Fee Based advisor Expectations

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
bill2009
Contributor
Contributor
Posts: 351
Joined: 03 Mar 2005 14:22

Fee Based advisor Expectations

Post by bill2009 »

I'm looking at the portfolio of a female friend age 70 just looking at having to convert an RSP to a RRIF and wondering whether she should stick with her current advisor. Total RSP is around 800K. She has some pension income but very little investment capital outside her RSP. She will need basically all her mandatory withdrawals to live on and build up a cushion outside the RSP.

I think I've satisfied myself that her current advisor has not been doing her any good. The account has a mix of 60% equities and 40% bonds, it's actively traded and, net of fees, has returned about 3.8% annualized since 2001. Looking at my own SDRSP and published figures for comparison, she would have been better off to have the money in XBB or GICs.

The challenge then is to plot a future course for her in terms of portfolio makeup and execution. In my mind a fee based planner could do an assessment with her, verify my findings, and recommend an asset mix going forward but what then? Does she end up having to pay someone a percentage of assets to manage a "self-directed" RRIF? Maybe involve the advisor once a year to figure out withdrawals and rebalancing?

I'm putting this out there because I care about her, and because i can see needing help sometime myself although maybe not with the RSP because t's all FI.

Thanks for any suggestions.
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33399
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Fee Based advisor Expectations

Post by AltaRed »

You have not indicated whether her current advisor is a commision based 'full service broker' but I will assume so based on your post. The 3 main remaining choices are: 1) fee for service which typically does not include trading recommendations or trade/sell execution, 2) percentage of AUM type advisors which are more plentiful, and 3) DIY...either both planning and execution, or simply the execution part in combination with a fee for service planner.

If this person does not have experience with DIY planning, or execution, I don't recommend 1) or 3) above. At 70, this is just too late to become 'hands on the wheel' directly. A major screwup in execution would be unrecoverable at her age.

With $800k, she should be able to attract the interest of % of AUM advisor....perhaps from Steadyhand or Mawer, to use two examples. Quite frankly, she could literally have all her eggs in a Mawer Balanced Fund MAW104 and sleep well at night. An overture directly with Mawer (or Steadyhand) might be her best choice.

As for past performance, have you done any compative analysis using' Norms asset mixer http://www.stingyinvestor.com/cgi-bin/downside_adv.cgi to check 2001 to date performance against her portfolio? That could be a reasonable approximation if you do 2-3 slightly different asset mixes to see the bookends for what should have been expected performance. If I use the default 25/25/25/25 from 2001, I get 5.9% annualized arithmetic and if I choose 40% Cdn bonds, 60% TSX Composite, I get 6.8% annualized. All these are before costs.... If you knock off 1 percentage point for MER/costs, the results still are well above the 3.8% you mentioned. She can do better with a simple 2-3 ETF couch potato portfolio, or a single Mawer fund above.

P.S. Morningstar shows Mawer104 has 15 year performance of 7.97%. Hard to not like it. http://quote.morningstar.ca/QuickTakes/ ... ture=en-CA
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
bill2009
Contributor
Contributor
Posts: 351
Joined: 03 Mar 2005 14:22

Re: Fee Based advisor Expectations

Post by bill2009 »

sorry - I should have said: the current advisor fees are asset based. 1.3% management fees, .25% administration fees, plus GST for a total of about 1.75%. Thanks for the pointer to the calculator. I'll have a go with it. It still begs the question of what now.

Your 3 options sound right, I'm not sure i'd get her to trust another AUM type but I agree that full hands on might be impractical for her(as it may be for me someday).

I may be wrong but I've come to believe that all actively managed funds are more or less bad - they work until they don't(as opposed to ETFs that visibly track their index less the management fee).
User avatar
kcowan
Veteran Contributor
Veteran Contributor
Posts: 16033
Joined: 18 Apr 2006 20:33
Location: Pacific latitude 20/49

Re: Fee Based advisor Expectations

Post by kcowan »

I agree with AR. Too late to learn DIY. Mawer is a good choice. Avoids the excessive fees and the struggle. Plus you do not take on any responsibility.
For the fun of it...Keith
randomwalker
Veteran Contributor
Veteran Contributor
Posts: 2392
Joined: 14 Apr 2005 20:55

