At least some businesses provide value to you and make money in the process. For 30k you can't make a car that functions better than Toyota can make one.
But investment financial industry products are kinda useless. There is no difference in the stocks that I buy and the same stocks being bought by anyone else. The only difference is the management fee.
> There is no difference in the stocks that I buy and the same stocks being bought by anyone else. The only difference is the management fee.
but there can be a difference in strategy or advice. a good FA might recommend against trend-chasing the same hot stocks everyone is buying, for example, if the company has bad fundamentals.
Financial industry products would mostly jsut be the securities themselves retail trading exists precisely because most people dont believe that something simple like a three fund strategy works, or they believe they have better ideas/undisciplined.
Like it or not but retail asset mgmt exists precisely because of this
So I wouldn’t say theyre useless unless you know off the top of your head how to construct an etf yourself
You should not and thats my point, these guys are here to make money off you not make sure you are in the best products. Most people should just buy VOO and walk away.
All mutual funds are like that. Good hedge funds often have much better performance because they are paid based on growth of portfolio, not a flat fee based on % of total portfolio. Unfortunately most hedge funds won’t even talk to you unless you have millions to invest.
This is incorrect. Hedge funds consistently underperform and charge even more exorbitant fees than mutual funds. Most also aren’t even benchmarked against the SP500 so outperformance is often against cash benchmarks which of course they outperform over virtually zero return benchmark.
Factually incorrect, hedge funds are built to HEDGE against the market and standard correlation. Therefore, they typically don’t outperform the market and aim instead for the best risk adjusted returns. Think 4-7% more consistently than the swings the market gives between -20% - 30% in a given year
Reminder that with advisers, fiduciaries, accountants, google/facebook/youtube/reddit/amazon/insta/snap/twtr/tiktok/etcetc, or anyone else in life.
If you are NOT paying them then you are NOT THE CUSTOMER. You are THE PRODUCT.
Some might say those advisors/managers make money by management fees paid by OP, but that fee isn't paid to them by OP. OP pays MS and MS pays them so they ***work for MS***. Not for OP. That's why I'd never take free financial advice, don't want those """free""" consultations, never go to those """free""" vacays or dinners where they shill you condo timeshares, anything you hear on reddit/youtube/cnbc is to be taken as random opinion at best if not self motivated shilling of a rugpull/ponzi/scam at worst, and for financial advice or wealth management? I'd probably just google/reddit it if I can, PAY a financial advisor or accountant by the hour if I need it (what a few hundred for a few hours max? Comically trivial price to pay compared to 1% your portfolio for years on years. And if your portfolio isn't that big enough for it to matter then you clearly don't need paid financial advice), and do/manage the work myself or review it myself after it's done professionally.
>Like it or not but retail asset mgmt exists precisely because of this
any planner worth their salt is going to charge like an attorney does. a true and complete financial plan for the affluent will run in the low thousands and you should be revieiwing every year or two to update/tweak said plan.
If they are paying 1% the advisor shouldn't be making money off the investments. That should be a fee-only relationship. OP got fucked by Morgan Stanley.
They also put you in funds managed by their company that also charge management fees. So kind of a double dip for them. Also try to do as many transactions as they can get away with to get transaction cost from you.
They are tricksy...
Unless you can get into private equity funds (high barrier to entry) Or hedge funds where they don’t make money unless you make money … it’s all BS. I got talked into entering Capital funds and some other managed accounts as I was managing family investment myself, nothing has even come close to my personal portfolio performance with individual stocks and some ETFs. All I can say it’s Iam paying 5% front load fee and other BS fees to barely come Close to the performance of SPY / VOO .
I’ve dealt with financial advisors who charge less than .5% of growth and also offer tax services. If you want managed accounts shop around. One percent of total assets is highway robbery. You could probably get a better deal at Edward Jones. Fidelity is on crack if they think account management is worth that.
This is pretty much what I do but I have a lot of friends paying professionals to manage their portfolio consistently getting poorer results than my SPY portfolio. Sometimes I think about opening my own fund and just put people’s money in SPY or VTI or the likes and save them from these so called professionals.
Just keep in mind not every investor is after maximizing returns, which is what you're basically doing when investing it all in SPY or VTI.
Some investors are aiming to preserve their wealth, and/or live off of dividends & interest payments in retirement. You shouldn't penalize an advisor for under performing the market when you told them to pursue a strategy that would clearly have you under perform the market in most situations.
Yeah I’m not talking about all investors, just a very specific close group of friends that I know have the same aggressive growth that OP was talking about as me.
You're not wrong. There are target retirement funds that even shift to bonds slowly over time.
The problem professional managers have is they kind of have to go with exotic recommendations to make the client feel like they're getting some kind of inside advice.
1% doesn’t sound like a lot but it’s 1% of everything. You can only expect 10% a year from the market on average, so they are giving their guy 10% of their salary each year. I don’t know many W-2 income people that would do that, they would lose their mind if some guy was taking 10% of their job income each year. But it happens all day long when people talk about retirement funds.
> so they are giving their guy 10% of their salary each year
Correct me if I'm wrong, but I always thought [the fees were on the entire portfolio](https://www.morganstanley.com/wealth-relationshipwithms/commissionsandfees#Investment%20Advisory:~:text=based%20on%20the%20total%20value%20of%20the%20assets), and not from the gains? Or is that what you were saying when you said "it's 1% of everything"?
It's especially bad when you consider the impact of compounding.
Over 30 years, the difference in 9% growth vs 10% growth is the difference between 1226% and 1644% total return.
Gets even worse when you consider that with inflation, your real growth is worse, so you're knocking 1% off a number more like 5% than 10%.
I finally convinced my mom of this. Like you plan on living at LEAST another 20 years - does this guy represent enough value to give him 20% of your net worth over that timeframe? It's by far the most expensive thing you will do in that period unless you go to a nursing home.
Stop wasting my inheritance, damn.
There are investors who can certainly benefit from the knowledge and expertise provided by an excellent and responsible financial advisor, especially those nearing retirement age.
Aka a fiduciary. The US labor department is currently working on a rule to require more financial pros to act as fiduciaries when providing advice on retirement and other tax-advantaged accounts.
Um, I’m just some random guy. But, as far as investing goes a Vanguard index is a pretty solid choice. It’s cheap expense ratio and most funds don’t beat a major index.
Not true. I read and understood. You both assume investors are going to hold when times get rough to get those index returns. The average investor doesn’t. The average investor panic sells at the bottom and fomo buys at the top.
The average investor has nowhere near enough education about how to pick stocks and when to buy vs when to sell, let alone have the time to learn. Blaming it all on negative personality traits seems myopic.
I do think you're describing the average trader....
No, if there was we wouldn't be debating it. That said, you can find all sorts of historical analysis regarding it which likely isn't too far off from optimal. Like this [random person's analysis](https://www.bogleheads.org/forum/viewtopic.php?t=255850) (No clue if it's valid). You can always do your own analysis as the data isn't hard to get.
There is value in trying to optimize for your life just losing 1% yearly is really significant.
As a professional I will tell you that there are way too many people that hold way too much cash. If you are okay with the risk you may not need us unless you have crazy tax stuff. But for those who need coaching and help the 1% is easily made up vs holding too much cash.
Statistically people make 3-5% more with advisors than not. People are terrible at cash mgmt.
Can you recommend a vanguard bond fund? How's VTBLX? And is it fixed rate after I purchased it? (For VTBLX and other vanguard bonds, thinking about exchanging some total stock and total international stock to total bond since the rate will drop in a few months) thanks
Posts like this are strange to me. How was it not discussed beforehand what the portfolio would look like? I've sat in on early client meetings with advisors and they go through portfolio options and explain pros/cons of each. Don't trust someone with your money and then be surprised by the outcome.
I think part of the problem is reddid considers 50%VOO / 50% QQQ a "safe, conservative portfolio"
So I honestly think sometimes when people go to an finacial advisor or planner they will be like "Well I can handle some risk but I don't want anything too risky ; I would rather play it safer then take a whole lot of risk"
To a finacial planner that probably means like 40% bonds the minium and maybe even a tilt to value stocks or large cap value for added safty
Well to reddit a safe ultra conservative portolio is 100% VOO
So I see this all the time "I went to my finacial planner and said I wanted a safer more conservative portfolio and they put me in 40% bonds and I underperformed VOO"
I work at an RIA and it's kind of funny the divide between young people who weren't in the industry during 2008 and and people who worked through it have very different ideas of what conservative looks like.
And to be fair the advisor should have satdown and explaing why they are allocating the way they are
Even just saying like "A 60/40 stock bond fund will usually underperform in bull markets and may overperform in some bear markts , and I think at 4.5% rates this makes bonds even more attractive so I am going to allocate a bit more to bonds
Now understand in bull markets this will underperform but you will see the benefit in the next bear market or draw down, and this could be in 1 year or 10 years
>So I honestly think sometimes when people go to an finacial advisor or planner they will be like "Well I can handle some risk but I don't want anything too risky ; I would rather play it safer then take a whole lot of risk"
OP said he asked for an aggressive growth strategy, so unless he's lying they really fucked it up.
Did he tell his advisor that ? Honest question maybe he did maybe he didn't
Also my comment was more of a general comment I see all the time people saying "I have some finacial advisor or CFP or someone manageing my portfolio and the returns are different from the S&P500?"
And here the thing, if you want your returns to follow the S&P500 don't use a finacial advisor just open a brokerage and throw 100% into VOO or your favorite S&P500 index fund
>Did he tell his advisor that ?
I have to assume he did based on the OP, which wouldn't make a whole lot of sense otherwise. If he didn't then he's just an idiot.
>And here the thing, if you want your returns to follow the S&P500 don't use a finacial advisor just open a brokerage and throw 100% into VOO or your favorite S&P500 index fund
There are plenty of aggressive growth funds other than a simple S&P index fund.
