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Old 12-25-2021, 05:49 PM   #21
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Originally Posted by mrfeh View Post
I don't see how any FA is worth $14K per year, unless they would stop you from panic selling.
That is my thinking, as well. It seems like it would be simple enough to just invest it all in Wellesley or Wellington or 50/50 and the survivor wouldn't have to do anything but pull off 4% yearly and take RMDs and pay the taxes on them. I'm sure the broker would take care of that for free.
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Old 12-25-2021, 06:20 PM   #22
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Originally Posted by ProGolferWannabe View Post
I am not complaining. I think I have been more than clear that I am in general satisfied with the advisor and recognize that the one year under performance of the previously mentioned 1.5% vs a 60/40 portfolio is likely not large enough or a long enough period of time to consider changing anything. And yes, the advisor made me aware of the structure of the portfolio before investing….the allocation is well within my comfort level with regard to risk and return. I am asking what might be better parameters to make such an evaluation.


The answer seems pretty obvious given that your concern is prompted by the adviser's portfolio underperforming the 60/40 portfolio in 2021. You want the adviser's portfolio to exceed or at least match the 60/40 portfolio in terms of annual return (especially given the $14k fee that you pay). Since that didn't happen in 2021, you need to talk to your adviser to adjust the portfolio for the upcoming year. Either way it's a good idea to review/adjust your portfolio annually, whether DIY or through professional money management.
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Old 12-25-2021, 07:19 PM   #23
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Originally Posted by ProGolferWannabe View Post
My portfolio is about $4 million; fees are $14,500 per year. As the portfolio grows (or shrinks) the fee will remain unchanged (so long as they don’t raise the fixed fee). If my math is right, that works out (currently) to about .4%. The underlying cost of the funds they invest in are negligible…..all index based ETFs.
I'm a big fan of DIY with respect to portfolio management but as you've described your situation, I think their fee is reasonable. I like that they invest in low cost passive index funds rather than funds that enrich them. They are doing your taxes which has value. Hopefully they wil be advising you on draw down strategies and things like social security, IRMAA optimization if applicable and tax loss harvesting. And they will be more than worth the fee if the time comes where your wife must manage the portfolio.

Their asset allocation sounds reasonable. I would not base a decision to fire them on how they are performing relative to some other portfolio allocation, as long as they remain invested in low cost index funds and are not attempting to market time. However, if you really would prefer to be in a simple 60:40 portfolio of U.S equity to bonds, couldn't you just tell your advisor that is what you want? I would imagine they would be happy to comply, as such an allocation is eminently reasonable.
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Old 12-25-2021, 07:20 PM   #24
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Originally Posted by ProGolferWannabe View Post
My portfolio is about $4 million; fees are $14,500 per year. As the portfolio grows (or shrinks) the fee will remain unchanged (so long as they don’t raise the fixed fee). If my math is right, that works out (currently) to about .4%. The underlying cost of the funds they invest in are negligible…..all index based ETFs.
I'm a big fan of DIY with respect to portfolio management but as you've described your situation, I think their fee is reasonable. I like that they invest in low cost passive index funds rather than funds that enrich them. They are doing your taxes which has value. Hopefully they wil be advising you on draw down strategies and things like social security, IRMAA optimization if applicable and tax loss harvesting. And they will be more than worth the fee if the time comes where your wife must manage the portfolio.

Their asset allocation sounds reasonable. I would not base a decision to fire them on how they are performing relative to some other portfolio allocation, as long as they remain invested in low cost index funds and are not attempting to market time. However, if you would prefer to be in a simple 60:40 portfolio of U.S equity to bonds, couldn't you just tell your advisor that is what you want? I would imagine they would be happy to comply, as such an allocation would be eminently reasonable.
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Old 12-26-2021, 05:10 AM   #25
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I had a FA for several years in the early 2000's. He managed about half of my investments and I kept the rest. I consistently outperformed his return, and I fired him. I tried a different one with the same result. No more FA's for me.
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Old 12-26-2021, 06:26 AM   #26
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Originally Posted by ProGolferWannabe View Post
Would be interested in the thoughts of those here. After managing my (and my wife’s) nest egg independently for our entire working lives, I handed over the management of our money to a fee only CFP. I like the advisor, I am happy with the fee structure (fixed fee regardless of the amount of funds under management—-not an AUM approach), their investment style/approach is based on low cost ETFs, etc. Overall, happy.