Re: Fee Based advisor Expectations

Post by randomwalker »

bill2009 wrote: 05 Jun 2017 15:02 I'm looking at the portfolio of a female friend age 70 just looking at having to convert an RSP to a RRIF

I think I've satisfied myself that her current advisor has not been doing her any good. The account has a mix of 60% equities and 40% bonds, it's actively traded and, net of fees, has returned about 3.8% annualized since 2001. Looking at my own SDRSP and published figures for comparison, she would have been better off to have the money in XBB or GICs...
This is sad to say the least if not actually criminal. To have 800k today she would have started with about 449K in 2001 with a 3.8% annualized return. A simple do nothing 50/50 split between a Canadian stock index fund and a bond index fund would see her holding about $1.2 million in her rrsp today . Maybe you should sit down with your friend and the advisor (or adviser) and ask them to explain what value they have added over the last 15 and a half years. Get them to justify their fee then throw them out on their ear.
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33399
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Fee Based advisor Expectations

Post by AltaRed »

As much as I'd like to agree, the existing advisor will most likely deny anything is sub-par and have lots of excuses. And likely be confrontational as a tactic to deflect challenge. And maybe have a few valid points IF the client somewhere along the line did not go along with some recommendations within that 16 year old history. Unless this 70 yr old lady is really loaded for bear, I don't see much productive happening from a major confrontation.

That said, the advisor needs to be told that the 16 year performance of the portfolio is abysmal. Go loaded with charts of a 60/40 graph from the Asset Mixer and/or the 15 year chart from Mawer 104 to 'support' your case. Still it is time to part ways and move on. The 70 yr old lady may be reluctant to try another % of AUM advisor, but Mawer, to my knowledge (I may be wrong), doesn't take any additional fees above the MER of their funds. Regardless the track record of MAW104 speaks for itself....at a reasonable MER.

Other than the OP volunteering to explain what a 2-3 ETF index portfolio could do for her, and probably having to advise on when to draw what from the ETFs, and likely having to do the actual execution, e.g. looking over her shoulder, or getting trading rights on her DIY account, I don't know what else she can do. Age 70 is not the time for 99% of investors to start a DIY without guidance (oversight).

I suppose a 'fee for service' planner could prepare a plan, or maybe better yet, just validate a plan put together by the OP. That way, the lady would have the input of 2 people (one a trained professional), and the OP would not feel as exposed making recommdations and helping with execution. A portfolio of VAB (or XBB) and VCN (or VDY) or XIU (or XDV) and XAW is all it would take to have a 60/40 portfolio, gradually growing in fixed income over time (120-age might not be a bad proxy for equities). Then execute using VPW (variable percentage withdrawal).
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
User avatar
ghariton
Veteran Contributor
Veteran Contributor
Posts: 15954
Joined: 18 Feb 2005 18:59
Location: Ottawa

Re: Fee Based advisor Expectations

Post by ghariton »

Since we don't have a fiduciary standard for financial advisers in Canada, there is nothing to be done except move on. Confronting the existing adviser may be emotionally satisfying but would gain you or your friend absolutely nothing. I would make alternative arrangements and then simply send the adviser a registered letter instructing him to transfer the funds. No explanation.

As to the future, I agree with AltaRed's suggestions. An AUM based adviser is probably the best alternative, given the age issue. However, much as I rail against annuities, this might be a case for considering one. When you are evaluating alternatives, you should get a serious quote, and see the balance between the lower return on annuities versus getting out from under financial adviser fees altogether.

George
The juice is worth the squeeze
bill2009
Contributor
Contributor
Posts: 351
Joined: 03 Mar 2005 14:22

Re: Fee Based advisor Expectations

Post by bill2009 »

Since we don't have a fiduciary standard for financial advisers in Canada, there is nothing to be done except move on. Confronting the existing adviser may be emotionally satisfying but would gain you or your friend absolutely nothing. I would make alternative arrangements and then simply send the adviser a registered letter instructing him to transfer the funds. No explanation.
Yes, the less invested in this the better.
To have 800k today she would have started with about 449K in 2001 with a 3.8% annualized return. A simple do nothing 50/50 split between a Canadian stock index fund and a bond index fund would see her holding about $1.2 million in her rrsp today .
Yes, that's almost exactly the situation. It really is sad because this lady is actually brighter than average and i doubt the manager is any worse than average.
bill2009
Contributor
Contributor
Posts: 351
Joined: 03 Mar 2005 14:22

