Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
How does my FA compare?
Old 07-20-2019, 01:00 PM   #1
Recycles dryer sheets
 
Join Date: Mar 2014
Posts: 64
How does my FA compare?

I think she's doing well, although I guess it could be just the market, but I thought I'd ask:

I inherited an IRA in 2016 of $188k. It came with a financial adviser and I left the funds there because the thought of pulling money out of a lot of different UITs with assorted maturation dates and withdrawal fees gave me a headache.

After taking out about $37k over the past 3 years, it's now worth over $242k. Her fees are a little high but overall I'm pretty happy with the results and was considering moving another fund over. My only input was to have her roll my parents' energy UITs, when they matured, into technology ones. The rest of the rollover funds the FA chose. Including the money I withdrew, that's about a 47% increase over 3 years - is that what most people are averaging now with the market these days??

The IRA and TSP I'm managing have done ok but not as well as this IRA, but on the other hand, I don't spend my free time going to financial seminars the way this woman does...
__________________

Kim451 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-20-2019, 02:42 PM   #2
Thinks s/he gets paid by the post
OldShooter's Avatar
 
Join Date: Mar 2017
Location: City
Posts: 4,622
Ask her to provide the time-weighted total return % for the equity portion of your account since inception. Advisors typically avoid providing this number, but all you need to do is to compare it to a total US market fund's total return and you will have your answer.

This is a bit of a tedious calculation for someone in her shop to do but it is a reasonable thing for you to insist on especially given fees that are "a little high."

Or you can do it yourself but you will need records sufficient to track monthly all funds that you have added to or drawn from the account. Excel will help you.
__________________

OldShooter is offline   Reply With Quote
Old 07-20-2019, 02:54 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 22,431
It's really hard to say. To try to compare to a balanced equity/bond index investment, the market had some volatility, so it would really make a difference when exactly in 2016 it was worth $188K, and exactly when the $37K was withdrawn.

If I use June2016 to JUNE2019, and spread the 'over 3 years'' w/d of $1K per month to get to $36K w/d, a 100% stock index comes out at ~ $235K, but that number could really vary with specific timing. So it is hard to say, but could be doing quite good, but maybe middling depending on timing. They don't look terrible though. We also don't know anything about their volatility from those numbers.

http://bit.ly/30EoeUa <<< short link to data

I guess the question is, do you want to be in specific Unit Investment Trusts, over the diversification of using broad-based index funds? I'd have to see the history of those UITs in the ups/down of the past 20 years to have any confidence at all in how they might perform in the future, compared to some stock/bond blend.

A cynical person might suspect the FA has you in UITs because she can charge higher fees for these, or her company makes higher fees, or just to make the portfolio look 'special'. Do you want to be in UITs?

edit - just saw OldShooter's post - this points out an issue for many of us - lack of transparency. I like to know what I'm invested in, and the broad based indexes just buy 'the market' a wide range of holdings. I guess some people might want specific bond categories, but you can look it up easily for any Total Bond index fund and see if it fits. I'd bet that's tougher for a bunch of UITs?

-ERD50
ERD50 is offline   Reply With Quote
Old 07-20-2019, 03:14 PM   #4
Full time employment: Posting here.
RetireBy90's Avatar
 
Join Date: Feb 2009
Location: Cville
Posts: 858
I would think it depends on how comfortable you are in managing your own funds. When mom passed, she had assets with an advisor and had to call him for any actions. She was comfortable with this and trusted him, so when I took overwatch I left those funds with him and any new ones went to a Fido account managed by me.
All that to say, my brother, sister and I all shared in estate. I manage my $$ and both sister and brother have advisors. They don’t want to spend the time to manage and monitor funds where I enjoy it.

If it frees you to do what you want, then work with advisor on how to get fees under control. If we get returns of 6% over next decade as some suggest, and you pay expenses of 1% in funds selected by advisor, then another 1% to manage your $242, then one third of return goes to someone else. One of the things that will provide you greatest return is to get the expenses down. Find a way to pay all in less than 1%, advisor and fund fees. Many advisors will drop less percent with a higher balance. Just my 2%
__________________
FIRE 31 Aug, 2018 - Always leave every place better than you found it, always give more than expected
RetireBy90 is online now   Reply With Quote
Old 07-20-2019, 03:27 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 22,431
Quote:
Originally Posted by RetireBy90 View Post
...They donít want to spend the time to manage and monitor funds where I enjoy it. ....
And a set AA and buy & hold some broad based index funds takes near zero time/effort each year. Maybe 10 minutes if you want to review to rebalance or pull some funds?


