So I guess I accidentally fired my FA yesterday....

[mystang52]

The best defense is a good offense, and the FA is very good. Look how he has changed the focus from "why did my portfolio not do better" to "why doesn't he want to work with me". He still didn't give you the courtesy of even a boilerplate answer to your real question. You are lucky--he could have said you wanted low management fees but you really should allow him to churn your funds to take advantage of market swings and here is how much better he would have done if you had (presto, a chart with cherry picked timing results) blah blah blah

Good riddance.

+1 Rather than explain his actions he went on offensive to deflect having to do so.

 

[Sarah in SC]

It isn't all that uncommon for an advisory firm to "fire" a client. The circumstances are really different in every case, and it likely also hinged on how the relationship was prior to the email you sent.

Managing expectations is critical to providing good professional services any any field, and I would imagine that the FA felt that it is better to terminate the relationship in your particular circumstance. I wouldn't be embarrassed, as it is strictly a business decision for him.

 

[FIREmenow]

I don't think this should be the right expectation. You are paying to have someone take care of a chore. You are *able* to do it just as well but you don't want to because you want to spend your time elsewhere. A FA doesn't have the crystal ball to beat the market, not year-by-year or over multiple years.

I agree with you. Perhaps the words are wrong. I expect someone to do better than I would with the time I am able/willing to devote to it. I am paying for their time to do the research, etc. which would be better than I could do without spending the time on that.

I do, however, expect that one would be able to get in the ballpark with some of the benchmarks available, and, if not, offer potential reasoning/decisions why it did not.

I didn't/don't expect a crystal ball. Explanation of a decision that didn't work out along with with rationale, and a plan for moving forward is just fine with me.

 

[samclem]

A FA doesn't have the crystal ball to beat the market, not year-by-year or over multiple years.

I agree that they don't, but some promise (or imply) that they will.
To the OP: Yes, the FA did you a big favor. If you've done the math on the amount that the .5% fee amounts to, and realize that it will only take you about 3 hours per year to do this yourself, you already know that doing it yourself earns you quite an hourly rate. Tax free.
Some FAs (like docs, lawyers, and many other specialists) resent an informed client. I'll bet your FA just doesn't get many calls/emails like yours, and doesn't want to deal with the hassle.
If I were in your boots, I'd get a target allocation set up and transition out of the hodgepodge of funds into a simpler set of funds/ETFs that you picked and understand. Five years from now, send your FA a Thank You card on the date of your "breakup" comparing the balance of your account with your allocation compared to the balance if you'd stayed with his picks. And send him a photo of what you bought with the money saved on fees. >Then< let it go.

 

[mike143]

Three-fund portfolio - Bogleheads

 

[FUEGO]

Wow, sounds like you dodged a bullet. Your financial leech, er I mean adviser, just unlatched himself from you on his own. Rarely does this occur so easily in the wild.

Go grab a vanguard balanced fund at 0.20% expense ratio or less and call it a day.

Oh, and what a jackass your FA was.

 

[bssc]

Congratulations on being fired. I think that was the best thing that could happen to your portfolio.

 

[2B]

Wow, sounds like you dodged a bullet. Your financial leech, er I mean adviser, just unlatched himself from you on his own. Rarely does this occur so easily in the wild.

Comparing a FA to a leech is somewhat demeaning .... to the leech.

 

[Bikerdude]

Put it all in Wellington and go take a nap.

 

[Sarah in SC]

Comparing a FA to a leech is somewhat demeaning .... to the leech.

As always, so nice to see these friendly faces and voices when I check in around these parts.

 

[dd564]

I think you need to look at the psychology of the financial advisor.

Some are leeches that just want to set it and collect with minimal interactions.
Others want to have more discussions about strategy, debate, etc.

For a FA to succeed, they need to have the right type of clients and this one probably thought you were going to be difficult in the long run to work with.

Also, some advisors know that they aren't providing someone like you as much service as they are providing someone with a lower education financially.

If I'm a financial advisor, and my client is pretty knowledgable, I can assume long term that my 0.5% fee puts me at a disadvantage over the guy doing it himself.

Also, one more point, the financial advisor is not getting paid to do better than the market. (in some cases he's being paid to make money for a insurance company, etc.).
Unless he told you he would outperform the market, he's just there to do his best.

It's like hiring a property manager for a rental home. You probably can do a better job yourself because you care more about your own rental home, but you pay them so you don't have to worry about leaky faucets and bad tenants, etc.

 

[target2019]

“…A society, or all mankind, should study the consequences that are likely to result from each decision that is possible at the present time. By making appropriate selections today, society can influence its future, rather than wait for the inevitable to occur. The individual, too, can consider what sort of person he wants to become, and what goals he wants to achieve, before making a choice between various alternatives. He can set out to produce a certain future for himself, instead of feeling that his life is completely determined by forces over which he has little control.” Allen Tough from The Adult’s Learning Projects

Yes, your email may have been provocative. Yes, his reaction was unprofessional. Yes, you now have to move on to the next FA or do it yourself.

Without knowing what space the funds are in, or knowing anything about you, it's hard to say what selections are appropriate. Suggest you pump that stuff through M* analyzer and see what it is really about. Then start simplifying while still hitting the right areas in the style box that's right for you.

 

[phil1ben]

There is no excuse for unprofessional conduct or communication. Period.

However, allow me to just focus on the performance issue. As a disclaimer I do not use a FA and only buy individual stocks and individual bonds (mostly munis) for my own account. I own very few mutual funds because I do not see any reason to pay their fees when I can do it myself. I listen to CNBC and read the Wall Street Journal just like they do. I will not comment on allocation among funds because I do not purchase them. I am just focusing on performance 2% below a benchmark for 1 year.

