High Net Worth? Get Thee To An Advisor!
Re: High Net Worth? Get Thee To An Advisor!
The recent direction of this thread is about alternative methods of helping one's spouse, after one's death, to manage their investments - and thus a chunk of their income. At least half of us will likely pre-decease our spouses. It's unrealistic to suggest that someone without much interest, and without much experience, probably in their 80's, is likely to jump at the opportunity to learn those new skills.
[OT, sexist, etc] I'm astonished at how few women here drive standard transmission vehicles. 99% of women in the UK can drive standards. Why are North American women incapable of driving standards? Can't they just get a few helpful lessons from their (undoubtedly-competent) husbands, and develop this basic life-skill? [/OT, sexist, etc]
This is a real problem, not a theoretical one - and this has been a valuable discussion. There's no right answer - so each option is valuable - and equally no suggestion is wrong. A pure auto-pilot method is a little nerve-racking - I think some monitoring is required - and that represents, to a greater or lesser degree, how many of us currently manage our portfolios. Dan added an interesting "new" concept that seems to be an effective method of providing continuity - and providing assurance to the not-yet-departed.
[OT, sexist, etc] I'm astonished at how few women here drive standard transmission vehicles. 99% of women in the UK can drive standards. Why are North American women incapable of driving standards? Can't they just get a few helpful lessons from their (undoubtedly-competent) husbands, and develop this basic life-skill? [/OT, sexist, etc]
This is a real problem, not a theoretical one - and this has been a valuable discussion. There's no right answer - so each option is valuable - and equally no suggestion is wrong. A pure auto-pilot method is a little nerve-racking - I think some monitoring is required - and that represents, to a greater or lesser degree, how many of us currently manage our portfolios. Dan added an interesting "new" concept that seems to be an effective method of providing continuity - and providing assurance to the not-yet-departed.
Peter
Patrick Hutber: Improvement means deterioration
Patrick Hutber: Improvement means deterioration
Re: High Net Worth? Get Thee To An Advisor!
Well, yes. My family has lived through the ups and downs in my investments and seen how I reacted and how well we've fared.Do you seriously think that someone who's not particularly interested in investing, who's never been through something like this before, and who now has to make do with that portfolio since there may no longer be regular job income, etc. is going to have the same intestinal fortitude that you did?
As I said, in this special case, there is the following characteristic:
For the couple of unhappy examples cited by those above, I don't want to presume, but perhaps this characteristic was/is currently lacking.- the students have proof of the success and (hopefully) have trust and faith in the teacher
Yet.. can't that be addressed? And why are you waiting until you're dead to start training your "successor"?
"A dividend is a dictate of management. A capital gain is a whim of the market."
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Re: High Net Worth? Get Thee To An Advisor!
My hubby might be game to take it on. The biggest problem I see is that he is quite a successful guy in most areas of his life (particularly in his choice of women) which has given him a lot of confidence over the years. Without question, he would be prone to market timing and picking stocks. In fact, he always asks me why I don't time the market and pick stocks more with all the knowledge I have learned.
Our family genetics tell us that he is more likely to predecease me, though.
Our family genetics tell us that he is more likely to predecease me, though.
Hey, some of us can handle stick just fine, and prefer it.[OT, sexist, etc] I'm astonished at how few women here drive standard transmission vehicles. 99% of women in the UK can drive standards. Why are North American women incapable of driving standards? Can't they just get a few helpful lessons from their (undoubtedly-competent) husbands, and develop this basic life-skill? [/OT, sexist, etc]
Re: High Net Worth? Get Thee To An Advisor!
So too does my wife, and, IIRC Bylo's also.couponstrip wrote:Hey, some of us can handle stick just fine, and prefer it.[OT, sexist, etc] I'm astonished at how few women here drive standard transmission vehicles. 99% of women in the UK can drive standards. Why are North American women incapable of driving standards? Can't they just get a few helpful lessons from their (undoubtedly-competent) husbands, and develop this basic life-skill? [/OT, sexist, etc]
(I'm pretending not to have picked up on the double entendre. )
Exit, pursued by a bear.
