Author Topic: Investing in a Private Banking Situation  (Read 6940 times)

DrJohn

  • 5 O'Clock Shadow
  • *
  • Posts: 83
Investing in a Private Banking Situation
« on: August 17, 2014, 12:16:21 PM »
OK- I used to be with Schwab and my advisor jumped ship to Ch8se. I followed him as I trusted him. I was sold the "Priv@te Client" accounts at Ch8se.  Next thing I am from 10 sectors I could basically understand (e.g. small cap, mid cap, large cap, health, tech, energy, Europe, REIT, bonds, emerging markets) and invested by thew new firm into 80 plus funds, hedge funds, stocks etc. I don't even have the time to start researching/understanding what I have.   All investments charge fees 0.8-1.2% and there is a 1% fee on top of that.  I do have a 401(k) at a newish job invested in a V@nguard 2030 retirement fund as a baseline for comparison and that has made 11.1% in the last year which is way beyond the measly few % I have seen in the Ch8se accounts.

Now I want to get an independent viewpoint from a non-biased fee based advisor as I feel that it has all gone badly wrong.  I think that is the right way out.

Has anyone else experienced the same problem?

Sorry to be weird/cloak and dagger with the  8's and @'s but I am a bit paranoid about this type of stuff with the size of funds involved.

Joel

  • Pencil Stache
  • ****
  • Posts: 775
  • Location: California
Re: Investing in a Private Banking Situation
« Reply #1 on: August 17, 2014, 01:25:18 PM »
Sounds like its time for you to do some research and get out of those. I am a huge fan of bogleheads (as are many on here) for its simplicity.

Alabaster

  • 5 O'Clock Shadow
  • *
  • Posts: 85
Re: Investing in a Private Banking Situation
« Reply #2 on: August 17, 2014, 01:41:58 PM »
Just a heads up, standard character substitutions might make reading a bit odd for humans, but they aren't going to confuse a well designed data collection system if that's what you're worried about... They add very little entropy to the problem.

DrJohn

  • 5 O'Clock Shadow
  • *
  • Posts: 83
Re: Investing in a Private Banking Situation
« Reply #3 on: August 17, 2014, 01:56:38 PM »
I love you guys!  So pragmatic.  I was thinking about that even as I posted this, though I should know better.  Well, you learn something new every day...

marty998

  • Walrus Stache
  • *******
  • Posts: 6492
  • Location: Sydney, Oz
Re: Investing in a Private Banking Situation
« Reply #4 on: August 17, 2014, 04:35:43 PM »
If someone at Chase is using your $$$ and time to read this thread, then that is more reason to move.

RyeWhiskey

  • 5 O'Clock Shadow
  • *
  • Posts: 83
Re: Investing in a Private Banking Situation
« Reply #5 on: August 17, 2014, 05:50:30 PM »
http://www.bogleheads.org/wiki/Main_Page

You're welcome. Report back in a year.

rmendpara

  • Pencil Stache
  • ****
  • Posts: 602
Re: Investing in a Private Banking Situation
« Reply #6 on: August 17, 2014, 06:37:05 PM »
I don't know the balance in your accounts, but unless it's in the multi-millions, your advisor is likely doing "fancy stuff" to make himself look busy and to make you think it's something you can't substantially replicate yourself.

With 10-15 funds/ETFs, you could gain exposure to almost every major sector in the world and likely earn a very similar risk/return to what any advisor will put together.

You only need an advisor's assistance with more complex items like estate planning. Managing your own retirement is fairly simple, and you can gain the assistance of an advisor if you prefer to be more hands off or if you are the type of person who tends to panic.

hodedofome

  • Handlebar Stache
  • *****
  • Posts: 1211
  • Age: 39
  • Location: Texas
Re: Investing in a Private Banking Situation
« Reply #7 on: August 18, 2014, 08:41:54 AM »
There are a few good advisors out there. There's some bad ones too. What's been your account performance with the guy in the past 10 years? How does it compare to a balanced strategy of say 25% US stocks, 25% Int'l stocks, 10% REITs and 40% Bonds? http://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&EmergingMarket3=5&TIPS3=15&mode=2&annualOperation=0&REIT1=10&REIT3=20&endYear=2013&initialAmount=10000&TotalBond2=40&TotalBond1=40&LongTermBond3=15&EAFE3=15&IntlStockMarket1=25&portfolio3=David+Swenson+Yale+Endowment&portfolio2=Stocks%2FBonds+%2860%2F40%29&portfolio1=Custom&TotalStockMarket2=60&TotalStockMarket3=30&TotalStockMarket1=25&annualAdjustment=0&startYear=2003

Note that without knowing your objectives, total returns don't tell you everything. What's the benchmark? Is he hitting it or beating it after fees?

