Fisher Investments?

[Bikerdude]

I'll never forget Ken Fisher saying in a Forbes column in early 2008 that there was NO CREDIT CRISIS! And to load up on stocks!

Guess he got that wrong.

I've bought a few stocks from his recommendations in Forbes (not alot of $$) and none of them has been a good investment.

Stay away from them.

Exactly! Fisher got killed in the financial collapse and so did his investors minus an additional 1.5%.

 

[Bikerdude]

I believe Fisher has a 'one size fits all' portfolio of 80% equities. How's that allocation when you're 80?

 

[Rustward]

I see little evidence here than anyone here "hates" financial advisors. What I do see is a belief that a FA is usually an unnecessary expense standing between us and FIRE.

Maybe that is your observation, but there seems to be an awful lot of effort spent here trashing them. Is this accomplishing anything? Well, at least we know what some of us do all day. Why not just ignore the subject?

 

[FUEGO]

My former boss (company's CEO) was suckered into thinking Fisher Investments was awesome. I sat on the investment management committee for our employee stock ownership plan where we managed a smallish seven figure investment portfolio of mostly equities (generally held in mutual funds during my tenure). The guy from Fisher drove down from the other side of the state to meet with us. I can echo the comments by many others here - light on details, unable to show any good actual performance results, provide references, describe with particularity their strategy, compare their results with similarly risky and similarly allocated portfolios, etc. His performance was so poor, I don't think he could sell to a 90 year old widow, let alone our investment committee. Even my idiot boss didn't fall for his crap. And he falls for every sucker that cold calls him (I wish I was exaggerating!). I remember hearing a lot of buzz words, and I think they had some kind of superduper awesome system (the "Vortex" or "Whirlwind" or something??) that was supposed to produce more return with less risk and limited downside potential. Always a good indicator of BS or outright fraud.

Unfortunately right after I resigned from the employer, they went with a similar investment manager from a local bank. 1.75% fee for managing what was basically a S&P 100 basket of stocks, minus the bad ones ( ). 4 more years till I get the rest of my money from these fools. 4 more years. Just 4 more years...

By the way, I think rayvt is suffering a little cognitive dissonance here. Not liking what he's hearing because it just may be true partly or wholly.

 

[REWahoo]

Why not just ignore the subject?

Are you saying we shouldn't respond to the OP's question? That would be rude...

 

[rayvt]

Ha! I guarantee that Fisher doesn't use the same strategies for my money he manages as I use in my money I manage myself. And Fidelity Contra uses a completely different strategy in the money they manage.

In any case, a 1.25% fee for managing an equity portfolio is not out of line. Sure, it's more than the 0.1% than the index funds cost, but it's not outrageous.

And, um, everybody got crushed in the financial collapse. In the words of Jim Cramer, anybody who says he didn't is a liar. Heck, the S&P lost 50%.

I believe Fisher has a 'one size fits all' portfolio of 80% equities.

In this you are wrong. This is what I remarked upon in my first post in this thread -- people spouting false information about Fisher. If you don't like them, fine, but throwing around completely incorrect information just reflects poorly on you.

Actually, Fisher will allocate your portfolio with them however you want. Mine is 100% equities, because, hell, why should I pay somebody 1.25% to invest in bonds that are only paying a little more? Fixed income is easy -- just buy BND and IEF and sit on them.
About once a year I get a call from them expressing concern that my account with them is 100% equities. I assure them that they are only seeing a part of my overall portfolio, and that I have plenty of assets in other classes, that the money I have with them is for them to invest in stocks. They always (low key, BTW) ask if I would consider letting them manage all my portfolio, and I always decline.

Youse guys are still not getting my point. No one strategy is guaranteed to be best. All those folks who did buy-and-hold of an S&P500 index fund got that lesson rubbed in their face. And as clever as we all think we are, never forget that you might be wrong, and the super-duper strategy that you think is the cat's meow might just be headed for the ditch.

That's why it's good to have some portion of your investments managed by different people, using different strategies. Risk mitigation.

Na, not cognitive dissonance on my part. I'm not using Fisher because I bought the BS and thinks they walk on water, or that they have some super crystal ball. I'm using them to guard asainst the off chance that my own investment strategies go pear-shaped. Wall Street is littered with the bones of those who "knew" that their strategy was a sure-fired one, and is littered with the bodies of people who misunderstood the risks they were taking on. I small fee on part of my total portfolio is a small price to pay to help ensure that I won't be one of them.

