Separately Managed Account (SMAs) revisited

[steady saver]

I've posted before about Separately Managed Accounts (in our case, with Fidelity). We do not currently have one.

At the time, I didn't have any losses in my individual brokerage account for that to make sense even bothering with. Today is a different story.

I'm looking at wanting to get rid of some megacorp stock anyway. We're way overloaded in it and while it's down, it's also likely to be a very slow climb up. Between having too much money in it proportionately, and thinking we'd be better off even in diversifying, I want to pose the question of SMAs again.

I just got off the phone with my local FIDO rep. She has always been very helpful, not at all pushy and I feel completely comfortable telling her I don't or do want to do something. She pointed out today that, in this market with everything upside down that our decision to hang on and do nothing is an option that makes perfect sense. I told her I wanted to be smarter with the overweighted company stock we have and take the losses and put it to work somewhere else. She said she thought that was a good idea and that we could do it ourselves or we could consider the SMA again if we didn't want to do it ourselves.

Here's my quandry. I'm not sure what I'd invest that money in once I sell the stock. I could put it into VTI (my other largest holding in my individual brokerage account), use it to lower my AA (which was around 71% equities last I could get a reading in the analysis section of my FIDO report) and sit on cash OR buy into something safe like CDs or bonds though CDs at the moment sound like a waste of good cash potential.

DH is delaying his retirement just for a bit so we have a psychological safety net. We also have about 3 - 4 years of cash so there's no fire there.

I'm a little gun shy but I also want to unload some of this stock whether we set up an SMA and let someone manage it or whether we do something with it ourselves.

If we were wanting to lower our equities portion of our AA, this is the time. What to invest in? Or, if we were wanting to buy into the depressed stock prices, it would also be nice to have that extra cash to invest and so again, what might you invest in - index funds or something else?

Thoughts?

I will add, that is was Old Shooter's calming influence that helped me walk away from things for a few days (though not years...) to be able to come back and look at this again. I suppose Plan C is to do nothing; that's viable too.

I imagine DH might say "just do the SMA." I've just always been less geared that way. That said, it sure is easier to blame someone else than take responsibility for my own well-intended work I'm just not sure if it's that I don't have the interest in doing things like I used to, or if this market has shaken my confidence.

 

[OldShooter]

... I will add, that is was Old Shooter's calming influence that helped me walk away from things for a few days (though not years...) to be able to come back and look at this again. I suppose Plan C is to do nothing; that's viable too ...

You really do have an urge to play with your food, don't you?

Reducing an overconcentration is always a good thing and it really doesn't matter whether the market is high or low (except for tax considerations). Unless you're deliberately changing your AA, you'll sell and then buy another equity asset immediately, so the market condition is a don't-care.

I'm not sure what the SMA gets you and I don't see that it has anything to do with the decision on the overconcentration. I have never looked at them, but if it means someone else will be running the money then given your temperament shown here I wonder if you'd be happy with that or would be second-guessing, Monday morning quarterbacking, etc. Not to mention that you are knowledgeable enough that you really don't need to be paying fees for management.

I still think that a taking couple of years without looking at the account would be the best medicine, but fixing the overconcentration is safe and will give you some trade confirmations to read. Then stop looking.

 

[RetireBy90]

I looked at this a couple years ago as we were approaching retirement. I was thinking that it would be prudent to work with an advisor now while I have facilities to manage our accounts. I was managing mom’s accounts at the time and wanted to ensure I was comfortable with a specific advisor before the NEED came around.
I decided to not turn over to the SMA but continue to work with the advisor. I meet with her about once a year and review out portfolio and needs. All is good but it is comforting to have advisor also look at things. Also, if I go first (in long time from now), DW is comfortable with this advisor so I know she will be in good hands.
So, all that to say, perhaps an option is to put some of the megacorp dollars into an SMA as a trial, see how they perform against some you continue to manage ?

 

[steady saver]

You really do have an urge to play with your food, don't you?

Reducing an overconcentration is always a good thing and it really doesn't matter whether the market is high or low (except for tax considerations). Unless you're deliberately changing your AA, you'll sell and then buy another equity asset immediately, so the market condition is a don't-care.

I'm not sure what the SMA gets you and I don't see that it has anything to do with the decision on the overconcentration. I have never looked at them, but if it means someone else will be running the money then given your temperament shown here I wonder if you'd be happy with that or would be second-guessing, Monday morning quarterbacking, etc. Not to mention that you are knowledgeable enough that you really don't need to be paying fees for management.

I still think that a taking couple of years without looking at the account would be the best medicine, but fixing the overconcentration is safe and will give you some trade confirmations to read. Then stop looking.

Oh gosh, you have me there! Yes I guess I do like to play with my food. I almost even hated posting but...

I really don't want to do the SMA...I think that's clear to me now. And my DH is fine either way. I know if I keel over before he does that he'll have someone manage the whole thing and I give him my blessings on that. And I appreciate his trust in me right now.
I'd not been as on the ball with our investments in recent years, letting things just ride in the accumulation phase b/c I was busy with work and had some health issues. But yes, I've historically liked really being more up to date with things and this whole new financial environment has drawn me in.

I'm going to think things over as to what I'll do with the sale of this stock. But I'm going to go ahead and sell it, perhaps in stages as I watch this all play out. But even DH wants to reinvest at least some of it back into the market rather than using the whole thing to ratchet down our equities exposure.

So thank you, once more, for your sage reply and encouragement, Old Shooter. I'm glad I went ahead and hit "send" on my note, even if I sound wishy washy at times. It really does help me to brainstorm out loud.

 

[steady saver]

I looked at this a couple years ago as we were approaching retirement. I was thinking that it would be prudent to work with an advisor now while I have facilities to manage our accounts. I was managing mom’s accounts at the time and wanted to ensure I was comfortable with a specific advisor before the NEED came around.
I decided to not turn over to the SMA but continue to work with the advisor. I meet with her about once a year and review out portfolio and needs. All is good but it is comforting to have advisor also look at things. Also, if I go first (in long time from now), DW is comfortable with this advisor so I know she will be in good hands.
So, all that to say, perhaps an option is to put some of the megacorp dollars into an SMA as a trial, see how they perform against some you continue to manage ?

My DH thinks you have a fun idea there, Retireby90! He said he could compare his SMA with whatever I did!
One thing that has been good about establishing this relationship with our FIDO advisor is that I'd feel completely comfortable turning things over to her, as would DH, if we were ever in need of that. It's a good feeling. I may not always want or be able to manage things and it's nice to know we've established a relationship with an advisor (actually 2 advisors there) that we trust.

Thanks for your input. I appreciate it.