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28030
  • Age: -999
  • Location: Seattle, WA
Re: Investing in a Private Banking Situation
« Reply #8 on: August 31, 2014, 04:04:04 PM »
I followed him as I trusted him.

Right, and you trusted him because you liked him.  He's a salesmen above all else, and trying to get your money.

invested by thew new firm into 80 plus funds, hedge funds, stocks etc. I don't even have the time to start researching/understanding what I have.   All investments charge fees 0.8-1.2% and there is a 1% fee on top of that.

It's a trap!  You're getting charged about 2%.

Let me put it another way.

Versus 4% SWR, you can only have a typical 2% WR. That means you have to work TWICE as long to build a stache to support that.

Let me put it another way.

When you FIRE, you'll take 4%.  Half of the money will go to them.  Half will go to you.  Are you happy with half of your FIRE budget going to them?

With that being said... it's time to get out ASAP.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Frankies Girl

  • Magnum Stache
  • ******
  • Posts: 3015
  • Age: 81
  • Location: The laboratory
  • Typical Ghoul Next Door
Re: Investing in a Private Banking Situation
« Reply #9 on: August 31, 2014, 04:40:29 PM »
When I started out, I didn't really know much at all about how the stock market works. I also had a very nice adviser at Chase for a money market I opened years back. She was really charismatic, seemed to listen to me and what I was wanting... and then suggested funds that while weren't totally horrible, had loads and fees out the wazoo and weren't a great fit for ME, but definitely benefited her and Chase. I didn't really pay attention to this until the last couple of years either. I got up to speed on how investing can work and how little I actually needed an adviser. Once I understood the basics, I sold off those funds, closed the account and moved everything over to self manage. Believe me, if I can get this stuff, anybody can.

You don't need an adviser at all. Seriously. Do the research, read some of the bogleheads stuff, check out Jim Collins' stock series, and take control of your money - get it out of those high fee funds and fire that adviser.

http://jlcollinsnh.com/stock-series/
http://jlcollinsnh.com/2012/06/06/why-i-dont-like-investment-advisors/
^especially this post


TreeTired

  • Bristles
  • ***
  • Posts: 449
  • Age: 135
  • Location: North Carolina
  • I think we can make it
Re: Investing in a Private Banking Situation
« Reply #10 on: August 31, 2014, 04:41:26 PM »
I have the bulk of my accounts at Schwab also.  There is a guy I can call if I need help (Wiring money, wiring shares to a charity, little "services" like that)  but he is not my advisor and I wouldn't follow him anywhere.   I make all my own investment decisions so I have nobody to blame for crappy performance except myself.  Best case you can actually sue these guys for churning or otherwise not properly exercising their fiduciary responsibility to you.  Unfortunately, I don't have that option, so if and when my account loses money it will all be on me.

TomTX

  • Magnum Stache
  • ******
  • Posts: 3609
  • Location: Texas
Re: Investing in a Private Banking Situation
« Reply #11 on: August 31, 2014, 08:22:02 PM »
OK- I used to be with Schwab and my advisor jumped ship to Ch8se. I followed him as I trusted him. I was sold the "Priv@te Client" accounts at Ch8se.  Next thing I am from 10 sectors I could basically understand (e.g. small cap, mid cap, large cap, health, tech, energy, Europe, REIT, bonds, emerging markets) and invested by thew new firm into 80 plus funds, hedge funds, stocks etc. I don't even have the time to start researching/understanding what I have.   All investments charge fees 0.8-1.2% and there is a 1% fee on top of that.  I do have a 401(k) at a newish job invested in a V@nguard 2030 retirement fund as a baseline for comparison and that has made 11.1% in the last year which is way beyond the measly few % I have seen in the Ch8se accounts.

Now I want to get an independent viewpoint from a non-biased fee based advisor as I feel that it has all gone badly wrong.  I think that is the right way out.

Has anyone else experienced the same problem?

Sorry to be weird/cloak and dagger with the  8's and @'s but I am a bit paranoid about this type of stuff with the size of funds involved.

Let me be blunt.

Your "advisor" is fucking you in the ass, with no lube.

Educate yourself.

DrJohn

  • 5 O'Clock Shadow
  • *
  • Posts: 83
Re: Investing in a Private Banking Situation UPDATE
« Reply #12 on: October 23, 2014, 08:51:10 AM »
Sorted. 

Liquidated all funds on September 25th and moved over to Vanguard.  No more management fees (yay!)- will save about $15k p.a. right there, plus a ton of money in further fund fees and expenses.  Bit of hassle moving funds, but now they are happy and settling down in their new home ;-) 

Thanks for the reality check guys (and Bogleheads too).