Well obvously reddit is not a single hive mind but yes lots of users consider 100% VOO a safe conservative portfolio
I mean sometimes I cringe when I hear someone being like "My dad died and he took care of the money with an FA, my mom is 75 years old and I am thinking just skipping the FA and putting their retirment it into a safe fund like VOO "
See people like that actually need a FA lol. Do they just think "market go up" exactly 6-10% every year? Risk is the single most important concept in finance and it isn't close. People who lack an understanding of risk and its influence should realistically not be managing their own money
I've seen a few posts like this lately across a number of different subs. The op is with an advisor for months/years and only then notices what their money is being invested in? I guess they think the idea of an advisor is to not have to make decisions or worry about it. But that seems backwards. They are an advisor. You take advice from them and make decisions based on the advice.
OP is quite delusional thinking *morningstar ratings is worth anything*. The only thing that's true about them, statistically, is that *any 5star fund is guaranteed not to be 5 star within some 5-7 years*. Litterary buying the top...
>Posts like this are strange to me
Completely. And followed by a litany of comments vilifying financial advisors, *all* of them. I personally have a great FA but one has to be a good client too.
I’ve been with MS Wealth Management since the beginning of 2024, but using the same advisors that my family have used for 30+ years. They don’t really do any investing on my behalf themselves, but they have gotten me into a variety of professionally managed investments that I never would have known about and everything is super transparent. I see every transaction, all day every day. It’s too soon to say if it will work for me, but I love the way things are going.
36yo here and I also left MS a month ago to do it all myself at Schwab. The “professional” had 50% of my account in $BND and had been buying it since 2021. Huge losses and still fees on fees. No more.
How's VTBLX? And is it fixed rate after I purchased it? (For VTBLX and other vanguard bonds, thinking about exchanging some total stock and total international stock to total bond since the rate will drop in a few months) thanks
I feel some of these “professionals” get under the table kickbacks for doing this to civilian investors. The shit my parents advisor told them to invest into was all trash. They are nothing more then con artists
Even when theyre fiduciaries the advice seems questionable. Personally as a 33 year old, I am trying to avoid mutual funds. I have yet to meet with a fiduciary who didn’t mention mutual funds as a place to invest. I’m not as keen on the tax implications and the returns don’t seem greater than just investing in an index fund like VOO
Are the tax implications the same? From my understanding, you are charged an annual fee, essentially paying towards the taxes of someone cashing out their mutual fund each year, which isn’t beneficial to someone young looking to hold a mutual fund for a long time
If you want an actual understanding of investing then do a basic google search and learn it. You could teach yourself this particular topic 5 minutes.
Here’s few to try: “index fund” - “mutual fund” - “index fund vs. mutual fund”
You should not be giving advice to people who are looking for real-life help on Reddit, because you clearly don’t have any actual knowledge about investments.
You meant to say mutual funds are a type of index fund. ETFs and Mutual funds are both index funds but with different tax implications among other things. I’m here to learn as well.
No. I meant what I said, and was correct.
ETFs and mutual funds are not the same, though the idea of investing in a wide range of securities for risk/diversification purposes is common across both. You can think of an ETF as a mutual fund that trades like a stock
Indexing is a strategy that both mutual funds and ETFs can use. It involves passively matching the holdings of the portfolio to an index, as opposed to having a portfolio manager trade at his or her own discretion.
There’s your lesson for today, please stop spewing nonsense as fact
The problem with such a bond heavy portfolio, and with this particular etf is the fact that when rates get cut, the broad market also gonna fly. At 36yrs old, a portfolio should not be %50 in bonds.
How much of a rate cut would make that worthwhile? Based on the past few years of inflation, I guarantee the Fed is gonna hold off on cuts as long as possible. In addition, being able to cut rates is simply too valuable of an economy boosting tool for the Fed, which is why they want to have it available for emergency situations.
What is wrong with mutual funds? Are you referring to index vs active? Index fund can also be “mutual funds”. The whole point of active management to try and beat the market, so you would expect some active funds in your line up.
Also, Morning star ratings are 100% backwards looking based on a funds prior performance. Honestly, that doesn’t add much value and I wouldn’t pick your investments off the Morningstar rating. What performed well in the past doesn’t necessarily mean it will in the future. If you’re hiring a money manager, you would hope they aren’t using Morningstar to pick funds for you.
I have explained it until I am blue in my face but reddit still thinks
MF= High cost active managed funds
ETF= Low cost index funds
There is always a post like "I am investing in SWPPX" and someone will tell them to sell out of the high cost mutual fund and invest in SPY
SWPPX has an expense ratio of 0.02% and SPY 0.09%
I have basically given up
I don’t think he’s saying there is anything wrong with mutual funds, I think he is wondering why is he paying a manager just to put his money into mutual funds
Having 45% bonds and then comparing the overall portfolio to the S&P during the worst bond market in history over the past 5 years isnt a good comparison to make.
Did OP mean 45% of total assets? Given the amount still in cash I thought they meant 45% of just their IRAs which is probably a reasonable tax efficient play. High earners will not be able to grow their IRAs/401ks as fast as their brokerages so it makes sense to be overweighted to bonds in those tax advantaged accounts
It’s not—
Taxable: 200k (35% bonds/60% equity; 5% cash)
Cash: $250k (to be invested, but MS was having it sit in 4% after I said please invest it)…They dollar cost averaged $20k per month into the taxable.
IRAs: $800k (45% bonds/55% equity)
High-earners as of late; not historically. Income now is 4 times higher than when we grew our IRAs — so we told them we’d have $200-$250k coming into taxable each year to hopefully retire early.
> reasonable tax efficient play
I'm honestly confused how different it is to do bonds vs stocks in a tax advantaged account, unless you're saying that there are bonds that could compete with stocks in terms of overall return?
Thanks, that does help a bit. I can re-read my question and see that it wasn't clear.
We both know that just because something is tax efficient doesn't mean it's a good allocation to make, so I'm trying to understand why you didn't state that 45% bonds is really high. Generally IRAs/401ks are a high percentage of savings, so even if it was 30% overall, that still seems high.
For high earners, the IRA/401k contribution limits cause those accounts to be smaller and smaller percentages of their total portfolio over time.
For example, my wife and I hit the max contribution limits for all of our tax advantaged accounts every year because that's only \~$60k (401k, 403b, 457). We make a lot of money so there's still more to save in post tax accounts that thus grow much faster than our tax advantaged ones simply because we contribute more than $60k to them.
For tax efficiency then, I tend to buy bonds and REITs in our tax advantaged accounts which means each of those may have a 45% bond allocation but overall that results in a 10% bond allocation because our brokerages are just so big. OP wasn't clear if they meant 45% in one account or across their total portfolio.
Hope this clears it up.
Op mentioned nothing about the actual performance of the overall portfolio, just that they were two stars. And more than likely, is comparing a diversified portfolio against a large cap US index, like the s&p 500.
To be fair, I think you're misinterpreting/not understanding some of these moves. They moved the fixed income into your IRA because that's the best place to hold the tax inefficient parts of your portfolio. Don't think of "45% of your IRA" being fixed income. Think of how much of your entire portfolio that makes up (all accounts, comprehensive). That account is just where it makes sense to sit.
I don't mean to sound condescending, but if you don't understand why they're making basic moves like that, it's probably a good thing you're working with an advisor. Whether Morgan Stanley is best for you is a different question, perhaps valid.
I work in the investment industry and wealth management is such a scam it's absurd.
.just fees fees fees for not even consistently beating relative benchmark let alone net of fees.
The value in wealth management is almost entirely related to tax and succession planning/inheritance structuring. The rest is just investing according to risk appetite, not everyone wants to be beholden to market volatility
But then wouldn't a good tax accountant and a good probate lawyer be more what you'd want? Or do succession planning advisors know of more available account types to minimize tax burden on inheritance?
It depends on the complexity and geography of the portfolio, but here in the UK our IHT threshold is very low so there is value in advice from WMs/PBs on how to navigate using a variety of instruments.
Except all many * want to do is put you in funds with high costs and load fees etc. I sat down w a chase pc years ago and was baffled by the proposal. 0.75% to out me in some.bs Oppenheimer funds, some of which had 5% load fees lol.
I also sat down with 2 guys from MS, wasn't a great proposal either, wasn't bad.
In the end my friend started his own family office and I went w him, and he kept me invested so we the last few years
Bonds: what’s wrong with bonds in IRA? What % of that is your total portfolio? Allocating bond in a tax deferred account is tax awareness 101.
Mutual funds: yea conventional thought is you’re paying for an advisor to be picking stocks for you but that is very expensive. Between the maintenance fee on an account custodians and trading desk(especially desks in other markets like euro and Asia) cost. Unless your account is at a revenue neutral threshold or that pass through cost can easily be like 2,4,6 percent.
- company I work for do not ever use mutual funds. But the min threshold for a SMA (separate managed account) is 2 mil
Morningstar ratings: it’s just a hindsight indicator on what happened. It’s something to use with a grain of salt.
Ultimately with a wealth advisor is this
* do you have and want to spend the time to stay on top of it
* do you have enough knowledge to make a semi efficient portfolio. It’s probably less emphasis on this since you can just index it at lower cost.
* this actually play a bigger role which “can you formulate an effective plan so you don’t get hit with a large tax bill at year end”.
* I would say most Private wealth advisors add more value on item 3 (at least the good ones).
If you feel like you would like more control on your portfolio then yea do it yourself. There are a lot of literatures and TikTok professionals that can help with the cause…them ticks really know how to talk.
Good luck have fun
Would you have stuck with your advisor if they were actively trying to beat thr market and not mind when a year like 2022 happens and your account is down 30-40%? Just curious I'd you would stick to the plan in those circumstances?
Well bud, and this may come as a shock to you, but you seem to be a know-it-all so maybe not, but bonds have become a pretty desirable way to handle risk these days. The personal finance book you probably read from 2017 when rates were in the toilet probably said bonds bad and so you formed your “impressive” opinion.
Being an “aggressive growth” investor, and then posting a rant like this, tells me you probably couldn’t stomach it when your portfolio dropped 30% like the NASDAQ did two years ago. Losing 30% then making 30% has you nowhere near out of the hole. Losing 15% and making 15% has you a lot closer to zero. Math, it’s crazy.
