Hired a FA

[davebarnes]

@Jerry1
Do not allow them to trade without your explicit permission for each and every action.

 

[Sunny]

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On a smaller scale, I'm also concerned about DW. I'm concerned (and so is she) about what would happen if I'm not here. This will give her some continuity. It's not likely to happen soon, but one never knows.

This really shouldn’t be overlooked imo. Not saying this is the only reason for us going with a FA, but in a few ways I’m already on borrowed time. Both of my brothers barely made it into their 40s for instance. DW could figure out investments if she wanted to, but the interest to do so just isn’t there.

I sleep a whole lot better at night not only having our FA available when needed, but for continuity for when I’m eventually gone.

 

[ERD50]

I did pay a one time fee for a Financial Analysis which was very helpful but they do not do hourly. ...

In addition to the on-going ~1% fee?

....

On going hand holding may not be necessary, but if they prove their value, I'd probably stick with them. ....

Let us know how it goes as you progress.

.... Not sure how to respond to the members of this forum comment because I'm not sure who "them" is in your comment. My point in saying that members here have been helpful was to thank everyone for their input on my financial life this past year or so. The input of the forum members has helped me understand a lot. That in turn helped me work better with the FA. For example, it is helpful to learn from this group about sequence of returns risk. Then, when the FA brought it up, it was a better conversation plus it was good to see that he brought it up, that he had some understanding of the issue as he handles my portfolio.

As for why do I need them? I need them (the forum members) for some personal interaction and broad based input and education. I need them (the FA) for my specific situation and to handle something I do not want to handle.

On a smaller scale, I'm also concerned about DW. I'm concerned (and so is she) about what would happen if I'm not here. This will give her some continuity. It's not likely to happen soon, but one never knows.

Sorry, by "them", I meant the FA team, not the posters here (I try to avoid the ambiguity of he/it/them, but I still mess up). I only asked because of the way you worded it, that the posters here were 'equally' helpful. Kind of joking, I figured there are other reasons.

So OK, like we have said about many things here, even if one does not want to take a DIY approach for something (anything), it generally helps to get educated so you can approach the pro with good questions, and get the most of your time with them. Sounds good.

And I can understand wanting continuity for DW. Maybe at some point, when it gets static, she can see that it won't take much special knowledge to have a balanced portfolio, and draw what is needed beyond any SS/pension.

Do you feel like you are getting 'flogged' by the posters here? Let us know.

-ERD50

 

[Luck_Club]

Have to post...
Raymond James lost over 5% nearly 10% at the bottom in a 3 month period At the same time my 4 stock concentrated position of XOM, T, Chev, Ed & a treasury was down 2% at the bottom and beat him 5:1 at any given point! Dumped them and it wasn't easy because they provided a logical reasonable understanding during a difficult period.

Your choice not mine. I'd love to find someone to manage my money with the same care and caution I would, but so far, I think they only want the fees.

 

[ERD50]

....
One concept perhaps is to ask the FA for some fund benchmark, so you can match up their performance against the benchmark including the fees.

For me personally - if I were to arrange for an FA to provide continuity for DW, I'd be concerned if they were doing anything other than investing in the broad-based index funds. I don't expect them to 'beat the market', and would be fearful that trying would only put us further behind. I would be paying for the 'hand-holding' (well, not literally!), and the 'sleep-comfortably-factor' (wait! definitely not literally!).

If I'm trying to keep things simple for DW, I sure don't want to ask her to track a portfolio against a benchmark. Then we get into the questions of which benchmark? Risk adjusted? And if they fall behind, she's supposed to do what exactly? bla-blab-bla and on and on. No longer simple.

Decide on an AA, rebalancing strategy, and the initial index funds and be done with it. If you want simple.

-ERD50

 

[Kelor]

I applaud you for hiring an FA. Just as I hire a mechanic, plumber, etc., there are things I don't want to become an expert in. I have no problem paying for services -- even if they are expensive.

