Author Topic: Leaving FA for roboadvisor/DIY - questions including re: private equity (CANADA)  (Read 668 times)

ottawan

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I have a couple of different questions within this post if anyone has input or can weigh in I'd appreciate it!  I've been reading this Investor Alley forum for a while but haven't posted here before.

I've been wanting to leave our financial advisor for a few years (since finding MMM and lurking in this forum really!) and finally decided to do it this past week.  Gulp.  Needless to say he wasn't pleased but I held firm, which was hard after nearly 20yrs with these guys. 

I't seems the majority in this forum are DIY investors, and I've had a Questrade account for years but haven't really warmed up to it.
I opened an account with Nestwealth robo-advisor 2 years ago when thinking about leaving our FA, and so far like how user-friendly it is, enjoy the graphs and pie-charts, and rates of return info it spoonfeeds me.   Can Questrade provide anything like this (not questwealth)?  Or do you have to manually calculate your rates of return with QT?  I have only ~$5000 with QT now that I invested ~10yrs ago and I never really look at it to be honest.  It never felt that user-friendly to me.

I know logically and financially that it makes sense to use QT going forward, and I feel well-informed about a simple ETF portfolio (based on CCP) I could model, but I wonder if anyone else uses a robo-advisor for the additional features they offer or feel there's value there?  Nestwealth has a set fee, not a % so as my account grows the % of cost goes down.  Right now it's $80/month per account and I have 3 accounts (TFSA, RRSP, and a taxable), and it comes out to ~0.35% currently for the NW fees.

Second question(s)-
One hiccup with shifting all of our investments out of our FA's management is he purchased 2 private equity funds within one of my accounts.  I didn't realize this, and he let me know it will be at least 12 months until it matures plus up to 120 days to redeem it.  I checked with QT and they couldn't confirm that they could hold it, nor be able to redeem it in future.  Does anyone know of any DIY investment platform that can handle private equity funds, or am I stuck keeping this with my FA for the next year?   I admittedly don't really know much about private equity and if this is a good fund to hold - most of what I have read focuses on simple ETFs like Vanguard.  I'm annoyed with myself for not knowing he had invested in this type of fund but it is what it is at this point.  If there's nowhere I can move it to then I'll keep my account open with my FA for the 2 PE funds until they mature, which is a small portion of the total portfolio.

Thanks for any thoughts on the above!

Car Jack

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I don't know what you have available in Canada, but it seems QT is throwing significant fees at you.  Can you self direct anywhere up in the great white north?  Setting up a simple portfolio and not screwing around with a bunch of buying and selling keeps the number going up without the added fees.  I'm in the US where it's easy to get very low cost funds.  My overall ER is under 0.02%.  "You get what you don't pay for"

TheStrenuousLife

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I looked at roboadvisors like Wealthsimple, but at the end of the day, buying the US Total Market Vanguard ETF seems like it will generate much greater returns at a fraction of the cost in fees.

Have you read this old, but still relevant post from MMM linking to Jim Collins' stock series?  https://www.mrmoneymustache.com/2013/03/07/how-about-that-stock-market/

Scandium

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What exactly are the features you feel the robo provides you? Pie charts and rate of return calcs? I think most of my accounts will give me a CAGR or something similar. But really; whats the point? What do you need that for? I'm going to invest as much as possible, in the global index funds, no matter what. If my CAGR is up or down has no impact on anything I do. I'm not going out of my way to get non-actionable information, and I'm definitely not paying 0.35% for it! Would you change your investing based on what these graphs show you? (if yes then you do need them..)

ottawan

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What exactly are the features you feel the robo provides you? Pie charts and rate of return calcs? I think most of my accounts will give me a CAGR or something similar. But really; whats the point? What do you need that for? I'm going to invest as much as possible, in the global index funds, no matter what. If my CAGR is up or down has no impact on anything I do. I'm not going out of my way to get non-actionable information, and I'm definitely not paying 0.35% for it! Would you change your investing based on what these graphs show you? (if yes then you do need them..)

Thanks for the face-punch I needed! lol
I suppose I don't need them at all, as I don't plan to change my investments based on those charts or graphs. I'm also investing to hold long term.  Just a feature I have grown accustomed to with my FA...but true it is not worth the 1000s of extra dollars it will cost me each year even with a robo-advisor.

I can create my own tracker and graphs and charts I'm sure.

Scandium

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What exactly are the features you feel the robo provides you? Pie charts and rate of return calcs? I think most of my accounts will give me a CAGR or something similar. But really; whats the point? What do you need that for? I'm going to invest as much as possible, in the global index funds, no matter what. If my CAGR is up or down has no impact on anything I do. I'm not going out of my way to get non-actionable information, and I'm definitely not paying 0.35% for it! Would you change your investing based on what these graphs show you? (if yes then you do need them..)

Thanks for the face-punch I needed! lol
I suppose I don't need them at all, as I don't plan to change my investments based on those charts or graphs. I'm also investing to hold long term.  Just a feature I have grown accustomed to with my FA...but true it is not worth the 1000s of extra dollars it will cost me each year even with a robo-advisor.

I can create my own tracker and graphs and charts I'm sure.
I'm not sure what's available in Canada, but there are several 3rd party sites offering these features. Personal capital, sigfig, mint(?), and probably others. Not sure what to search for, net worth tracker maybe? Of course there is the issue of 3rd party access to your accounts..

Lucky Penny Acres

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Second question(s)-
One hiccup with shifting all of our investments out of our FA's management is he purchased 2 private equity funds within one of my accounts.  I didn't realize this, and he let me know it will be at least 12 months until it matures plus up to 120 days to redeem it.  I checked with QT and they couldn't confirm that they could hold it, nor be able to redeem it in future.  Does anyone know of any DIY investment platform that can handle private equity funds, or am I stuck keeping this with my FA for the next year?   I admittedly don't really know much about private equity and if this is a good fund to hold - most of what I have read focuses on simple ETFs like Vanguard.  I'm annoyed with myself for not knowing he had invested in this type of fund but it is what it is at this point.  If there's nowhere I can move it to then I'll keep my account open with my FA for the 2 PE funds until they mature, which is a small portion of the total portfolio.

You may be able to hold the interests in the private equity funds directly yourself rather than holding them at QT or with your old FA. It might save you some fees.

Right now, the interests in the private equity funds are likely titled as "Name of FA FBO (for the benefit of) ottawan" or something similar. Typically by contacting the fund's administrator directly (which typically operates effectively the same as a transfer agent for the fund), you can get a transfer form to transfer the title of the assets to just "ottawan" so you hold them directly rather than through a broker or FA. The FA could assist you with the transfer into your own name. You would likely have to sign some paperwork and provide some information about yourself directly to the private equity fund.  After the transfer, the private equity fund would send any distributions directly to your own bank account and you would be in direct control of requesting a redemption from the fund instead of relying on your FA.