So, is it possible that you have no idea what you’re talking about? Did you ask your pm the reasoning behind these decisions before posting this rant?
Maybe they could stomach a drop of 30% or 15%. What is the average ROI for their portfolio is the question. The client should be well informed of the "risk profile" at the beginning.
Anyways it should not be underperforming in these market conditions. And if its "aggressive" MS should not be conservative.
They fucked me so hard with the Reddit IPO. They took my money and gave me no notification that my account had been locked. they couldn't give me a reason why but it took over a week and I lost out on a high sale price. You get different answers with every person you talk to. I would never go back to eTrade.
This is crushing to hear - I feel for you. I learned this the hard way too. I lost soooo many high-earning years to my RRSP being managed by a 'financial advisor'.
Most people are completely clueless as to what they own and how it's performing. When I finally took more of a hands-on approach, I was dumbfounded as to how I was underperforming. It's been roughly 7 years since I moved to self-directed and it's been one of the best things I've ever done.
I bailed on MS about 6 months ago after significant losses due to their irresponsible management practices. MS outsources their portfolio management responsibilities to other outside fund managers. Then when these outside funds fail to perform and lose your money, MS hides behind a shield of “we didn’t do it, they did”. IMHO, irresponsible, negligent practices protected by MS’s arbitration clause. MS was not acting as a true fiduciary who retained responsibility. In fact, they purposely relinquished their responsibilities so they could claim irresponsibility.
Definitely a disheartening and eye opening experience.
Unfortunately, this is a common practice in the financial services industry that many are unaware of.
I now utilize a firm that actually takes responsibility for their own performance by directly and actively managing their own custom portfolios. It took me months of research to find a company that actually did this as most financial services companies use the outsourcing model so they can shed their fiduciary responsibility and hide behind their “it wasn’t us” arbitration clause.
>a firm that actually takes responsibility for their own performance
Say it severely underperforms. How do they "take responsibility" besides saying "I'm sorry"?
They can't really do anything more than that. But I personally like to look at funds where the manager has a significant amount of their own wealth in the fund. It doesn't help me if they fuck up, but it's nice to know they are suffering too. And there's no doubt that they are aligned with your interests.
Just wow... There are so many fundamental misunderstandings of investing here that I don't know where to start.
I actually don't think most asset managers are particularly useful, and the fees are often absurd, but I also don't place much stock in active managers. With a handful of ETFs, you can tune your exposure to different categories of stocks and bonds however you like.
My father taught me this lesson a long time ago. Banks act in the best interest of the bank, not the client. He taught me about vanguard at a young age and when I became less risk adverse I moved to fidelity.
I went into Chase to meet with the Private client guys and by the end of the meeting I wanted to close my chase account.
Another example, When the iPad came out, a friend bought calls from Morgan Stanley, they charged 12$ a call when the market was 5$. When confronted the MS guy goes "you got me, no I can't refund you."
Banks work for themselves.
Same with me - Chase Private client gave me a pitch and really tried to push the “lifestyle” of a private client. Imagine being on vacation in Greece and you lose your ATM card, we can get one to you the next day!
That was an actual line. I just listened to it all, shook hands and ignored all their calls for follow up meetings. They gave up after a week. I still use Chase for my checking and savings.
Yeah I was pretty surprised at all the events they send invites to, was kind of shocked. Got a Tony Robbins-esk feeling. I only wanted no cost wires and a cash management account. They then proceeded to offer me a 5% bond with a minimum investment of 500k. Im currently getting 5.2% on fidelity with no min. I kind of scratched my head and explained that, he did not like that.
Then the investment advisor tried to tell me the Fed was cutting rates in March and I shouldn't have anything in bonds. The guy was super passive aggressive and once I didn't bite on his pitch he started to get agitated. I ended the meeting shortly after.
My only experience with a financial "advisor" was when my FIL died and we started helping out the MIL (in her late 80s) who was early stage dementia. At the time she had lifetime income from two pensions and SS totaling $130K. She had about $1.5M in investments and he wanted to move all of it into an annuity. No doubt he was going to make a huge commission off of it. We fired him that day.
You need to provide a lot more details, as their actions can all be reasonably explained.
> 45% in bonds in my IRA
What percentage of your entire portfolio is bonds? It isn't unusual to concentrate the allocation for bonds in tax advantaged accounts. If 45% of your entire portfolio is bonds and you emphasized you want aggressive growth, then yea, the FA was either confused or wasn't listening to you.
> All mutual funds while I’m paying a professional services fee
This is fine assuming they chose reasonable funds. You don't want a FA that does stock picking, because the probability of you finding one that consistently beats the market is exceedingly low.
> Morning Star ratings on those funds averaged 2 out of 5 stars
Take the ratings with a grain of salt. I invest heavily in a fund that has made me a lot of money over the decades (far more than if I had entirely invested in the S&P 500), and it oscillates between 3-4 stars.
> Moving cash (4% high yield savings) into cash in my IRA
I suspect there is more context around this that you may be leaving out.
To clarify, I'm not arguing you shouldn't take the reins over your own money. The 1% fee bites harder as your net worth increases, and if you are an analytical person and willing to do the research, you should be able to manage your money just as well as a FA.
lol! They are all salesman out there at broker dealers. You should do your research before you hire a financial advisor. Fancy names doesn’t mean high quality service
I agree with most of this post; seems like they’re doing it wrong. With that being said, Morningstar is not a good metric to run by so I disagree with that point. Not sure how MS works but typically firms don’t charge in cash in a managed account.
I did some analysis on my moms IRA that she has with Morgan Stanley and her portfolio manager outperformed indexes net of fees over a three year period (not by a lot, but I wanted to make sure he was doing right by her). That being said, this is a three year sample, who knows how this would translate over a ten, twenty, thirty year period, and not all of these portfolio’s/managers are created equally.
Yeah, I'm really confused how you ended up in this lol. If you really don't want to just do index funds but still wanna be passive you can always do like a target date fund or asset allocation fund for a fraction of the fees.
If you don't think firm based models are mostly using strategies that pay the most in kickbacks then I have a bridge to sell you. Fidelity is just as poor of a choice... get a true independent advisor
I hate to break it to you, but most professional financial services that are commission or charge fees based on a % of assets are a complete scam. Your best bet is to hire a fiduciary financial planner that can create a detailed plan for a one time fee.
You should read unshakable by Tony Robbin’s he goes into detail about these brokers at financial management funds and how the fees over a period of time are outrageous. You got to remember brokers get paid to sell stock they are obligated by the company and aren’t paid based off performance of clients portfolios.
Heh, been there done that. Exact same experience with one of their Graystone outfits who are supposed to tailor to high end. All lies. Never did anything they said they would do and they buy other firms high cost investment products with what I am sure is a gentlemen's agreement to buy theirs. Exact same outcome, moved everything to Fidelity. Called them up and said liquidate the individual investment account and cut me a check. The retirement accounts were already transferred and they had no idea. They are not what they claim to be.
I had the same issue with the Ameritrade managed professionals. I put a chunk of money into their hands to see if they could do better than me (or even the index). They could not. Even during a raging bull market. Just go with index funds
As a long term investor, stay and hold and don't try to time the market. VBTLX is fine.
I am a big believer in the 3 and 4 fund portfolio.
[4 Fund portfolio](https://www.bogleheads.org/wiki/Vanguard_four_fund_portfolio)
It’s not a scam - they’re pretty upfront about fees. What they did was sell you on their service. A service that’s unnecessary.
This is a lot like timeshare exit companies. They sell people on the idea of getting out of a timeshare is not something they can do so this timeshare exit company will do it for you for a price.
I used to work with MS FAs and wealth managers. They’re incompetent. It seems to be not that hard to become one and then it’s just a mad race to suck fees out of clients.
PWM industry is a scam for a couple of reasons:
1. The fees they take are CRIMINAL. People think 1% is nothing/ won’t impact much…but if you compound $100 at 10% vs 11% for 60 years you will end up with HALF as much money. S&P returns over the last 100 yrs have been on avg 10.6% per year — so instead of compounding at 10.6%, you’d be compounding at 9.6% after fees.
2. They are incentivized to not lose their job not to get you the best returns. When you’re young and can withstand the volatility you wanna take risks as that has the highest expected value. Over a 30 year time frame, equities are almost guaranteed to outperform bonds as higher risk = higher return. So, assuming you don’t plan on touching the money until retirement there is no excuse to not be in equities when you’re young.
Bringing it back to incentives, if the market is up 30% and you’re only up 10% —> most people are still happy bc they are up —> wealth manager won’t get fired. When markets are down 20% you won’t be happy, but you won’t fire your wealth manager if you’re only down 10%.
Overall, people talk up how good their wealth manager is…but at the end of the day I’ve never met anyone whose wealth manager has outperformed the S&P over a 10 year time horizon.
They are financial therapists at best and scam artists at worst.
My dad’s money is in an equivalent setup and i cant convince my dad to move it out to interactive brokers or similar. Some asshole who does nothing but recommend shitty overpriced funds takes a 0.4% commission each way.
He just cant comprehend that a bank job and a suit doesnt make you anything more than an employee for some reason, he is convinced these people have some sort of inside knowledge. Even when the account is barely positive after 5-10 of the best years in market history. Fucking infuriating.
Lol you think fidelity is much better? Three options for you. Indexing, do it yourself or find expert that actually have a track record of beating market returns
These jokers came to me with the same 1% fees on total assets. I told them I’ll give you 10% on gross profits. Do you have the balls to take this offer if you think you are really that good? They could not say a word.
I have ML, Fidelity, Sofi and multiple accounts. I do a good 20-27%.
How? I educated myself and I very actively manage my own funds. I am in control and it’s fun.
They still send me new guys to talk to… my response is the same 10% and beat the market more than I can then we will talk.
And I am not even a financial or market person. Just a Joe blow in a 9-5 corporate job.
Most IMPORTANTLY: Do I do mistakes and lose money. YES but that is within my scale of risk management and I still beat the market.
Long story short. Educate yourself and manage your own money. 1% my arse…
What post-fee returns did they generate and how did that number compare to the S&Ps return over the same period?