Re: Fee Based advisor Expectations

Post by bill2009 »

kcowan wrote: 05 Jun 2017 19:23 I agree with AR. Too late to learn DIY. Mawer is a good choice. Avoids the excessive fees and the struggle. Plus you do not take on any responsibility.
Keith: I struggle to believe that any fund, balanced or otherwise, is going to do better than the market less their mer - don't they all have to revert over time? I thought everyone on this board stopped believing in mutual funds years ago.

Absolutely no disrespect intended. I'm just surprised. If I seriously thought any of the funds would reliably do as well as my hamfisted DIY I'd be lining up to at least audition them.

EDIT: I guess if they did as well as my hamfisted DIY less 1% that would be notably better than this lady has seen, so I may need to listen harder here.
pmj
Veteran Contributor
Veteran Contributor
Posts: 3412
Joined: 27 Feb 2005 18:15
Location: Ottawa

Re: Fee Based advisor Expectations

Post by pmj »

bill2009 wrote: 06 Jun 2017 10:25I struggle to believe that any fund, balanced or otherwise, is going to do better than the market less their mer - don't they all have to revert over time? I thought everyone on this board stopped believing in mutual funds years ago.

Absolutely no disrespect intended. I'm just surprised. If I seriously thought any of the funds would reliably do as well as my hamfisted DIY I'd be lining up to at least audition them.
Not everyone here is absolutely set against MFs - although it is the received wisdom.

MAW104 has a good record. It's also worth comparing the big-bank dividend funds against the TSX, making due allowance for re-invested dividends. I was surprised when I did this ... and that was with traditional I-class funds, before the recent arrival of reduced-fee D-class funds.
Peter

Patrick Hutber: Improvement means deterioration
bill2009
Contributor
Contributor
Posts: 351
Joined: 03 Mar 2005 14:22

Re: Fee Based advisor Expectations

Post by bill2009 »

Thanks for the input

Alternatives:
1 Status Quo with review of her budget to live within expected means.
2 New asset value based manager with review of her budget to live within expected means.
3 Mawer/Steadyhands type fund
4 Fee based plan and budget followed by DIY execution based on ETFs
5 Fee based plan and budget followed by pay-for-trade execution by a broker willing to do GIC rollovers and infrequent ETF trades.
6 Some combination of an annuity with one of the above.

We used what is now TD Private Wealth Management for several years when we were starting out. We moved everything into TD Waterhouse discount brokerage because I didn't see the value but they might be willing to do the execution for alternative 5.
EDIT: I checked with the guy that we had used at TD. He is still focussed on high MER funds but said he would be willing to handlea portfolio that size with mostly GICs and a couple of ETFs.

I mention the budget because this is a bright lady and her spending is one item directly under her control. If she knows what she can realistically spend she can plan to stay under that and build up a non-registered surplus.
User avatar
kcowan
Veteran Contributor
Veteran Contributor
Posts: 16033
Joined: 18 Apr 2006 20:33
Location: Pacific latitude 20/49

Re: Fee Based advisor Expectations

Post by kcowan »

bill2009 wrote: We moved everything into TD Waterhouse discount brokerage because I didn't see the value but they might be willing to do the execution for alternative 5.
EDIT: I checked with the guy that we had used at TD. He is still focussed on high MER funds but said he would be willing to handlea portfolio that size with mostly GICs and a couple of ETFs.

I mention the budget because this is a bright lady and her spending is one item directly under her control. If she knows what she can realistically spend she can plan to stay under that and build up a non-registered surplus.
MIL had an FI only portfolio and we used the above approach (Waterhouse). It was bond rather than GICs but it was also 11 or 12 years ago.
For the fun of it...Keith
OptsyEagle
Veteran Contributor
Veteran Contributor
Posts: 2240
Joined: 25 Feb 2007 18:59

Re: Fee Based advisor Expectations

Post by OptsyEagle »

Keep in mind that the numbers from Norm's website are "average". That means that 1/2 of everyone that allocated their assets, in that same way, underperformed it. Now it would be nice if all one had to do was go to any financial advisor and be guaranteed to NOT be one of the multi-millions of portfolios that underperform the average, but in reality there is no advisor, no Steadyhand, no Mawer and no friend that can ever guarantee this.

