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Help me - The FA's are beating me.
Old 05-01-2023, 08:40 AM   #1
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Help me - The FA's are beating me.

I have a Vanguard tIRA, Vanguard Roth, Vanguard taxable, and an IRA through an FA. MIL has a few accounts through a different FA.

My tIRA and taxable accounts are 100% stock. My Vanguard IRA is 58% Wellesley, 16% Total stk, 16% International stk, and 10% total bond. I realigned my mix into Wellesley in late 2001.

My FA tIRA is 5% cash, 40% equities, 45% Fixed income and preferred, and 10% alternatives.

MY MIL's FA account must be a little more aggressive that my tIRA's, in that she gains more than I do in good months and loses more in bad months.

My FA tIRA has been beating my Vanguard tIRA over the past few years - in up and down markets. MIL's account always beats my Vanguard account in up markets.

Years ago I remember my Vanguard tIRA account was beating my FA account. I'd like to get back to those times when I was beating the FA, but I'm unsure how to do it. But I need to re-allocate $ and find the best funds to serve as my non- equity portion. This without getting top heavy in equities.

What funds do you Vanguard folks use for non equity assets in your tIRA's?
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Old 05-01-2023, 09:36 AM   #2
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Short-term Investment Grade Bonds and Individual Tips. I don't look at my historical returns. And I especially don't look at anything narrower than the total portfolio except to check for unrealized losses in taxable.
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Old 05-01-2023, 12:21 PM   #3
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Sounds like a good FA. If you can't beat him, why not join him instead of the gyrations? Or is it more of a game for you?
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Old 05-01-2023, 12:38 PM   #4
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Do the returns include the fees paid>?
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Old 05-01-2023, 12:41 PM   #5
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Do the returns include the fees paid>?
Thatís what I was wondering.
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Old 05-01-2023, 12:41 PM   #6
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I think OP means her Roth IRA is 100% stock.
That Wellesley fund is 62% bonds, so that's part of the reason your tIRA is underperforming...
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Old 05-01-2023, 01:52 PM   #7
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Help me - The FA's are beating me.


So funny!

When I saw the thread, I immediately thought: "Holy mackerel, never heard of FAs getting violent with their clients".

PS. I guess the rash of recent Web headlines about crimes and violence being committed daily conditions me to be so jumpy about what I read.
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Old 05-01-2023, 04:06 PM   #8
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Thoughts:

1) You should be looking at cumulative total return, not at individual years.


2) Four years is only beginning to look at a long enough period to draw conclusions.

3) Different asset allocations produce different results, an unknown but probably big factor in what we are seeing here. You should be looking at total return of the equity tranche of each account, not blended returns mixing equities and fixed income.

4) The most important analysis, looking at each equity tranche versus a total market fund like VTI, is missing here. Do this and be sure to use total return numbers, which is increased by dividend income and is reduced by FA fees.
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Old 05-01-2023, 04:59 PM   #9
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Agree that make sure you are comparing equally. Total return including dividends or capital gain distributions, and less any fees.

My only thought is maybe the FA has a closer stop loss selling point, and therefore might be minimizing downward trend. The question is when and how to jump back in. Yes, that's basically market timing.
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Old 05-01-2023, 05:10 PM   #10
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Originally Posted by jebmke View Post
Short-term Investment Grade Bonds and Individual Tips. I don't look at my historical returns. And I especially don't look at anything narrower than the total portfolio except to check for unrealized losses in taxable.
Thanks - I'll look into working in some short term bonds and TIPS.

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Originally Posted by marko View Post
Sounds like a good FA. If you can't beat him, why not join him instead of the gyrations? Or is it more of a game for you?
It is more of a game at this point. I still hold the lead long term, but the tide has been turning.

And I'm thinking long term after I'm gone. DW is not investment savvy. Not that moving an account from Vanguard is a big deal, but it would be easier for her if I moved it.
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Old 05-01-2023, 05:16 PM   #11
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Quote:
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Do the returns include the fees paid>?
Quote:
Originally Posted by Jerry1 View Post
That’s what I was wondering.
Yes returns are after fees paid. Return is based on increase/ decrease of portfolio balances divided by beginning portfolio balance.

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Originally Posted by TheWizard View Post
I think OP means her Roth IRA is 100% stock.
That Wellesley fund is 62% bonds, so that's part of the reason your tIRA is underperforming...
I've never rebalanced, so the Wellesley pct of account has increased - and more than expected. I'll rebalance and take care of this.

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Help me - The FA's are beating me.


So funny!

When I saw the thread, I immediately thought: "Holy mackerel, never heard of FAs getting violent with their clients".

PS. I guess the rash of recent Web headlines about crimes and violence being committed daily conditions me to be so jumpy about what I read.
That is funny. But one of the FA's is Chicago based so I suppose physical violence is possible.
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Old 05-01-2023, 05:23 PM   #12
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Originally Posted by OldShooter View Post
Thoughts:

1) You should be looking at cumulative total return, not at individual years.

2) Four years is only beginning to look at a long enough period to draw conclusions.
True, I'm going to take a longer term look at it. I only had 4 years of MIL data handy, so I stopped there for this exercise. I have 9 years of comparison between me and out FA, so it is more revealing.

Quote:
3) Different asset allocations produce different results, an unknown but probably big factor in what we are seeing here. You should be looking at total return of the equity tranche of each account, not blended returns mixing equities and fixed income.

4) The most important analysis, looking at each equity tranche versus a total market fund like VTI, is missing here. Do this and be sure to use total return numbers, which is increased by dividend income and is reduced by FA fees.
Yep I'm aware that I'm comparing apples to oranges. I'm only comparing the bottom line. - the account balances.
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Old 05-01-2023, 05:27 PM   #13
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Originally Posted by 38Chevy454 View Post
Agree that make sure you are comparing equally. Total return including dividends or capital gain distributions, and less any fees.

My only thought is maybe the FA has a closer stop loss selling point, and therefore might be minimizing downward trend. The question is when and how to jump back in. Yes, that's basically market timing.
Yes - I need to convert some of the Wellesley to Total stk and Int Total stock to increase my return. And yes it's market timing, so I will do it in spurts
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Old 05-01-2023, 06:02 PM   #14
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I think one should also adjust for taxes and risk. Which, I will add, is hard to do correctly. I've never known any active investor who says they have done it, let alone done it properly. Whenever I bring it up, I tend to get ignored.
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Old 05-01-2023, 06:26 PM   #15
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I think one should also adjust for taxes and risk. Which, I will add, is hard to do correctly. I've never known any active investor who says they have done it, let alone done it properly. Whenever I bring it up, I tend to get ignored.
Not a thread hijack here, so I'm not encouraging discussion, but the fundamental problem is that we have no numerical way to assess risk. Standard deviation, despite Harry Markowitz's efforts, does not do it IMO.
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Old 05-02-2023, 07:26 AM   #16
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The answer as to why is down in the weeds.

You'd need to examine specific funds and how they are invested. For example, Wellesley did not deliver performace last year to match 35% total stock and 65% total bond.
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