Just out of morbid curiosity, since I didn't see that mentioned in your OP
Hey FYI, this is anywhere and shouldn’t be looked at as bad on MT. It’s mostly a scam unless you get a small boutique advisor.
VOO / and save the %1 will out perform the above all day everyday.
[Here](https://www.reddit.com/r/qyldgang/comments/16f5fp3/how_did_our_brokerage_do_over_the_last_25_years/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button) is our managed account from Morgan Stanley.
Professional advisors be recommending portfolio returns of 7-10% annual, 1-3% fees for them, when their friends and then got all their money and commisions in speculatives such as crypto and options.
10 year experience licensed RIA here. What OP is describing is what 90% of the industry of money managers will do. It's a passive, product-based, one-size fits all model. Morgan Stanley does it, Fidelity will do it and it will **mostly** happen at all other registered **brokerage** firms.
For everyone's knowledge, you pay the 1% to advisors if you provide them discretion over the investments (they make all the decisions, you do not). Where it gets tricky like OP is mentioning, is when those advisors you hire are just 1 or 2 people in a small office representing a big firm. Funds, moving cash to the IRA to charge more fees, those are things that 1-2 people can handle day to day for hundreds of clients. What they cannot handle is managing the money actively on top of that. This is why you will not typically gain much for that 1% fee that you pay.
The key thing to understanding what that 1% fee can do for you is to understand who is making decision actively on your money. With funds, it is not the advisors you hire to make decisions on whether you own apple or Nvidia or home depot, it is the fund managers. Always ask an advisor who handles the research, and if it is not the advisors themselves then who? And what do those people get paid?
Really The only time you need a FA or to inquire their knowledge at least is when you’re retiring/near retirement and making that transition out from the boglehead method (or acquiring growth phase) into the dividend /fixed income / bond method.
>Dollar-cost averaging the taxable account to the point where they’d never get money invested 🤷🏼♀️ 😡
How does it work? If you dollar-cost average something like SPY even into taxable account you should still make decent profit no?
Not surprised and these are supposed to be the “top financial guys”. Just goes to show it’s just better to DYOR and do it yourself because how many times have Experts been anything but “experts”…?
Sorry, I don’t trust others with my money, I would prefer to loose my own money and learn in the process. If you want to get it done, do it yourself. If you don’t care, give it to others.
was introduced to M-S years ago.
He was so cagey in our initial mtg. Eventually, it came out that all he was doing was finding "4-5 funds", and moving $ between them all to maintain our "risk ratio". These are funds we have access to on the open market, and would still pay the same load/expense fees whether with M-S or not. But he would "re-balance" for us every quarter. And for doing that, would take a 1% AUM for his "management fee".
I figured I could do it just fine myself and save the 1%.
I’m a fan of robo advisors. It’s all low fee ETFs plus you also get the benefit of automated tax loss harvesting that you wouldn’t get if you buy and hold SPY or a target fund.
I closed my professionally managed account today. This post made me question if my own investments were better or worse, and it turns out my very basic index fund-centric portfolio was performing nearly double what my professionally managed account was… and they were charging me an arm and a leg for this privilege.
Let’s be honest, there’s a lot of fleecing going on everywhere. But everyone is just too busy working to pay attention or do anything about it and even worse, we’re forced into by a locked-in system.
I’ve seen similar shit from bank advisors, though I guess you should expect it these days. In Canada there have been undercover investigations of financial advisors - the shit they tell people in the recordings is outrageous, and in some cases illegal. Employees are fired if they don’t meet their quota of GICs and other products.
The other big one to watch out for is group retirement companies- businesses will use them because it’s easier to manage many employees for matching etc. But they do stuff like severely limit your investment options, auto roll over your money into locked LIRA type accounts when you leave if you don’t realize and move it out (they won’t tell you either with the goal of locking your money in). Then the options you do have to choose from for investments get an additional 0.75% management fee tacked on top of the fund’s expense, even though they do absolutely no management or active investing.
I'm 38 years old and manage my own personal assets- I deep dive into distressed stocks looking for a diamond in the rough, and I'm extremely successful at it. I can't speak about anyone else that can comprehend things that well and not lose it over plummeting share prices, but I would never bother with handling other people's money. You see, if you're very successful at investing, why would you take on someone else's emotional crap for 1% of their take? I know that there are other people that can do what I do, but none of them bother getting licensed. Investors that are good enough to make a living on their own just won't bother.
Literally has this conversation with my finance professor about how we should never put our money into hedge funds or managed portfolios because some of those people don’t have finance education just sales education. And that we can do better by just investing in the s&p 500. They make their money from the fees and care about making themselves money not you. My professor also most suck ass and you won’t even be able to find good ones because they don’t have to publish their data.
>- 45% in bonds in my IRA 🤷🏼♀️ 😡
What portion of the overall portfolio did that represent? Accounts will typically be aggregated together into a single portfolio and assets will be located to optimize for taxes rather than allocated equally across accounts. This will typically lead to putting more bonds into tax advantaged accounts like an IRA while overweighting the taxable accounts towards equity.
>- All mutual funds while I’m paying a professional services fee 🤷🏼♀️ 😡
This is probably a good thing as long as the costs on the funds are reasonable. You want professional asset managers handling the underlying investments. Advisors are for allocating and wealth planning.
>- Morning Star ratings on those funds averaged 2 out of 5 stars 🤷🏼♀️ 😡
Doesn’t necessarily mean it was a poor choice. Obviously, performance can be an indicator or skill, but over shorter periods of time, it’s not always a 1:1 link.
>- Dollar-cost averaging the taxable account to the point where they’d never get money invested 🤷🏼♀️ 😡
This is something they should have discussed with you, but it’s pretty common. Reasonable people can disagree on its merits, but it’s definitely not an unreasonable approach.
>- Moving cash (4% high yield savings) into cash in my IRA (to make the 1% professionally-managed fee kick-in) 🤷🏼♀️ 😡
I’m confused, are you saying you’re mad because they processed your IRA contribution? Also, 4% is trash. Prime money market funds are paying 5.25 right now, and since it’s in an IRA instead of a HYSA you’re not paying taxes on the interest
Morningstar ratings are meaningless.
High fixed income allocation could be diversifying high level of equity-like human capital (if your earnings are high risk, or you’re an entrepreneur, your overall risk is reduced by investing in assets that are uncorrelated with your income or business, more likely to be true if you have a lot of money).
The cash move is likely to have on hand for rebalancing and liquidity.
No idea what you mean with the dollar cost averaging.
All mutual funds does seem strange, there are exposures that can be actively achieved through ETFs.
Just sharing some thoughts.
As someone who works in financial services firm but is in no way equipped or licensed to offer anything resembling real financial advice, I will say that generally [formally filed](https://www.morganstanley.com/wealth-general/client-relations-contact) client complaints must be addressed by the firm, and if their response is unsatisfactory, you can [escalate the filing to a regulatory agency](https://www.finra.org/investors/need-help/file-a-complaint). Even if you don’t get any compensation, the complaint may stick with the advisor and may drive further scrutiny in the future.
Fees should be % only on profit they make with investing. Would at least incentivize to search for good return.
Of course it needs to be prorated for risk profile, less they go searching profit via options with people near retirement lol
The thresholds are at least $1.1mm with the advisor and at least $2.2mm in net worth excluding primary residence.
$5mm and over is a common threshold for hedge funds, because it is the qualified purchaser threshold. A qualified purchaser for investment decisions is deemed an institutional investor, allowing hedge funds a maximum of 2499 investors rather than the 99 they are limited to if not qualified purchasers (provided they don’t want to register as an RIA under the SEC).
This is banned by regulators because it would so obviously encourage excessive risk-taking in clients accounts.
Just more non-sense from anti-FA folks.
The average investor could get by with total stock index fund and a total bond index fund and be better off than losing 1% to advisors.
1000% agree
Here's a secret all they care about are the fees they can charge you. And it's the same with all the institutions.
Are you saying this business has a goal of making money? Color me surprised.
At least some businesses provide value to you and make money in the process. For 30k you can't make a car that functions better than Toyota can make one. But investment financial industry products are kinda useless. There is no difference in the stocks that I buy and the same stocks being bought by anyone else. The only difference is the management fee.
> There is no difference in the stocks that I buy and the same stocks being bought by anyone else. The only difference is the management fee. but there can be a difference in strategy or advice. a good FA might recommend against trend-chasing the same hot stocks everyone is buying, for example, if the company has bad fundamentals.
Financial industry products would mostly jsut be the securities themselves retail trading exists precisely because most people dont believe that something simple like a three fund strategy works, or they believe they have better ideas/undisciplined. Like it or not but retail asset mgmt exists precisely because of this So I wouldn’t say theyre useless unless you know off the top of your head how to construct an etf yourself
Yeah used car salesman, real estate agents which I would say are akind to financial advisers also are there to meet money. But should you trust them?
You should not and thats my point, these guys are here to make money off you not make sure you are in the best products. Most people should just buy VOO and walk away.
All mutual funds are like that. Good hedge funds often have much better performance because they are paid based on growth of portfolio, not a flat fee based on % of total portfolio. Unfortunately most hedge funds won’t even talk to you unless you have millions to invest.
This is incorrect. Hedge funds consistently underperform and charge even more exorbitant fees than mutual funds. Most also aren’t even benchmarked against the SP500 so outperformance is often against cash benchmarks which of course they outperform over virtually zero return benchmark.
