Got a call from my FA, good news or bad?

[Al in Ohio]

Quote:

Originally Posted by jollystomper +1 OP, you said you have been with him since July. Compare the gains on what the money he has managed, less the fees, with the gains in the S&P 500, or the 3 stock portfolio mentioned above.

Ditto that. You say “you haven’t lost any money”. The last 12 months if you didn’t “gain” at least 25% increase on your portfolio he isn’t earning his keep. And as a paid advisor he should have done better than that.

[Katsmeow]

OP

It sounds like the numbers for your 401k are for your investments with Prudential rather than what you are doing with this guy.

Regardless I don't see much of a reason to use an advisor except for people who truly can't understand a simple strategy.

For your 401k your funds have high expenses. Now, that may be that your 401k has bad choices and doesn't have low cost index funds.

I generally look at DH's and my IRAs as a total portfolio (I recently rolled over my 401k to an IRA). I personally divide my assets between Vanguard and FIDO. Really though I would be OK with a situation where for the overall portfolio I decided on my asset allocation (about 55/45 right now) and then mostly put stuff in the Total Stock Market and Total Bond Funds with a little International. Both Vanguard and FIDO have low cost index funds that will do that. I do it a little more complex (I also invest in a mid cap and small cap index funds and at Vanguard I have some Wellesley) but honestly I could probably get by with simplifying and I may do that at some point.

I don't compare how my IRA did to DH's IRA and we have 4 different IRA's between us and some have more equities than others. I look at the total.

[ERD50]

Quote:

Originally Posted by Venturer Thanks for all the replies. I just looked at my 401k account for last year it was up 13.32% for the year, ....

So they have you in a 40/60 AA - that seems low for stock allocation, but not crazy low.

You can replicate that with just two funds, VTI and BND. A 40/60 mix would have provided 17.57% return for 2019

link to portfolio analyzer>>> http://bit.ly/37VxsQ2

A more typical 50/50 or 60/40 would have got you 19.75%, 21.94%. Of course, a higher AA could drop a bit more in a downturn, but not to worry - you pull from the bond side in that case, you won't be selling low.

Quote:

DW says she doesn't care which way we go as long as we don't run out of money. She just wants no headaches and to not have to worry about it.Thanks again to all y'all.

Your FA is your worst risk of running out of money, those expenses are eating up your money. Going it alone is easier than trying to figure out what your FA is doing.

-ERD50

[Souschef]

At our last HOA meeting, a rep from Ed Jones gave a pitch. I went to their website, and they get between .35% and 1.5% AUM with a minimum of $25,000. As someone else said here, with a 4% WR, you are giving up 25% of it to the FA.
I was also struck by Frankiesgirl post # 35 comment about FA ingratiating themselves as a "friend". After DW's husband passed away, the "friend" talked her into getting a $100K annuity with his insurance proceeds. He realized $3K to 7K for his "help" to her. I recently mentioned this to her son, and he was shocked, because he was a "friend".

[michelek]

[QUOTE
2. Consider Taylor Larimore's 3-fund portfolio — https://www.bogleheads.org/forum/vie...p?f=10&t=88005
3. Don't panic. Markets go and they go down.[/QUOTE]



If one doesn’t belong to Vanguard/ just Fidelity- what are the 3 fund equivalents in Fidelity?

[audreyh1]

Quote:

Originally Posted by michelek [QUOTE 2. Consider Taylor Larimore's 3-fund portfolio — https://www.bogleheads.org/forum/vie...p?f=10&t=88005 3. Don't panic. Markets go and they go down. If one doesn’t belong to Vanguard/ just Fidelity- what are the 3 fund equivalents in Fidelity?

Fidelity Total Stock Market Index Fund FSKAX
Fidelity International Index Fund FSPSX
Fidelity US Bond Market Index Fund FXNAX

I see he recommends no more than 20% of the equity position in international which is a reasonable upper limit. You really don’t have to have international exposure - that’s entirely optional. Many companies in the total market index will have international exposure already.

[zippy2020]

Quote:

Originally Posted by LiveBelowMeans The other risk is that your nice guy takes off with your money. I would only work with a large firm that has a reputation to protect. One where my small assets are a drop in the bucket. Vanguard, Schwab, or Fidelity. Jmho

This would only happen in a Bernie Madoff situation. First off, the investor NEVER makes a check out to the adviser unless s/he chooses to pay the fees directly rather than subtracting them from the account (due to IRS rules).

