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

[Venturer]

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.

 

[REWahoo]

...I am really wondering if we might be better off to take it all both hers and mine and go to Fido or Vanguard.

^ This. You will almost certainly be better off going with either one of these vs. staying with that "nice guy" and helping him make his boat payments.

 

[davebarnes]

You don’t have to self direct.
You have 1000 [-]busybodies[/-] experts here who will tell you what to do.
All of them will give better advice than your FA and their collective fee is quit modest.

1. Determine the asset allocation you are comfortable with. Safer and low growth or riskier and higher growth. There is no safer and high growth option.
2. Consider Taylor Larimore's 3-fund portfolio — https://www.bogleheads.org/forum/viewtopic.php?f=10&t=88005
3. Don't panic. Markets go and they go down.

 

[pb4uski]

..... 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. ...

That's probably your best course. What is your AUM fee?

Self directing isn't rocket science. The big decision is what you asset allocation is (% in stocks vs % in bonds) but the reality is that anything between 30/70 and 70/30 will have similar success rates. Then just pick broad based index stock and bond funds (and take tax-efficient placement into mind if you want to). Vanguard and Fido will hold your hand and help you out but once you have things set up it is easy.

 

[ls99]

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.

Would be useful to find out why this FA left. It may not have been voluntary. Say, look through Brokercheck of FINRA.

 

[Chuckanut]

I Choose to do it myself. Investing is only complicated for two types of we 'ordinary' people - 1.) Those who need complications and stress in their lives and thus create it in their investments, and, 2.) FAs and others who profit handsomely from convincing people that investing is complicated.

I can't tell you what to do. But, I can tell you what I do: 60/40 Asset Allocation. The 60% stocks breaks down to 50% Total USA Market Index and 10% Foreign Market Index, and the 40% breaks out to 30% US Bond Market Index and 10% money market accounts and CD's. Re-balance once a year.

I have friends who find the above too complicated, especially the part about balancing, they do 100% in Vanguard Wellesley.

Take what you wish and leave the rest.
.

 

[audreyh1]

Chuckanut’s approach is an excellent one for starting out and is a good all weather portfolio. You can skip the foreign if you want. You can go 50/50 stocks/fixed income if you want.

It’s really no more complex than that - just rebalance once in a while, like a year.

 

[pb4uski]

You can really do it with 4 tickers or less if you want.

Once you’ve sorted thru your three considerations you are ready to build your portfolio and you’ll need only these three tools to do it. See, I promised this would be simple.

1. Stocks. VTSAX (Vanguard Total Stock Market Index Fund) You’ve already met this fund in earlier posts of this series. It is an index fund that invests in stocks. Stocks, over time, provide the best returns and with VTSAX, the lowest effort and cost. This is our core wealth building tool and our hedge against inflation. But, as we’ve discussed, stocks are a wild ride along the way and you gotta be tough.

2. Bonds. VBTLX (Vanguard Total Bond Market Index Fund) Bonds provide income, tend to smooth out the rough ride of stocks and are a deflation hedge. Deflation is what the Fed is currently fighting so hard and it is what pulled the US into the Great Depression. Very scary. The downside for bonds is that during times of inflation and/or rising interest rates they get hammered.

3. Cash. Cash is always good to have in hand. You never want to have to sell your investments to meet emergencies.

Cash is also king during times of deflation. The more prices drop, the more your cash can buy. But idle cash doesn’t have much earning potential and when prices rise (inflation) its value steadily erodes.

We tend to keep ours here: VMMXX This is a Money Market Fund and time was they offered higher yields than banks. These days, with interest rates near zero, not so much. Now we also keep some in our local bank. If you prefer, an on-line bank like ING works fine too.

So that’s it. Three simple tools.

 

[Red Badger]

Here is a lighthearted, humorous but very accurate read on DIY investing.


https://jlcollinsnh.com/stock-series/

 

[Bestwifeever]

That gives you a good excuse to change. Call Vanguard and Fidelity to discuss; they also offer very nice FAs if you want that, too.

 

[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?

 

[frayne]

^ This. You will almost certainly be better off going with either one of these vs. staying with that "nice guy" and helping him make his boat payments.

^ what he/she said ^

 

[jazz4cash]

He is a nice guy and we haven't lost any money ....

Those are awfully weak reasons to stay with this guy. I would think you will be hearing from his boss very soon. What is the name of his new firm?

You should definitely speak with Fido, VG, and Schwab.

 

[target2019]

One characterisitc often heard, is that the FA is a nice guy.
And then you hear nothing of the FA's performance.
If one can afford to give away 1/2 of portfolio real performance, continue down that path. The FA appreciates it.

 

[calmloki]

....