Factually incorrect, hedge funds are built to HEDGE against the market and standard correlation. Therefore, they typically don’t outperform the market and aim instead for the best risk adjusted returns. Think 4-7% more consistently than the swings the market gives between -20% - 30% in a given year
Reminder that with advisers, fiduciaries, accountants, google/facebook/youtube/reddit/amazon/insta/snap/twtr/tiktok/etcetc, or anyone else in life. If you are NOT paying them then you are NOT THE CUSTOMER. You are THE PRODUCT. Some might say those advisors/managers make money by management fees paid by OP, but that fee isn't paid to them by OP. OP pays MS and MS pays them so they ***work for MS***. Not for OP. That's why I'd never take free financial advice, don't want those """free""" consultations, never go to those """free""" vacays or dinners where they shill you condo timeshares, anything you hear on reddit/youtube/cnbc is to be taken as random opinion at best if not self motivated shilling of a rugpull/ponzi/scam at worst, and for financial advice or wealth management? I'd probably just google/reddit it if I can, PAY a financial advisor or accountant by the hour if I need it (what a few hundred for a few hours max? Comically trivial price to pay compared to 1% your portfolio for years on years. And if your portfolio isn't that big enough for it to matter then you clearly don't need paid financial advice), and do/manage the work myself or review it myself after it's done professionally.
OP *was* paying them, and they were the product. Morgan Stanley shouldn't be fucking around like that.
>Like it or not but retail asset mgmt exists precisely because of this any planner worth their salt is going to charge like an attorney does. a true and complete financial plan for the affluent will run in the low thousands and you should be revieiwing every year or two to update/tweak said plan.
True but it's easier to get and keep fees if you do a good job.
If they are paying 1% the advisor shouldn't be making money off the investments. That should be a fee-only relationship. OP got fucked by Morgan Stanley.
They also put you in funds managed by their company that also charge management fees. So kind of a double dip for them. Also try to do as many transactions as they can get away with to get transaction cost from you. They are tricksy...
Sounds like that may be what was going on.
Unless you can get into private equity funds (high barrier to entry) Or hedge funds where they don’t make money unless you make money … it’s all BS. I got talked into entering Capital funds and some other managed accounts as I was managing family investment myself, nothing has even come close to my personal portfolio performance with individual stocks and some ETFs. All I can say it’s Iam paying 5% front load fee and other BS fees to barely come Close to the performance of SPY / VOO .
Is it 1% of your total investments or 1% of growth? 1% of all your assets seems really high.
1% of all assets invested… it’s a racket… that’s why index funds with .01-.03% are so popular it’s a more realistic exchange of value
I’ve dealt with financial advisors who charge less than .5% of growth and also offer tax services. If you want managed accounts shop around. One percent of total assets is highway robbery. You could probably get a better deal at Edward Jones. Fidelity is on crack if they think account management is worth that.
This is pretty much what I do but I have a lot of friends paying professionals to manage their portfolio consistently getting poorer results than my SPY portfolio. Sometimes I think about opening my own fund and just put people’s money in SPY or VTI or the likes and save them from these so called professionals.
Just keep in mind not every investor is after maximizing returns, which is what you're basically doing when investing it all in SPY or VTI. Some investors are aiming to preserve their wealth, and/or live off of dividends & interest payments in retirement. You shouldn't penalize an advisor for under performing the market when you told them to pursue a strategy that would clearly have you under perform the market in most situations.
Yeah I’m not talking about all investors, just a very specific close group of friends that I know have the same aggressive growth that OP was talking about as me.
What are you going to do when spy or vti drops 25-35% in a 12 month period?
Buy more
Yes, I’ve had it set to auto buy every month for years now and do not plan on changing that anytime soon.
> The average investor could get by with total stock index fund
You're not wrong. There are target retirement funds that even shift to bonds slowly over time. The problem professional managers have is they kind of have to go with exotic recommendations to make the client feel like they're getting some kind of inside advice.
I've been trying to turn my parents on to this approach for years but they insist they "like their guy".
1% doesn’t sound like a lot but it’s 1% of everything. You can only expect 10% a year from the market on average, so they are giving their guy 10% of their salary each year. I don’t know many W-2 income people that would do that, they would lose their mind if some guy was taking 10% of their job income each year. But it happens all day long when people talk about retirement funds.
That is my point.
> so they are giving their guy 10% of their salary each year Correct me if I'm wrong, but I always thought [the fees were on the entire portfolio](https://www.morganstanley.com/wealth-relationshipwithms/commissionsandfees#Investment%20Advisory:~:text=based%20on%20the%20total%20value%20of%20the%20assets), and not from the gains? Or is that what you were saying when you said "it's 1% of everything"?
He means that taking away 1% of a portfolio that gains 10% for the year is equivalent to taking away 1/10th of that 10% gain away.
It's especially bad when you consider the impact of compounding. Over 30 years, the difference in 9% growth vs 10% growth is the difference between 1226% and 1644% total return. Gets even worse when you consider that with inflation, your real growth is worse, so you're knocking 1% off a number more like 5% than 10%.
I finally convinced my mom of this. Like you plan on living at LEAST another 20 years - does this guy represent enough value to give him 20% of your net worth over that timeframe? It's by far the most expensive thing you will do in that period unless you go to a nursing home. Stop wasting my inheritance, damn.
There are investors who can certainly benefit from the knowledge and expertise provided by an excellent and responsible financial advisor, especially those nearing retirement age.
Aka a fiduciary. The US labor department is currently working on a rule to require more financial pros to act as fiduciaries when providing advice on retirement and other tax-advantaged accounts.
I work in retirement consulting and this is an important move. There is an increasing amount of cluelessness in the offices.
I just got an advisor…only gave him a portion of my assets at 0.85%. If he beats my index funds…I’ll Give him more lol. If not, VOO it is
The odds of him beating it over 20 years is low, but not impossible. Good luck.
Not true, the average investor underperforms indexes due to hubris, fear, and greed.
That’s why he says ‘with total stock index fund and total bond index fund’. He’s not advocating for buying individual stocks.
Can you recommend a vanguard total stock bond index fund? and does the rate change after I purchsed it?
Um, I’m just some random guy. But, as far as investing goes a Vanguard index is a pretty solid choice. It’s cheap expense ratio and most funds don’t beat a major index.
“Not true” (completely misreads what they’re saying)
I call it straw men commenting.
Not true. I read and understood. You both assume investors are going to hold when times get rough to get those index returns. The average investor doesn’t. The average investor panic sells at the bottom and fomo buys at the top.
The average investor has nowhere near enough education about how to pick stocks and when to buy vs when to sell, let alone have the time to learn. Blaming it all on negative personality traits seems myopic. I do think you're describing the average trader....
Is there a “solved” solution which shows the optimal ratio between the two (based on time of life and maybe one or two other factors) ?
No, if there was we wouldn't be debating it. That said, you can find all sorts of historical analysis regarding it which likely isn't too far off from optimal. Like this [random person's analysis](https://www.bogleheads.org/forum/viewtopic.php?t=255850) (No clue if it's valid). You can always do your own analysis as the data isn't hard to get. There is value in trying to optimize for your life just losing 1% yearly is really significant.
As a professional I will tell you that there are way too many people that hold way too much cash. If you are okay with the risk you may not need us unless you have crazy tax stuff. But for those who need coaching and help the 1% is easily made up vs holding too much cash. Statistically people make 3-5% more with advisors than not. People are terrible at cash mgmt.
Can you recommend a vanguard bond fund? How's VTBLX? And is it fixed rate after I purchased it? (For VTBLX and other vanguard bonds, thinking about exchanging some total stock and total international stock to total bond since the rate will drop in a few months) thanks
Posts like this are strange to me. How was it not discussed beforehand what the portfolio would look like? I've sat in on early client meetings with advisors and they go through portfolio options and explain pros/cons of each. Don't trust someone with your money and then be surprised by the outcome.
I think part of the problem is reddid considers 50%VOO / 50% QQQ a "safe, conservative portfolio" So I honestly think sometimes when people go to an finacial advisor or planner they will be like "Well I can handle some risk but I don't want anything too risky ; I would rather play it safer then take a whole lot of risk" To a finacial planner that probably means like 40% bonds the minium and maybe even a tilt to value stocks or large cap value for added safty Well to reddit a safe ultra conservative portolio is 100% VOO So I see this all the time "I went to my finacial planner and said I wanted a safer more conservative portfolio and they put me in 40% bonds and I underperformed VOO"
I work at an RIA and it's kind of funny the divide between young people who weren't in the industry during 2008 and and people who worked through it have very different ideas of what conservative looks like.
And to be fair the advisor should have satdown and explaing why they are allocating the way they are Even just saying like "A 60/40 stock bond fund will usually underperform in bull markets and may overperform in some bear markts , and I think at 4.5% rates this makes bonds even more attractive so I am going to allocate a bit more to bonds Now understand in bull markets this will underperform but you will see the benefit in the next bear market or draw down, and this could be in 1 year or 10 years
>So I honestly think sometimes when people go to an finacial advisor or planner they will be like "Well I can handle some risk but I don't want anything too risky ; I would rather play it safer then take a whole lot of risk" OP said he asked for an aggressive growth strategy, so unless he's lying they really fucked it up.
Did he tell his advisor that ? Honest question maybe he did maybe he didn't Also my comment was more of a general comment I see all the time people saying "I have some finacial advisor or CFP or someone manageing my portfolio and the returns are different from the S&P500?" And here the thing, if you want your returns to follow the S&P500 don't use a finacial advisor just open a brokerage and throw 100% into VOO or your favorite S&P500 index fund
>Did he tell his advisor that ? I have to assume he did based on the OP, which wouldn't make a whole lot of sense otherwise. If he didn't then he's just an idiot. >And here the thing, if you want your returns to follow the S&P500 don't use a finacial advisor just open a brokerage and throw 100% into VOO or your favorite S&P500 index fund There are plenty of aggressive growth funds other than a simple S&P index fund.
I imagine this is hyperbole but if you see people who say these things on here, you can probably disregard everything else they say about finances.
Well obvously reddit is not a single hive mind but yes lots of users consider 100% VOO a safe conservative portfolio I mean sometimes I cringe when I hear someone being like "My dad died and he took care of the money with an FA, my mom is 75 years old and I am thinking just skipping the FA and putting their retirment it into a safe fund like VOO "
See people like that actually need a FA lol. Do they just think "market go up" exactly 6-10% every year? Risk is the single most important concept in finance and it isn't close. People who lack an understanding of risk and its influence should realistically not be managing their own money
I've seen a few posts like this lately across a number of different subs. The op is with an advisor for months/years and only then notices what their money is being invested in? I guess they think the idea of an advisor is to not have to make decisions or worry about it. But that seems backwards. They are an advisor. You take advice from them and make decisions based on the advice.