I have roughly 25% of my position managed by an RIA firm, 40% managed by me, and 35% in mutual funds. I'm perfectly fine outperforming both the RIA and the Mutual Funds. Though I hope to continue my streak, I anticipate that eventually I will not.

 

[RobbieB]

Good for you and welcome to the club!

My 1% AUM FA guy consistently beats the S&P 500 index funds with hand picked large cap dividend stocks. And I don't worry about the market and just look at the monthly report.

And they send the divis direct to my checking account every month so I can blow that dough -

 

[FI_by_2023]

25% of annual spend is a lot for piece of mind (1/4 of 4% withdrawal rate). I appreciate piece of mind, but would have suggested you work into it rather then all upfront. I am guessing acquaintances did not share their portfolios with you, so it would be going off of their perceptions...

Also, by doing this, be careful not to shift your responsibility of your portfolio to someone else. You have the most interest in your health, parenting, your financial resources, etc. Some things human nature should not delegate...or assume others are more interested in it then you.

Wish you success.

 

[Jerry1]

In addition to the on-going ~1% fee?

Do you feel like you are getting 'flogged' by the posters here? Let us know.

-ERD50

No, the initial engagement was a one time fee but that amount will now be credited toward the first bill based on the percentage of assets.

No, not feeling flogged at all and never actually expected to be. This is a very polite forum. I wouldn’t hang out here otherwise and I’m sure many if not all here feel the same.

 

[Jerry1]

Also, by doing this, be careful not to shift your responsibility of your portfolio to someone else. You have the most interest in your health, parenting, your financial resources, etc. Some things human nature should not delegate...or assume others are more interested in it then you.

Wish you success.

This caution has been mentioned by a few. Point accepted. I’ll remain engaged enough to know exactly what’s going on. Thanks.

 

[flintnational]

This caution has been mentioned by a few. Point accepted. I’ll remain engaged enough to know exactly what’s going on. Thanks.

35 posts in. I would have thought you would have changed your evil ways and begged for forgiveness by now.

 

[audreyh1]

So this is why you are giving up your Fidelity account and dropping your Fidelity 2% rewards VISA card?

 

[HI Bill]

Best luck with your FA! I'm hoping that for 1%, they'll manage your portfolio well, as well as your taxes and distributions. I'd hope that they prepare up a detailed retirement plan outlining their tax and investment strategy that they're planning to implement for you. If they haven't offered, I'd ask them to! Just because you don't want to manage your investments, I would be hesitant to let them work without a solid plan and a little knowledge of their actions.

In my pre-retirment last 3 years, I've been having Vanguard prepare a retirement plan for me annually.

FAs for people with smaller accounts often don't do those folks justice, as was the case of my mom's FA who was paid by Oppenheimer.

 

[Jerry1]

So this is why you are giving up your Fidelity account and dropping your Fidelity 2% rewards VISA card?

Yes.

 

[haha]

While I do not care what anyone does with his/her money, 1% is really a big bite. Since I own my home outright, 1% of my portfolio would be very similar to what I spend on all the rest of my life.

I think I would just spend a day reading and deciding what broad low cost equity funds I wanted, and the rest would be Bills up to 1 year. When interest rates get absurdly high again, I would put some of the bills into govt bonds.

Definitely not the best system, but pretty good and likely better net than paying an FA, who may do something very similar anyway.

Ha

 

[RobbieB]

I just don't see it that way at all. My guy makes me more dough than the S&P 500 index including paying his fee. Plus the big dividends to blow.

 

[Chuckanut]

One simple strategy that seems to work is put it all into Wellesly Income fund. Get a check for the dividends every quarter and reinvest the gains (hopefully gains will be the usual result).

 

[Jerry1]

I just don't see it that way at all. My guy makes me more dough than the S&P 500 index including paying his fee. Plus the big dividends to blow.

I hope that’s the case. It was mentioned in another post and I would like to make sure I have some reasonable benchmark to evaluate him on. The S&P would not be a good fit given the conservatism built into my plan. I’ll need something that is closer to a 40% equity 60% bond index. Did I say I was conservative (i.e. very afraid of sequence risk right now). I expect my equity percentage to increase over time.