TomTX

  • Magnum Stache
  • ******
  • Posts: 3609
  • Location: Texas
Re: Investing in a Private Banking Situation
« Reply #13 on: October 23, 2014, 09:04:09 AM »
Good.

frugalecon

  • Pencil Stache
  • ****
  • Posts: 541
Re: Investing in a Private Banking Situation
« Reply #14 on: October 23, 2014, 10:32:51 AM »
It sounds like the OP went to this "Private Bank" b/c of a personal connection to his "advisor" and, frankly, lack of information, which he has fortunately addressed. But I wonder how many people are in a "Private Bank" situation b/c of the perceived status that it affords. I have very peripherally known two guys who work for "Private Banks," and based on their cars, vacations, clothes, and other accoutrements of life it is very lucrative...for them! (Or I suppose they could be highly leveraged.)

Would people be willing to pay such outlandish fees just for the status?

SunshineGirl

  • Pencil Stache
  • ****
  • Posts: 749
Re: Investing in a Private Banking Situation
« Reply #15 on: October 23, 2014, 10:44:36 AM »
Good decision, Dr. John!

surfhb

  • Guest
Re: Investing in a Private Banking Situation
« Reply #16 on: October 23, 2014, 11:00:19 AM »
You're paying 2% and your investments were + 11% and below last year?

The S&P 500 index was over 20% bro

You were being fucked well :).  Good job!!!
« Last Edit: October 23, 2014, 11:03:06 AM by surfhb »

NP

  • 5 O'Clock Shadow
  • *
  • Posts: 50
Re: Investing in a Private Banking Situation
« Reply #17 on: October 23, 2014, 03:51:09 PM »
Congratulations on shedding those ridiculous fees. You probably don't need an advisor but if it'd make you sleep better or if you believe it'd be prudent to have a second set of experienced eyes look at your investments, hire one for a flat fee.

I've parked a bigger chunk of a few buy and hold ETFs in the brokerage of a major bank. Because of the account balance I have some sort of premium relationship (whatever that means), a few extra services, and lower or waived fees. Their brokerage fees are only OK, but it makes no difference for buy and hold funds you don't contribute to often (you can make regular contributions to the same funds elsewhere). It's a small gain but it's practically free so it's worth it. Maybe something similar could be pulled off with private banking, too (I have no experience with that).

DrJohn

  • 5 O'Clock Shadow
  • *
  • Posts: 83
Re: Investing in a Private Banking Situation
« Reply #18 on: June 19, 2015, 03:19:39 PM »
UPDATE:  Fixed it.  Moved to Vanguard.  Much happier and spreading the word about the "Financial Advisers" who don't add anything but fees.  The adviser quit that company also, but I can deal with my own finances thanks very much...  Steering my own course and it feels great.

FREEDOM!

forummm

  • Walrus Stache
  • *******
  • Posts: 7396
  • Senior Mustachian
Re: Investing in a Private Banking Situation
« Reply #19 on: June 19, 2015, 05:27:07 PM »
Nice going! You'll save yourself a bunch of money going forward.

frugalecon

  • Pencil Stache
  • ****
  • Posts: 541
Re: Investing in a Private Banking Situation
« Reply #20 on: June 20, 2015, 09:46:23 AM »
There is a really nice guy who lives up the street from me who works for a "private bank." His wife is a SAHM. Two sons who both went through very expensive private schools. They generally have three high-end SUVs parked in front of the house, always a late model Mercedes one and then a couple of Chevy Suburbans. Very nice of his clients to pay for those.

nobodyspecial

  • Handlebar Stache
  • *****
  • Posts: 1469
  • Location: Land above the land of the free
Re: Investing in a Private Banking Situation
« Reply #21 on: June 20, 2015, 12:20:01 PM »
"Where Are the Customers' Yachts?"

DrJohn

  • 5 O'Clock Shadow
  • *
  • Posts: 83

forummm

  • Walrus Stache
  • *******
  • Posts: 7396
  • Senior Mustachian
Re: Investing in a Private Banking Situation
« Reply #23 on: June 20, 2015, 01:18:15 PM »
Quote
That got her attention. So did this: In the past five years, my friend has spoken to her financial adviser seven times. When you break down how much she's paid him, we figured each meeting cost her $21,000, or nearly $50,000 per hour.

nobodyspecial

  • Handlebar Stache
  • *****
  • Posts: 1469
  • Location: Land above the land of the free
Re: Investing in a Private Banking Situation
« Reply #24 on: June 20, 2015, 02:45:42 PM »
Even if you just have a regular retirement account with a high street bank 250K at 2.5% pa fee.
Once a year you go in and re-sign all the know-your-customer paperwork = $6K/hour