On our own now

[Scuba]

Yesterday after months of thinking and research, we terminated our FA. I finally “got religion” and now believe not even the best FA can consistently beat the market. We were paying fees of 0.7%, which isn’t too bad, but still resulted in our advisory fees being the second largest line item in our budget (after travel). We are moving our portfolio to Fidelity and will be converting to a “lazy” portfolio over the next few years.

Many on this forum are quite critical of FA’s. Ours helped us for a particular purpose at a particular time in our lives, and I don’t regret having her for almost 5 years. However I do appreciate the challenges posted on this forum, as these comments got me thinking it was time to self-manage again.

This decision is going to save us hundreds of thousands of dollars if we live to average life expectancy. Thank you for challenging my thinking and helping me see a better way for us!

 

[omni550]

Woo Hoo! Glad to hear of your money-saving conversion.

omni

 

[Red Badger]

Good on ya! There's a time and a place for most everything... It was time to let her go.

 

[arky]

...... but still resulted in our advisory fees being the second largest line item in our budget (after travel). ...........

Just curious, where do taxes rank ?

 

[Scuba]

Just curious, where do taxes rank ?

My budget comment was in reference to after-tax spending. In the past, taxes would have been our #1 line item, but we are hoping that we will be able to reduce that over the next few years. So including taxes (federal & state), the FA fees were our #3 highest spending item.

 

[Dtail]

We have most of our monies at Fidelity as DIY investors.
You should still receive great service at Fidelity for no fees.

 

[iloveyoga]

I just helped my sister do the same thing!!

 

[Aiming_4_55]

Congrats Scuba! Even more funds for trips and scuba fun!

 

[RobbieB]

I just had a meeting with my Fidelity guy and I'm going to give him another 2 hundred grand so I can get the managed "municipal bond ladder" built up.

Turns out I'm invested in 2 CA muni mutual funds that have a .75% annual expense. At a half mil they will provide a managed ladder of individual bonds for .4%.

Cool. More dough to blow -

 

[mrfeh]

Yesterday after months of thinking and research, we terminated our FA. I finally “got religion” and now believe not even the best FA can consistently beat the market. We were paying fees of 0.7%, which isn’t too bad, but still resulted in our advisory fees being the second largest line item in our budget (after travel). We are moving our portfolio to Fidelity and will be converting to a “lazy” portfolio over the next few years.

Many on this forum are quite critical of FA’s. Ours helped us for a particular purpose at a particular time in our lives, and I don’t regret having her for almost 5 years. However I do appreciate the challenges posted on this forum, as these comments got me thinking it was time to self-manage again.

This decision is going to save us hundreds of thousands of dollars if we live to average life expectancy. Thank you for challenging my thinking and helping me see a better way for us!

We had the exact same experience, 5 years ago. Got rid of our FA (who we had used for 3 years) after being convinced we could do it ourselves. The convincing site was bogleheads instead of this one, but that's neither here nor there.

One of the best decisions we've made. No regrets.

 

[phil1ben]

I just had a meeting with my Fidelity guy and I'm going to give him another 2 hundred grand so I can get the managed "municipal bond ladder" built up.

Turns out I'm invested in 2 CA muni mutual funds that have a .75% annual expense. At a half mil they will provide a managed ladder of individual bonds for .4%.

Cool. More dough to blow -

Assuming that you hold the bonds to maturity, for a $500,000.00 ladder (i just picked a number) you are paying Fidelity $2,000.00 for the 10 minute exercise of selecting 5-10 bonds, or perhaps less. This is not rocket science. Why not pick the bonds yourself and pocket the money. I even think Fidelity has a bond ladder tool that you can use for free. Stated another way, if you are laddering 15 years, I presume that your all-in annual average interest rate is about 3.0%. You are paying them more than 10% of one year's return.

 

[Jerry1]

I just had a meeting with my Fidelity guy and I'm going to give him another 2 hundred grand so I can get the managed "municipal bond ladder" built up.

Turns out I'm invested in 2 CA muni mutual funds that have a .75% annual expense. At a half mil they will provide a managed ladder of individual bonds for .4%.

Cool. More dough to blow -

Assuming that you hold the bonds to maturity, for a $500,000.00 ladder (i just picked a number) you are paying Fidelity $2,000.00 for the 10 minute exercise of selecting 5-10 bonds, or perhaps less. This is not rocket science. Why not pick the bonds yourself and pocket the money. I even think Fidelity has a bond ladder tool that you can use for free. Stated another way, if you are laddering 15 years, I presume that your all-in annual average interest rate is about 3.0%. You are paying them more than 10% of one year's return.

I'm not sure of RobbieB's situation, but what I'm looking at is a bit different than a bond ladder. It's called their Core Bond Strategy. For a $500K minimum, Fidelity will create a bond portfolio for me that will generate a specified amount of income. The draw for me is that they have access to other types of debt than just treasury bonds. Though I admit that with interest rates climbing a bond ladder may be sufficient.

 

[splitwdw]

Assuming that you hold the bonds to maturity, for a $500,000.00 ladder (i just picked a number) you are paying Fidelity $2,000.00 for the 10 minute exercise of selecting 5-10 bonds, or perhaps less. This is not rocket science. Why not pick the bonds yourself and pocket the money. I even think Fidelity has a bond ladder tool that you can use for free. Stated another way, if you are laddering 15 years, I presume that your all-in annual average interest rate is about 3.0%. You are paying them more than 10% of one year's return.

