the clients investments are managed by a financial adviser. While meeting with him today regarding client matters, I had him look at my plan to FIRE on 11/1/22. That plan is at T Minus 4 years
He feels I'm solid but he suggests some small changes to my modest portfolio. I'm not sure I agree with him despite his knowledge versus mine.

He recommends I get rid of my S&P 500 index fund, the Schwab 1000 index fund, and a health care fund. He suggests I put that money into the Rational Dividend Capture Fund (HDCAX) Some of my concerns are the front load of 4.75% and the expense ratio of 1.64%. By comparison the S&P 500 index fund where most of my money is at has no front or back load and the expense ratio is only 0.03%

He does recommend I hang on to my International Index fund.

He also recommends I switch my Putnam Growth and Opportunities holdings for the Putnam Absolute Return 700 Multi-Strategies fund. I have no feeling regarding that one way or the other. I'm too ignorant to know which is better.

So what say you all? Do I follow the broker's advice?

I can tell you that in the 10+ years he's been managing my clients money he has always been conservative. He'd rather preserve the money even if it has meant allowing gains to pass by as the market has performed well.
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Old 08-20-2018, 06:13 PM   #2
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I would say that you have aligned yourself with a first-rate thief who is accomplished at converting his clients money into his commissions.


It is obvious why he would like a 4.75% cut up front, because the performance of that fund really stinks! I am sure that he would have something else that he would recommend in a year that you could churn your money into.
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Old 08-20-2018, 06:15 PM   #3
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He would be robbing you blind. If this is what he invests your clients' money in, he is robbing them blind as well. I am appalled at what I read. There are many very inexpensive ways of achieving the same or similar results.

You say you are "not real smart regarding money..." It's your job to be smart about money, to protect your clients. I am sorry to say this, but if you do not understand why this is robbery, you should not be responsible for other people's money. Please, do some basic reading and research to improve your investing knowledge so no one can take advantage of you or your clients.
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Old 08-20-2018, 06:25 PM   #4
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These are not products he has any of my clients money invested in. Right now he's keeping the lion's share of client investments in CD's.
He doesn't make a dime from my personal investments as I don't go through him. My little bit of dabbling has been on my own without a broker. Nonetheless, obviously the brokerage house would be getting that money from me.
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Old 08-20-2018, 06:30 PM   #5
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Holy s#!t!!!!! Run, and take very cent with you. What a slime ball.

And what Another Reader said. Wake the hell up. You are a danger to the people counting on you. Get good at what you do, or do something else for God's sake.

Okay, I exhaled. FA's that are both honest and competent are "rare as baptized rattlesnakes." Go read JLClollins blog. That's about all you need.
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Old 08-20-2018, 06:37 PM   #6
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I'll take the client's portfolios to be looked over by a couple of other FA's to get their take, but they may be just a different denomination of rattlesnake.

Although the clients investments are first presented to me they go through an attorney and are presented to a judge for approval before any action is taken. Obviously those safeguards may not be enough.

You guys have made it crystal clear though that I should listen to my gut to stay the course I'm on rather than to take the broker's recommendations regarding my measly personal funds.
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Old 08-20-2018, 06:52 PM   #7
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IMO, you should only consider using a fee only FA that is a fiduciary. Here is an article by Clark Howard discussing this topic. Ideally the FA should invest in low cost index funds similar to those offered at Vanguard, Fidelity or Schwab.
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Old 08-20-2018, 07:08 PM   #8
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A proper fiduciary should examine and consider the needs of the specific client. The needs of a 95 year old in a nursing home are very different than those of a disabled 12 year old. In your shoes, I would look for a true fiduciary with a strong track record of putting the client first and of managing trusts and similar accounts. That individual and their company should be presented to the court(s) as the best fiduciary for the needs of a broad client base.
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Old 08-20-2018, 07:18 PM   #9
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This must be a joke. The OP is goofing on us. Nobody would sell the S&P index fund for the Rational Dividend Capture Fund. I am stunned and angered a FA would make such a suggestion.
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Old 08-20-2018, 07:30 PM   #10
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Old 08-20-2018, 07:41 PM   #11
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So what you got from the FA is the free advice that you asked for, and it's worth what you paid for it. (As is everything you read in this thread.)