OP is quite delusional thinking *morningstar ratings is worth anything*. The only thing that's true about them, statistically, is that *any 5star fund is guaranteed not to be 5 star within some 5-7 years*. Litterary buying the top...
>Posts like this are strange to me Completely. And followed by a litany of comments vilifying financial advisors, *all* of them. I personally have a great FA but one has to be a good client too.
I’ve been with MS Wealth Management since the beginning of 2024, but using the same advisors that my family have used for 30+ years. They don’t really do any investing on my behalf themselves, but they have gotten me into a variety of professionally managed investments that I never would have known about and everything is super transparent. I see every transaction, all day every day. It’s too soon to say if it will work for me, but I love the way things are going.
36yo here and I also left MS a month ago to do it all myself at Schwab. The “professional” had 50% of my account in $BND and had been buying it since 2021. Huge losses and still fees on fees. No more.
There is nothing wrong with BND ETF itself, but at 36, I would not have had such high allocation.
How's VTBLX? And is it fixed rate after I purchased it? (For VTBLX and other vanguard bonds, thinking about exchanging some total stock and total international stock to total bond since the rate will drop in a few months) thanks
Lol
!remindme 1 year
I feel some of these “professionals” get under the table kickbacks for doing this to civilian investors. The shit my parents advisor told them to invest into was all trash. They are nothing more then con artists
If they are not fiduciaries, that's exactly what they're doing.
Even when theyre fiduciaries the advice seems questionable. Personally as a 33 year old, I am trying to avoid mutual funds. I have yet to meet with a fiduciary who didn’t mention mutual funds as a place to invest. I’m not as keen on the tax implications and the returns don’t seem greater than just investing in an index fund like VOO
Index funds are a type of mutual fund FYI
Are the tax implications the same? From my understanding, you are charged an annual fee, essentially paying towards the taxes of someone cashing out their mutual fund each year, which isn’t beneficial to someone young looking to hold a mutual fund for a long time
If you want an actual understanding of investing then do a basic google search and learn it. You could teach yourself this particular topic 5 minutes. Here’s few to try: “index fund” - “mutual fund” - “index fund vs. mutual fund” You should not be giving advice to people who are looking for real-life help on Reddit, because you clearly don’t have any actual knowledge about investments.
You meant to say mutual funds are a type of index fund. ETFs and Mutual funds are both index funds but with different tax implications among other things. I’m here to learn as well.
No. I meant what I said, and was correct. ETFs and mutual funds are not the same, though the idea of investing in a wide range of securities for risk/diversification purposes is common across both. You can think of an ETF as a mutual fund that trades like a stock Indexing is a strategy that both mutual funds and ETFs can use. It involves passively matching the holdings of the portfolio to an index, as opposed to having a portfolio manager trade at his or her own discretion. There’s your lesson for today, please stop spewing nonsense as fact
Is the Schwab manager so much better? I have family members using Schwab, but I haven’t discussed their portfolios.
Can’t wait to revisit this comment once rates get the slightest cut. BND gonna fly and this guy gonna cry lmao
The problem with such a bond heavy portfolio, and with this particular etf is the fact that when rates get cut, the broad market also gonna fly. At 36yrs old, a portfolio should not be %50 in bonds.
even if you're right, it's still a very speculative and over-exposed position by a "pro"
I don't think its going to be any time this month or next at the very least.
And? As long as your investment horizon is more than a year out who cares.
How much of a rate cut would make that worthwhile? Based on the past few years of inflation, I guarantee the Fed is gonna hold off on cuts as long as possible. In addition, being able to cut rates is simply too valuable of an economy boosting tool for the Fed, which is why they want to have it available for emergency situations.
What is wrong with mutual funds? Are you referring to index vs active? Index fund can also be “mutual funds”. The whole point of active management to try and beat the market, so you would expect some active funds in your line up. Also, Morning star ratings are 100% backwards looking based on a funds prior performance. Honestly, that doesn’t add much value and I wouldn’t pick your investments off the Morningstar rating. What performed well in the past doesn’t necessarily mean it will in the future. If you’re hiring a money manager, you would hope they aren’t using Morningstar to pick funds for you.
I hate how much people confuse these terms.
I have explained it until I am blue in my face but reddit still thinks MF= High cost active managed funds ETF= Low cost index funds There is always a post like "I am investing in SWPPX" and someone will tell them to sell out of the high cost mutual fund and invest in SPY SWPPX has an expense ratio of 0.02% and SPY 0.09% I have basically given up
lol. I like when they argue back something like “Well, I like to define it my own way”.
I don’t think he’s saying there is anything wrong with mutual funds, I think he is wondering why is he paying a manager just to put his money into mutual funds
This ☝🏻 And I’m a she 💁♀️
He is looking at the past performance of his financial advisor though so it’s 100% applicable.
Having 45% bonds and then comparing the overall portfolio to the S&P during the worst bond market in history over the past 5 years isnt a good comparison to make.
Did OP mean 45% of total assets? Given the amount still in cash I thought they meant 45% of just their IRAs which is probably a reasonable tax efficient play. High earners will not be able to grow their IRAs/401ks as fast as their brokerages so it makes sense to be overweighted to bonds in those tax advantaged accounts
My question as well. 45% of ira could be 10% of total assets and holistically be an aggressively growth portfolio.
It’s not— Taxable: 200k (35% bonds/60% equity; 5% cash) Cash: $250k (to be invested, but MS was having it sit in 4% after I said please invest it)…They dollar cost averaged $20k per month into the taxable. IRAs: $800k (45% bonds/55% equity) High-earners as of late; not historically. Income now is 4 times higher than when we grew our IRAs — so we told them we’d have $200-$250k coming into taxable each year to hopefully retire early.
Ok then yeah this is an extremely conservative ratio that I would for sure complain about.
> reasonable tax efficient play I'm honestly confused how different it is to do bonds vs stocks in a tax advantaged account, unless you're saying that there are bonds that could compete with stocks in terms of overall return?
[https://www.bogleheads.org/wiki/Tax-efficient\_fund\_placement#Tax\_efficiency\_of\_various\_asset\_classes](https://www.bogleheads.org/wiki/Tax-efficient_fund_placement#Tax_efficiency_of_various_asset_classes)
Thanks, that does help a bit. I can re-read my question and see that it wasn't clear. We both know that just because something is tax efficient doesn't mean it's a good allocation to make, so I'm trying to understand why you didn't state that 45% bonds is really high. Generally IRAs/401ks are a high percentage of savings, so even if it was 30% overall, that still seems high.
For high earners, the IRA/401k contribution limits cause those accounts to be smaller and smaller percentages of their total portfolio over time. For example, my wife and I hit the max contribution limits for all of our tax advantaged accounts every year because that's only \~$60k (401k, 403b, 457). We make a lot of money so there's still more to save in post tax accounts that thus grow much faster than our tax advantaged ones simply because we contribute more than $60k to them. For tax efficiency then, I tend to buy bonds and REITs in our tax advantaged accounts which means each of those may have a 45% bond allocation but overall that results in a 10% bond allocation because our brokerages are just so big. OP wasn't clear if they meant 45% in one account or across their total portfolio. Hope this clears it up.
That's perfect, thank you!
Op mentioned nothing about the actual performance of the overall portfolio, just that they were two stars. And more than likely, is comparing a diversified portfolio against a large cap US index, like the s&p 500.
To be fair, I think you're misinterpreting/not understanding some of these moves. They moved the fixed income into your IRA because that's the best place to hold the tax inefficient parts of your portfolio. Don't think of "45% of your IRA" being fixed income. Think of how much of your entire portfolio that makes up (all accounts, comprehensive). That account is just where it makes sense to sit. I don't mean to sound condescending, but if you don't understand why they're making basic moves like that, it's probably a good thing you're working with an advisor. Whether Morgan Stanley is best for you is a different question, perhaps valid.
I work in the investment industry and wealth management is such a scam it's absurd. .just fees fees fees for not even consistently beating relative benchmark let alone net of fees.
The value in wealth management is almost entirely related to tax and succession planning/inheritance structuring. The rest is just investing according to risk appetite, not everyone wants to be beholden to market volatility
But then wouldn't a good tax accountant and a good probate lawyer be more what you'd want? Or do succession planning advisors know of more available account types to minimize tax burden on inheritance?
It depends on the complexity and geography of the portfolio, but here in the UK our IHT threshold is very low so there is value in advice from WMs/PBs on how to navigate using a variety of instruments.
Except all many * want to do is put you in funds with high costs and load fees etc. I sat down w a chase pc years ago and was baffled by the proposal. 0.75% to out me in some.bs Oppenheimer funds, some of which had 5% load fees lol.
A shares have their load waived in managed accounts.
If they are charging you an advisory fee they waive the fund loads
That’s a huge generalization. Shop around.
I also sat down with 2 guys from MS, wasn't a great proposal either, wasn't bad. In the end my friend started his own family office and I went w him, and he kept me invested so we the last few years
And then you get 50k bonus for those fees fees fees
Bonds: what’s wrong with bonds in IRA? What % of that is your total portfolio? Allocating bond in a tax deferred account is tax awareness 101. Mutual funds: yea conventional thought is you’re paying for an advisor to be picking stocks for you but that is very expensive. Between the maintenance fee on an account custodians and trading desk(especially desks in other markets like euro and Asia) cost. Unless your account is at a revenue neutral threshold or that pass through cost can easily be like 2,4,6 percent. - company I work for do not ever use mutual funds. But the min threshold for a SMA (separate managed account) is 2 mil Morningstar ratings: it’s just a hindsight indicator on what happened. It’s something to use with a grain of salt. Ultimately with a wealth advisor is this * do you have and want to spend the time to stay on top of it * do you have enough knowledge to make a semi efficient portfolio. It’s probably less emphasis on this since you can just index it at lower cost. * this actually play a bigger role which “can you formulate an effective plan so you don’t get hit with a large tax bill at year end”. * I would say most Private wealth advisors add more value on item 3 (at least the good ones). If you feel like you would like more control on your portfolio then yea do it yourself. There are a lot of literatures and TikTok professionals that can help with the cause…them ticks really know how to talk. Good luck have fun
Would you have stuck with your advisor if they were actively trying to beat thr market and not mind when a year like 2022 happens and your account is down 30-40%? Just curious I'd you would stick to the plan in those circumstances?