From previous posts, RobbieB has had a FA for quite a while and likes what the FA does. That's how RobbieB can blow more dough and having a FA can give peace of mind for some people. Not quite sure if the FA had him in the 2 CA munis or if that's something that RobbieB did himself. If it was the FA maybe RobbieB should take a closer look at his other investments and ask the FA why he/she picked those. Maybe there's a tax break

OP, Have to laugh, from the title of this thread, I thought the discussion was about last child moving out.

 

[Amethyst]

I thought it was about being retired and having to live on your savings!

OP, Have to laugh, from the title of this thread, I thought the discussion was about last child moving out.

 

[RobbieB]

Yes, I like having someone who knows what they are doing watching my stash. They tried to walk me through buying bonds on their site and I spent a half hour looking and bought nothing. I suffer investment paralysis.

The CA muni bond funds were simply a conversion of Pop's Michigan muni bond funds at Fidelity. So that was easy, CA muni's make more sense than MI muni's if you live in CA.

At the time I didn't even know the expenses and didn't care, just switch from MI to CA for the tax advantage.

I have another account with Morgan Stanley that buys the individual bonds and that one makes the same amount of dough as the Fidelity funds with 66% of the principal. Learned by comparison.

Anyway seems like a good play for me. Get me down to 75% equities from the current 80%. I'm going to have both accounts stop re-investing interest too and just blow the dough.

 

[splitwdw]

Yes, I like having someone who knows what they are doing watching my stash.

And that's all that matters!

 

[DrRoy]

Woo Hoo! Glad to hear of your money-saving conversion.

We have most of our monies at Fidelity as DIY investors.
You should still receive great service at Fidelity for no fees.

+1 and +1.

 

[HarveyS]

Just an FYI - when I built my muni ladder I called Fido and they put me thru to a bond specialist. He and I discussed my situation, what return I wanted, what % of total portfolio was to be in munis, etc. He walked me thru what was available to purchase that met my needs, reviewed ratings, insurance (if any), and other particulars. I instructed him to buy what I wanted, he did so. No fee. This helped get me past the analysis paralysis. We talk every 9-12 months as bonds mature/get called and need to be replaced.

 

[Scrapr]

Just an FYI - when I built my muni ladder I called Fido and they put me thru to a bond specialist. He and I discussed my situation, what return I wanted, what % of total portfolio was to be in munis, etc. He walked me thru what was available to purchase that met my needs, reviewed ratings, insurance (if any), and other particulars. I instructed him to buy what I wanted, he did so. No fee. This helped get me past the analysis paralysis. We talk every 9-12 months as bonds mature/get called and need to be replaced.

Do you (or anyone) happen to know if Vanguard does this? Or do you have to use the PAS for this advice?

 

[68bucks]

I'm curious what the OP's FA was getting them in in returns over that 5 year period. I have contemplated getting rid of my FA from time to time. He has only averaged about 5% since 2011 but I'm in mostly very conservative stuff and 5% was the target in the begining. I'm sort of risk averse I guess. I'm not sure I want to spend the time necessary to manage it myself. I will be retired soon and will have more time so I might reconsider then.

 

[REWahoo]

I'm not sure I want to spend the time necessary to manage it myself.

One of the most prevalent misconceptions about DIY investment management is that it is time consuming. It isn't.

I spend less than an hour a month, and most of that is just checking balances and making sure I'm on track to meet our RMD withdrawal requirements for the year.

 

[HI Bill]

And that's all that matters!

That's not all that matters! What matters is what fees you are paying, and what you're getting in return! If your FA is helping you beat the market, or manage your money in a way that meets your best interest (not theirs), or you are unwilling/incapable of managing your own investments, then go ahead and stick with the FA! If not, move your funds to someplace like Vanguard! My mother's FA had her in investments in funds with a 5% front-end load, and very high fees...almost nothing she did was in my Mom's best interest, except keeping her from taking out more than 6% annually (due to sequence of returns, she did well with this, and never ran out of money).

 

[splitwdw]

That's not all that matters! What matters is what fees you are paying, and what you're getting in return! If your FA is helping you beat the market, or manage your money in a way that meets your best interest (not theirs), or you are unwilling/incapable of managing your own investments, then go ahead and stick with the FA! If not, move your funds to someplace like Vanguard! My mother's FA had her in investments in funds with a 5% front-end load, and very high fees...almost nothing she did was in my Mom's best interest, except keeping her from taking out more than 6% annually (due to sequence of returns, she did well with this, and never ran out of money).

That's all that matters to RobbieB and anyone else on this forum that has a FA. RobbieB has had his FA for quite a while and he is satisfied with him/her. I do not have a FA. I'm not going to argue with someone that likes what their FA does for them.

 

[Freedom56]

Yesterday after months of thinking and research, we terminated our FA. I finally “got religion” and now believe not even the best FA can consistently beat the market. We were paying fees of 0.7%, which isn’t too bad, but still resulted in our advisory fees being the second largest line item in our budget (after travel). We are moving our portfolio to Fidelity and will be converting to a “lazy” portfolio over the next few years.

Many on this forum are quite critical of FA’s. Ours helped us for a particular purpose at a particular time in our lives, and I don’t regret having her for almost 5 years. However I do appreciate the challenges posted on this forum, as these comments got me thinking it was time to self-manage again.

This decision is going to save us hundreds of thousands of dollars if we live to average life expectancy. Thank you for challenging my thinking and helping me see a better way for us!

Good move!

 

[RobbieB]

Got the sell order in for the stocks, going to start the managed muni bond thing with Fidelity next week. New AA will be 75/20/5 which I like. All the muni bonds should generate 25 to 30 grand a year double tax free.

The local Fidelity guy is a CFP, although the bonds will all be managed by the bond guys in Boston.

Yes, I like having a person I know to talk to and meet with face to face. I like having a whole team of people supporting him. I like to go where everybody knows my name.