Help me refine my message to my advisor

[Time2]

OP: you should be outraged. You told this supposed trusted adviser you don't want a product with >.75% fee. Yet he responds suggesting some product with 2.4% fee. He didn't just ignore your stipulation. He showed his true colors that he does not have your interest at heart; he's looking to get one last dollop of fees from you. After this attempt to rob you, he is not entitled to any courtesy or "loyalty" from you..

Did you mean any courtesy or Royalty from you.
I just suspect that last sale would generate income for the FA for at least a few years. Maybe that's just me.

 

[RetiredHappy]

Fidelity Premium Services kicked in at $1M.

I think it is now called Fidelity Private Client Group, with an assigned in-person advisor at the local office.

 

[latexman]

I think it is now called Fidelity Private Client Group, with an assigned in-person advisor at the local office.

My Fidelity mobile app says Fidelity Premium Services when I click the link to my advisor.

 

[RetiredHappy]

My Fidelity mobile app says Fidelity Premium Services when I click the link to my advisor.

Mmm.... dunno. Mine says Fidelity Private Client Group.

 

[latexman]

Mmm.... dunno. Mine says Fidelity Private Client Group.

Different programs

 

[travelover]

In my experience, when I've pointed out to people how much they are actually paying and the poor investments they have been sold, they tend to become defensive, because after all, they chose the FA and signed the paperwork. In fact, several have gotten quite angry at me, though I was as diplomatic as possible. As messenger, I was shot.

This is unfortunate because I think they were hoodwinked by a rather slick salesmen - they were lambs to the slaughter and didn't stand a chance against the fancy office, nice suit and slick 40 page "financial plan" that they were afraid to admit they did not understand.

So, to the OP, don't feel like it was even partly your fault. Most of us are no match for good salesmen.

 

[RetiredHappy]

Different programs

Old article from 2015.
https://thefinancebuff.com/vanguard-fidelity-large-account.html

I also read somewhere else that Premium Services became Private Client Group later on. Dunno.

 

[Exchme]

That won't be the FA's plan. It just won't happen. He has an emotional commitment from you that you don't seem to want to sever.

100% agree, this is purely business from the FA's point of view and he can read the room and is a trained persuader. If OP so much as talks to the FA on the phone, the misplaced loyalty gives the FA a strong chance to keep sucking OP dry. Showing up to an in-person meeting guarantees it.

An article from 40+ years ago in the college newspaper stuck with me. The local pawn shop owner said he had people come in each week and pawn their stereo for $45 and come back a few days later and pay $50 to get it back. He said you could see in their eyes the need to be taken advantage of. He was almost regretful...but not enough to stop taking their money of course. Here the FA isn't even regretful about taking OP's money.

 

[racy]

Old article from 2015.
https://thefinancebuff.com/vanguard-fidelity-large-account.html

That's an article from 2015. I know from recent email exchanges with Vanguard that this statement: "At $1 million in Vanguard funds and ETFs you get the Flagship status. You get an assigned rep,.." is outdated. Now I'm offered a whole "team".

 

[Time2]

That's an article from 2015. I know from recent email exchanges with Vanguard that this statement: "At $1 million in Vanguard funds and ETFs you get the Flagship status. You get an assigned rep,.." is outdated. Now I'm offered a whole "team".

Yes, it was nice to have an assigned rep, and now that I have a whole "team" I don't like it because I don't really have anyone.

 

[Aerides]

There's no need to tell the FA your future plan (and come on, give the OP some credit here that he can resist the charms of a salesman. FA's want to keep making money, but most aren't that slick.)

Just tell the FA what you want him to do. More this, less of that, not "because we want to one day..." - that's none of his business. Give him a week to come back with a concrete plan. If he fails, or comes back with anything with a cost ratio above your asking numbers, move it all now. If he does as you wish, move it when you are comfortable.

In the meantime, talk to Fidelity. They will take it all, in kind, and do it without you having to make even one phone call to your FA.

 

[Magus]

Not being flippant, just thank him for the guidance over the years and that you’re taking over management of your portfolio.

If you’re already at a place like Schwab, you can then transition holdings as you see fit, managing tax impacts as it makes sense.

Bingo

 

[Qs Laptop]

Lots of great advice here. Leave, quickly. Go to Fidelity, open an account, and transfer your funds in kind.

About a week after the funds have been transferred to Fidelity and the balances confirmed go ahead and call your advisor and thank him for his help over the years, that he did a pretty good job educating you on investment basics, and that you are confident you can handle it yourself from now on. What's he going to say? You've just complimented him on a job well done and you're moving on. The deed's been done.

If he objects or starts a sales pitch, stop him and remind him the last thing you asked was for him to not show you investments with a fee greater than 0.75%. Instead, he tried to upsell you to products with much higher costs. Thank him for his past work and say goodbye.

 

[CRLLS]

There's no need to tell the FA your future plan (and come on, give the OP some credit here that he can resist the charms of a salesman. FA's want to keep making money, but most aren't that slick.)