 

[Sarah in SC]

Maybe that is your observation, but there seems to be an awful lot of effort spent here trashing them. Is this accomplishing anything? Well, at least we know what some of us do all day. Why not just ignore the subject?

Rust, I've given up on old Ray, but can I try you instead? What I do all day is financial planning. But I still think that the DIYers around here are ok. And even managed to hold on to my high opinion of myself despite the occasional broad brush of ill will that some of my less credentialed and less scrupulous brethren rightfully deserve. Like say, Fisher.

 

[Nords]

There's a time & place for hating "financial advisors", but that time & place isn't "all the time & everywhere."

Only the ones who charge more than Rick Ferri. Maybe you could ask him or Jeff Rose or Eric Haas* for their opinions on Fisher's management.

Now if you can show me someone who's outperformed (after fees, trading costs, and taxes) for 20+ years then I'd be willing to go as high as 0.50%. But one of those guys is Buffett, and he manages my money for just the cost of buying shares of Berkshire Hathaway.

* [Trivia question: Besides being cheap fee-only financial advisors and guys, can you guess what other qualification these three share?]

 

[FinanceDude]

Oh please.
I see little evidence here than anyone here "hates" financial advisors.

Well there are a few, but I won't name names........

 

[youbet]

I don't think it is a matter of "hating" financial advisors. It's a matter of chosing a FA-Free lifestyle and not wanting constant reminders from friends, family, the FA industry and others that you're not chosing the traditional path and need to get on board.

 

[FUEGO]

In any case, a 1.25% fee for managing an equity portfolio is not out of line. Sure, it's more than the 0.1% than the index funds cost, but it's not outrageous.

12.5 times more expensive doesn't seem outrageous to you?

To be fair, I am paying closer to 0.20% in my indexed portfolio, but I'm captive to my crappy 401k for a small part of the portfolio and I'm getting significant (and slightly more expensive) exposure to asset classes you most likely aren't.

 

[tightasadrum]

Is Fisher Investment worth the additional expense? They missed the big one in 2008. I looked into Rick Ferri’s company as Nords suggested. Although their fee is 0.25%, this fee is computed at one million dollars. That’s $2500 on one million invested. Anything less than one million is still $2500. Fisher’s minimum is half-milllion at 1.25%, or $6250. That’s a sizable difference.

Rick Ferri’s personal investment portfolio that he posts online uses dirt cheap index funds, average expense ratio around 0.17%. Add that E.R. of $850 to your $500,000 investment and you get $2500+$850=$3350. Fisher buys individual stocks, about 60 I think, with no MF expenses. But if you assume a buy and a sell for each stock every year, that’s another $960 of commissions to your broker for a new total of $6250+$960=$7210. That’s over twice as much as Ferri, but Fisher is trying to pick worldwide winners. Maybe that costs more.

But Ferri doesn’t select individual stocks. He buys a tiny bit of everything, the good and the bad, based on market cap loading. So the real question is whether Fisher’s guru’s can cull out the best performers going forward. Now Nords mentioned Buffett (in his mid-80s now) and his success at picking the winners on average. Buffett at one time questioned indexing and why anyone would think investing in every company on main street made more sense than choosing the two or three best ones in town. I think he has since agreed that indexing makes more sense than selecting poorly.

And there is the inherent overlap and duplication between funds. But Ferri did a pretty good job of avoiding duplication by picking the whole world. At least you can’t say he picked all the wrong companies to invest in.

I understand Rayvt’s theory about diversifying investment methods. But I’m not sure if Fisher is the right one. I received another phone call from Fisher today. They wanted to send that pleasant fellow back out to meet with me again. (He didn’t close the deal the first time.) I told them no, I could work out the facts myself. I’m sure he will call again. He’s my new friend.

 

[rayvt]

Hmmph. These debates sometimes become useful, when they get you to do some investigation and looking around. Different people bring in all sorts of different perspectives & viewpoints, and that too is often useful.

People have mentioned a number of useful links. I'd never heard of Rick Ferri, but after looking at his site, I wondered just what he brings to the party. His forte is as a writer rather than investment adviser -- although he now has a company to do investment management. But why should you pay anything -- even 0.25% -- for somebody to put your money into index funds? Just buy them yourself. He wants a minimum account of $1 million. Heck, for far less than $1M Fidelity or Vanguard will be happy to set you up in good cheap index funds without an additional annual fee.

Poking around other links, there are plenty of FA's who will put your money into DFA funds. But again, there's nothing special here. There is simply no need to pay somebody a fee to put you into index funds. And most of them want a minimum of $500K to $1M, and/or their minimum fee is based on that amount.

