Fee Based advisor Expectations

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Fee Based advisor Expectations

Post by AltaRed »

bill2009 wrote: 08 Jun 2017 08:24 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.
Perhaps so, but benchmark the perforamce against Norm's Asset Mixer, less a reasonable fee, for the best comparison. That is the ultimate test.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Fee Based advisor Expectations

Post by AltaRed »

kcowan wrote: 07 Jun 2017 20:52 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.
There will be an appropriate time....soon. Her portfolio needed to be throughly re-built from a 'hands on' DIY type to a Couch Potato type, i.e. she inherited her portfolio from the division of our assets and after a few years of observation, it was clear she needed to move to a Couch Potato as a minimum. But FWIW, this was also an education for me in terms of what, for example, a surviving spouse of FWF hands on types would go through as well. Hence my sometimes 'preachy' KISS posts.

But this is off-topic. The lady is lucky she has someone like Bill to help steer this 70 yr old lady. A lot of investors need an informed advocate to help them get traction.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
User avatar
Shakespeare
Veteran Contributor
Veteran Contributor
Posts: 23396
Joined: 15 Feb 2005 23:25
Location: Calgary, AB

Re: Fee Based advisor Expectations

Post by Shakespeare »

Norm and I (and possibly Dan) have argued for years that the best approach for the uninterested is not a couch potato portfolio but a low cost balanced fund. (I say this having tried to educate my sister in portfolio allocation principles.)
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
User avatar
deaddog
Veteran Contributor
Veteran Contributor
Posts: 3422
Joined: 19 Jan 2008 19:59
Location: Central BC/Arizona

Re: Fee Based advisor Expectations

Post by deaddog »

Shakespeare wrote: 08 Jun 2017 10:22 Norm and I (and possibly Dan) have argued for years that the best approach for the uninterested is not a couch potato portfolio but a low cost balanced fund. (I say this having tried to educate my sister in portfolio allocation principles.)
Are you suggesting using an advisor or DIY with a discount broker?

Most advisors operate on an AUM model and then there is the MER of the funds on top of that.

Where does one find "Low Cost" balanced funds?
"And the days that I keep my gratitude higher than my expectations, well, I have really good days" RW Hubbard
User avatar
Shakespeare
Veteran Contributor
Veteran Contributor
Posts: 23396
Joined: 15 Feb 2005 23:25
Location: Calgary, AB

Re: Fee Based advisor Expectations

Post by Shakespeare »

A fee-only advisor can provide a plan. Buying something like MAW104 can be done via discount broker. The big bank dividend funds can be bought at the bank. There are also the ING funds. All this has been discussed many times.

IMO 99% of people are not suited for DIY investing.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Fee Based advisor Expectations

Post by AltaRed »

Shakespeare wrote: 08 Jun 2017 10:22 Norm and I (and possibly Dan) have argued for years that the best approach for the uninterested is not a couch potato portfolio but a low cost balanced fund. (I say this having tried to educate my sister in portfolio allocation principles.)
I agree...except to put all of one's assets into one fund, e.g. MAW104, is a hurdle most people can't get over. In the case of Mawer, it is not so much specific fund risk because MAW104, for example, is made up of different weightings of a number of Mawer funds, but the vulnerability in a non-reg account of Mawer deciding to close up shop and sell the business.... and the investor not liking the performance of the successors. There would then be a huge cap gains to move on to an alternative.

For a registered account, it is not an issue since that switch can be made without tax consequences and why I brought up Mawer and Steadyhand (and Dan bringing up Leith Wheeler). Perhaps Bill should be comparing this lady's performance returns against the 3, 5, 10, 15 yr performance of the balanced funds of these providers. I have actually suggested to my ex that she convert at least her TFSA to MAW104 and keep adding to it with new contribution room indefinitely.

Added later: To respond to Shakes and DD, with enough assets, one can go directly to Mawer (for example). My mother owned, for example, RBC Balanced Fund and RBC Canadian Dividend fund. My current spouse owns RBC Balanced fund in her RRSP - all D series. I agree most investors are not suited for DIY.
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 »

Shakespeare wrote: 08 Jun 2017 10:22 Norm and I (and possibly Dan) have argued for years that the best approach for the uninterested is not a couch potato portfolio but a low cost balanced fund. (I say this having tried to educate my sister in portfolio allocation principles.)
Definitely Dan! ;) It's been at least ten years since I was up to my eyeballs in calculating dollar weight returns across the entire Canadian fund universe. The data have changed so I can't update or link new data to old but the work I did in the late 1990s and from 2005-08 is what convinced me that balanced funds have real behavioural benefits despite generally higher fees.
AltaRed wrote: 08 Jun 2017 10:44 I agree...except to put all of one's assets into one fund, e.g. MAW104, is a hurdle most people can't get over.
Very true. Got a call recently from an investor with a mid-high six-figure portfolio all in this fund; which concerned this person. But I said that the only reason to want to change is if the portfolio has a mix of registered and non-registered accounts; which would give rise to potential tax efficiencies by varying the mix across accounts. But it's all registered. So I pointed out that there are probably a hundred stocks from around the world and lots of government and corporate bonds - i.e. lots of diversification.
AltaRed wrote: 08 Jun 2017 10:44 In the case of Mawer, it is not so much specific fund risk because MAW104, for example, is made up of different weightings of a number of Mawer funds, but the vulnerability in a non-reg account of Mawer deciding to close up shop and sell the business.... and the investor not liking the performance of the successors. There would then be a huge cap gains to move on to an alternative.
Always a possibility but firms like Mawer and Leith Wheeler are so well established and have gone through some ownership changes. There should be less of a concern with these two. But it's true that it's never off the table. The bigger issue is good performance in the face of their large size - particularly Mawer.
AltaRed wrote: 08 Jun 2017 10:44 For a registered account, it is not an issue since that switch can be made without tax consequences and why I brought up Mawer and Steadyhand (and Dan bringing up Leith Wheeler).
With all three you can get advice directly from individual counsellors. Mawer has a mix of "mutual fund reps" and licensed portfolio managers depending on account size. I believe that Leith Wheeler - which is terrible at marketing their direct business - is similar but you'll only get real advice I think if you have enough for a managed account (i.e. licensed PM). Steadyhand will give you advice if you'd like as long as you meet their $10k minimum. But all have good stand-alone funds and great balanced fund options.
Post Reply