Just tell the FA what you want him to do. More this, less of that, not "because we want to one day..." - that's none of his business. Give him a week to come back with a concrete plan. If he fails, or comes back with anything with a cost ratio above your asking numbers, move it all now. If he does as you wish, move it when you are comfortable.

In the meantime, talk to Fidelity. They will take it all, in kind, and do it without you having to make even one phone call to your FA.

OP already has told the FA what he wanted and didn't want. The FA failed by giving him much higher cost investments. There is no need to contact the FA ever again. Just go to Fidelity or Vanguard, open an account(s) and let them do the contacts and transfer the whole enchilada "in kind" wherever possible.

By meeting with him and then again to review his next proposal gives the FA 2 more meetings to confuse the OP and keep him as a client. It is just like those robo calls. The longer you stay on the line, the more chance they can sell you something, except in the FA's case, the payout to him is much, much larger.

I know it is a major leap for anyone to leave their FA. If the FA is a good salesman rather than investor, he has convinced the client how difficult investing is. Not everyone is comfortable in DIY investing/money management. My buddy is one of those uncomfortable ones. I cannot convince him to come toward the light. If I have learned anything here over the years is that investing doesn't need to be rocket surgery.

 

[rodi]

I agree with Aerides because she is addressing what the OP asked.

OP - here is what I would have done back before I got my confidence in the lazy portfolio. At your face to face meeting:

- Remind the FA that you specifically asked for LOW COST funds. Low cost is defined as <0.75% from your original post. You are disappointed that he returned with a plan that was funds with >2% fees. Ask if he is able to meet your wishes.

- Ask about the tax consequences of switching from you current holdings to these new, expensive funds. Does he have any advice on how to avoid cap gains taxes. (I suspect he won't have a plan.)

- Ask about any AUM fees on top of the funds you are in or he is proposing to put you in. Ask how he is earning the AUM fees if he is also earning $$ from selling you the high expense ratio funds.

- In fact - ask him to outline his compensation for your current holdings with him, and what his compensation would be for his proposed plan. (This will probably be eye opening to you and eliminate any "loyalty" you feel to him.) He's probably making money on both AUM and kickbacks from the expensive funds. Push to get this information, he's going to try to blow off direct answers.

If he can put you in simple, low expense ratio, low fee, index funds AND has an AUM fee structure that doesn't make you upset... you can continue to have a good working relationship with him.

If he can't figure out that you are interested in low fee/ER index funds, or can't offer them, then you should accelerate your plan to move elsewhere.

The only part that has me concerned is if he has you in proprietary funds that can't be transferred in kind. That could create a tax situation you need to think about. If you do move forward to transfer to another brokerage you'll want to consider the tax consequences of selling the funds you currently have to buy the low cost index funds for your 3 fund portfolio. A few posters here have suggested that you hire an hourly fee based FA to give advise on how to avoid taxable pitfalls. When you are ready to move from the existing FA guy - consider doing this - the fee for a few hours advise could be inexpensive compared to the tax bill.

 

[Exchme]

In my experience, when I've pointed out to people how much they are actually paying and the poor investments they have been sold, they tend to become defensive, because after all, they chose the FA and signed the paperwork. In fact, several have gotten quite angry at me, though I was as diplomatic as possible. As messenger, I was shot.

This is unfortunate because I think they were hoodwinked by a rather slick salesmen - they were lambs to the slaughter and didn't stand a chance against the fancy office, nice suit and slick 40 page "financial plan" that they were afraid to admit they did not understand.

So, to the OP, don't feel like it was even partly your fault. Most of us are no match for good salesmen.

Yep, the salespeople are selected because they are good at creating bonds with people, then they are trained in persuasion and trained in how to counter all arguments. Then the ones that aren't the very best at it are fired. Pretty soon, the ocean is filled with only the slickest, hungriest sharks.

Those of us with lives outside that realm don't have any more chance with them than we would against Mike Tyson in his prime. The only way to win is not to play; OP should just fill out the paperwork at a reputable low cost brokerage to move the funds (if possible to minimize taxes) or liquidate and move the money if the funds cannot be held outside the FA's control.

OP is plenty smart on the subject and is easily able make and keep a lot more money investing on their own than the FA ever did for them.

 

[OldShooter]

I dunno. I see no upside to the OP's meeting with the FA, who has already proved himself to be a snake.

In fact the whole idea reminds me of a folk tale that is told in many versions in many cultures. Here is one: https://www.firstpeople.us/FP-Html-Legends/TheLittleBoyAndTheRattlesnake-Cherokee.html and a couple more: https://www.snopes.com/fact-check/stinging-criticism/

 

[target2019]

Pretty easy to find more on what's being offered. No guessing required. Put site:im.natixis.com and a keyword to explore. Or start with this page: https://www.im.natixis.com/us/fund-documents

I think many have been to this dance, or know someone who has.

