frayne said:Sad, at least I'll have myself to blame if my portfolio goes belly up. One thing I fail to understand is these people work 25-30-35 years of their lives accumulating and building wealth and then piss it away trusting some slick dude with a good sales pitch about life on easy street.
You just can't fix stupid.
Or am I being too critical ?
frayne said:Or am I being too critical ?
This timetable pretty well fits me, too. If I had relied on my 401k plan only, early retirement would not have been possible. I had to set up something I could manage without all the restrictions and controls.Ron'Da said:Remember that the idea of a personal IRA did not come till the early '80's and I did not get offered a 401k till the mid 80's (I was already in my late 30's). Although I contributed to both, as they became available, I still "lost a lot of time" in that endevor.
If the 401k had been as accessible as it is now in the 1980s when I set it up, it would be worth a lot more today. The rules kept changing. The 401k and 403b were never meant to be a permanent retirement savings instrument anyway.Ron'Da said:I don't believe a lot of the "common folk" (late 50 to late 60 in age) have either the knowlege or desire to manage their money. Is it their fault? Not really - things change...
That's the problem. What is a "fair price" and how do you measure what you pay vs. what you get (it's not like buying a can of soup!)OkieTexan said:I think it is a reasonable expectation that investors who don't want to (or can't) manage their own portfolios should be able to hire someone to do it for a fair price.
frayne said:able to retire at 55 with no debt and a pretty decent sized nest egg.
One friend of my FIL's who also took CBS' 1994 buyout used a trusted broker. (This is family story #214.) A few years later my FIL called him to talk about TIPS and was told "Nah, my advisor's got me in these high tech things-- Cicso, AOL, Nortel, EMC, all kinds of great stuff. I think they make computers. We're buying a house in San Francisco but we're going to get a mortgage so that we can keep our money in the stock market. It's amazing!"Leonidas said:So, when I sat across the desk from someone explaining to me the options I had for investing my money, I chose Plan B - "We advise and you decide". I didn't have a clue about investing, but I realized that if I didn't learn that control over something really important would be out of my hands. There were times when I was operating in the dark and have only luck and a really great market to thank for smoothing over my ignorant mistakes, but I forced myself to learn the things I needed to know in order to live up to my responsibility.
audreyh1 said:It's really sad because there sure seem to be a lot of sitting ducks out there for all these unscrupulous (and criminal) brokers.
There seems to be something about our culture where many people don't "feel qualified" to manage their own money. If instead there was a more prevalent attitude that many money managers (especially brokers!) are "sharks" people might be a lot more cautious.
But I hear about these stories over and over again! I have relatives (by marriage) who lost a lifetime of retirement savings in the 80s due to really inappropriate investments and heeding all sorts of risky "get rich quick" schemes. It seems folks somehow don't realize that they really could lose MOST of their money. It's more than denial, I think. It is perhaps simply unfathomable until they hear of stories of that exact outcome?
Of course in this particular example the broker really appealed to people's greed. That's a powerful appeal!
You hear these stories again and again - normal "blue-collar" working folks, actors, sports figures.
Didn't the NFL set something up to prevent players getting ripped off by unscrupulous financial advisors? Didn't they institute some type of oversight organization that qualified advisors?
Audrey
It's not just the blue-collar types-- it's the smarter ones too who theoretically can find/trust good managers or do for themselves.audreyh1 said:It's really sad because there sure seem to be a lot of sitting ducks out there for all these unscrupulous (and criminal) brokers.
You hear these stories again and again - normal "blue-collar" working folks, actors, sports figures.
Ron'Da said:That's the problem. What is a "fair price" and how do you measure what you pay vs. what you get (it's not like buying a can of soup!)
Unfortunately, those that have 401K's can't even get "direction" from their employer or 401k provider, under the current laws.
Really, I think people are more intelligent about finances. They just don't understand that they need to be part of the process for intelligent decisions. And to do that, they must take the initiative to learn a little on their own. They don't get their respective "kick in the a--" until they are ready (or forced) to retire; then it is too late...
- Ron
Lots of people are susceptible. In the late 90s I was deploying advanced networking infrastructure and Web systems and would probably have gone whole hog into technology. Two things stopped me - and honest adviser (I used at the time) who didn't think I should break up the diversified allocation she had us in and government conflict of interest requirements that prevented me from investing directly in companies I worked or might work with and drastically limited even broad tech sector mutual funds.Nords said:One military couple, good friends of ours, retired in 2004 but she went back to work in her field because the tech wreck had "busted her portfolio back to when she was an ensign". She's brainy, quick, funny, and very personable-- the kind of officer who worked with flag officers & security staffs at the highest levels and at her civilian job met with Scott McNealy to jawbone DoD computer specs. She says that she got caught in the applications & prospects of the gear, not the fact that people stopped buying it and their triple-digit-P/E stocks.
frayne said:Sad, at least I'll have myself to blame if my portfolio goes belly up. One thing I fail to understand is these people work 25-30-35 years of their lives accumulating and building wealth and then piss it away trusting some slick dude with a good sales pitch about life on easy street.
You just can't fix stupid.
Or am I being too critical ?
tnedator said:Do you include managed services like from Goldman Sachs, Bank of America Private bank, etc. to fall into the same category, or would consider them safer approaches?
JustCurious said:They are some of the worst, with the highest fees. Think about it, who do you think pays for those tall buildings with marble floors?
tnedator said:I am not speaking of the fees per se, but the likelyhood of losing it all.
I am in a position where I can get BOA managed service for about .40. Currently, I average well above that on my portfolio of mutual funds that have performed well, but vary in their expense fees.
samclem said:I think you'll find the 40 basis points from B0fA to be just the tip of the cost iceberg. If they put you into MFs, then there wil be underlying expenses there (about the same as you'd pay yourself IF they buy low cost ones--they may not). Trading costs, etc.
There's no getting around the fact that mny advisors and brokers have a much different set of incentives than their clients. I laugh when people say "well, my advisor outperformed the market last year by 4%, I don't mind giving him his 2%." They have no idea what risk he assumed with their money to get that gain. It's a no-lose game for the advisor or broker: If he outperforms the market, he gets the juicy fees. When he underperforms, he will try to keep the client for awhile by pointing out sectors he did outperform, or by emphasizing the great record he had last year. At the very worst, the client leaves--maybe thousands of dollars poorer, and the broker/advisor hasn't lost a cent. Taking risks with someone else's money is easy.
CyclingInvestor said:
samclem said:Hmm--I wonder what other costs are built into that vehicle.
The value of the B of A arrangement probably boils down to how you plan to handle your investments. If you believe that active management (i.e. having a manager pick selected stocks for the MFs), then the B of A arrangement sounds like an inexpensive way to buy into these funds (if there realy aren't any "catches" built in). If you believe (consistent with the majority of academic literature) that active managers do not add value, then you'll want to go with lower cost Vanguard index funds, simplify you life, and pocket the .2% annual difference.
One additional consideration: Is the B of A deal a permanent arrangement? Esp: is this a "teaser" ER, or a permanent one? Is it dependent on your present employer? If the larger accounts you are piggybackng on depart, will you be able to stay? This isn't a big deal if this is IRA or 401K money, but if this is a taxable accout, you could get burned really badly if you have to sell once the fees go up.