We have not heard from the clients who have done better then the average for obvious reasons, so all we are doing now is "Monday morning quarterbacking" her current advisor for falling into the performance group of millions of others, since 50% will ALWAYS be below average. That is going to be a very, very large number of people.

As the other posters have said, she is a little late for DIY and we have no idea if the performance would have been better had she attempted that in the past. She has $800K and she has had a positive return. I am not so sure I would want to simply step in and take over the program. Also, I would imagine that this portfolio was not as static as the websites portfolio's results are and since none of us were involved in it over the last 16 years, the speculation on what actually happened seems to be surrounded by the fact that the advisor received a fee. A fee that is considerably below average for this type of management, I will add.

Anyway, I don't know the advisor, nor the client, but I thought I would add the above for additional consideration. Good luck to you and your friend.
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33399
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Fee Based advisor Expectations

Post by AltaRed »

Good points OE, but I will take exception to your 'average' comment for Norm's data. By definition, these are index returns, and yes, it does assume that asset allocations were constant and fully invested for that entire period, i.e. perfect re-balancing. But it is indeed a reference point for benchmarking against index returns from which one could subtract a 'cost' factor and an 'inefficiency' factor. But taken at a reasonable worst case of subtracting 1% for cost and inefficiency, couch potato returns would still beat 3.8% hands down.

I think everyone understands that any actively managed portfolio of mutual funds is not going to meet index benchmarks each and every year (by definition) and there is the MER to consider. Bill is skeptical for good reason, but one can do a lot worse than Mawer (as an example) based on historical performance.

Staying with this advisor doesn't seem like a viable option unless as OE suggests, we don't know what really went on with the portfolio during that period of time. My preference for the lady would be to undertake a Couch Potato DIY portfolio of 2-3 ETFs and call it a day.....but the challenge is implementation and execution. Someone will have to set it up for the lady and provide oversight. That is what one would pay 1% AUM (or less) for. $8k a year in fees (1% of 800k) is more than enough for such basic service, i.e. managing asset allocation and sourcing mandatory withdrawals in a RRIF.

And hence the original concept of fee for service advice.... if some fee for service advisor would provide the minimum required.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
DanH
Veteran Contributor
Veteran Contributor
Posts: 2174
Joined: 21 Feb 2005 14:25
Contact:

Re: Fee Based advisor Expectations

Post by DanH »

AltaRed wrote: 05 Jun 2017 15:37If I use the default 25/25/25/25 from 2001, I get 5.9% annualized arithmetic and if I choose 40% Cdn bonds, 60% TSX Composite, I get 6.8% annualized. All these are before costs.... If you knock off 1 percentage point for MER/costs, the results still are well above the 3.8% you mentioned. She can do better with a simple 2-3 ETF couch potato portfolio, or a single Mawer fund above.
Norm's illustrator is perhaps the best tool you'll find online. We use some of the same data. But I've also built a historical (and updated) series of returns based on actual ETFs and index funds that existed at various times in the past. And using that series (all net of respective product MERs) I get slightly lower numbers - but along what you'd expect. For 60% Cdn Stocks (XIC) + 40% Cdn Bonds (XBB) I get 6.53% per year (or 5.33% net of 1% + tax). with 40/60 I get 5.82% (or 4.63% net of a typical advisory fee). So yes, significant long-term underperformance (assuming the 3.8% is accurate and comparable to these figures) but hardly criminal (as RW quipped).
AltaRed wrote: 05 Jun 2017 20:22 As much as I'd like to agree, the existing advisor will most likely deny anything is sub-par and have lots of excuses. And likely be confrontational as a tactic to deflect challenge. And maybe have a few valid points IF the client somewhere along the line did not go along with some recommendations within that 16 year old history. Unless this 70 yr old lady is really loaded for bear, I don't see much productive happening from a major confrontation.
ghariton wrote: 05 Jun 2017 21:14 Since we don't have a fiduciary standard for financial advisers in Canada, there is nothing to be done except move on. Confronting the existing adviser may be emotionally satisfying but would gain you or your friend absolutely nothing. I would make alternative arrangements and then simply send the adviser a registered letter instructing him to transfer the funds. No explanation.
I agree. What's the end goal of such a meeting? Seems a waste of time if the decision to leave has already been made. That said, making the advisor aware of the reasons for leaving isn't a bad idea if it's something she wants. That will allow her to make air her beefs to the advisor and it will point out to the advisor his/her weaknesses (painful but helpful).
AltaRed wrote: 05 Jun 2017 20:22I suppose a 'fee for service' planner could prepare a plan, or maybe better yet, just validate a plan put together by the OP. That way, the lady would have the input of 2 people (one a trained professional), and the OP would not feel as exposed making recommdations and helping with execution. A portfolio of VAB (or XBB) and VCN (or VDY) or XIU (or XDV) and XAW is all it would take to have a 60/40 portfolio, gradually growing in fixed income over time (120-age might not be a bad proxy for equities). Then execute using VPW (variable percentage withdrawal).
Good suggestions on theory but for someone who's never executed in her life, all FWR regulars underestimate how intimidating it is to do online trading of any kind - particularly with ETFs. She needs a trusted advisor.

