Hi, my wife and I are living the good life.

[Irwin41]

I guess I must have not been clear. My advisor doesn't invest in index funds. They have a screen for finding funds. Funds have to be in the top 25% of their category (previous quarter performance), have good performance for some period of time (I don't know the quantitative formuala), have a fund manager that has been around for a few years (again, I don't know the actual number), etc.

Since they are using an asset allocation scheme I can't get the performance that a good stock picker might get, but then I won't lose as much in the down markets either.

I went back and looked at 2005. S&P was up 4% I think, our porfolio was up almost 11% (net, after fee). I'm happy to continue.

Jim.

[Irwin41]

Reply to Jane, They charge that because that's pretty much what all the fee only advisors do. Yes, I've checked and most of them have a sliding scale. Something like 1.25 percent of the first $200K, 1 % from 200K to !M and 1/2 percent after that. Now those numbers are not exact. I don't recall exactly the details, but that is the way they determine the fee.

Jim

[Nords]

Quote:

Originally Posted by Irwin41 I guess I must have not been clear.* My advisor doesn't invest in index funds.* They have a screen for finding funds.* Funds have to be in the top 25% of their category (previous quarter performance), have good performance for some period of time (I don't know the quantitative formuala), have a fund manager that has been around for a few years (again, I don't know the actual number), etc.

So essentially you're paying them 1% of your assets every year to run a computer program?* That must be some pretty impressive software.*

If their screening tool is so effective, I wonder why they need your money instead of just using it to make their own fortunes with their own money.* Oh, wait, I remember, it's because they like helping people succeed-- except they don't like that enough to want to do it for free.

If your arrangment helps you sleep at night then it's a good thing.* You're paying them to allow you to remain blissfully ignorant, not that there's anything wrong with that.* It's your money and your choice.

But when Taylor Larimore over at the Vanguard Diehards spends a grand total of four hours a year in a portfolio that's split between the total stock market index and a bond index, then you might be able to find other uses for that 1% of your assets.* 1% doesn't sound like much until, as others have pointed out, it's one quarter of your annual SWR.

If the advisor could reliably earn you an excess over Taylor's indexed returns, and if that excess was more than the 1% you're paying for it, then you're getting a good deal.* Have you researched whether you're getting that?* More importantly, have your managers compared your performance to Taylor's portfolio-- or any index that represents your portfolio?* (I don't know if you've noticed that just about any schmuck with a dartboard has beat the S&P over the last five years, which is why so many managers compare their performance to it.) And will they refund your money when they don't maintain this performance over a long term, say 5-10 years?* Or do they get paid the same 1% whether they "beat the index" or not?

[rrspike]

Not an expert on this, but i have read of advisors who will charge a fixed fee for sevices, as someone here suggested (i.e not % of portfolio). Kind of like the legal profession.

I like the give and take on this subject of advisors. Dimensional Funds Advisors have a world-beating stable of funds that are made up of stocks from many indexes to cover just about every asset class and tilt you can imagine. They have over 40 funds and are absolutely index-driven. Their performances have beaten every other over index fund the last years. Extremely low management fees/expenses. Problem is, unless you are institutional investor you can'y buy in. DFA offers their funds only through certain advisors. Do i bite?

[poboy]

Well, I self manage my investments, my brother does not.* I have all my clocks set, microwave, tv, vcr, alarm, coffee maker, etc.* *Spent a few days visiting brother, got up early went to kitchen and all the clocks were blinking. I thought power had gone off during the night so I set them all.* Made coffee, was reading paper and sister in law came in.* Told her about power and clocks and she said you know, we never have set those clocks.* They had been in their home over a year.* Moral of the story.* They will live to be 150 years old and are quite confortable having an advisor handle their money while I prefer to do it myself. * I feel we do what we think is the best fit for us.

[Nevi]

Quote:

Originally Posted by Dog Sometimes managing money can be a curse. Makes you yearn for earlier days when you just worried about paying the bills. Lots of great discussion, but ultimately, it comes down to being able to sleep at night and enjoy your days. Give your finances their due diligence and don't second guess your choices (sometimes we can be too close to see the big picture). May you enjoy calm winds and following seas.

how true...............

[azanon]

I need to go into the advisor business. These screens he speaks of are free all over the internet or can be found in 50 dollar quicken software. I'd take me all of less than a day to do his portfolio and I could rake in 1% from there on out.