So the FA is on his way out, and trying to hook up the OP to something that guarantees his income stream.

 

[OverThinkMuch]

... we've been learning more about a boglehead / 3 fund strategy.
...
Long story short, their plan has fees that I'm unwilling to pay (2.8-2.4%?). But I need help with bullet points/questions to stay on target in next week's conversation

It sounds like you're new to 3 fund portfolios, or you would be shocked by 2.8% fees by an advisor. Yes, they're trying to keep you - because as soon as you realize you can buy 3 ETFs and pay very low expense ratios (VTI / VXUS / BND), the advisor is gone.

I don't know your level of assets, but if you had $360,000 invested with this advisor, you would be paying them $10,000/year in fees at 2.8%. Do you want to switch to index funds, or keep paying them $10,000 per year?

 

[JeffyD]

I join the others here that basically say “run, don’t walk” away from this FA.

You don’t owe him this fa any explanation for why you’re moving out. It is likely he is already expecting your call.

Whoever said that he’d be furious, uuhhh, me too.

 

[target2019]

Easy to find numbers posted on another thread by OP: https://www.early-retirement.org/forums/f26/hello-2021-might-be-my-fire-year-105402.html

OP has listed assets and spend, and used 2M invested with 100K spend in Firecalc.

I think 2.8-2.4% might be a typo by OP. If all 2M is with the advisor, then a rough estimate of fund and FA yearly fees (2.4%) is around $48K. If $1.2M is with advisor the fees could be around $28,8K.

There may be sales and/or redemption charges on invested assets. This I suspect by reading a little from tear sheets in my previous response.

 

[StuckinCT]

Thanks for all the thoughtful responses. It's funny how I thought I was asking one question, but you all answered the question at the back of my mind instead. I don't think we're ready to dump him yet, but I'm trying to figure out our plan to get there . FA has done a great job getting two uninvolved investors ready to retire at 50ish, so we feel like we have some loyalty to work through before we move on.

I just checked out "The Bogleheads Guide to Investing" to be clearer in our long term plan and our message to him.

BTW, the fee relationship so far has been a very, very modest annual fee, and I'm sure some skin in previous products sold to us.

I like you’re thought and definitely think it would be rude/disrespectful to just transfer out if you feel he or she has provided valuable guidance and advice. Most do it yourselves lag the indexes by wide margins for a variety of reasons including behavior. The stats are easy to find and the difference is about 3%. I would just say you’d like to keep total all in expenses below a certain level like 1.5%. If you have several million, might be able get under 1%.
I know there are some people who can manage things themselves but most people benefit from advice.

 

[splitwdw]

I've been wondering if the FA that's retiring will bring in the replacement FA to the meeting to tell LeeLee2021 how he will manage his/her portfolio.

 

[eyenitnoy]

Hello all - I posted my hello/details here (wow, more than a year ago), and things have changed! My spouse and I have started what we're calling our "sabbatical" for at least a year while we figure out if we're really the big R. My severance ended in July, spouse quit their untenable job in October, and since then we've been feeling what it's like to not have a corporate teat.

We're now on ACA within our planned budget, and getting a subsidy in 2022. Our spending in 2021 is pretty much as planned, and we have contingencies in place for lumpy expenses.

My main question is around a plan that our long-term, trusted advisor is proposing to us next week (when they retires, we'll be DIY after that). We've talked in the past about how we don't want to: buy into any new 'products' with a >~.75% fee, to avoid single stock risks/we'd rather do ETFs, and how we've been learning more about a boglehead / 3 fund strategy. Instead, they sent over a fact sheet for "Natixis Risk-Efficient Portfolios". Sad trombone.

Long story short, their plan has fees that I'm unwilling to pay (2.8-2.4%?). But I need help with bullet points/questions to stay on target in next week's conversation, so wanted to get this smart group's minds involved first.

1. How do we navigate what he's proposing with a more lean approach?
2. Has anyone have an opinion on or bought anything from Nataxis? I see some corporate stuff online, and a lawsuit where they are accused of self dealing their funds against fiduciary interests - is that as bad as I'm thinking it sounds?
3. How do we navigate from what he's proposing to a more lean/set it and forget it approach?

Thanks to any thoughts and direction you can provide to help us out

Well, since you asked, here is the advice:

1) Fire your advisor. Those fees (0.75% on whatever it is he is suggesting) are criminal. You CANNOT make money paying those fees.

2) The "Natixis risk efficient portfolio" has a nice website, I can't find the fees. If they are less than 100 basis points I'll eat my hat!

What to do with your money:

-Keep a couple years cash/cash equivalents.

The rest split between:
-S and P 500 index
-Large cap value
-small cap blend
-small cap value.

Pick whatever index fund/ETF you want along these lines (Vanguard) and NEVER pay more fees than 100 basis points per year. (0.1%) NEVER. EVER.

That's it. That's all you need to do.

 

[67walkon]

We're paying less than half a percent of our holdings in fees. Your fees are pretty high.