Firing FA after failing to learn lessons yet again

[Katoslake]

We tried to test drive a FA to theoretically make things easier for my wife and me going forward. She wanted me to really watch and see if the FA shared our priorities and would follow our wishes as it relates to investment choices. Fast forward 3 months and things aren’t going as we hoped.
Buffered ETF’s from First Trust ( exp seem very high), momentum investing in individual stocks (guess which ones- hint AI and EV).
I asked about expense ratios on the First Trust ETF’s above AUM, which are .65, and the person said they’d need to check because they were just thinking about return potential.
Everything is held at Schwab so I’m hoping it will only take a phone call to terminate the relationship.
Luckily, we approved no trades to date. Just wasted a bunch of time.

 

[Ncc1701]

Upload a written letter of authorization to remove the Schwab Institutional advisor and make the account a Schwab retail account. You can submit the letter via Schwab Secure messaging or drop it off at a branch.

If you still need help, you may want to investigate Schwab Wealth Advisory as a collaborative investment advisory solution. Good luck!

 

[EastWest Gal]

It sounds like this FA is not a fiduciary FA.

I think you should terminate the relationship ASAP. You might talk to Schwab first about the procedure. When we signed up with our FA, there was a limited POA form at Schwab we filled out. I just looked at the form just now and it doesn't seem to have a remove or rescind option. Another option would be to open another account at Schwab and journal everything over to that other account, to which your FA will not have access.

Going forward, look for an hourly fee only advisor, who can advise you and her on your portfolio, meeting by phone or zoom once or twice per year. Someone like Rick Ferri, for example. He's a major contributor to Bogleheads and has written some books.

BTW, Schwab Wealth Advisory is pretty expensive for AUM these days-0.5-0.8% AUM. Ours charged 0.37% AUM. But I came to decide they weren't worth the money.

 

[Jerry1]

Been down the same road. As EW Gal stated, they’re just not worth the money. At my AUM %, I was paying around $5000 per year. After a few years, I just couldn’t find any extra value the FA was bringing to the table to justify that amount of money. Buy some funds/etf’s that meet your risk tolerance and asset allocation and rebalance annually - save $5K+

I have DW on board with that program and as long as she is mentally sound, she can work the program. After that, I’m lucky enough to have two daughters that are capable of handling the basic formula.

 

[RetiredHappy]

Been down the same road. As EW Gal stated, they’re just not worth the money. At my AUM %, I was paying around $5000 per year. After a few years, I just couldn’t find any extra value the FA was bringing to the table to justify that amount of money. Buy some funds/etf’s that meet your risk tolerance and asset allocation and rebalance annually - save $5K+

I have DW on board with that program and as long as she is mentally sound, she can work the program. After that, I’m lucky enough to have two daughters that are capable of handling the basic formula.

We were paying $20K to 30K a year (growing through time), at 0.8% for about 13 years. Yeah, alot of money. We terminated the relationship in 2021.

 

[target2019]

Like many, you're overpaying for the promises. Add in the expense of recommended funds for a total drag of 1.5%.

Ditch the advisor for sure. But someone or something should perform the role.

Bogleheads has an input format for review questions. You might start with that format. If nothing else you'll have clear understanding of what your portfolio is right now. It also aids you in forming a plan that guides you in evolving to a low-expense indexing approach.

 

[Luvtoride]

“Test Drive” a FA? How did you find them?
We are very happy with our FA who we vetted thru a process of recommendations and searching in our area. They assist us with everything in retirement not just investment advice. Our philosophies aligned and we “hit it off” personally very quickly. We text or call them for any questions we have and they respond quickly.
Good luck finding a good one for you!

 

[Midpack]

“Test Drive” a FA? How did you find them?
We are very happy with our FA who we vetted thru a process of recommendations and searching in our area. They assist us with everything in retirement not just investment advice. Our philosophies aligned and we “hit it off” personally very quickly. We text or call them for any questions we have and they respond quickly.
Good luck finding a good one for you!

At what cost (e.g. %AUM)?

 

[FREE866]

I have zero interest or need for a FA as my situation is very very simple as is my approach to investing.

That said, I don't think 3 months is really a fair enough amount of time to judge whether this FA is right for you. It probably is as you said a "waste of time" though.

 

[Katoslake]

I have zero interest or need for a FA as my situation is very very simple as is my approach to investing.