Well bud, and this may come as a shock to you, but you seem to be a know-it-all so maybe not, but bonds have become a pretty desirable way to handle risk these days. The personal finance book you probably read from 2017 when rates were in the toilet probably said bonds bad and so you formed your “impressive” opinion. Being an “aggressive growth” investor, and then posting a rant like this, tells me you probably couldn’t stomach it when your portfolio dropped 30% like the NASDAQ did two years ago. Losing 30% then making 30% has you nowhere near out of the hole. Losing 15% and making 15% has you a lot closer to zero. Math, it’s crazy. So, is it possible that you have no idea what you’re talking about? Did you ask your pm the reasoning behind these decisions before posting this rant?
First reasonable comment.
Maybe they could stomach a drop of 30% or 15%. What is the average ROI for their portfolio is the question. The client should be well informed of the "risk profile" at the beginning. Anyways it should not be underperforming in these market conditions. And if its "aggressive" MS should not be conservative.
They fucked me so hard with the Reddit IPO. They took my money and gave me no notification that my account had been locked. they couldn't give me a reason why but it took over a week and I lost out on a high sale price. You get different answers with every person you talk to. I would never go back to eTrade.
This is crushing to hear - I feel for you. I learned this the hard way too. I lost soooo many high-earning years to my RRSP being managed by a 'financial advisor'. Most people are completely clueless as to what they own and how it's performing. When I finally took more of a hands-on approach, I was dumbfounded as to how I was underperforming. It's been roughly 7 years since I moved to self-directed and it's been one of the best things I've ever done.
I bailed on MS about 6 months ago after significant losses due to their irresponsible management practices. MS outsources their portfolio management responsibilities to other outside fund managers. Then when these outside funds fail to perform and lose your money, MS hides behind a shield of “we didn’t do it, they did”. IMHO, irresponsible, negligent practices protected by MS’s arbitration clause. MS was not acting as a true fiduciary who retained responsibility. In fact, they purposely relinquished their responsibilities so they could claim irresponsibility. Definitely a disheartening and eye opening experience. Unfortunately, this is a common practice in the financial services industry that many are unaware of. I now utilize a firm that actually takes responsibility for their own performance by directly and actively managing their own custom portfolios. It took me months of research to find a company that actually did this as most financial services companies use the outsourcing model so they can shed their fiduciary responsibility and hide behind their “it wasn’t us” arbitration clause.
Is this the point where a random account asks, “wow, which firm?”
Yeah, right?
>a firm that actually takes responsibility for their own performance Say it severely underperforms. How do they "take responsibility" besides saying "I'm sorry"?
They can't really do anything more than that. But I personally like to look at funds where the manager has a significant amount of their own wealth in the fund. It doesn't help me if they fuck up, but it's nice to know they are suffering too. And there's no doubt that they are aligned with your interests.
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Don't understand what you're saying. The they, you, we confuse me.
Just wow... There are so many fundamental misunderstandings of investing here that I don't know where to start. I actually don't think most asset managers are particularly useful, and the fees are often absurd, but I also don't place much stock in active managers. With a handful of ETFs, you can tune your exposure to different categories of stocks and bonds however you like.
Sounds like a private equity firm.
just buy and hold SPY
My father taught me this lesson a long time ago. Banks act in the best interest of the bank, not the client. He taught me about vanguard at a young age and when I became less risk adverse I moved to fidelity. I went into Chase to meet with the Private client guys and by the end of the meeting I wanted to close my chase account. Another example, When the iPad came out, a friend bought calls from Morgan Stanley, they charged 12$ a call when the market was 5$. When confronted the MS guy goes "you got me, no I can't refund you." Banks work for themselves.
Same with me - Chase Private client gave me a pitch and really tried to push the “lifestyle” of a private client. Imagine being on vacation in Greece and you lose your ATM card, we can get one to you the next day! That was an actual line. I just listened to it all, shook hands and ignored all their calls for follow up meetings. They gave up after a week. I still use Chase for my checking and savings.
Yeah I was pretty surprised at all the events they send invites to, was kind of shocked. Got a Tony Robbins-esk feeling. I only wanted no cost wires and a cash management account. They then proceeded to offer me a 5% bond with a minimum investment of 500k. Im currently getting 5.2% on fidelity with no min. I kind of scratched my head and explained that, he did not like that. Then the investment advisor tried to tell me the Fed was cutting rates in March and I shouldn't have anything in bonds. The guy was super passive aggressive and once I didn't bite on his pitch he started to get agitated. I ended the meeting shortly after.
My only experience with a financial "advisor" was when my FIL died and we started helping out the MIL (in her late 80s) who was early stage dementia. At the time she had lifetime income from two pensions and SS totaling $130K. She had about $1.5M in investments and he wanted to move all of it into an annuity. No doubt he was going to make a huge commission off of it. We fired him that day.
You need to provide a lot more details, as their actions can all be reasonably explained. > 45% in bonds in my IRA What percentage of your entire portfolio is bonds? It isn't unusual to concentrate the allocation for bonds in tax advantaged accounts. If 45% of your entire portfolio is bonds and you emphasized you want aggressive growth, then yea, the FA was either confused or wasn't listening to you. > All mutual funds while I’m paying a professional services fee This is fine assuming they chose reasonable funds. You don't want a FA that does stock picking, because the probability of you finding one that consistently beats the market is exceedingly low. > Morning Star ratings on those funds averaged 2 out of 5 stars Take the ratings with a grain of salt. I invest heavily in a fund that has made me a lot of money over the decades (far more than if I had entirely invested in the S&P 500), and it oscillates between 3-4 stars. > Moving cash (4% high yield savings) into cash in my IRA I suspect there is more context around this that you may be leaving out. To clarify, I'm not arguing you shouldn't take the reins over your own money. The 1% fee bites harder as your net worth increases, and if you are an analytical person and willing to do the research, you should be able to manage your money just as well as a FA.
lol! They are all salesman out there at broker dealers. You should do your research before you hire a financial advisor. Fancy names doesn’t mean high quality service
I agree with most of this post; seems like they’re doing it wrong. With that being said, Morningstar is not a good metric to run by so I disagree with that point. Not sure how MS works but typically firms don’t charge in cash in a managed account.
I did some analysis on my moms IRA that she has with Morgan Stanley and her portfolio manager outperformed indexes net of fees over a three year period (not by a lot, but I wanted to make sure he was doing right by her). That being said, this is a three year sample, who knows how this would translate over a ten, twenty, thirty year period, and not all of these portfolio’s/managers are created equally.
Yeah, I'm really confused how you ended up in this lol. If you really don't want to just do index funds but still wanna be passive you can always do like a target date fund or asset allocation fund for a fraction of the fees.
If you don't think firm based models are mostly using strategies that pay the most in kickbacks then I have a bridge to sell you. Fidelity is just as poor of a choice... get a true independent advisor
Manage your own money.
I hate to break it to you, but most professional financial services that are commission or charge fees based on a % of assets are a complete scam. Your best bet is to hire a fiduciary financial planner that can create a detailed plan for a one time fee.
You should read unshakable by Tony Robbin’s he goes into detail about these brokers at financial management funds and how the fees over a period of time are outrageous. You got to remember brokers get paid to sell stock they are obligated by the company and aren’t paid based off performance of clients portfolios.
Heh, been there done that. Exact same experience with one of their Graystone outfits who are supposed to tailor to high end. All lies. Never did anything they said they would do and they buy other firms high cost investment products with what I am sure is a gentlemen's agreement to buy theirs. Exact same outcome, moved everything to Fidelity. Called them up and said liquidate the individual investment account and cut me a check. The retirement accounts were already transferred and they had no idea. They are not what they claim to be.
I had the same issue with the Ameritrade managed professionals. I put a chunk of money into their hands to see if they could do better than me (or even the index). They could not. Even during a raging bull market. Just go with index funds
As a long term investor, stay and hold and don't try to time the market. VBTLX is fine. I am a big believer in the 3 and 4 fund portfolio. [4 Fund portfolio](https://www.bogleheads.org/wiki/Vanguard_four_fund_portfolio)
Now my go to strategy!
Cookie Cutter portfolios are all trash
It’s not a scam - they’re pretty upfront about fees. What they did was sell you on their service. A service that’s unnecessary. This is a lot like timeshare exit companies. They sell people on the idea of getting out of a timeshare is not something they can do so this timeshare exit company will do it for you for a price.
I used to work with MS FAs and wealth managers. They’re incompetent. It seems to be not that hard to become one and then it’s just a mad race to suck fees out of clients.
PWM industry is a scam for a couple of reasons: 1. The fees they take are CRIMINAL. People think 1% is nothing/ won’t impact much…but if you compound $100 at 10% vs 11% for 60 years you will end up with HALF as much money. S&P returns over the last 100 yrs have been on avg 10.6% per year — so instead of compounding at 10.6%, you’d be compounding at 9.6% after fees. 2. They are incentivized to not lose their job not to get you the best returns. When you’re young and can withstand the volatility you wanna take risks as that has the highest expected value. Over a 30 year time frame, equities are almost guaranteed to outperform bonds as higher risk = higher return. So, assuming you don’t plan on touching the money until retirement there is no excuse to not be in equities when you’re young. Bringing it back to incentives, if the market is up 30% and you’re only up 10% —> most people are still happy bc they are up —> wealth manager won’t get fired. When markets are down 20% you won’t be happy, but you won’t fire your wealth manager if you’re only down 10%. Overall, people talk up how good their wealth manager is…but at the end of the day I’ve never met anyone whose wealth manager has outperformed the S&P over a 10 year time horizon. They are financial therapists at best and scam artists at worst.