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William Shakespeare, Stage direction in "The Winter's Tale"
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Re: High Net Worth? Get Thee To An Advisor!
WADR, good luck with that. Just because they've seen you do it doesn't mean that they can do it when the full responsibility rests in their hands. There's ample evidence that suggests the odds aren't in their favour, including Bernstein's piece as linked upthread. Maybe your family members are "special cases" but even so, most peoples' families simply are not.Descartes wrote:Well, yes. My family has lived through the ups and downs in my investments and seen how I reacted and how well we've fared.
Yup. Actually it was moi who persuaded her to get an automatic on her new Civic. My argument was convenience in heavy traffic and that it will more than pay for itself in resale value. If left to her own devices she'd have got a stick shift.Nemo2 wrote:So too does my wife, and, IIRC Bylo's also.
If only persuading her to pay more attention to financial planning and investing were even a tenth as easy...
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Re: High Net Worth? Get Thee To An Advisor!
I wonder how many of the women here also drive stick? Count me in (although we drive very little and I mostly pilot a bicycle around town!)
Re: High Net Worth? Get Thee To An Advisor!
Descartes,Descartes wrote:Your hyperbole erodes your argument significantly, in my humble opinion.mike.bayer wrote:Sure, here are a few things you will need to teach them.
5. Are you saying my wife and kids are stupid?!
I don't think Mike Bayer is saying that your wife and kids are stupid. He is really raising the very legitimate question as to whether they have the interest and abilities to do this work. He especially underlines the emotional ability to stay while everyone else is heading for the doors. He makes very good points--and I think his hyperbole is mostly humorous. One of the reasons things are humorous often, though, is because they are true. So, maybe its a double edged sword. But, I think Mike did a pretty good job of putting things in perspective
Joe
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Re: High Net Worth? Get Thee To An Advisor!
Thanks Joe,gouthro wrote:Descartes,Descartes wrote:Your hyperbole erodes your argument significantly, in my humble opinion.mike.bayer wrote:Sure, here are a few things you will need to teach them.
5. Are you saying my wife and kids are stupid?!
I don't think Mike Bayer is saying that your wife and kids are stupid. He is really raising the very legitimate question as to whether they have the interest and abilities to do this work. He especially underlines the emotional ability to stay while everyone else is heading for the doors. He makes very good points--and I think his hyperbole is mostly humorous. One of the reasons things are humorous often, though, is because they are true. So, maybe its a double edged sword. But, I think Mike did a pretty good job of putting things in perspective
Joe
I am definitely not saying that his wife and kids are stupid and I really do hope he can teach them to be successful investors. My experience has been that very few people have what it takes to be serious long term successful investors. It seems that the human brain is simply not wired that way (in most cases).
The Dalbar studies show the facts pretty clearly. I'm not sure how different the numbers are for DIY investors but it showed a 9.14% S&P 500 20-Year Annualized Return(time weighted) vs a 3.83% “Average”Equity Fund Investor 20-Year Annualized Return (dollar weighted)
Source: DALBAR Quantitative Analysis of Investor Behavior (QAIB), 2011. Comparing time-weighted index returns to dollar-weighted fund returns suggests that the “average”equity fund investor buys high and sells low while owning a given fund for less than five years.
An investment in knowledge always pays the best interest. Benjamin Franklin (1706 - 1790)
Re: High Net Worth? Get Thee To An Advisor!
I have driven a standard for many years. I don't think it is unusual for a woman to drive a stick shift.Flights of Fancy wrote:I wonder how many of the women here also drive stick? Count me in (although we drive very little and I mostly pilot a bicycle around town!)
But I find I am not that 'average'. I am what some would consider high net worth. Well over the million. Never used an advisor...just this forum. Single mom, retired small business woman, no secondary education, just the desire to be independent and secure.
Re: High Net Worth? Get Thee To An Advisor!
The problem with writing is that one can't always discern a joke. My "accusation" is a joke; hence the smiley face.gouthro wrote:Descartes,Descartes wrote:Your hyperbole erodes your argument significantly, in my humble opinion.mike.bayer wrote:Sure, here are a few things you will need to teach them.