As you say, he's not going to make any money off of you, so how much thought did he put into the recommendation? It seems from the fund names that he may be steering you towards an income portfolio instead of a growth portfolio. These are probably the products he's most familiar with and what he recommends to his other clients who may be in a different phase of life and have different goals and financial resources than you do. I wouldn't follow these recommendations, except possibly to get rid of the health care fund.

I don't think you should move your own money under his care, even if you decide to take his recommendations for some reason. That sounds like a conflict of interest since it would then be hard for you to recommend removing him from managing your clients' funds if it came to that.
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Old 08-20-2018, 08:43 PM   #12
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These type of crooks should be jailed. Seriously, who pays a FE load in 2018? The 1980s are over.

It's sad these type of products still exist. In the 80s there was some reasons for part of a load to exist. Today it's nothing but a rip off of the consumer.
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Old 08-20-2018, 09:01 PM   #13
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Quote:
Originally Posted by firemediceric View Post
Right now he's keeping the lion's share of client investments in CD's [sic].
Awful.
Lots of better paying, capital preservation investments.
Not only is this guy a thief, he is also an idiot.
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Old 08-20-2018, 09:06 PM   #14
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RUN DON'T WALK! Do you want to partner? Seriously I think all of us on this forum can provide better thoughtful advice for you and your incapacitated clients.

I would love to help personally.

My expense ratio (Management fee for self managing like most on this forum) is currently .069% and will be lower when Vanguard eliminates some of my ETF fees to compete with other firms.

I have no front load fees and that includes all transactional costs for the year! I am up 19% this year on my returns, you can do better. Stick around here, hit the books and learn the best approach.

I personally use an Asset Allocation approach and rebalance. Everyones mileage will vary.
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FIRE in 2031 @ 50yrs old (+/- 2yrs) w/ a hypothetical $2.5mil portfolio, 3 appreciated homes worth $1.0mil and rental income to fund my gap years until RMD. Assets will go to an inherited IRA where I plan on watching the investments grow until I die or the trust gets executed.
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Old 08-20-2018, 09:12 PM   #15
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There are like 60 starred users here saying if it looks like it and smells like it, it is.

This is a ton of experience weighing in btw...welcome!
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AA (Stock/Bond/Cash ): 99/0/1% MIX (Small/Mid/Large): 50/25/25% BLEND(US/Foreign): 100/0%, REIT (Real Estate Equity): 50% of Assets

FIRE in 2031 @ 50yrs old (+/- 2yrs) w/ a hypothetical $2.5mil portfolio, 3 appreciated homes worth $1.0mil and rental income to fund my gap years until RMD. Assets will go to an inherited IRA where I plan on watching the investments grow until I die or the trust gets executed.
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Old 08-20-2018, 10:39 PM   #16
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Dump the crook like a hot rock!
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Old 08-20-2018, 10:45 PM   #17
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+1 that fund has a horrible track record compared to VFINX.

https://www.portfoliovisualizer.com/...ocation2_2=100
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Old 08-21-2018, 05:24 AM   #18
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Are you not a firefighter/paramedic? Is being a registered professional guardian a side gig? What credentials and experience are needed for that and where do the clients come from? Who picks the self-serving FA? I’m confused and hope I never need this service. But sure, help the nice FA out (or “my broker” as you call him, so you must already have a relationship with him) and let him enjoy your money too.
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Old 08-21-2018, 05:39 AM   #19
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Quote:
Originally Posted by firemediceric View Post
I'll take the client's portfolios to be looked over by a couple of other FA's to get their take, but they may be just a different denomination of rattlesnake.

Although the clients investments are first presented to me they go through an attorney and are presented to a judge for approval before any action is taken. Obviously those safeguards may not be enough.

You guys have made it crystal clear though that I should listen to my gut to stay the course I'm on rather than to take the broker's recommendations regarding my measly personal funds.
I am very shocked that an FA wants you to buy a product he will certainly benefit from. Actually, no I'm not.
Since you have no signed agreement, he will throw you a bone with string attached.
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Old 08-21-2018, 06:54 AM   #20
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I had to read the original post a third time, I still can't believe it. How sad for the incapacitated clients.
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