I Just Fired My AUM Advisor!

[RetiredAt49]

Well it took me about 1.5 years to convince my spouse that our Wealth Management Company (who charges 1.25% AUM fees) isn’t worth it and today I received her blessing to fire them!

Many things led up to the decision (i.e. their CEO claiming months ago that the bear market we are now in was just a “market correction” but later he had to eat his own words and apologize).

The nail in the coffin was a YouTube video I found of their CEO recommending that investors should just build a passive, well diversified, portfolio using low cost index funds… which is exactly what Jack Bogle, Warren Buffet, and many others have said all along!

I can’t believe he runs one of the largest Wealth Management Companies in the world but then he releases a YouTube video that contradicts the very fundamental principles for his company (i.e. investing is hard/magic and you should pay us 1.25% and have a “financial advisor” call you monthly - oh yeah, that drove my spouse crazy too [emoji23])

Now the tricky part is going to be untangling the 80+ individual stocks and moving to low cost index funds without taking a huge tax hit (most of our portfolio is in a taxable brokerage account).

 

[yakers]

Hey, if you had any losses lately could do some tax loss harvesting to reorganize the portfolio

 

[RetiredAt49]

Hey, if you had any losses lately could do some tax loss harvesting to reorganize the portfolio

Great idea and had already marked that down as a strategy (although I recently had my Wealth Management Company do some tax loss harvesting already) but plan to do more of it!

 

[target2019]

We accumulated various shares from gifts and straight out inheritance. I've kept some, but it is much too complicated to hold forever. I personally believe in slow rolling this. Many of your companies may be the cream of the crop now, so it makes little sense, at least to me, to trade 10 giants for VTI. But whatever.

I think the first thing is to create a flexible migration plan. For example, look for matching stocks with offsetting gain/loss. Then take the proceeds and immediately buy VTI, or whatever fund you pick for the core.

I guess you can also include features for regular income. Just ransom word from me, and good luck with this. You're already ahead of the game.

 

[nwsteve]

Another arrow in the quiver is to look at some of your biggest gainers and consider gifting shares to your preferred charities instead of sending them your cash.

 

[easysurfer]

Another reason to remember that nobody cares about your money than yourself no matter how much others say they care and want to help.

 

[ERD50]

You may already know this, but you should be able to move all the stocks (and hopefully most/all of the funds) as an "in-kind" transaction. That is not a taxable event.

Once they are at the new brokerage, you may still want to unwind some of those (with tax-loss harvesting as others have mentioned), but if they are reasonably diverse, that may not be a huge priority. If you have heirs, and if the step-up in costs basis sticks around, some of those capital gains may never be realized anyhow.

-ERD50

 

[gcgang]

Why pay even the cost of the index funds? Sounds like with 80+ stocks you’re well on your way to having your own “index fund”.

Harvest losses as they occur, but just hold the 80+ individual stocks with unrealized gains, while becoming aware of which sectors you’re under/overweighted vs the index.

 

[Souschef]

To slow roll the transition, move all your holdings to Fido, Schwab or other brokers. Then you can make the transition gradually.
I did that with DW's holdings. Someone had stuck her in funds with high expense ratios.
I moved all her holdings to Fido, then replaced the funds with equvcalent low expense Fido funds.

 

[RetiredAt49]

You may already know this, but you should be able to move all the stocks (and hopefully most/all of the funds) as an "in-kind" transaction. That is not a taxable event.


ERD50

Luckily my brokerage and IRA accounts are already in Fidelity… they are just removing my Advisor from my accounts.

 

[Happyras]

Luckily my brokerage and IRA accounts are already in Fidelity… they are just removing my Advisor from my accounts.

Sounds like they stuck you with someone like Crawford Investments. That was my pre-pandemic mistake to test them on 25% of our portfolio. I quickly learned they were idiots and fired them within a week. I was stuck with over 60 different stocks, most of which fell big time as we headed into March 2020.

We managed to unwind this mess over the course of 2020, and more recently in early 2022 we have focused on reducing our market risk by mainly doing buy/writes on SPY, and buying short term notes and treasuries. Good luck. I have yet to meet any advisor that will do this type of managed risk, as it takes more effort. Thankfully, I have others to learn from.