5. Are you saying my wife and kids are stupid?!
I don't think Mike Bayer is saying that your wife and kids are stupid. He is really raising the very legitimate question as to whether they have the interest and abilities to do this work. He especially underlines the emotional ability to stay while everyone else is heading for the doors. He makes very good points--and I think his hyperbole is mostly humorous. One of the reasons things are humorous often, though, is because they are true. So, maybe its a double edged sword. But, I think Mike did a pretty good job of putting things in perspective
Joe
Hyperbole means to exaggerate to an obviously ridiculous extent. In this case, Mike is exaggerating the complexity of the task under discussion to a ridiculous extent to dissuade the DIY investor from this course. Certainly he has a less than altruistic intent here given his livelihood (but I do not fault him on this - you've got to make a living).
I missed the humour in his hyperbole but I guess that's to my initial point (maybe he needs to add more smileys) .
If you have not already, then please read over Mr. Bernstein's article from which, it appears, Mike cribbed and exaggerated (1 in 10,000? That would mean, for example, only 50 people in Hamilton Ontario are equipped to be DIY investors!). Then read the rebuttal I had to Shakespeare's mention of this article since we are not, in my opinion, talking about the same case as Mr.Bernstein.
If you've done all this then: thank-you and I guess that's all I can say on the matter. If we still disagree then so be it.
"A dividend is a dictate of management. A capital gain is a whim of the market."
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Re: High Net Worth? Get Thee To An Advisor!
I don't think it needs to be complex at all but it does seem to be very difficult for most people. The Dalbar facts speak for themselves.
FYI - I'm happy to provide anyone with a no cost consultation and simple asset allocation plan.
An investment in knowledge always pays the best interest. Benjamin Franklin (1706 - 1790)
Re: High Net Worth? Get Thee To An Advisor!
[OT]
[/OT]
While DALBAR is probably correct directionally relative to index returns I would not put much faith in the specific numbers. See Does DALBAR really calculate investor returns.mike.bayer wrote:Source: DALBAR Quantitative Analysis of Investor Behavior (QAIB), 2011. Comparing time-weighted index returns to dollar-weighted fund returns suggests that the “average”equity fund investor buys high and sells low while owning a given fund for less than five years.
[/OT]
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Re: High Net Worth? Get Thee To An Advisor!
Hi Dan,DanH wrote:[OT]While DALBAR is probably correct directionally relative to index returns I would not put much faith in the specific numbers. See Does DALBAR really calculate investor returns.mike.bayer wrote:Source: DALBAR Quantitative Analysis of Investor Behavior (QAIB), 2011. Comparing time-weighted index returns to dollar-weighted fund returns suggests that the “average”equity fund investor buys high and sells low while owning a given fund for less than five years.
[/OT]
Interesting post with good arguments. What is your estimate of average investor returns for the 20 year period?
It seems the task is made more difficult as only about 63% of actively managed Canadian equity funds survived over five years through Q42010 and only 2.5% of them beat the index.
Ok - I will concede that the number will be more likely to be 1 in 100 to 1 in 1000.
Standard & Poor’s Indices Versus Active Funds Scorecard, December 31, 2010. Index used for comparison: S&P/TSX Composite Index Total Return. There has been no deduction of fund expenses from index returns.
An investment in knowledge always pays the best interest. Benjamin Franklin (1706 - 1790)
Re: High Net Worth? Get Thee To An Advisor!
Thanks. I haven't done a 20 year calculation. Some of the data changes by IFIC over the past few years has challenged the continuity of the work I started many years ago since I used their monthly category figures. For the nearly-15 years from late 1993 through July 2008 (prior to worst of financial crisis), equity fund investors earned an estimated 4.5% annually - about the same as GICs over the same period.mike.bayer wrote:Interesting post with good arguments. What is your estimate of average investor returns for the 20 year period?
