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

[Irwin41]

Or at least that's what they are telling us. We decided to turn over our finances to an advisor and they have been good to us so far.

I thought about doing it myself, but I don't need that grief at this stage of my life.

[HFWR]

Welcome, Irwin

[riskadverse]

Hi Irwin . . . glad to hear you're living the good life. Make sure you watch your financial adviser very very closely so you can continue to live the good life. His job is to invest your money, your job is to monitor that he has your best interest in mind (if that is possible).

[Nords]

Welcome to the board, Irwin.

Quote:

Originally Posted by Irwin41 Or at least that's what they are telling us.* We decided to turn over our finances to an advisor and they have been good to us so far. I thought about doing it myself, but I don't need that grief at this stage of my life.

It's a choice driven by interest & circumstances. But good luck with that.

Most people have a tough time paying an advisor when the market turns ugly for a year or two. Or the advisor is perceived to be earning more money than they're providing in fruitful guidance. Or there's a clear conflict of interest in how the advisor is paid and what funds your money ends up buying.

"Doing it yourself" can be incredibly complicated or elegantly simple. It's up to you. For the latter try the Coffeehouse approach (http://www.coffeehouseinvestor.com/Default.htm) which can be as straightforward as putting half your retirement assets in a Vanguard total-stock-market fund, and the other half of your retirement assets in a bond fund. Then go back to living your life.

Quote:

Originally Posted by Irwin41 Or at least that's what they are telling us. We decided to turn over our finances to an advisor and they have been good to us so far. I thought about doing it myself, but I don't need that grief at this stage of my life.

The real grief that you don't need in your life, is the realization one day that your financial advisor was more concerned with his own finances than yours. Guess what; he/she is!

You are paying him for something that you could do better yourself.

Vanguard has balanced index funds that will beat over 90% of the fund managers over the long haul. The fees are much lower, therefore they have an advantage.

Do you even know what you are paying your 'advisor'?

[SamHouston]

Quote:

Originally Posted by Cut-Throat The real grief that you don't need in your life, is the realization one day that your financial advisor was more concerned with his own finances than yours. Guess what he/she is! You are paying him for something that you could do better yourself. Vanguard has balanced index funds that will beat over 90% of the fund managers over the long haul. The fees are much lower, therefore they have an advantage. Do you even know what you are paying your 'advisor'?

Having just "fired" my advisor last week, and having another long conversation with him last night, in fact, I couldn't agree more. I'm in the process right now of setting up self-directed accounts with Vanguard and I'm looking forward to when I'll have one less thing to worry about...what my advisor is doing and why. I learned the hard way that the investor is a secondary concern for most advisors. Their first concern is their own income and future, not ours. I grew tired of spinning the wheel and trying to come up with an advisor who was the real deal. It's not worth it to me anymore.

[garrynky]

Quote:

Originally Posted by SamHouston Having just "fired" my advisor last week, and having another long conversation with him last night, in fact, I couldn't agree more.* I'm in the process right now of setting up self-directed accounts with Vanguard and I'm looking forward to when I'll have one less thing to worry about...what my advisor is doing and why.* I learned the hard way that the investor is a secondary concern for most advisors.* Their first concern is their own income and future, not ours.* I grew tired of spinning the wheel and trying to come up with an advisor who was the real deal.* It's not worth it to me anymore.

I agree totally. I'm in the process of getting out from under an advisor agreement. If I had a lot more money then maybe I wouldn't notice the money being siphoned off. Unfortunately I don't.

[Helen]

Quote:

Originally Posted by Irwin41 Or at least that's what they are telling us.* We decided to turn over our finances to an advisor and they have been good to us so far. I thought about doing it myself, but I don't need that grief at this stage of my life.

If you really don't want to manage your own money then it might be worth it. However, if you are paying your advisor 1% of your assets to manage your wealth for you and you are living on a total withdrawl rate of 4%, then you are paying a huge percentage of your "annual salary" to do so.

As was pointed out, there are very simple approaches to investing and you can do it through Vanguard.

Read some books by John Boggle and find a simple solution.

Personally, I would not sleep well letting someone else guard my nest egg. There is a huge conflict of interest.

JMO,

-helen

[JPatrick]

Quote:

Originally Posted by Irwin41 Or at least that's what they are telling us.* We decided to turn over our finances to an advisor and they have been good to us so far. I thought about doing it myself, but I don't need that grief at this stage of my life.

I think we ought to give Irwin a break here.* There are very good advisors out there and for all we know he may have hooked one.* If I could find one that could beat me by 200BP or so (plus his expenses< I'd dump the whole thing in a heartbeat.
Judging by your websight, you are out of country a fair amount accompanied by(based on your crew pics) a number of dead cats.
The only thing I'd recommend if you are going to use an advisor is this.* When you meet to do a* review, be it quarterly or otherwise, come armed with the performance numbers of a portfolio like the "coffehouse" to give yourself an idea how things are going.* If the coffeehouse did 8% and his fee is 2% then he ought to be able to show you 10% gains.* If no--time for a change.* If yes--go sailing and have fun.* If yes by a bunch--publish his/her name here.

[Spanky]

Irwin's advisor is also living the good life.

It's nothing wrong to have an advisor as long as you are happy with his/her services.