Bill, it sounds like you've got a good handle on this and your friend is getting good guidance. That said, if your friend is in or very close to Toronto I have a couple of good recommendations for her - one a registered PM (so legal fiduciary) who uses truly passive ETFs; another is not a PM but has a real pro who operates like a fiduciary. I've referred people to both and I'd not hesitate to continue doing so. But both charge a % of assets. That's kind of your only realistic/sustainable option. But you could certainly look at working directly with Steadyhand, Mawer or Leith Wheeler (people often forget LW but very solid firm that should be included in this list).
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33399
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Fee Based advisor Expectations

Post by AltaRed »

DanH wrote: 07 Jun 2017 12:49 Good suggestions on theory but for someone who's never executed in her life, all FWR regulars underestimate how intimidating it is to do online trading of any kind - particularly with ETFs. She needs a trusted advisor.
I've had my own personal experience with this...with my ex. Since we parted ways in 2008, she has been managing her own portfolio at a discount broker, but in reality she is only transacting what I recommend (or picking one of 2-3 options I give her with reasoning behind each) and 9 years later, she still wants me on the phone to guide her through her actual buy and sell executions.

Even now that she is mostly in a Couch Potato portfolio, she still relies on my guidance (oversight). I've said before...she is a bright person so it isn't IQ. It is just that this DIY financial stuff is too much for her in her 60s and/or it is a mental/disinterested block. She will need to go to a trusted % of AUM advisor when I no longer provide her with that kind of oversight.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
DanH
Veteran Contributor
Veteran Contributor
Posts: 2174
Joined: 21 Feb 2005 14:25
Contact:

Re: Fee Based advisor Expectations

Post by DanH »

Do you have someone lined up for her yet? While it's not an issue for my household (all accounts are at HighView, run like all other client accounts) but many friends and relatives rely on me for specific suggestions. I don't have a back-up for them since they're all significantly older than me so counting on not needing a back-up. But I really should at least given them a couple of names.
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33399
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Fee Based advisor Expectations

Post by AltaRed »

If you were directly that post to me, no one yet, but I had mentioned a 'fee for service' planner in Calgary as her best option given she has:
a) >80% of her holdings (all non-reg) now all in ETFs as of this year (took some years to manage cap gains in the transition from stocks),
b) ~10% in HISA type cash - she wants a lot of cash,
c) <10% of total portfolio RRSP/TFSA - currently GIC ladders - likely to change to single assets in each over time.

Adjustments and execution would be quite simple....and her paying in the order of 0.5-1% of AUM for a portfolio of the size she has would be criminal. I was going to start with the MoneySense advisor list for Calgary (there are a few fee for service advisors there) given no other recommendations.