Assets are always held by a financial institution, never by any individual.

Personally I suggest most people use the very good investing advice found on this and certain other forums. If you are middle-class and aiming for retirement, you need to know the basics of investing and have a place to ask questions. This is a good place to learn.

****

Unlike many here, we do use an independent CFP firm. For decades I handled the investing, but when we retired (early) I no longer wanted to spend the time on it, especially regarding potential tax situations which were going to affect us in the future.

I feel there are times when DIY is appropriate and times when it is not. I know how to change the oil on a car - but I never enjoyed doing it and paying somebody to do it for me is, for me, worth my time and energy. When we were younger I did our wills from a form I downloaded from Nolo Press. But now that we are older and have substantial assets? You bet I found not just an estate attorney, but one who specializes in eldercare because we also had a MIL with beginning dementia to consider.

Financial advising is a complex subject. Investing and saving are two very small parts of it.

You do not use a CFP to get yourself the biggest investment gains. The best way to utilize a CFP is in active, regular engagement - s/he is your partner in achieving your life goals as efficiently as possible. Using a CFP is a holistic process for financial and estate strategies, not just retirement planning.

If you do not have well-defined goals, you will not be able to get the best out of any financial adviser relationship. A good adviser can help you clarify what you want to do and how to achieve those goals: short-term, medium-term, and long-term.

You use a CFP in an ongoing process to help you mitigate risk in all aspects of your financial picture: insurance (from auto to life to healthcare), inheritance (both top down and bottom up), and continued financial planning. The latter is especially important when what we call Major Life Changes occur: birth, death, marriage, divorce, illness/injury.

I will say that it is not easy or simple to find a good CFP unless you know someone within the industry. Both my ex-boss (38 yrs in the industry) and our CFP (30 yrs which includes 6 with my ex-boss) do almost no "hard" advertising at all. 90+% of their clients come from personal referrals. Both have a good percentage of multi-generational family clients.

My spouse and our heir neither enjoy nor have the interest in financial matters as I do. It was important for us to ensure the smoothest transition possible for when things change - which of course, they will (hopefully not for many years....but who knows?).

BTW, a CFP makes certain you have all your legal documents in place (they will require copies). When MLCs occur, you are reminded to update those documents to reflect your new circumstances. When you and your partner disagree on major financial decisions, the CFP is there to arbitrate and help arrive at an agreement acceptable to both. They are the neutral "third party" needed to keep your plans on track.

[davebarnes]

Quote:

Originally Posted by michelek If one doesn’t belong to Vanguard/ just Fidelity- what are the 3 fund equivalents in Fidelity?

I actually have 4 funds.
S&P 500
NASDAQ
Total bond fund
Thompson bond fund

And, a tiny amount of cash.

I think the overall strategy should be:
1. towards simplicity and not complexity
2. Reducing drag
3. Being comfortable with your allocation ratio

[RobLJ]

For a long time (until 2006), I used a Lazy Portfolio approach, although it didn't exactly replicate any of these, rebalancing each year.
https://www.marketwatch.com/lazyportfolio


Here's the Bogle link, which is probably a clearer overview:
https://www.bogleheads.org/wiki/Lazy_portfolios


I scaled back on risk and diversified before the financial crash, which helped me on the downside and probably hurt me similarly on the upside.
Just pick one that seems to fit your risk tolerance and rebalance once a year. As I get older, I'm moving slowly back towards simplification, like DaveBarnes and others suggest.

[NotYourAverageJones]

Quote:

Originally Posted by wolf MY simple approach. Vanguard. Total stock market index fund. Online CD purchases. Various maturities. You decide on your % allocation, based on your age and risk tolerance. Simple. No need for FA.

+1

[LOL!]

About the only reasons that a salesrep moves from one firm to another are:
(a) They are not making enough money for their firm (quotas!)
-or-
(b) They are not making enough money for themselves.

They only make money either way by taking it out of the YOUR pocket.

As a side note, I don't suppose WellsFargo or any of their employees told you about their totally free WellsTrade brokerage account to go along with their totally free checking account? That is, if you have ever ever paid a fee for anything at WellsFargo in the last say 25 years, then you got ripped off.