[Irwin41]

Thank you all for the suggestions and concerns. I've been actively investing in stocks and mutual funds since the early 80's. Tobias's guides "The only investment ..." were quite helpful in establishing my early investment strategies and help me refrain from panicking during the '87 crisis. I remained fully invested and have never tried to time the market. I did due diligence on selecting my adviser. They are fee only advisers and rake off about 1%. Their target percentage is 9%, a moderately aggressive goal, but they have been able to meet or beat that for the last 3 years. They showed me their track record for the 1999 -2003 time period for the same investment mix and it was acceptable, considering what the market did. I believe their numbers and did interview a couple of their clients that had been with them for a while now. They invest in mutual funds exclusively and use their own brand of "Modern Portfolio Theory". I do monitor them on a regular basis and have questioned some of their trades, but they've been able to explain them satisfactorily.

They use Fidelity for trading, are very sensitive to tax issues and at not additional cost have given us addition services, such as keeping a file of important documents like wills, insurance policies, etc. Much like what an expensive lawyer might do.

Someone mentioned they are more interested in making money for them than for me, however as fee only advisers, the best way for that to happen is for them to continue to grow my nest egg, thus giving them more funds to draw their 1% from and keep me from going somewhere else. I do measure their performance against a mix of stock and bond indices and so far they have beat the mix by a multiple of their fees. They are a small firm but a good track record.

Of course I'll keep an eye on them, but so far I'm quite happy with their results.

My only complaint is the need to hire a prettier receptionist!

Jim.

[2B]

Quote:

Originally Posted by Irwin41 They are fee only advisers and rake off about 1%. Their target percentage is 9%, a moderately aggressive goal, but they have been able to meet or beat that for the last 3 years.

If I only averaged 9% over the last 6 years, I might start looking for an advisor.

I don't know how many people I encourage to lose their advisor and do it themselves. I've even seen people financially raped by their advisors and still be too scared to make the leap.

No one will ever be more interested in your money than you are. You can buy the same type of stuff they do. You can rebalance your portfolio every year just like they should do. You can also take the 1% fee and do something nice for your self with. If you have a $1MM portfolio that would be $10,000!

Here’s the bottom line: Brokers have nearly inevitable conflicts of interest with their clients, and they work in a corporate culture where sales come first and customers come second. As a result, I have started recommending that investors stop doing business with brokers altogether and instead work with independent advisors who don’t sell products.

[AltaRed]

I think that is what Irwin was saying... a fee only advisor. Now what is wrong with that if he/she is making recommendations that in the aggregate beat the market?

[Jane_Doe]

Interesting subject. Why can't they charge an hourly or set fee ($1000 for example). I don't get why someone should pay a PERCENTAGE of their portfolio. It doesn't make sense. Again, an hourly or reasonable set fee, I can see but if you take 1% of MY money - I wouldn't do it. No way, no how. It's not like they are guaranteeing you anything (except to take some of your money for fees regardless of the outcome). What if you gave them 1% (or whatever %) of the total gain for the year - THAT would be an incentive for them to perform!!

Sorry, Irwin - not trying to jump on your case (at all!) - just wondering if you have checked out how other "fee only" advisors charge.

Wishing you the best -

Jane

[2B]

What a concept! Charge 1% of assets annually to recommend a broadly diversified portfolio of low fee, primarily index based mutual funds. Would everyone please send me the names and addresses of customers for my new business.

I got the impression that their advisor was buying/selling individual stocks through Fidelity but I could certainly be wrong. That would be more credible for the fee but I still can't believe it's worth the money. It goes back to the basic premise that 75% of all money managers don't beat their respective index in any given year. Almost none will beat it over any extended period. The advisor is at least not blowing smoke about "substantial double digit returns every year." The number he is shooting for is conservative for most individual index investors.

[rs0460a]

Jim (AKA Irwin41):

An interesting topic, and timely since I have been looking at the same "situation".

I/DW are 58, 2 years away of retiring at age 60 (not really early, but that's our plan).* I've managed our "joint retirement portfolios" (meaning our respective 401K/IRA's) over the last 24+ years.

Over the last five years, we've gone from a 70/30 to 60/40 mix.* If you look at your returns provided by "your firm" as stated for the last 3 years, I assume you are talking about the period of 2003 thru 2005.*

Checking my own records, I show the net return (gains - contributions) for our joint portfolio averaging 16.76 per year (50.28% total).

Now I'm no "investment genius".* I read all the "basic books", along with information on the various commercial web sites, and participated in discussions with "good folks" as are on this site.

While I understand your "exhaustion" for doing it yourself all these years, please consider what you are talking about.* Like one person pointed out, with a $1M portfolio, at $10K/year, the "service gets expensive".* 25 years of retirement, with no gain would still yield a cool quarter-million $$$.

Since it's "your money", I not saying what you should do.* However, with "my money", I'll manage my own investments.* Since the 1% would "cost" me more than $10K (due to our current "base") I'll take the time to manage my resources.* If I "stumble", I'll be the one to blame.* If your advisor "stumbles", you "paid for the option" to blame him.* However, in either case, the $$$ is still gone.

Anyway - that's my story...*

- Ron

[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.

[JPatrick]

Quote:

Originally Posted by Irwin41 My only complaint is the need to hire a prettier receptionist! Jim.

Not so fast Jim, that would probably cost you another 50 BP's.*

[mathjak107]

we loose money the old fashioned way: by ourselves ha ha ha