That said, I don't think 3 months is really a fair enough amount of time to judge whether this FA is right for you. It probably is as you said a "waste of time" though.

We had several hours of conversations regarding our risk tolerance and goals. It only took 3 months to determine that everything recommended was complicated and expensive. We are generally skeptical people when it comes to motivations. It became apparent that achieving market matching returns (index) was not good enough for the advisors. Nice people, but they make money at the expense of the customer. We determined that the expense and effort aren’t worth it. It was a test drive to find someone my wife and I would be comfortable with. She determined she wasn’t which means I’m not. The agreement only applied to her IRA (40% of family portfolio).
Back to self directed at Schwab

 

[TickTock]

Complicated and expensive are two big red flags.

I think you'll do better self-directing.

 

[Koolau]

IF I ever hire a FA it will be hourly and for the purpose of asking technical questions about moves I want to make. I don't want anyone else authorized to change my AA or buy/sell anything in my name. I'm guessing it's harder and harder to find such a FA as they want to use AUM to make their money. I'm sure that's okay for some folks, but I'll take a chance on not making as much money but also not paying a percentage of my funds whether the FA is any good or not (or lucky or unlucky, more to the point.)

 

[Katoslake]

Update. We called Schwab and rescinded the advisory agreement with the independent firm. Wanted to make sure nothing could be done by the, soon to be former, advisor. Unfortunately, the advisor had invested in a 15 month First Trust Large Cap buffered ETF. 30% downside buffer with an approximate 9.5% cap depending on fees. Fees are approximately 1.85% not including the AUM of .65. The amount invested was just over $100,000.
Had a conversation with the former advisor to let him know he’d been terminated. He said he wanted what’s best for us and then asked me to refer him anyone I thought could benefit from his help. He then said he would continue to invite us to his firms fun events.
Our account is back in self directed status at Schwab.

I deserve whatever comments come my way

 

[FREE866]

“ 30% downside buffer with 9% cap”
lol
Not laughing at you but what a joke

 

[aja8888]

"Fees are approximately 1.85% not including the AUM of .65."

This is near criminal.

 

[Koolau]

Update. We called Schwab and rescinded the advisory agreement with the independent firm. Wanted to make sure nothing could be done by the, soon to be former, advisor. Unfortunately, the advisor had invested in a 15 month First Trust Large Cap buffered ETF. 30% downside buffer with an approximate 9.5% cap depending on fees. Fees are approximately 1.85% not including the AUM of .65. The amount invested was just over $100,000.
Had a conversation with the former advisor to let him know he’d been terminated. He said he wanted what’s best for us and then asked me to refer him anyone I thought could benefit from his help. He then said he would continue to invite us to his firms fun events.
Our account is back in self directed status at Schwab.

I deserve whatever comments come my way

I'm so glad you got away from the advisor! Thanks for sharing.

 

[VanWinkle]

Great move to get away in short test of his "skill" in helping himself to your monies. That fund is a great way to make money.... for the advisor.

 

[TickTock]

Unfortunately, the advisor had invested in a 15 month First Trust Large Cap buffered ETF. 30% downside buffer with an approximate 9.5% cap depending on fees. Fees are approximately 1.85% not including the AUM of .65. The amount invested was just over $100,000.

Now I'm sure you'll do better self-directing!

 

[OldShooter]

... Unfortunately, the advisor had invested in a 15 month First Trust Large Cap buffered ETF. 30% downside buffer with an approximate 9.5% cap depending on fees. Fees are approximately 1.85% not including the AUM of .65. The amount invested was just over $100,000. ...

I would tell him that I wanted him to bust the trade or provide a letter from his compliance officer explaining why the purchase was consistent with his fiduciary duty to you. Read here: File a Complaint and make sure the rep understands that you will be filing a complaint if they do not satisfy you.

Also run a check here: BrokerCheck - Find a broker, investment or financial advisor to make sure you know what and who you're dealing with.

 

[Katoslake]

I would tell him that I wanted him to bust the trade or provide a letter from his compliance officer explaining why the purchase was consistent with his fiduciary duty to you. Read here: File a Complaint and make sure the rep understands that you will be filing a complaint if they do not satisfy you.

Also run a check here: BrokerCheck - Find a broker, investment or financial advisor to make sure you know what and who you're dealing with.

Thanks for your help and advice !