Managed Account advice?

[Shawn3B]

Talking with Morgan Stanley about a UMA, and specifically rolling over an old 401k held somewhere else to a IRA with them. Considering moving other accounts/assets also. Seeking advice on if to, and what rates to expect, etc...

Say I have 100k in my 401k. They are asking 1.3% management fee.
To me, it seems very worthwhile to move my 401k 0- having limited investment/allocation choices there, and me having to manage it, to them. The 1.3% should easily be recouped, and probably by a lot. Right?

The question is more my other assets. I generally do mostly ETF's (and some "gambling" on high-risk / high-potential types, start-ups and whatnot ... that accounts for say 15% or so of the portfolio). ETF's like QQQ, SPY, IWF, VTI

The more specific question is... with a MS UMA, or really any managed account, am I better off with that (with the 1.3% yearly fee) over just riding an ETF long-term?
I am 35... would I expect better returns over 20 years with a manger??

I've always heard managed funds (or playing the market) can't beat the long-term index... but the proposal is the account does US, International equity, bonds, REITs, etc, etc... so it reduces risk and should provide moderate risk and 'stable' returns. It's not just stocks, is part of the sales pitch. ... long-term, am I better off going this route?
Very generally speaking...?

[Petunia 100]

Talking with Morgan Stanley about a UMA, and specifically rolling over an old 401k held somewhere else to a IRA with them. Considering moving other accounts/assets also. Seeking advice on if to, and what rates to expect, etc...

Say I have 100k in my 401k. They are asking 1.3% management fee.
To me, it seems very worthwhile to move my 401k 0- having limited investment/allocation choices there, and me having to manage it, to them. The 1.3% should easily be recouped, and probably by a lot. Right?

The question is more my other assets. I generally do mostly ETF's (and some "gambling" on high-risk / high-potential types, start-ups and whatnot ... that accounts for say 15% or so of the portfolio). ETF's like QQQ, SPY, IWF, VTI

The more specific question is... with a MS UMA, or really any managed account, am I better off with that (with the 1.3% yearly fee) over just riding an ETF long-term?
I am 35... would I expect better returns over 20 years with a manger??

I've always heard managed funds (or playing the market) can't beat the long-term index... but the proposal is the account does US, International equity, bonds, REITs, etc, etc... so it reduces risk and should provide moderate risk and 'stable' returns. It's not just stocks, is part of the sales pitch. ... long-term, am I better off going this route?
Very generally speaking...?

The drag of 1.3% per year, compounded over many years, is substantial. Watch this PBS special from Frontline: http://www.pbs.org/wgbh/pages/frontl...an-retirement/

It is extremely easy to diversify your money without much fuss. Open an account at Vanguard and put all of your money into a Target Retirement fund. You will have US stocks and bonds, foreign stocks and bonds. Reits, small caps, emerging markets are all included. Your money will be automatically rebalanced, and your allocation will grow slightly more conservative each year. The cost will be about one-sixth of what Morgan Stanley wants to charge you.

[jIM_Ohio]

1.3% is expensive.
1% for under $200k should be baseline
0.5% for over $200k should be baseline.

[cardtrick]

Very good advice regarding target retirement funds. You can also just hold diversified companies and get the same effect, although with a lot more risk.

[Shawn3B]

Thanks all.
I am still reading through the PBS article ... good stuff.

Yeah, the more I read and think about it ... 1.3% is quite high, especially over time and compounded.
I could move the IRA over to something that provides me more choice than my current option. I tend to work a lot of hours and don't really follow the market that close; so there is appeal of someone 'watching for me' and in theory making better choices and getting better returns than I may, or at least reducing risk. Their sales pitch is also financial planning/advice and free trades, even in accounts not under management. I don't trade much, only 1 or 2 sales a year, on average, some years none. In 2007-08 my 401k lost something like 40%, maybe even 45%... I wonder if it was managed, if the loss could have been reduced and by how much?
Their sales pitch is the blended approach, rebalancing and trying to predict major market trends ... doing better in slideways or down markets than I would likely do.

[disneysteve]

They are asking 1.3% management fee.

That's insane!

The drag of 1.3% per year, compounded over many years, is substantial.

I could move the IRA over to something that provides me more choice than my current option.

Absolutely. And keep it simple. Vanguard's Total Stock Market ETF has an expense ratio of 0.05%. Do you really think this guy can do something that is worth paying him 26 times as much?

trying to predict major market trends

This should be a huge red flag to you. Anybody who tries to convince you that they can predict what the market will do should make you turn and run away as fast as you can, especially when they want to charge you a ridiculous amount for that prediction.

It's amazing and sad that these places are able to stay in business.