The reason I used broad category IFIC data is because it included all IFIC-reporting funds during each month during the period. Data for those funds didn't subsequently get pulled out as each fund 'died'. so my data - while dated at this point - controls for suvivorship bias by virtue of IFIC's method. But what it doesn't include is any fund that didn't report to IFIC. And in recent years, some big firms pulled out of IFIC, a situation that has worsened.mike.bayer wrote:It seems the task is made more difficult as only about 63% of actively managed Canadian equity funds survived over five years through Q42010 and only 2.5% of them beat the index.
Re: High Net Worth? Get Thee To An Advisor!
Back on topic...
Canadian Couch Potato's new post may be relevant here:
A Spreadsheet to Manage Multiple Accounts
Canadian Couch Potato's new post may be relevant here:
A Spreadsheet to Manage Multiple Accounts
You’ve got an RRSP with your employer, another with a discount brokerage, and your spouse has a couple of his or her own. You both have TFSAs, too, plus an online savings account where you park your cash. If all of these accounts are intended for the same purpose (such as to fund your retirement), you should think of them as one large portfolio. But how can you keep track of them all?
The ever-industrious Justin Bender, portfolio manager at PWL Capital in Toronto, has come to the rescue again. He’s created a custom spreadsheet to help Couch Potatoes keep track of their asset allocation across multiple accounts. Download the spreadsheet here, fire it up in Excel, and follow these instructions:
Re: High Net Worth? Get Thee To An Advisor!
I think that a little less interest in investing is better than too much. In my own case, I know I have become a better investor over the years, as my interest in investing has waned. I do much less "stock picking" now, and am much less prone to watching the market and reacting to it on a weekly or monthly basis. Buy and hold, along with diversification, has been much more successful for me than trying to beat the market.mike.bayer wrote: I am definitely not saying that his wife and kids are stupid and I really do hope he can teach them to be successful investors. My experience has been that very few people have what it takes to be serious long term successful investors. It seems that the human brain is simply not wired that way (in most cases).
I'm okay with lagging the stock market a bit because of expenses, and lagging the bond market a bit because of the (ridiculously high) fees to purchase bonds. It's still much better than what I got from mutual funds and financial advisors.
If your spouse and kids aren't as interested in investing as you, that's probably a good thing. I agree that not everyone has the desire or ability to do it, but the number of people that do is WAY more than 0.01%. It's probably well over 50%. Maybe not so much by the time you're in your 80's, but by then hopefully you've annuitized, or at least got out of equities.
Re: High Net Worth? Get Thee To An Advisor!
It's been a mind numbing day and this line is the funniest thing I read in a long time.newguy wrote: And she's still not sure how they filmed Jurassic Park if they're all dead.
Thank You
Re: High Net Worth? Get Thee To An Advisor!
WAY more than 0.01%CathyF wrote: I agree that not everyone has the desire or ability to do it, but the number of people that do is WAY more than 0.01%. It's probably well over 50%. Maybe not so much by the time you're in your 80's, but by then hopefully you've annuitized, or at least got out of equities.
OK, sure. I'll buy that.
probably well over 50%
What kind of people to you hang out with? Leona Helmsley? You need to get out with the little people more often.. It's certainly not 50% of my neighbours.
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Re: High Net Worth? Get Thee To An Advisor!
Hmmm
In my case the more interested I became in investing, I stopped stock picking all together and the only market timing I do is value averaging and rebalancing. I'm not sure what your idea of proper diversification is but the best global equity fund I have seen holds almost 8000 securities.
My mom is in her eighties and has half her portfolio in equities. She barely spends her pension & cpp and has no interest in annuities. She is not interested in earning a negative real returns and understands the trade off between capital preservation and maintaining purchasing power.
I think 50% is a pipe dream based on the data I have seen but I'm not sure what your definition of a successful investor is.
I guess if you are happy with the 4.5% equity returns that Dan estimates. That is certainlly not what I would consider to be a successful investment experience.
In my case the more interested I became in investing, I stopped stock picking all together and the only market timing I do is value averaging and rebalancing. I'm not sure what your idea of proper diversification is but the best global equity fund I have seen holds almost 8000 securities.
