Firing our FA tomorrow

[OldShooter]

FWIW I have been recommending Bill Schultheis' "The Coffee House Investor" for years. Sorry to say that his more recent book, "The Coffeehouse Investor's Ground Rules," is not an improvement or a replacement. It is more a collection of anecdotes. OK reading, but the first book is the one you want.

 

[Gumby]

I started investing when I was 22 and have never had a financial advisor. I don't expect that will ever change.

 

[audreyh1]

Cheering you on, EastWest Gal! They really should have included a few classes in personal finance in medical school so that new physicians don’t feel so reliant on the “expertise” of others for retirement investments.

I’m sure the thinking was there is no need as doctors have access to financial professionals to take care of that for them!

 

[TheWizard]

Good moves for all of those who fired their FA and are doing it on their own henceforth.

I never had a FA. I started investing in 1973 with mandatory monthly contributions to my 403(b) with TIAA, along with a hefty employer match. I did get to choose from a limited number of investment options.

Three decades later, when I started to get serious about retirement, the Internet had finally been invented and it was easy to find info about investing. So I did that and have been able successfully to manage my much more complicated portfolio in recent years...

 

[whatnot]

I think everyone should have basic financial literacy. Required high school class. Knowledge is power!

 

[DrRoy]

I fired mine about 10 years ago. My rate of return over several years on the funds that I retained was better than his, before the fees. Congrats to you.

 

[Flyfish1]

Congrats- I fired my FA years ago. We had become friends and went fishing together and that abruptly ended when he didn't have my business. In hindsight I wished I had never hired an FA , ever, but I was younger, busier, with kids, etc.. Lots of moving parts back then.

 

[grasshopper]

Dang, never had a FA, I started my investing with Vanguard no load Windsor fund 40 years ago for taxable. Later had tIRA in Star fund 60/40 for diversification. Now just VTI Total Stock Market, T-bills, and CD's

 

[Gumby]

Dang, never had a FA, I started my investing with Vanguard no load Windsor fund 40 years ago for taxable. Later had tIRA in Star fund 60/40 for diversification. Now just VTI Total Stock Market, T-bills, and CD's

Windsor was my first and only fund for about the first ten years. Then I had to sell it all to pay for law school, and the fund closed while I was out of it.

 

[EastWest Gal]

@EastWestGal : how did it go?

It went OK. I actually started the meeting by telling her what we were planning to do, and why. I explained how the fee was exhorbitant given the little work they actually did and that everyone knows that minimizing fees and costs are key to maximizing return on investment, given that everything is in unmanaged index ETFs. I also asked why a small portion of my IRA was in a managed fund with an expense ratio 5-10x higher than the expense ratio of the unmanaged fund, and how such a decision was made. Her answer was "That's propietary information" and I reamed her over the coals on that answer. It's our money and you will not say how that decision was made, and why the IRA is in 8 different tiny funds and and two large index funds (VTI and BND). It seems saying it was propietary suggests there is something to hide.

All of our portfolio is already in Schwab and we could always manage it ourselves anyway, so it's a matter of rescinding the limited POA from them. I called Schwab today and it was already done.

When we went with a financial advisor for the first time, in 1993, I was 33, a new mom, and a full-time pediatrician. There was no internet, and no way to learn about investments, and my dad, who had started his own investment portfolio, taught me nothing-he didn't know either. My inlaws were newly retired teachers, and had pensions.

It was so empowering. No words...

 

[ls99]

^^^ well done!

My one and only FA ever was at Lamont Geological Observatory of Columbia U, who was then called the Personnel Manager. CU was converting from Defined Benefit to Defined contribution model.
She said, put as much as you can into 401K. And so I did into TIAA. I vaguely recell I was around 24. At retirement all moved to Vanguard, and is being mostly ignored.
As of today I receive $29 and change for life from my vested Defined Benefit. The other stuff grew nicely, mostly by not paying any attention beyond putting $ into it. My nieces will be VERY happy when I kick the bucket.

 

[REWahoo]

It was so empowering. No words...