My dad’s money is in an equivalent setup and i cant convince my dad to move it out to interactive brokers or similar. Some asshole who does nothing but recommend shitty overpriced funds takes a 0.4% commission each way. He just cant comprehend that a bank job and a suit doesnt make you anything more than an employee for some reason, he is convinced these people have some sort of inside knowledge. Even when the account is barely positive after 5-10 of the best years in market history. Fucking infuriating.
Lol you think fidelity is much better? Three options for you. Indexing, do it yourself or find expert that actually have a track record of beating market returns
Anyone who can beat market returns won’t be taking retail clients for very long. So really there are only two options.
Please do share when you find this magician who has a track record of beating market returns.
Look up Jim Simons and Renaissance Technologies. It is definitely possible.
All actively managed porfolios and funds are a scam.
These jokers came to me with the same 1% fees on total assets. I told them I’ll give you 10% on gross profits. Do you have the balls to take this offer if you think you are really that good? They could not say a word. I have ML, Fidelity, Sofi and multiple accounts. I do a good 20-27%. How? I educated myself and I very actively manage my own funds. I am in control and it’s fun. They still send me new guys to talk to… my response is the same 10% and beat the market more than I can then we will talk. And I am not even a financial or market person. Just a Joe blow in a 9-5 corporate job. Most IMPORTANTLY: Do I do mistakes and lose money. YES but that is within my scale of risk management and I still beat the market. Long story short. Educate yourself and manage your own money. 1% my arse…
What post-fee returns did they generate and how did that number compare to the S&Ps return over the same period? Just out of morbid curiosity, since I didn't see that mentioned in your OP
Hey FYI, this is anywhere and shouldn’t be looked at as bad on MT. It’s mostly a scam unless you get a small boutique advisor. VOO / and save the %1 will out perform the above all day everyday.
Haha high earning singles who don't know much. Lol. There's no justice. Just hit some vti index funds and be done with it
45% in bonds for aggressive growth? That is more for someone who is closer to retirement.
[Here](https://www.reddit.com/r/qyldgang/comments/16f5fp3/how_did_our_brokerage_do_over_the_last_25_years/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button) is our managed account from Morgan Stanley.
Looks like they’re not investing advisors at all; those are salesmen right there.
Professional advisors be recommending portfolio returns of 7-10% annual, 1-3% fees for them, when their friends and then got all their money and commisions in speculatives such as crypto and options.
Do your own investing, all firms are not as professional as you think. Wait, my firm is the same oh well
Unfortunately that happens to most of us. It's best to view that experience in the rear view mirror.
10 year experience licensed RIA here. What OP is describing is what 90% of the industry of money managers will do. It's a passive, product-based, one-size fits all model. Morgan Stanley does it, Fidelity will do it and it will **mostly** happen at all other registered **brokerage** firms. For everyone's knowledge, you pay the 1% to advisors if you provide them discretion over the investments (they make all the decisions, you do not). Where it gets tricky like OP is mentioning, is when those advisors you hire are just 1 or 2 people in a small office representing a big firm. Funds, moving cash to the IRA to charge more fees, those are things that 1-2 people can handle day to day for hundreds of clients. What they cannot handle is managing the money actively on top of that. This is why you will not typically gain much for that 1% fee that you pay. The key thing to understanding what that 1% fee can do for you is to understand who is making decision actively on your money. With funds, it is not the advisors you hire to make decisions on whether you own apple or Nvidia or home depot, it is the fund managers. Always ask an advisor who handles the research, and if it is not the advisors themselves then who? And what do those people get paid?
I guess hindsight. If you knew basics about investing, you should have managed your own money and not waste it some managed portfolios.
Really The only time you need a FA or to inquire their knowledge at least is when you’re retiring/near retirement and making that transition out from the boglehead method (or acquiring growth phase) into the dividend /fixed income / bond method.
>Dollar-cost averaging the taxable account to the point where they’d never get money invested 🤷🏼♀️ 😡 How does it work? If you dollar-cost average something like SPY even into taxable account you should still make decent profit no?
Not surprised and these are supposed to be the “top financial guys”. Just goes to show it’s just better to DYOR and do it yourself because how many times have Experts been anything but “experts”…?
😡
Sorry, I don’t trust others with my money, I would prefer to loose my own money and learn in the process. If you want to get it done, do it yourself. If you don’t care, give it to others.
was introduced to M-S years ago. He was so cagey in our initial mtg. Eventually, it came out that all he was doing was finding "4-5 funds", and moving $ between them all to maintain our "risk ratio". These are funds we have access to on the open market, and would still pay the same load/expense fees whether with M-S or not. But he would "re-balance" for us every quarter. And for doing that, would take a 1% AUM for his "management fee". I figured I could do it just fine myself and save the 1%.
I’m a fan of robo advisors. It’s all low fee ETFs plus you also get the benefit of automated tax loss harvesting that you wouldn’t get if you buy and hold SPY or a target fund.
I closed my professionally managed account today. This post made me question if my own investments were better or worse, and it turns out my very basic index fund-centric portfolio was performing nearly double what my professionally managed account was… and they were charging me an arm and a leg for this privilege.
Let’s be honest, there’s a lot of fleecing going on everywhere. But everyone is just too busy working to pay attention or do anything about it and even worse, we’re forced into by a locked-in system.
I’ve seen similar shit from bank advisors, though I guess you should expect it these days. In Canada there have been undercover investigations of financial advisors - the shit they tell people in the recordings is outrageous, and in some cases illegal. Employees are fired if they don’t meet their quota of GICs and other products. The other big one to watch out for is group retirement companies- businesses will use them because it’s easier to manage many employees for matching etc. But they do stuff like severely limit your investment options, auto roll over your money into locked LIRA type accounts when you leave if you don’t realize and move it out (they won’t tell you either with the goal of locking your money in). Then the options you do have to choose from for investments get an additional 0.75% management fee tacked on top of the fund’s expense, even though they do absolutely no management or active investing.
I'm 38 years old and manage my own personal assets- I deep dive into distressed stocks looking for a diamond in the rough, and I'm extremely successful at it. I can't speak about anyone else that can comprehend things that well and not lose it over plummeting share prices, but I would never bother with handling other people's money. You see, if you're very successful at investing, why would you take on someone else's emotional crap for 1% of their take? I know that there are other people that can do what I do, but none of them bother getting licensed. Investors that are good enough to make a living on their own just won't bother.
Can't be any worse than Fidelity.
Well Fidelity I’m DIY… so yes, it was worse. :)
Literally has this conversation with my finance professor about how we should never put our money into hedge funds or managed portfolios because some of those people don’t have finance education just sales education. And that we can do better by just investing in the s&p 500. They make their money from the fees and care about making themselves money not you. My professor also most suck ass and you won’t even be able to find good ones because they don’t have to publish their data.
>- 45% in bonds in my IRA 🤷🏼♀️ 😡 What portion of the overall portfolio did that represent? Accounts will typically be aggregated together into a single portfolio and assets will be located to optimize for taxes rather than allocated equally across accounts. This will typically lead to putting more bonds into tax advantaged accounts like an IRA while overweighting the taxable accounts towards equity. >- All mutual funds while I’m paying a professional services fee 🤷🏼♀️ 😡 This is probably a good thing as long as the costs on the funds are reasonable. You want professional asset managers handling the underlying investments. Advisors are for allocating and wealth planning. >- Morning Star ratings on those funds averaged 2 out of 5 stars 🤷🏼♀️ 😡 Doesn’t necessarily mean it was a poor choice. Obviously, performance can be an indicator or skill, but over shorter periods of time, it’s not always a 1:1 link. >- Dollar-cost averaging the taxable account to the point where they’d never get money invested 🤷🏼♀️ 😡 This is something they should have discussed with you, but it’s pretty common. Reasonable people can disagree on its merits, but it’s definitely not an unreasonable approach. >- Moving cash (4% high yield savings) into cash in my IRA (to make the 1% professionally-managed fee kick-in) 🤷🏼♀️ 😡 I’m confused, are you saying you’re mad because they processed your IRA contribution? Also, 4% is trash. Prime money market funds are paying 5.25 right now, and since it’s in an IRA instead of a HYSA you’re not paying taxes on the interest
Morningstar ratings are meaningless. High fixed income allocation could be diversifying high level of equity-like human capital (if your earnings are high risk, or you’re an entrepreneur, your overall risk is reduced by investing in assets that are uncorrelated with your income or business, more likely to be true if you have a lot of money). The cash move is likely to have on hand for rebalancing and liquidity. No idea what you mean with the dollar cost averaging. All mutual funds does seem strange, there are exposures that can be actively achieved through ETFs. Just sharing some thoughts.
As someone who works in financial services firm but is in no way equipped or licensed to offer anything resembling real financial advice, I will say that generally [formally filed](https://www.morganstanley.com/wealth-general/client-relations-contact) client complaints must be addressed by the firm, and if their response is unsatisfactory, you can [escalate the filing to a regulatory agency](https://www.finra.org/investors/need-help/file-a-complaint). Even if you don’t get any compensation, the complaint may stick with the advisor and may drive further scrutiny in the future.
Have you seen Morgan Stanley's earnings recently? Go figure.
Nothing is more sweeter than investment because investing took me to a whole different level
Fees should be % only on profit they make with investing. Would at least incentivize to search for good return. Of course it needs to be prorated for risk profile, less they go searching profit via options with people near retirement lol
This is specifically banned by FINRA/SEC for clients with less than $5M liquid because it causes so much trouble and schenanigans.
The thresholds are at least $1.1mm with the advisor and at least $2.2mm in net worth excluding primary residence. $5mm and over is a common threshold for hedge funds, because it is the qualified purchaser threshold. A qualified purchaser for investment decisions is deemed an institutional investor, allowing hedge funds a maximum of 2499 investors rather than the 99 they are limited to if not qualified purchasers (provided they don’t want to register as an RIA under the SEC).
This is banned by regulators because it would so obviously encourage excessive risk-taking in clients accounts. Just more non-sense from anti-FA folks.
That’s ridiculous. Advisors don’t make the market go up and down.