My FA called thursday and informed me that he had left W Fargo for a great new group and wanted us to be one of his "Lucky" folks to join him on his exciting new journey. We have been with him/them since July on a referral from a friend. He is a nice guy and we haven't lost any money but am torn about this. My DW moved her 401 from her employer as well as all but 2 of her Ira's over. I moved all but 1 of my Ira's but was waiting for some problems from my former employer to be cleared up before moving my 401 over. My 401 is with Prudential and has made a better % than hers has so i have left it there. Since I've been reading here I am really wondering if we might be better off to take it all both hers and mine and go to Fido or Vanguard. I don't feel confident in totally self directing us so I would have to have help where ever we go. I have been contacted by Prudential as well as TD Ameritrade about moving my 401 to them. I'm at a loss and need some encouragement from some of you smarter than me folks.
I faced exactly the same situation in 2015. It prompted me to move my portfolio from USAA Wealth Management to Vanguard. I liquidated the managed stock portfolio USAA had created, and was churning. The proceeds were reinvested in Vanguard stock index funds. I kept the managed individual bond portfolio and the bonds have been converted over time to Vanguard bond funds as they mature.
It is noteworthy that the managed accounts at USAA underperformed their indexes, and USAA's balanced fund, during the 6 years we were in the USAA wealth management program. My "wealth manager" at USAA was a very nice guy but objectively he didn't meet the benchmarks the company itself set. I would be over $200,000 wealthier had I simply invested my money in USAA's balanced fund instead of going with its wealth management program. An expensive lesson learned.
When moving to Vanguard I chose to use the Vanguard Personal Advisors program even though I felt comfortable with managing and rebalancing a simple mutual fund portfolio myself. My spouse does not want to deal with investments. We determined having a specified "advisor" to sustain the plan would give her comfort in the event I die first. We did not feel a need for an active manager of our portfolio. Having been burned by active investment, we are comfortable with index investing.
Overall I've been very pleased with the outcome. The fees are much lower than at USAA. The customer service has overall been good when I've needed it. I have taken advantage of their Flagship/Personal Advisor tax and estate planning advice which I used to validate the advice I was receiving from my tax advisor and estate attorney. My equity portfolio in VG index funds mirrors the market return. The bond funds have also performed better than USAA's individual bond portfolio even thought interest rates have declined and I have a higher mix of tax free bonds.
The first VG advisor we were assigned was very experienced and excellent. He made the transition of the portfolio from USAA effortless. He also spent significant time collaborating on the construction of the new portfolio in a tax efficient manner over two years. In addition, the VG plan considered our other investments outside VG. Unfortunately was promoted after two years. The second VG advisor is less experienced and less proactive. He responds to calls and requests, but rarely calls on his own initiative. His only consideration of our investments outside VG is "move them to VG and let me manage them". From my perspective it makes no sense to move, and liquidate with a significant tax hit, a portfolio of dividend stocks I accumulated over a period of 30 years and which generates substantial cash flow from dividends.
My biggest issues with VG are:
1) With rare exceptions the personal advisors are essentially customer service reps executing against a formula, not real advisors. They have limited flexibility. They are assigned about 100 customers so I'm sure it is easy to default to responding to questions and inquiries. The truth is, once the plan is developed and the investments are made, the portfolio is pretty much on autopilot.
2) The online tools for analyzing and modeling performance and alternatives are rudimentary. I often have to ask the advisor to run analyses for me as I annually reevaluate my portfolio mix.
3) Vanguard really pushes what I consider to be a high (30%) distribution of assets to international. They don't consider that most of the US S&P 500 companies have significant income from international operations, so if you accept the 30% international allocation to stocks your stock allocation is really about 50% international. This speaks to a lack of sophistication in VG's modeling. I continue to remind my advisor returns from international have lagged US returns over time and John Bogle, founder of VG, was not a proponent of international. My advisor simply spouts the current VG corporate line about the need for maximum diversification in a portfolio. When I asked for data proving that diversification maximized returns I received an academic paper from a couple of professors speaking to economic theory, not real world results.
I still have investments (securities and non-qualified deferred income) outside of VG which need to be converted to index funds. This migration will require an additional 4-5 years in order to minimize the tax hit. My first advisor was on top of this issue and worked closely with me on how much to move each year and which assets to move, liquidate, and convert to income investing. I expected the same out of the new advisor. He made no recommendation the first year (again, not proactive). The second year I pushed hard and commented in the evaluation form sent by VG. He then brought in one of VG's tax advisors who performed what I thought was a very thorough and excellent analysis of my situation as well as several alternative approaches to moving the assets in a tax efficient manner.
To conclude, if it were not for my spouse's fear of managing the money in my absence, I'd stay with VG (due to the low cost and quality of funds) and drop personal advisor services. Once all of my investments are moved, and converted to index funds, the only real role of the advisor will be keeping up with rebalancing and attending to any customer service needs my spouse may have during her life. I certainly feel having the portfolio at a large institution has less risk than in the hands of an independent financial advisor who could run off with the money, leaving my spouse penniless in old age.
You are suspecting wrong. I'm not on here daily but I am following and reading. Now with that being said. I have gotten an email from a Prudential advisor, and a TD advisor. Yesterday I got a snail mail from Vanguard personal advice service with a link to look at online or a number to call. As well my WF personal FA has been calling and texting every other day. But I have ghosted him. I have been reading on Bogleheads and other topics here. I also received a letter from Wells telling me my new adviser's name and that he would be contacting me soon also. I am not one to jump from the pan to the fire so I am researching. I thank y'all for the responses so far!
