Rate my advisers portfolio please.

[rerod]

I wanted to address a few questions I didn't have time to answer before..

no meed to pay for your adviser. just keep in touch with other things like market trend and whats govt. policies. then you will also no need to have an adviser.

See.. Im totally out of touch with market trends and what govt. policies are changing. Even if I knew.. It would be a guess as how to address the changes.

Absolutely. You can stay with Vanguard and just shuffle things around a bit and have a perfectly good portfolio.

Any suggestions on how I should "shuffle"? Anybody?

Yup.
You can certainly do this yourself, with a little thought and effort put into it.

My method was to look up each fund's morning star rating.. Then picked 4 and 5 star..

What to sell and the consequences is another question..

That seems too conservative to me.
I'd just let your FA know that you're willing to be a little more risky (assuming you are) and see what he then suggests.

I have expressed this idea to Dick.. His reply was " nothing has changed" and mentioned china..
I think he experienced shell shock, as we all did, when the market fell.

Does he know something.. or have a gut feeling which we dont?

[disneysteve]

Any suggestions on how I should "shuffle"? Anybody?

You mentioned that this is not your only account (though it is the bulk of your money). Can you give us the whole picture? How is the TIAA account invested because that will influence how this money should be invested.

Forgetting about the TIAA account for the moment, if you want to go really, really simple, my quick answer would be to ditch VINEX and just keep VTIAX for your international exposure, ditch VBIAX, VWEAX, and VFIJX and buy VTSAX (Total Stock Market Index) and VBTLX (Total Bond Market Index). As for allocations, we can go back and forth on the details of that but at 47, I think something like this would be a good place to start:

VTSAX 50%
VTIAX 20%
VBTLX 30%

What to sell and the consequences is another question.

You said this was a retirement account. Is it a Roth or some other type of account? If it is a tax-sheltered account, there are no consequences to selling.

I have expressed this idea to Dick.. His reply was " nothing has changed" and mentioned china..
I think he experienced shell shock, as we all did, when the market fell.

Does he know something.. or have a gut feeling which we dont?

I would get away from this adviser as fast as I could. He is saying nothing has changed at a time when the S&P 500 has doubled in 3 years. Year to date, the market is up over 11% while you've been essentially sitting on the sidelines with the bulk of your money out of the equity market. If he didn't want to be in stocks during a 3-year-long bull market, when would he want to be in?

[jpg7n16]

Totally OT but since you keep using the doctor analogy, it really isn't a valid analogy.

I wasn't saying it's exactly the same. My point was not that you needan advisor or you can't invest. Obv not. It was that people who have no idea what the heck they're doing often think they can do it themselves because they read something online (both in medicine and in finance). Or think that because they know someone in a semi-related but irrelevant field, means that that person is qualified to give them good advice. And there are problems created by that.

You can't just discount the value of professional advice because of something you read online. Applies to medicine, law, taxes, and portfolios. I stand by my analogy. You can't just say financial advisors are worthless because you can learn it online. Otherwise the same would apply to tax professionals. Why pay a CPA to do your taxes, when you can learn everything you need to know at IRS.gov?

In fact, the OP's answers to some questions above highlight some of the shortfalls of doing it yourself. Case in point:

Even if I knew.. It would be a guess as how to address the changes.

It's not enough to set up a proper portfolio today. You have to monitor and adjust over time.

Right now that responsibility falls onto OP who is not comfortable knowing how to make those changes. IMO he could benefit from an advisor to help make those changes.

That is not to say that nobody should ever use an adviser - that isn't my point. Some people need that extra knowledge and support. In this particular case, though, I don't think OP needs an adviser to maintain a portfolio of Vanguard funds. I also don't think the asset allocation is appropriate.

I personally think OP could benefit from an advisor. But is at odds with his current one about what level of risk to take in the account. And given the amount likely in play here (if he qualifies for performance based fees) - mistakes at that level are more costly.

Vanguard even has advisor options available that may be suitable if OP wants to stay with Vanguard.

https://personal.vanguard.com/us/whatweoffer/advice

https://personal.vanguard.com/us/whatweoffer/advice/assetmanagement?Link=ongoingservices&LinkLocation=advice_overview

I have expressed this idea to Dick.. His reply was " nothing has changed" and mentioned china..
I think he experienced shell shock, as we all did, when the market fell.

Does he know something.. or have a gut feeling which we dont?

Well, advisor recommendations should primarily be influenced by the client's needs. If you are now the client, as opposed to your parents, then something has definitely changed - his client. It may not be in the market, but there was a definite change in your goals as his client and the portfolio should adjust to reflect that.

If he is more concerned with having a secure portfolio, than with your needs as his client - then find a new advisor. A very conservative portfolio for someone seeking a growth portfolio is unsuitable.