 

[Choices]

We used an FA to look over our stuff at about 5 years out. He said we were the “millionaires next door”. The guy taught finance at the local U. He explained that he was a fiduciary and would not sell us anything. Loved him! Lots of graphs and charts. Kinda expensive but worth his hourly rate.
My experience with RJ was that their rep had nice shoes. I can see those shiny loafers to this day. RJ handled our 401k at “ the firm”.
We just bump along on our own now and pull monthly reports that we ponder and then file. Working great.

 

[Franklin]

well Jerry, good for you.....i admire your honesty. Ive taken half my nut and invested it myself and the other half is with Merrill. I track my results verses Merrill. ML knows what I have outside of their grasp and tries to balance me out. They do give me just about any service I ask (my main account is with BofA and they are one and the same). But, my Jury is still out on whether I am getting my 1% worth. Hey, with your egg its worth a try!! BTY, they make their own purchases based upon my moderately conservative rating.

 

[VanWinkle]

I hope that’s the case. It was mentioned in another post and I would like to make sure I have some reasonable benchmark to evaluate him on. The S&P would not be a good fit given the conservatism built into my plan. I’ll need something that is closer to a 40% equity 60% bond index. Did I say I was conservative (i.e. very afraid of sequence risk right now). I expect my equity percentage to increase over time.

Wellesley Income(VWIAX) would be a good benchmark for a 40/60 portfolio.

 

[Hermit]

While I do not care what anyone does with his/her money, 1% is really a big bite. Since I own my home outright, 1% of my portfolio would be very similar to what I spend on all the rest of my life.

I think I would just spend a day reading and deciding what broad low cost equity funds I wanted, and the rest would be Bills up to 1 year. When interest rates get absurdly high again, I would put some of the bills into govt bonds.

Definitely not the best system, but pretty good and likely better net than paying an FA, who may do something very similar anyway.

Ha

Jerry and Robbie have a much better chance of getting a Christmas Card from an FA than you.

 

[VanWinkle]

Returns are 0.03% (1-year), 4.98% (3-year), 5.33% (5-year), and 8.46% (10-year). In times when inflation remains low, you're at least keeping slightly ahead of inflation, but if inflation ever rares its head and rises above 5%, this fund will likely not help your money maintain it's purchasing power, IMHO. It has an (IMHO) overly conservative 60.29% bonds and 37.64% stocks, which given bond returns of late, is insufficient to do much. And 2.07% in short-term reserves. It also holds only 72 stocks, so is not very diversified, compared even to the S&P500. It does hold 1033 bonds.

If this is in a taxable account, returns after taxes are 2.49%, ITD, and 2.38% for 10-year. Definitely NOT keeping up with inflation.

Just my 2 cents.

Most people that have the fund are thinking defensively with the 2008 return of -9.84%. It won't keep up with the Total Stock Market Indexes in the good times or bad (-36.99 in 2008 for VTSAX)

It is not a magic fund, but if you want part of your money in a balanced fund, this is a well managed fund.

Not recommended for a taxable account for sure.

This is an unusual year for bonds, so the recent returns are not great.
Foreign Indexes look bad this year too, but the TAX Loss harvesting has been one advantage.

VW

 

[HI Bill]

Most people that have the fund are thinking defensively with the 2008 return of -9.84%. It won't keep up with the Total Stock Market Indexes in the good times or bad (-36.99 in 2008 for VTSAX)

It is not a magic fund, but if you want part of your money in a balanced fund, this is a well managed fund.

Not recommended for a taxable account for sure.

This is an unusual year for bonds, so the recent returns are not great.
Foreign Indexes look bad this year too, but the TAX Loss harvesting has been one advantage.

VW

Thanks...sorry, I deleted my post as some of the numbers quoted above are inaccurate.

 

[38Chevy454]

Jerry and Robbie have a much better chance of getting a Christmas Card from an FA than you.

Can buy a whole lot of Christmas cards for 1% AUM fee.