I think these words were quite sufficient:

Her answer was "That's propietary information" and I reamed her over the coals on that answer.

Well done.

 

[braumeister]

I’m sure the thinking was there is no need as doctors have access to financial professionals to take care of that for them!

Precisely.
I still remember the doc I had 30 years ago, who was a brilliant diagnostician and I really enjoyed talking with him. One day a particular drug came up and I asked him something about buying stock in the company that made it. His response was "Oh, I don't pay any attention to the stock market; I have a guy who does that for me."

 

[audreyh1]

Precisely.
I still remember the doc I had 30 years ago, who was a brilliant diagnostician and I really enjoyed talking with him. One day a particular drug came up and I asked him something about buying stock in the company that made it. His response was "Oh, I don't pay any attention to the stock market; I have a guy who does that for me."

Of course! Someone as highly trained and skilled as a doctor is going to think that other professions are held to the same standard. Unfortunately in the area of financial management that’s is usually not at all the case. Doctors are very busy, and delegate much outside of their career.

 

[Lorenzo]

"Proprietary" sounds to me like the decisions are made by proprietary software, and the FA has little understanding how the underlying algorithm works.

 

[Dtail]

Of course! Someone as highly trained and skilled as a doctor is going to think that other professions are held to the same standard. Unfortunately in the area of financial management that’s is usually not at all the case. Doctors are very busy, and delegate much outside of their career.

I give an example to my friends that if I studied the internet and youtube and became an expert at removing a gallbladder, would you let me? Of course not.
However, that concept of expertise one CAN have in portfolio investment management and they find it hard to believe, if they don't have a financial background.

 

[EastWest Gal]

"Proprietary" sounds to me like the decisions are made by proprietary software, and the FA has little understanding how the underlying algorithm works.

You might be right, but I no longer care. I'm free!

 

[EastWest Gal]

Of course! Someone as highly trained and skilled as a doctor is going to think that other professions are held to the same standard. Unfortunately in the area of financial management that’s is usually not at all the case. Doctors are very busy, and delegate much outside of their career.

I was not that doc, but 30 years ago, there was no internet, and my brokerage statements came by snail mail, once a month. And I was insanely busy--working 60 hours per week, pregnant or breastfeeding 5-6 times a day, etc. No time for the markets.

 

[mebden]

The biggest problem I had was my Dad and all his coworkers all which were factory workers and Maintenace workers making pretty good money back in the 60's & 70's as they never trusted the stock market or the companies that they worked for so a lot of them didn't invest in it as they all thought it was a government way to take their hard earned money and I know lots of them that didn't invest a penny and some were supposably in a company pension plan and then the company filed bankruptcy and they lost everything from that pension and had 0 to live off of but did get SS and if it wasn't for that these people would of had nothing to live on. I'll never forget when I told my dad I was putting 10% of my paycheck into a newly created 401K plan with a 3% match where I worked at and my dad said stop it immediately do you remember what happened to me and all his friends losing their pension and I tried to explain to him this is different and he said no its not just another way for the government to get your money. I'm glad I didn't listen to him, or I wouldn't be financially set now and also the ones that did have FA's back then got ripped off constantly as they didn't understand the crap most FA's were telling them as they made presentations none of then understood.

 

[TheWizard]

The biggest problem I had was my Dad and all his coworkers all which were factory workers and Maintenace workers making pretty good money back in the 60's & 70's as they never trusted the stock market or the companies that they worked for so a lot of them didn't invest in it as they all thought it was a government way to take their hard earned money and I know lots of them that didn't invest a penny and some were supposably in a company pension plan and then the company filed bankruptcy and they lost everything from that pension and had 0 to live off of but did get SS and if it wasn't for that these people would of had nothing to live on. I'll never forget when I told my dad I was putting 10% of my paycheck into a newly created 401K plan with a 3% match where I worked at and my dad said stop it immediately do you remember what happened to me and all his friends losing their pension and I tried to explain to him this is different and he said no its not just another way for the government to get your money. I'm glad I didn't listen to him, or I wouldn't be financially set now and also the ones that did have FA's back then got ripped off constantly as they didn't understand the crap most FA's were telling them as they made presentations none of then understood.