My mom is in her eighties and has half her portfolio in equities. She barely spends her pension & cpp and has no interest in annuities. She is not interested in earning a negative real returns and understands the trade off between capital preservation and maintaining purchasing power.
I think 50% is a pipe dream based on the data I have seen but I'm not sure what your definition of a successful investor is.
I guess if you are happy with the 4.5% equity returns that Dan estimates. That is certainlly not what I would consider to be a successful investment experience.
An investment in knowledge always pays the best interest. Benjamin Franklin (1706 - 1790)
Re: High Net Worth? Get Thee To An Advisor!
I said 50% of people are capable of doing it, not that 50% are doing it. It's not rocket science, despite what advisors try to make us believe.mike.bayer wrote: I think 50% is a pipe dream based on the data I have seen but I'm not sure what your definition of a successful investor is.
You're putting words in my mouth. I'm happy with a market-return for a balanced portfolio. I know I can't consistently outperform the markets, so I don't try. I don't think you can either. I understand you're pumping your own company here.I guess if you are happy with the 4.5% equity returns that Dan estimates. That is certainlly not what I would consider to be a successful investment experience.
Re: High Net Worth? Get Thee To An Advisor!
[quote="Descartes"][
If you have not already, then please read over Mr. Bernstein's article from which, it appears, Mike cribbed and exaggerated (1 in 10,000? That would mean, for example, only 50 people in Hamilton Ontario are equipped to be DIY investors!). Then read the rebuttal I had to Shakespeare's mention of this article since we are not, in my opinion, talking about the same case as Mr.Bernstein.
Hello again Descartes,
I know that Mike Bayer is exaggerating. Although, I think his point is that you have to be interested in this stuff and if you are interested you will read a lot. I certainly haven"t read everything that he mentions and I have done alright. But, I do know a lot more about it than my wife does, and in my opinion, ever will know. And I already mentionned that my wife is more intelligent than me. ( But, perhaps she is not as crafty ). I know people are giving all kinds of arguments here about why some people can't or won't run their own portfolio and thus may need an advisor. For me, though, it seems so obvious that it is hardly worth arguing.
joe
If you have not already, then please read over Mr. Bernstein's article from which, it appears, Mike cribbed and exaggerated (1 in 10,000? That would mean, for example, only 50 people in Hamilton Ontario are equipped to be DIY investors!). Then read the rebuttal I had to Shakespeare's mention of this article since we are not, in my opinion, talking about the same case as Mr.Bernstein.
Hello again Descartes,
I know that Mike Bayer is exaggerating. Although, I think his point is that you have to be interested in this stuff and if you are interested you will read a lot. I certainly haven"t read everything that he mentions and I have done alright. But, I do know a lot more about it than my wife does, and in my opinion, ever will know. And I already mentionned that my wife is more intelligent than me. ( But, perhaps she is not as crafty ). I know people are giving all kinds of arguments here about why some people can't or won't run their own portfolio and thus may need an advisor. For me, though, it seems so obvious that it is hardly worth arguing.
joe
Re: High Net Worth? Get Thee To An Advisor!
At least something good came out of it all!Wife: Well, if you're going to be like that, I'm not talking to you any more.
For the fun of it...Keith
Re: High Net Worth? Get Thee To An Advisor!
I really hope that story was made up!kcowan wrote:At least something good came out of it all!Wife: Well, if you're going to be like that, I'm not talking to you any more.
Re: High Net Worth? Get Thee To An Advisor!
I really Hope Kcowan goes with her next time.CathyF wrote:I really hope that story was made up!kcowan wrote:At least something good came out of it all!Wife: Well, if you're going to be like that, I'm not talking to you any more.
This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed
Re: High Net Worth? Get Thee To An Advisor!
kcowan wrote:At least something good came out of it all!ghariton wrote:Wife: Well, if you're going to be like that, I'm not talking to you any more.
I am game to go but I think George (ghariton) will have something to say about it!BRIAN5000 wrote:I really Hope Kcowan goes with her next time.CathyF wrote: I really hope that story was made up!
For the fun of it...Keith