The whole idea of having somebody else manage a portion of your money is to diversify among strategies & methods. Well, going to a FA who puts your money into a basic index fund strategy is no different that the basic index fund strategy that you do yourself. So that's not diversifying strategies, it's just running the same strategy in 2 different accounts. That's dumb and defeats the whole purpose.

Most FA's seem to want to manage your entire portfolio. Fisher certainly does, and the links to other FA's that people have posted all seem to want to, what with their talk about 60/40 or 80/20 equitys-to-fixed-income. No thanks, it's trivially easy to do fixed income myself, without paying any fee to a FA.

Actually, the more I think about it, and the more I look at it, for an actively managed fund, Fidelity Contra is working out better than Fisher. Currently I have money with both. Maybe I'll just switch it all to Contra.

 

[samclem]

But why should you pay anything -- even 0.25% -- for somebody to put your money into index funds? Just buy them yourself.

And, I think Rick Ferri has as much as said so in his books. But there are many folks (not you or me) who don't/can't do the limited amount of management required by a "buy index funds and rebalance" approach, so Ferri opened his business to do that for them, if they want. It makes a lot more sense than paying someone 4-6 times more so they can put you into even higher ER actively managed funds (that probably won't do as well).

From reading your posts, it's clear you believe there are managers who can add value >>and<< that it's possible for a mere mortal to identify these managers in advance. I (and lots of studies) disagree with you, but let's say that you are right. You wouldn't want to hamstring such a gifted seer by telling him to just use mutual funds--he'd be able to make even more money by dealing in individual stocks. But rather than go to such an individual stock picker yourself, why not band together with others and pool your money and put it under his management. In short, why not just buy an actively managed mutual fund . . .

Actually, the more I think about it, and the more I look at it, for an actively managed fund, Fidelity Contra is working out better than Fisher. Currently I have money with both. Maybe I'll just switch it all to Contra.

And it looks like that's the way you are leaning. Of course, there are many hundreds of other actively managed funds out there. And most will do worse than their respective indexes on a risk-adjusted basis in most years. But, hope springs eternal.

 

[Nords]

People have mentioned a number of useful links. I'd never heard of Rick Ferri, but after looking at his site, I wondered just what he brings to the party. His forte is as a writer rather than investment adviser -- although he now has a company to do investment management. But why should you pay anything -- even 0.25% -- for somebody to put your money into index funds? Just buy them yourself. He wants a minimum account of $1 million. Heck, for far less than $1M Fidelity or Vanguard will be happy to set you up in good cheap index funds without an additional annual fee.
The whole idea of having somebody else manage a portion of your money is to diversify among strategies & methods. Well, going to a FA who puts your money into a basic index fund strategy is no different that the basic index fund strategy that you do yourself. So that's not diversifying strategies, it's just running the same strategy in 2 different accounts. That's dumb and defeats the whole purpose.

50 military servicemembers contacted Jason Hull at HullFinancialPlanning.com last month for two free hours of advice (each) from a qualified financial advisor. But the life of a fee-only advisor (as opposed to "fee-based" or "assets under management") is a career you usually have to save up for.

We used to have a poster, Saluki, who's a financial advisor. He had two types of clients:
1. "I earn $250K/year + company stock options and I work 100 hours/week. 95% of my asset allocation is my company stock, and I might be laid off next month. My accountant says that I gotta get me something called "asset allocation" and another thing called "diversification", but my time is far better spent in the office than it would be doing whatever it is that you guys do. Where do I sign?!?"
2. "OMG I saw on CNBC that the markets are falling and we're all gonna die!!!!! I can't take it anymore, and I just pulled all my money out of the market. Where do I get gold bars to bury in my backyard? Help me help me!!"

So you're right. You don't need a financial advisor. But there are plenty of those two types of customers out there, so the advisors don't need you either. In fact they need to lower the advisor standards some more so that they can create more advisors to handle all the demand.

I don't need an advisor either. But if I decided that I didn't want to (or couldn't) manage my money, then I'd rather have it in passive index funds than have it subject to the 70% probability of lagging the averages.

 

[Sarah in SC]

Good explanation, Nords. But Saluki's designation is CFA, and I'm pretty sure their standards are getting raised, not lowered! There are only 110,000 in the world, I think, with the CFA. Rarely do those guys work directly in client relationships, because of their value is in analysis rather than hand-holding. CFPs do a fair bit of that.

The sky is falling is especially popular right now.