What I suggested she will really need more than anything in the future is estate planning advice. She has significant unrealized cap gains which will only grow over time and I suggested, for example, that she consider establishing an endowment fund to take the tax bite off cap gains taxes at death. I've been looking into that myself.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
DanH
Veteran Contributor
Veteran Contributor
Posts: 2174
Joined: 21 Feb 2005 14:25
Contact:

Re: Fee Based advisor Expectations

Post by DanH »

Yes, directed at you AltaRed. I don't want to hijack this thread but I have very mixed feelings about the MoneySense list because it's based on a model of advisors/firms paying a significant fee to be reviewed and to be on this list. We were asked and we respectfully declined. So it's a good start and there are some good advisors there (though I don't know the AB based folks) but you want to cast a wider net. There is another resource from Rob Carrick - i.e. a spreadsheet linked at the end of this article.
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33399
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Fee Based advisor Expectations

Post by AltaRed »

Unfortunately, I can't access that article but thanks anyway. Will make it a winter project to seek out possibilities.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
DanH
Veteran Contributor
Veteran Contributor
Posts: 2174
Joined: 21 Feb 2005 14:25
Contact:

Re: Fee Based advisor Expectations

Post by DanH »

User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33399
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Fee Based advisor Expectations

Post by AltaRed »

Thanks much
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
User avatar
GreatLaker
Contributor
Contributor
Posts: 662
Joined: 16 Dec 2014 13:02
Location: Toronto

Re: Fee Based advisor Expectations

Post by GreatLaker »

A few years ago I was investigating fee-only financial planners and created a list of questions to ask when interviewing them. I thought it would be helpful to others so loaded it to Dropbox. Hope it's useful.

List of Questions to Ask a Financial Planner
When I was young, I was poor. Now, after years of hard work, I am no longer young.
User avatar
kcowan
Veteran Contributor
Veteran Contributor
Posts: 16033
Joined: 18 Apr 2006 20:33
Location: Pacific latitude 20/49

Re: Fee Based advisor Expectations

Post by kcowan »

AltaRed wrote: 07 Jun 2017 13:10She will need to go to a trusted % of AUM advisor when I no longer provide her with that kind of oversight.
Isn't it awful when you are being used and abused! I remember Inquisitive using one of our founders to create a fee-based financial plan and then she said: Now what? and he said not my job. It is a huge problem. I remember my first trades on Greenline being very intimidating. Click a button and hope for the best!

I view it like training wheels on a bike. No one wants to go without them unless they have to.

I think in your case you need to wean her off your support because odds are she will outlive you. It will be better to do it while you are alive. Get over the need to be needed.

(I did a total break from my first wife but a good friend has maintained the need to be needed. I gently tell him to get on with his life.)
For the fun of it...Keith
bill2009
Contributor
Contributor
Posts: 351
Joined: 03 Mar 2005 14:22

Re: Fee Based advisor Expectations

Post by bill2009 »

OptsyEagle wrote: 07 Jun 2017 11:27 Keep in mind that the numbers from Norm's website are "average". That means that 1/2 of everyone that allocated their assets, in that same way, underperformed it. Now it would be nice if all one had to do was go to any financial advisor and be guaranteed to NOT be one of the multi-millions of portfolios that underperform the average, but in reality there is no advisor, no Steadyhand, no Mawer and no friend that can ever guarantee this.

We have not heard from the clients who have done better then the average for obvious reasons, so all we are doing now is "Monday morning quarterbacking" her current advisor for falling into the performance group of millions of others, since 50% will ALWAYS be below average. That is going to be a very, very large number of people.

As the other posters have said, she is a little late for DIY and we have no idea if the performance would have been better had she attempted that in the past. She has $800K and she has had a positive return. I am not so sure I would want to simply step in and take over the program. Also, I would imagine that this portfolio was not as static as the websites portfolio's results are and since none of us were involved in it over the last 16 years, the speculation on what actually happened seems to be surrounded by the fact that the advisor received a fee. A fee that is considerably below average for this type of management, I will add.

Anyway, I don't know the advisor, nor the client, but I thought I would add the above for additional consideration. Good luck to you and your friend.
That's insightful. Thanks.

As another back-check I looked at their after-fee full year performance for 2012, 2013, 2014, and 2015 against clear equity and fi sections of our DIY portfolio and found they outperformed pretty handily. Over a very long term my portfolio did better but only marginally. There is zero chance that i'll move funds to her advisor but tweaking may be more in order than radical change.
Post Reply