Now if he has information on you that indicates that your risk tolerance is really not as high as you say it is, maybe he's got some basis for the conservative recommendation. But based on the limited info we have, it's too conservative.

[kv968]

I have expressed this idea to Dick.. His reply was " nothing has changed" and mentioned china..
I think he experienced shell shock, as we all did, when the market fell.

Does he know something.. or have a gut feeling which we dont?

Well, advisor recommendations should primarily be influenced by the client's needs. If you are now the client, as opposed to your parents, then something has definitely changed - his client. It may not be in the market, but there was a definite change in your goals as his client and the portfolio should adjust to reflect that.

If he is more concerned with having a secure portfolio, than with your needs as his client - then find a new advisor. A very conservative portfolio for someone seeking a growth portfolio is unsuitable.


Now if he has information on you that indicates that your risk tolerance is really not as high as you say it is, maybe he's got some basis for the conservative recommendation. But based on the limited info we have, it's too conservative.

As jpg said, the advisor should take into consideration the client's (i.e. you) wishes also. Granted if his client wanted to go to extremes such as put all the money into a Chinese real estate IPO at age 50 or everything into a MM account at the age of 25, he should definitely strongly suggest against doing so. However if your willing to take on more reasonable risk than what you currently have he should explain to you (in detail) the risks as he sees it, what it could mean to your portfolio and why he thinks it might not be the right decision for you. "Nothing has changed" just doesn't cut it for me. There has to be more explanation than that.

[Ochayebeers]

Hi there,

I work in the financial planning industry in the UK (based in Glasgow).

My gut feeling is that paying an adviser to use passive instruments (index trackers) means that you are not getting a brilliant deal. A good adviser should be able to identify in most instances the 20% of actively managed funds that consistently beat the index and create a properly asset allocated portfolio that matches your attitude to risk. My personal view is that your portfolio cannot generate any alpha and should therefore be at the barest minimum cost (I would grudge paying more than 0.3% per year really).

I note that your adviser only charges if your portfolio gains and that sounds great but I would double check that as it is totally unheard of over here, perhaps you are not getting full disclosure. Also check if this is based on nominal or real outperformance ie after accounting for inflation.

I know that in the states passive investing is very popular (Vanguard have launched here as well) but in the UK we have mutual funds called Investment Trusts which date back to the 1880's (they originally invested in the emerging markets in the United States!). These funds can often have annual charges of only 0.5%. I think that's a great deal for a fund that has a chance to beat the index! I wonder if you can access them over there as this is better than the 2% you often get from a standard mutual fund (unit trust).

Anyway, hope that's helpful!

Cheers,

Les

[rerod]

Hi there,

I work in the financial planning industry in the UK (based in Glasgow).

A good adviser should be able to identify in most instances the 20% of actively managed funds that consistently beat the index and create a properly asset allocated portfolio that matches your attitude to risk.
Anyway, hope that's helpful!

Cheers,

Les

How do I go about determining which mutual funds Vanguard offers consistently beat the index? Isn't it allot of who manages the fund? How good that particular manager performs?

[disneysteve]

How do I go about determining which mutual funds Vanguard offers consistently beat the index? Isn't it allot of who manages the fund? How good that particular manager performs?

Beating the index is more often a function of dumb luck, being in the right place at the right time, taking a risk that pays off.

As for checking out Vanguard funds, just go to Vanguard.com. You can pull up a list of all of their funds with YTD, 1, 5 and 10 years and since inception performance numbers. If you click into the individual fund profiles, you can see how they've performed against their index.

[rerod]

Thanks Steve.

I now find myself in somewhat of a pickle..

I wrote my FA the other night. I only suggested we make the account more aggressive.. He fired me and gave his 60 day notice because I had mentioned it in the past.. wow
A year ago he mentioned a star student of his (FA taught finance at the U of I ) was taking over his accounts as he slowly retired. Not sure yet if thats the path I want to take because it seems most people manage their own accounts when invested in Mutual accounts.. This star student of his is 5 hours away in Chicago also..

I guess I honestly dont trust anyone.. including myself at this point.

[jpg7n16]

I wrote my FA the other night. I only suggested we make the account more aggressive.. He fired me and gave his 60 day notice because I had mentioned it in the past.. wow

Well I guess that solves that problem huh?

I guess I honestly dont trust anyone.. including myself at this point.

Someone has to manage your money. Either that's you, or you pay someone to do it for you. What other alternative do you have? Put it all in cash until you trust someone? That's directly against your growth objective.

In the meantime, I'd prob structure your account as suggested above. Those are more growth oriented allocations.

------------------------------------------------------------------

How involved do you want to be in managing the account?
Is this something you want to do yourself?
Or were you looking for a person/company to manage it for you?

Ideally, how do you want this to go?