 

[ERD50]

The whole idea of having somebody else manage a portion of your money is to diversify among strategies & methods. Well, going to a FA who puts your money into a basic index fund strategy is no different that the basic index fund strategy that you do yourself. So that's not diversifying strategies, it's just running the same strategy in 2 different accounts. That's dumb and defeats the whole purpose.

I guess where you've been losing me is, what makes you feel that Fisher is providing you any significant diversification of your stock AA?

Since you've got only your stock AA with them, if we plotted Fisher versus SPY or VTSMX, would we see similar overall returns, but a significant reverse correlation of the dips and peaks? That seems unlikely to me, but if you aren't getting that, what does the diversification buy you?

I have trouble seeing how your stock AA can get significantly more diversified than SPY or VTSMX?

-ERD50

 

[audreyh1]

I think rayvt believe that there is some advantage to diversifying among different investment approaches/strategies. But there are no studies that I am aware of that demonstrate any such advantage. In addition, if paying someone to run a certain strategy costs more than other strategies, that would seem to count against the approach.

 

[brewer12345]

Good explanation, Nords. But Saluki's designation is CFA, and I'm pretty sure their standards are getting raised, not lowered! There are only 110,000 in the world, I think, with the CFA. Rarely do those guys work directly in client relationships, because of their value is in analysis rather than hand-holding. CFPs do a fair bit of that.

The sky is falling is especially popular right now.

There must be a sizable minority of CFAs who work directly with clients and do a fair bit of hand holding given the volume of continuing ed and other stuff I see from both the CFA Institute and my local society. Its actually something I have thought about as a second career since I have done a bit of it pro bono and I like to think I have done a pretty good job of it. However, this first career seems hard to get rid of.

 

[target2019]

Not Fisher, but another hot shot is calling me today. He has REITs at 6.8% yield, and potential for pretty decent capital appreciation.

Can't imagine how many calls and emails I'd be getting if he actually managed my money.

 

[Sarah in SC]

There must be a sizable minority of CFAs who work directly with clients and do a fair bit of hand holding given the volume of continuing ed and other stuff I see from both the CFA Institute and my local society. Its actually something I have thought about as a second career since I have done a bit of it pro bono and I like to think I have done a pretty good job of it. However, this first career seems hard to get rid of.

Yes, I think that would be a great choice for you after this career, Brew. The ones we know are running boutique money management firms, not doing lower level stuff, which I think is/would be far more satisfying. I'm encouraging our new hire who has a Masters in Finance to start for the CFA instead of the CFP, because I think it will offer her a lot more choice in what she does and where she does it. So many CFPs are basically in sales. Ugh! And as you know, I consider the CFAs to be the rockstars of our world. I know I'd not make it through level one!

 

[brewer12345]

Yes, I think that would be a great choice for you after this career, Brew. The ones we know are running boutique money management firms, not doing lower level stuff, which I think is/would be far more satisfying. I'm encouraging our new hire who has a Masters in Finance to start for the CFA instead of the CFP, because I think it will offer her a lot more choice in what she does and where she does it. So many CFPs are basically in sales. Ugh! And as you know, I consider the CFAs to be the rockstars of our world. I know I'd not make it through level one!

The CFA taes a permanent toll. Lets just leave it at that.

Many of the potential employers local to me are wealth management firms and they seem to have a steady appetite for CFAs. That might be a way to manage client money again if I decide to move on.

 

[haha]

This and similar topics are the gift that never stops giving. Good for incessant debate, and of course completely non-resolvable.

I have never met anyone who I would prefer managing my money to me managing it myself. If I did want to farm management out, I would just buy Loews or Berkshire, plus some vehicle for fixed income, and some sort of emerging market equity vehicle.

Ha

 

[LitGal]

Thanks, Everyone!

Last month, I was the one to ask the first question about Fisher. Haven't responded until now because my husband and I have been discussing your responses. We've decided not to choose Fisher; instead, I will continue reading/researching and working with our Vanguard funds.

Some of the rationale I've posted in the "Hi, I am..." forum.

Bottom line: Wellington and Wellesley Income have been a nice balance with Star Conservative and Moderate Growth. We're not winning races, but are staying a healthy distance ahead of inflation. Vanguard has so many useful tools on their website; I'm learning a lot. Plus Dan Wiener's Investment Adviser and Scott Burns' articles have been helpful.

And thanks for all of your input.

Merry Christmas!

 

[trouthog]

I also requested. Info. Many yrs ago. And get nothing but phone calls.