You are right
Old Ppl are hard to reason with much of the time...

 

[mebden]

You are right
Old Ppl are hard to reason with much of the time...

I have so many friends and acquaintances that listened to this old school lesson told by their parents and Elders and will now have to work till their almost dead or live off of just SS. So now I'm trying to change the younger generation and I've started with my son and anyone that asks what do I need to do to maybe get to where ur at when I'm your age. I just say save and when your done with that save more quit living like the Jones as they really don't have it any better than you do their just in debt up to their eyeballs. This is a class that should be mandatory in High School, but I really think the Government doesn't want a bunch of smart rich middle-class people as they might stand up to us lol

 

[TheWizard]

I have so many friends and acquaintances that listened to this old school lesson told by their parents and Elders and will now have to work till their almost dead or live off of just SS. So now I'm trying to change the younger generation and I've started with my son and anyone that asks what do I need to do to maybe get to where ur at when I'm your age. I just say save and when your done with that save more quit living like the Jones as they really don't have it any better than you do their just in debt up to their eyeballs. This is a class that should be mandatory in High School, but I really think the Government doesn't want a bunch of smart rich middle-class people as they might stand up to us lol

Many posters here have said that a Financial Literacy class should be mandatory in high school nowadays.
For more than one reason, I do not agree.

With this newish thing called the Internet nowadays, we have plenty of resources for those who choose to LBYM and invest the excess to figure out how to do it right.

Problem is, many folks can't or won't LBYM and therefore don't have significant $$$ to invest.
I'm glad this isn't a problem I ever had...

 

[Badger]

I didn't start investing until I started a 401k when I was 40yrs. Now at mid 70's I never had a FA thanks to many of the folks here, the library, and a lot of research to try and understand how to invest. After a couple of discussions with FAs I knew enough to do much better than them and I could save the silly level of expenses they required. My understanding is still pretty basic but enough to grow a pretty nice nest egg.

 

[zangbao]

I don’t think mandatory financial literacy class in high school will help all that much. I had it in high school and remember the yawns in class through budgeting, checkbook balancing and investing. I remember thinking who has the time to wait for stocks to go up?

I had attended a mandatory investing class in the military and thinking to myself that it was ridiculous to set aside so much of my meager paycheck when I could be spending that money now.

Much later, when I finally realized I needed to save for retirement, I lost my way at first when I fell to a FA sales tactic from USPA&IRA (now First Command) and signed up for their 50% front load IRA.

I manage my own investments for the last 20 years and doing just fine.

 

[CaliKid]

Thanks to you all and my free time as a retiree, DH and I are firing our FA tomorrow. Expenses were the main issue, but mission creep was a main issue. Early in my career, the California Medical Society endorsed a financial management group that took the time to educate physicians. Their focus was on index funds, and they flew us 400 miles to their headquarters, where I learned a lot. They developed mission creep and suggested something regarding DS which ended up being an illigal Roth IRA contribution, which we had to reverse and for which DS had to pay a penalty.

We switched to a company founded by Rick Ferri, a major Bogleheads contributor. I was still working full time so did not decide to go on our own. Their expenses were far less than our previous expenses. Rick Ferri left the company and it has been sold twice and has changed names. It has become far too clear that the company's expenses to us far outweigh the benefits. Thanks to you all and to a small extent, Bogleheads, for helping us see the light. Also, read Coffeehouse Investor if you have not yet done so.

We haven't even had our Zoom meeting for the cancellation, yet I already feel free. And I'm educating DS about investing through this forum and books like Coffeehouse Investor. We had a dinnertime discussion regarding asset allocation two night ago-he gets it and is interested. Thanks to you all.

Good for you. I prefer not paying the fees but for some it's better to pay an FA for a variety of reasons. I never judge. It's very sporting of you to do a Zoom meeting - I would just send an email.

As for your DS and the illegal Roth contribution. What did they suggest you do? The rules seem pretty clear so it's hard to imagine an FA, even a rookie FA, messing that up.