The FA's performance was based on a single year. He apparently made some choices which resulted in below benchmark performance for the year. I get it. His choices involved a decision to allocate your money in a certain way that proved incorrect as compared to his peers. No one has a crystal ball. Had he made other choices (hopefully informed guesses really) you may have been 2% above the benchmark. To me, you cannot analyze performance of money management over a single year. He should be answering the question of how he has performed against the benchmark over the past 7-10 years. Hopefully you inquired before retaining him.

As stated I do not use a FA, but (except for his unprofessional conduct) his performance needs to be evaluated over a period longer than 1 year. If you did not ask the question and do not know the answer that is reason enough to switch because you do not know his history. Many money managers investing fixed income funds simply got 2014 wrong. They never expected interest rates to go down. Virtually all of them contemplated at least a 75-100 basis point rise from January, 2014. That view would have weighted them towards short term products to protect against perceived interest rate risk.

If you decide to retain another FA, get his/her history against the relevant benchmark for an extended period of time. Just my two cents.

 

[Chuckanut]

A

Here are the funds as of the end of the year:

Fidelity Balanced
Fidelity Four in One
Vanguard Total Stock Index
Vanguard Value
Pandora
Vanguard Mid Cap
IShares Russell 2000 Index
Scout Intl
Vanguard Total Intl Index
Pimco All Asset
Cap World Bond Fund
Met West TR Bond
Vangaurd S-T Bond

My gut impression is that this number and combination of funds is very similar overall to having just three index funds - Total US Mkt/Total Bond Mkt/ Total Intl Mkt.

 

[easysurfer]

Congratulations.

Easier to just pull the band aid off quickly then in small parts .

 

[W2R]

The best defense is a good offense, and the FA is very good. Look how he has changed the focus from "why did my portfolio not do better" to "why doesn't he want to work with me". He still didn't give you the courtesy of even a boilerplate answer to your real question. You are lucky--he could have said you wanted low management fees but you really should allow him to churn your funds to take advantage of market swings and here is how much better he would have done if you had (presto, a chart with cherry picked timing results) blah blah blah

Good riddance.

+1 Rather than explain his actions he went on offensive to deflect having to do so.

+2 This guy did not do a very good job for you at all, and charged you anyway. You are much better off without his input.

 

[Helen]

The best defense is a good offense, and the FA is very good. Look how he has changed the focus from "why did my portfolio not do better" to "why doesn't he want to work with me". He still didn't give you the courtesy of even a boilerplate answer to your real question.

This is exactly what I was thinking. He never answered your question, Firemenow. He had you analyzing your own behavior instead of his.

So what is your next move?

 

[FIREmenow]

This is exactly what I was thinking. He never answered your question, Firemenow. He had you analyzing your own behavior instead of his.

So what is your next move?

Thanks, I will likely be building a simple bogglehead 3- or 4-fund portfolio and managing myself after a bit more research.

I have to assess the tax consequences, however, of moving stuff around at different times and from different allocations and account types.

Best,

 

[harley]

As always, so nice to see these friendly faces and voices when I check in around these parts.

Well, you know, there are leeches like for medical applications in the old days. Not necessarily beloved, but useful and somewhat appreciated. Then there are the leeches like in The African Queen. I'm sure you are much more like the former.

 

[Bestwifeever]

As always, so nice to see these friendly faces and voices when I check in around these parts.

I bet you would have had a better and more thoughtful answer for the OP taking the facts as he gave them at face value (there may be more to the story but I imagine you have had clients contact you with questions about their accounts' performance)

 

[LoneAspen]

I got an email reply that was a bit of a shock. It basically said that while he appreciated a knowledgeable client, the "tone" of my email was "unprofessional, condescending and disrespectful." He said that apparently I had taken a "adversarial approach to our engagement" and he could not continue work with a relationship like that. He said that I obviously didn't understand what a "long term relationship" was all about. As such, and apparently prior to writing me the email, he had immediately terminated his firm directing of my accounts.

I'm not on social media, but if I got something like that from a so-called "professional" that I pay to manage my accounts, I'd be very tempted to take to Twitter, Facebook, Instagram, send copies to reporters at major financial outlets, let his firm's partners/execs/board of directors know, etc, and spread the word about how this guy treats his clients when they ask questions.

I'd certainly advise everybody I know who this bum is, and never to do business with him, or his firm, ever again.

 

[sheehs1]

My guess is that yours may not have been the only email or phone call with questions. My advice is for you to call THE or one of THE managing partners and discuss it with him/her. They need to know, regardless of whether you stay or go.

I do not know what your email said but I can't imagine it was that out of line. (of course if HE is a managing partner well then…..). You had questions. He should have answered them. Handling other peoples money is stressful on both sides, for the FA AND for the client. Most FA's understand this.

In my opinion, the way this person handled it was possibly most unprofessional. Once any modicum of trust is broken, it is broken. So…I am thinking you will have to move on, either to another advisor at the same firm or somewhere else.

 

[nash031]

Am I missing something? Why am I feeling embarrassed? Did I breach some kind of "code"?

I'd say he's missing something: that he works for you and should consider it a privilege to collect money from you at such a generous rate. Ego is a b****. Happily take your 0.5% elsewhere.

 

[38Chevy454]

Take the 0.5% and put it back in your pocket! Manage it yourself. Move on and prosper to your advantage, not the FA's.

 

[INTJ10]

My experience with FA's is that once you lose confidence/trust with the other person it can't be gained back so the relationship becomes more and more adversarial. Maybe he figured it was too much effort to regain your trust and things were going to go downhill anyway.


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