3. Don't panic. Markets go and they go down.

This is what has always concerned me with investments. By not being in the market one avoids both options. <jk>

For real though, my sister has one stock she has invested in for years - decades - Starbucks. She rode it from a high of $18 down to under $4 back in 2009. Stubborn. Now it's 20 times that of its low. For all that time she has been paying a financial adviser an annual fee and commissions every time she buys more of the same Starbucks stock. She will not change from that adviser, opting to give him a large amount of her earnings and appreciation. By choosing the stock she wanted, based on her drinking Starbucks, and sticking with that single stock she is looking real good. She ignores what the adviser has siphoned off for doing pretty much nothing and has been lucky so far. My fingers are crossed for her. We have thrown money at Vanguard and have done ok with no advice though experience confirms that simpler is better - my great ideas and flyers haven't had a great overall return compared to VTI plodding along.

 

[MRG]

One characterisitc often heard, is that the FA is a nice guy.
And then you hear nothing of the FA's performance.
If one can afford to give away 1/2 of portfolio real performance, continue down that path. The FA appreciates it.

+1

I remember when Megacorp was cutting heads there were two really nice guys who needed maps to find their cubes. They both ended up at Uncle Ed's Bad Investment Advice Firm. Pay 1% for a nice guy who really is a blithering idiot and probably needs the GPS to drive home?

 

[audreyh1]

2019 was a great market year. Did he make you any money?

 

[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.

 

[jollystomper]

2019 was a great market year. Did he make you any money?

+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.

 

[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

 

[mystang52]

OP gave little detail, but my reading between the lines is that the FA's proposal, to quote Hamlet's stepfather, is rank and smells to Heaven. I wouldn't give this FA a penny.

 

[Dash man]

Move on!

 

[FrankiesGirl]

You don't want a nice guy. This is not a budding friendship; it's a business arrangement.

Do you hire your car mechanic or your surgeon to operate based on niceness? I'd be pretty horrified if that was the best criteria you had to go on.

You want someone that cares more for your money than any one else, and doesn't plan on putting anyone else before your interests. You want someone that has the basic intelligence to understand how the market works, and choose simple, easy to use funds that are going to offer you the safest path forward to growing your wealth. You need that person to spend a few hours, maybe a week or so reading some solid, well-researched and documented information on how the market works and suggestions for portfolios that fit your current and future needs and then puts a plan in place... You know who that person is? Hint: you see them every morning in the bathroom mirror.

Your current advisor's niceness should have nothing to do with anything. Many unscrupulous companies train their advisors to ingratiate themselves into their clients' lives, ask about vacations the kids/grandkids, family & work stuff, send a card maybe on your anniversary and birthday and congrats when the teen graduates high school... it's meant to make it harder for you to see them as a business relationship when they start blurring the lines.

And that means you have more trouble telling them to take a hike when you realize they don't offer any real value to your portfolio, or even are robbing you blind (albeit legally and with your permission) with their fee structure and terrible fund suggestions meant to put more of your money into their pockets and usually without any real effort on their part to actually do the best for you.

It's harder to tell a friend you don't want to be friends any more. That is what they are counting on.

I promise you that self-managing a basic index investment portfolio using a "lazy" selection of 2-4 funds will be an excellent choice and the time you spend reading about how the market works will not be painful, ill-spent or impossible for you to learn.

I am the poster child for "if I can do it, any one can" in that I knew NOTHING around 7 years ago, came into some money and stumbled around until I found out about indexing, Bogleheads and all that jazz. I'm a "creative" artist for heaven's sake! I hated math/numbers/money stuff and was terrified of the big bad market and sure I was going to end up losing everything and I would NEVER be able to handled any of this.

I read a few books and blogs, found the Bogleheads wiki, the amazing "If You Can" by William Bernstein, Jim Collins' stock series (now a book "Simple Path To Weatlh," and I am 100% confident, calm, and very happily handling all my money/investments - even taxes! - on cruise control.

 

[kgtest]

+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.

+1

Take stock of your assets, holdings and their performance...this is hard but doable once you track down the numbers and data, then compare against the same time period for the S/P.

That's what I started doing which lead me down a rabbit hole of DIY. This lead me to see how I compared against the Nasdaq, and the Dow...then I was like wait why is Nasdaq outperforming me... OH that is made up of X, Y and Z and they have been on fire. Okay.

What is my risk tolerance? How does that and how well I sleep ACTUALLY transpose into an equity asset allocation?

OR, just do the ole xfer ALL your dough to Vanguard...then drop it in VTI.

 

[DrRoy]

If you are paying a FA fee of 1% of assets, and have a WR of 4% for example, then you are paying 25% of your WR to your FA. I find that math to be nuts. Combine your accounts at Fido. That's what I did. You can likely get a free FA there.