Quote:
Originally Posted by RetireBy90 View Post
.... One of the things that will provide you greatest return is to get the expenses down. Find a way to pay all in less than 1%, advisor and fund fees. Many advisors will drop less percent with a higher balance. Just my 2%
Why stop at 1% fees? VTI and BND are 0.03%.

-ERD50
ERD50 is offline   Reply With Quote
Old 07-20-2019, 03:30 PM   #6
Moderator
Aerides's Avatar
 
Join Date: Nov 2015
Posts: 5,325
So looking at this simply, in 3 years on $188k you gained 91k plus whatever the fees were. 48% total return over 3 years.

That sounds pretty healthy, and perhaps slightly better than the typical index funds. But it's a very small sample, and we've now idea if that's just getting lucky, and riding the strong bull during that period. I agree it would be helpful to know what the AA is, where it's invested exactly, so that the potential downside is mitigated as well.

Given it's a small amount overall, I wouldn't be a big rush to move it if you otherwise have comfort with her.
Aerides is offline   Reply With Quote
Old 07-20-2019, 06:22 PM   #7
Thinks s/he gets paid by the post
The Cosmic Avenger's Avatar
 
Join Date: May 2016
Location: Mid-Atlantic
Posts: 1,333
It seems like you're getting a good return, but my dad held a bunch of sector funds and bonds when he passed away, and even though I'm a simple index fund kind of investor, I left those investments as-is because he was a smart guy, very good with numbers. But other than the higher expense ratio for those sector funds, I'm not paying a fee for keeping his investments as he held them.

If you're happy with the return, I'd just fire the FA and keep those investments, or maybe sell them and buy an index fund or two.
__________________
-Looking to FIRE in the mid-2020s, which would be our mid-50s.
The Cosmic Avenger is online now   Reply With Quote
Old 07-21-2019, 04:47 AM   #8
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 3,127
As an example, if your WR is 4% and your advisor fee is 1%, they are getting 25% of your annual spending. Way too much for me.
__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote
Old 07-21-2019, 05:51 AM   #9
Thinks s/he gets paid by the post
VanWinkle's Avatar
 
Join Date: Oct 2017
Location: Brighton
Posts: 1,432
Quote:
Originally Posted by DrRoy View Post
As an example, if your WR is 4% and your advisor fee is 1%, they are getting 25% of your annual spending. Way too much for me.
This!! +1
__________________
Retired May 13th(Friday) 2016 at age 61.
VanWinkle is offline   Reply With Quote
Old 07-21-2019, 10:15 AM   #10
Recycles dryer sheets
 
Join Date: Mar 2014
Posts: 64
Quote:
Originally Posted by ERD50 View Post
A cynical person might suspect the FA has you in UITs because she can charge higher fees for these, or her company makes higher fees, or just to make the portfolio look 'special'. Do you want to be in UITs?

edit - just saw OldShooter's post - this points out an issue for many of us - lack of transparency. I like to know what I'm invested in, and the broad based indexes just buy 'the market' a wide range of holdings. I guess some people might want specific bond categories, but you can look it up easily for any Total Bond index fund and see if it fits. I'd bet that's tougher for a bunch of UITs?

-ERD50
My parents had had their IRA set up in UITs for years, with this adviser. I didn't try to change it because none of them were maturing at the time and, I had to look up UITs! I can go online to see what they're invested in but the fees are not transparent. At the maturation date, I can see what the total returns are and we've rolled the ones with low returns into other funds.

Anyway, I retired early and can't touch my IRA or TSP yet so this is the only fund I can use, and I wasn't planning to have it last more than 10 years. Looks like it may hang in for a while though at this rate. Since my regular IRA and TSP are the bulk of my funds, and I'm managing them and pretty sure they don't have the best manager, I'm still considering what to do with them.
__________________

Kim451 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
How Does This Group Compare to the US at Large? Midpack FIRE and Money 28 04-11-2011 08:50 PM
How Does Your 401K Compare keegs FIRE and Money 20 10-30-2010 03:22 AM
How does your stash compare to this? mickeyd FIRE and Money 32 02-19-2009 09:20 AM
How to compare funds? smooch FIRE and Money 4 05-06-2005 06:08 AM

» Quick Links

 
All times are GMT -6. The time now is 04:18 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.
×