And because of all the free services that WellsFargo gives away, WellsFargo has to charge higher fees to stay in business to the chumps that don't know any better.

BTW, other firms such as Fidelity, Schwab, and Vanguard also have plenty of similar free services. Be sure if you use any of these that you know that you are not paying what the other folks pay to keep these places in business. Know better.

[nels52]

one reason they often move is pure $$$...they are given a pretty good enticement to switch firms. They'll tell you it's because the new firm has better support or more options for investing but it is often a pure bonus for them. I had a broker who switched twice within 3 years ----- I moved once but not the 2nd time and am now DIY.

[troutnut1]

My FA from a large firm approached me with that same idea about 5 years ago. It became apparent to me through talking with him that he really wasn’t supposed to be talking me into going with him. That made me wonder. If he would violate his agreement with his present firm to drag me with him, how ethical could he really be? Soon my “nice guy” advisor was replaced by another “nice guy” who was assigned to take over his clients. Luckily for me, the company made a serious error on a rollover that ended up costing me a lot of money. So it was easy to fire him and the company. I moved everything to Fidelity and have been happily saving all the money I used to pay in advisor fees. This forum gave me the courage to do that and I believe I have been better off for it. Fidelity offers me advice if I want it, but I just don’t want it anymore.

I think the firm your FA works for would probably consider you theirs instead of his. If that is the case, I would be very unlikely to follow the advisor to any new firm. Also be aware that the present firm will send someone to take care of you very soon if they haven’t already. Also be aware that firms like Fidelity, E-trade, etc. will offer you financial incentives for moving the money to them.

[tomc5179]

Another vote for "dump his ass fast" and do it yourself with VG or Fidelity. Read up and learn. It might seem scary at first, but it's simple. Best move I ever made.

[michael274]

This is exactly what I was thinking. I’ve been through this with my “nice guy” financial planner. Believe me, wish I’d never met him. My guy didn’t leave voluntarily. He was involved with legal troubles concerning this business. Also, he was involved with TD Ameritrade, so I’m thinking they got your contact info from the fp?? Go with your gut, and lose the guy syphoning off your growth. Vanguard or Fidelity, IMO.

[HGTVFanatic]

This might not have anything to do with your situation but here goes. My husband had his 401k with Prudential through his union. After he retired, it was a huge ordeal to withdrawal any money. Withdrawals had to be approved by a Board of Directors (!) and other nonsense and it could take a couple of weeks to get your own money. After doing that once, we moved his entire account to Vanguard and never looked back. Now we go to Vanguard, enter how many shares we want to sell and we have the money in three or four days. This may not apply to your situation.

[HGTVFanatic]

Quote:

Originally Posted by Markola We are with Vanguard Professional Advisor Services. Investors of $500K or more there get a dedicated advisor, and ours is excellent. The fees are less than Wells Fargo and Fidelity and probably anywhere else with comparable personal service. I used to do it myself but now I’m a believer. My wife and I really benefit from the neutral third party advice for discussing and funding our different lifestyle desires fairly, not to mention that she’s uninterested in finances but we have great assurance that she’d be advised and taken care of without a hitch if I got Coronavirus. What’s to lose from scheduling an evaluation call with them?

We've been with Vanguard for at least five years with much more than this and it's news to me that we get an advisor. Hmmm. Maybe you have to request the services?

[harley]

Quote:

Originally Posted by HGTVFanatic We've been with Vanguard for at least five years with much more than this and it's news to me that we get an advisor. Hmmm. Maybe you have to request the services?

I'm signed up for email communications, and I know they push mention it in the emails they send out, the Personal Advisor Services and Flagship Services. They have called me a few times over the decade, usually when I get assigned a new advisor. Give them a call and talk to them about what they offer. You don't have to use anything you don't want, and despite my mildly snarky tone above they really don't put any pressure on you. I usually call in and just talk to whoever I get, and don't worry about my assigned advisor. But others use them, and if you qualify for Flagship services you should have access to them to. So definitely call them.

[mystang52]

I can't help but suspect that OP is not following this thread.

[Venturer]

Quote:

Originally Posted by mystang52 I can't help but suspect that OP is not following this thread.

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!