They have a somewhat different allocation of assets than what I have traditionally had….they have more money in international and developing markets/countries than I have had, as well as more money in REITs. Theoretically, I am ok with this broader allocation, but practically speaking, my returns for the past year have lagged behind what I would have earned had I just kept a 60/40 portfolio.

I am a long term investor, so am not worried about shorter term performance deficiencies, but at what point would you be thinking about moving on or at least addressing the issue with advisor? Is there certain amount of time you think is reasonable (say 2-3 years) or a certain performance benchmark deviation (my portfolio performs 5% less than a balanced non-managed portfolio)?

Thanks in advance.
Each year you should determine the performance and decide if it's working.

I'd evaluate each quarter, gather statistics, and at beginning of each year decide if the outcome is worth $14,500.

Your performance should be exactly the ETF mix says minus the $14,500. If it's not, than you need an explanation.

Since you're doing this for the benefit of spouse you should be thinking about whether it is truly the right decision for her. Maybe a robot type service is more predictable.

I'm glad you brought this up. It applies to many of us.
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Old 12-26-2021, 10:01 AM   #27
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It is a fact that international ETFs have really underperformed for years, and hence lower performance than while you DIY. The question goes back to you and your FA as to whether you want to continue to hold international market ETFs.
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Old 12-26-2021, 10:13 AM   #28
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Don’t expect a FA to talk you through the bad times. I knew where I should have been positioned going into 2008 and he talked me out of it.
Just because they can talk, it doesn’t mean they say the right things.
In the end it was good, I broke free and have been DIY ever since - and much happier.
$14,500 is a lot of money to pay to underperform. That’s more than our cost of healthcare in a year.
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Old 12-26-2021, 11:33 AM   #29
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Totally understand your concerns regarding your health and your wife but is having an advisor worth the $8000/year or so more than a Lifestategy fund? Only you can decide.
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Old 12-26-2021, 12:27 PM   #30
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Realize you have trusted yourself for many year as a DIYer. You now are trying to transition from DIY to DIFY (do it for you). You should figure what are all the various services this advisor is actually providing you. Then determine a dollar value for each separate service plus the annual value for future handling for spouse. Does the total value of services equal or exceed the $14,500 fee?

You should schedule a meeting with the advisor to discuss the transition and how s/he can help build the trust level you need to sleep comfortable at night and not have to keep micro-managing the advisor. Trust takes time to earn, plus you have to learn to give up a level of direct control. Act as an owner of your company and allow your president (advisor) manage the details. Though you must have mutually agreed to measurements between the two of you that the advisor is evaluated on quarterly and annually.

Personally I know I prefer direct control so we are simplifying our finances so spouse can easily handle. The big thing I have come to accept is that I don't know what the market will do, so we just set a target AA with defined bands that I monitor monthly to see if current AA is outside the target bands and needs to rebalance our simple 3-fund portfolio back to target AA. Accepting what the market will provide and not worrying about trying to get every last dollar of performance.
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Old 12-26-2021, 12:43 PM   #31
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Everything in life has a cost. One can fly on a low cost airline or business class on a traditional airline.. Either will get you there safely. I have managed my own investments for many years( I'm almost 80). I managed my daughter' investments, too.. I did well. My investments are now in the 8 figures.. This year I said "enough"- for the reasons mentioned( wife not interested; I won't live very much longer; it's time my daughter did her own investing. The right investment management is a lot more than managing "what to buy". I wouldn't be so fast in putting down using one. I feel it is totally worth the cost. My wife and daughter's family now have someone we all trust to help them in the future.. I sleep much better knowing that. That is worth something.. How much that is worth is totally up to the individual involved.
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