The major firms have management services. If you trust the larger companies, that may be an option. You don't HAVE to go with a solo advisor.

Vanguard's management services start at $500k (https://personal.vanguard.com/us/wha...dvice_overview )
Fidelity's start at $50k (Managed Account Services - Fidelity )
Schwab's vary by account structure, and can be from as low as $25k (Investing Costs: Charles Schwab: Fees and Minimums )


But if you want a single person to work with, I'd recommend finding a CFP in your area. They can look at your whole financial picture - more than just your portfolio:

Find a Certified Financial Planner Professional

[rerod]

Vanguard's management services start at $500k (https://personal.vanguard.com/us/wha...dvice_overview )

Thanks good info..

I will meet Vanguards minimum as soon as my Dads farm sells, which we just excepted a offer for. I will deposit the money in the MM account and then request their recommendations.

Thanks again!

[Ochayebeers]

I wouldn't be too attached to Vanguard or any single manager if you want actively managed funds.

I would create a portfolio of different managers so that you have a mix of growth, value, and other investment styles. And be prepared to sack your managers if they underperform for extensive periods.

For Asia, First State are the masters, for bond funds, M&G. For general global exposure I use Baillie Gifford. For American exposure specifically I use trackers mostly, although Framlington have made a decent fist in recent times. For the UK I lean more to smaller companies, but you can't beat Neil Woodford for the bigger ones (Invesco Income & High Income).

I'm not sure what the IRS implications would be for you to use UK domiciled funds, but if you are able, why not consider Investment Trusts which charge less than 1% per annum. (Many at 0.5% total expense).

One downside of trackers that is rarely mentioned is that they are as volatile as the index they track, which is mostly very volatile nowadays. One benefit an actively managed fund can give is a Beta of less than one ie you get insulated from the full movement of markets in the long run.

Another thing to consider is that asset allocation on its own really only works well in bull markets. Within your equity your adviser ought to guide you to the most promising area. Is it small cap, or large cap or is it Asia or Europe? Even with bond funds, is it government debt or high yield corporates? While you can asset allocate yourself, it can be good to get advice regarding sector allocation.

Not that I am opposed to trackers, a good adviser ought to be using them to cut the costs of your portfolio where he is struggling to sector allocate or where the markets are efficient.

[disneysteve]

I wrote my FA the other night. I only suggested we make the account more aggressive.. He fired me and gave his 60 day notice because I had mentioned it in the past.. wow

That was easy, and obviously speaks volumes about that particular adviser. He might be good handling retiree portfolios but obviously handling clients who are young and in the growth phase of their lives isn't his speciality. Clearly, he wasn't the right person for you even if he was right for your parents.

Someone has to manage your money.

True, and nobody will ever care as much about your money as you do.

I wouldn't be too attached to Vanguard or any single manager if you want actively managed funds.

I agree. If, for some reason, you opt for actively managed funds, don't tie yourself to one company. You need to do your homework and search out the best funds in each category. Along with my index funds, I have a small cap value fund with Heartland, a real estate investment trust with Cohen and Steers, a gold and precious metals fund with Oppenheimer, etc. If you want to go all index, Vanguard is a fantastic choice but if you want to go actively managed, you need to shop around. No one company excels in every area.

[Ochayebeers]

Forgot to mention before.

I have never heard of an IFA firing a client! Sounds like a cheeky git to me - I would have been round his office with a cricket bat if it was me!

The client is king!

Hope you find someone you like. Why not talk to several different people, many advisers here will give you the first meeting free and without obligation - must be similar where you are.

[rerod]

I have never heard of an IFA firing a client! Sounds like a cheeky git to me - I would have been round his office with a cricket bat if it was me!

The client is king!

He gave his 60 day notice and said he would no longer do anything for me. He was insulted with my "rear-mirror view... Your account has had a return of 7.4% a year over the past five years, 8.1% a year over the past three years, and 5.6% over the year ending 2/2012."

Finding a IFA I trust and performs sounds about as fun a dating again.. Unless there are great gains to be made when a good IFA use's multiple institutes. I think I will keep it easy and remain with Vanguard and use their recommendations. Dont any IFA's charge fee's based on performance?

[disneysteve]

I have never heard of an IFA firing a client!

I see nothing at all wrong with an adviser firing a client. If the two don't agree on how things should be handled, they should end their relationship. It is no different than a doctor discharging a patient from his practice, something I've done numerous times over the years.

He gave his 60 day notice and said he would no longer do anything for me. He was insulted with my "rear-mirror view... Your account has had a return of 7.4% a year over the past five years, 8.1% a year over the past three years, and 5.6% over the year ending 2/2012."

Whether or not the portfolio has had a good return doesn't correlate at all with whether or not the allocation is appropriate for your age, goals and risk tolerance. A good adviser should certainly understand that. This guy obviously does not.