 

[pb4uski]

How many of the 80+ tickers are companies that you don't mind owning? Are there any real dogs that you want to dump as soon as you can? Do you expect to have any room in the 0% capital gains tax bracket in 2022?

Like others have said, I would make changes slowly and methodically towards what you want in the long run, especially for taxable accounts. There's nothing wrong with a portfolio of 80 individual stocks if they are 80 good individual stocks... other than individual stocks do take more work than stock index ETFs.

 

[Dtail]

80 individual stocks says it all. Old Shooter probably hasn't seen this thread yet.

 

[audreyh1]

Well it took me about 1.5 years to convince my spouse that our Wealth Management Company (who charges 1.25% AUM fees) isn’t worth it and today I received her blessing to fire them!

Many things led up to the decision (i.e. their CEO claiming months ago that the bear market we are now in was just a “market correction” but later he had to eat his own words and apologize).

The nail in the coffin was a YouTube video I found of their CEO recommending that investors should just build a passive, well diversified, portfolio using low cost index funds… which is exactly what Jack Bogle, Warren Buffet, and many others have said all along!

I can’t believe he runs one of the largest Wealth Management Companies in the world but then he releases a YouTube video that contradicts the very fundamental principles for his company (i.e. investing is hard/magic and you should pay us 1.25% and have a “financial advisor” call you monthly - oh yeah, that drove my spouse crazy too [emoji23])

Now the tricky part is going to be untangling the 80+ individual stocks and moving to low cost index funds without taking a huge tax hit (most of our portfolio is in a taxable brokerage account).

I would love to see that video!

 

[jazz4cash]

Luckily my brokerage and IRA accounts are already in Fidelity… they are just removing my Advisor from my accounts.

Yes but that is not material to ERD50’s excellent advice wrt your taxable account stock positions.

 

[COcheesehead]

I fired my full service broker in 2008. Sold everything and transferred it to Fidelity. The tax losses we banked lasted until 2016.

 

[RetiredAt49]

I would love to see that video!

https://youtu.be/aWzMp1Z_1i0 - fast forward to the 4 minute 30 second mark and watch the last few minutes.

 

[rodi]

congratulations on stopping the 1.25% suck on your account.

As others have mentioned - figure out if there are some good stocks in there, figure out which ones to use for tax loss harvesting. There is a good chance the FA churned your account enough to not have any huge gains from stocks held over a long time.

 

[Dtail]

https://youtu.be/aWzMp1Z_1i0 - fast forward to the 4 minute 30 second mark and watch the last few minutes.

Ken Fischer - what a surprise. They used to call me, but won't anymore after I embarrassed them.

 

[jazz4cash]

I would love to see that video!

+2

 

[RetiredAt49]

+2

Already posted it above

 

[jazz4cash]

Wow. That guy. Truly astounding that he would so elegantly espouse passively buying a US or world index when his firm doesn’t operate that way. I knew they were stock pickers that claim to devise “custom, not cookie cutter portfolios” but 80 stocks seems crazy. Thanks for posting and congrats.

 

[FREE866]

Great thread. I do everything through index ETF's and have been for years.

I don't have my money with Fisher, but I do think he is incredibly smart and offers great insight into how markets work. He's a voice of reason that I find quite comforting when markets are in turmoil.

 

[audreyh1]

https://youtu.be/aWzMp1Z_1i0 - fast forward to the 4 minute 30 second mark and watch the last few minutes.

I wondered if it was someone like Ken Fisher. ‘nuff said!

 

[MarieIG]

Congrats to OP for his clever way of convincing his wife to part ways with KF.

I will try again to watch the video. I'm not a fan of KF.

After DF passed away (DF had put me on his brokerage account), TD Ameritrade "invited" DH and I to a seminar/dinner given by his group. I was the one who asked the question how they were paid. I am not the brightest bulb on the tree, but did the math on that pretty quickly. I then thought about the 4 percent rule, which if I were to withdraw 4 percent on retirement (which in any event I thought was way too much), that would give Mr. Fisher almost 1/3 of my income, and the lowest tier of the funds. If I were to withdraw less (like 1 percent on retirement which I figured was plenty), he would be getting more than me!

Interestingly, I recently transferred the proceeds from the sale of our house into a joint brokerage account; and a week later DH got a letter from KF's group, congratulating him for "being one of the one percent" (barf) and offering assistance. That went straight into the shredder.