When I first wanted to start putting savings into stocks, rather than just the bank, I didn't know how/where (and still don't) to purchase stocks/bonds. I was told I needed to go through a financial professional associated with a bank or financial institution as a conduit to get it done. So, I have always had a financial advisor, but he has never "advised" me to really do anything. When I first brought him money, we talked about my goals and he gave me his opinion on what distributions to make. But he has never called to suggest rebalancing, or advise that buying or selling one stock or the other would be beneficial. He really just administers my account and sends me distributions when I request them. So not so much an advisor, as an administrator. He recently joined Raymond James and my accounts moved from Wells Fargo to Raymond James. I get an invoice every year for like $75 administration fee, but I don't know how much more he gets in % of my account. He says just a pittance. I will probably not be adding any new money, now that I'm not working anymore, so it will just sit and draw/lose interest. How would I go about taking it back and administering it myself? And would that not require selling all and reinvesting the cash elsewhere. If so, that sounds like it could incur big losses, since I know nothing about when is a good or bad time to sell and I've always heard accumulation over the long haul is how to grow investments, so never to cash out. Obviously, I am clueless about how investing works.
I'm going to be frank, since I've transitioned from advising to trading for an institution to an independent trader I no longer speak the advisor speak. I may upset some people.
Unless you're the advisor's top five percent of his book you won't get the TLC that you feel you deserve. A lot is dependent on the the actual designation of your advisor and the way the account and brokerage/advisor/firm is set up.
Truth is that practically all IAR's, RIA's, CFP's etc. have never even placed an active trade in their lives. Ask him/her if they've short stock or how to place a synthetic short call...
You see these advisors or just like you guys. They know as little or you may know more about the mkt than they do. Heck, the 20 yr vet next to my corner office didn't even know what the russell 2000 was. That's not saying that they're bad people, but a guy that walks in with a massive "circle of influence" that knows nothing is promising as opposed to someone that's been reading Kiplinger since five years old but is an introvert.
They don't have the time away from building and maintaining their business. They do exactly what the most of you are doing...the fund will do the work...more on that later. If a client likes individual securities than they'll call up the trading desk or use the an third party or own platform to place the trade. And no, the platforms don't look anything like what you'd imagine. Basically plain Jane..just enter the cusip or ticker.
They don't look at look at charts and know nothing of technicals(which are total BS btw) They don't know what really is moving price much like 99% of diy'ers. Some may even get sick to their stomachs if they knew what's really going on and are exposing their retirement money from home.
Wallstreet...Banks more precisely is about A.U.M.. If you've started to have a suspicion as you progressed in your investing you aren't far from the mark. Being an advisor is about running a business whether as an inde or captive. We were well versed in the lingo and what to say to you. To add to the perspective, the actual traders, market makers and specialists can give two iotas about the fundamentals of a company and its balance sheet. Equities aren't even something I trade anymore with all their drama...what vehicle doesn't have theirs.
Much of investing is common sense. There is a difference in which "phase" you're in. Are you in the accumulation in your life or crossed over to distribution side.
If you're in the prior, take full advantage of any 401k. Not for the return, but the match - that's golden. Forget trading - period. You are NOT a trader. If you enjoy buying individual stocks and it makes you feel you're progressing than more power. To the rest of you, don't get into that rut. Everyone has that uncle that friend that said they knocked it out of the ballpark with such and such stock. Trading is not what you think it is. My world is different. What you may see as a great yearly return is likely what I pull out in a week, I still remain grounded. To strangers that ask I sell corporate insurance.
I behoove you to max out your 401k to the match and nothing else. If you want more growth but the SP500 for growth that's it. You can do this with etf or funds - I think Vanguard has at least one. If I was still an advisor and didn't cared less about making my gross I'd also tell you to load up on preferred stock for the dividends. And that doesn't mean the 10% oil and gas companies. I've seen plenty of them along the participation programs blow-up take a chunk out of client portfolios in the office. You want a big well known name and a preferred that is callable. Because somewhere down the line it is going to get called back a par. Don't complicate and worry about your average price.
You need to to take advantage of insurance products. For those that are younger and in their accumulation phase - whole life. Not just any, make sure that it's older MUTUAL company like Mass mutual etc. If you work with an advisor that can't get products from companies like that - dump him. He's selling proprietary or limited lines. If you're in the eclipsing on the distribution phase of your life (around 5 years and on to retirement) you need to ANNUITIZE.
Gone are the days of Defined Benefit Plans. Wall street took care of that with the inception of the defined CONTRIBUTION plans. It took all the burden off the company and put it on to you. You are aware that you start taking distribution each time you kill off your growth. I'm sure you've seen the Monte Carlo scenario your genius advisor output from his retirement calculator which by the way anyone can get myriads online. They're a dime a dozen. REMEMBER, math is not money and money is not math. You need to maximize your efficiency with annuitization and possibly other insurance insurance products like Long-term care if you consider it.
Realize the SP is up 15% for this year and 55% for the past five. If you or anyone else is "trading" your retirement money and you haven't beat this your playing games. I don't want to piss people off, but most mutual fund managers can't even do this - especially in the long-term. So again quit the baloney and just by the index tied.