Author Topic: So I fired Northwestern Mutual and Merrill Lynch today  (Read 4228 times)

GOFU

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So I fired Northwestern Mutual and Merrill Lynch today
« on: January 29, 2018, 01:15:48 PM »
So, I fired Northwestern Mutual and Merrill Lynch today. I posted over in the Case Studies my situation with a stupid NWM policy that I didn't need, can't remember why I bought, and therefore dumped. (Thanks to those who chimed in.) I will take my cash value of $36,700 and walk, thank you very much. And I will stop giving you $314 per month, thank you again.

I also took a good hard look at my statement from Merrill Lynch for year-end 2017. They have me in a bunch of mutual funds, selling and buying throughout the year, but always with the same asset allocation mix: 90/10 stocks/bonds. I paid $7,000 in advisory fees during 2017 on a traditional IRA portfolio. That's $583 in passive income per month for big bad ML, paid by little ol' me. No more, thank you very much.

I did a little analysis of how this could affect my goal of Financial Independence. At 5% return over 10 years:

       Lump sum of $36,700
    + monthly contributions of $897 (314 + 583 paid to myself instead of those pricks)
    - .04% for Vanguard fees
    = $201,130 yield

This analysis does not factor for higher expense ratios of funds owned through ML, so yield shades low.

$200k in 10 years!! Day-uummm. With no further cash outlay on my part, not one dollar difference in my spending/investing.

I know how much closer this gets me to my goal of Financial Independence. How far would it would take you toward yours?

I was a passive fool for way too long. But the house is getting cleaned out, and the expensive shiny skyscraper office people are the first to go.

Be this a good example or a cautionary tale, it feels pretty good to me, thank you very much.

Related older thread:  https://forum.mrmoneymustache.com/investor-alley/merrill-lynch-smooth-talk/
« Last Edit: February 10, 2018, 08:24:54 AM by GOFU »

Wayward

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Re: So I fired Northwestern Mutual and Merrill Lynch today
« Reply #1 on: January 30, 2018, 11:08:49 AM »
Good for you!  Thank goodness for Vanguard, I can't believe the fees of some other companies out there.  Can't wait until I can have a nest egg that size :)

GOFU

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Re: So I fired Northwestern Mutual and Merrill Lynch today
« Reply #2 on: January 30, 2018, 11:56:45 AM »
Wayward: Thank you very much.

The "advisors" are a crippling factor for so many trying to build wealth. So many "advisors" provide nothing, or even do harm, while working on separating people from their money. Churning their accounts, high expense ratio funds, high advisory fees, etc.

My Merrill "advisor" was in the 20th floor of a glass mirror high rise class A office space. Rent for their floor of the building in my midwestern city was easily more than a million dollars a year. I was in there once for a meeting that concluded at 4pm on a Friday, and when we walked out of the fancy conference room the entire office was an absolute empty tomb. I thought, "Damn these investment types have it good." It makes me cringe to think how much money I gave those people and what it could be doing for me.

This piece is eye popping. https://www.physicianonfire.com/investment-fees-will-cost-millions/  The comments are worth the time too.

But hey, what's done is done. Onward and upward.

I wish you every success.

Cezil

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Re: So I fired Northwestern Mutual and Merrill Lynch today
« Reply #3 on: January 30, 2018, 01:08:26 PM »
That is wonderful, GOFU!  Woohoo!!

This was really interesting for me to read because my SO, who got laid off last June, got hired at one of the two companies you mention.  He makes really good money, excellent benefits, has a beautiful campus.  It's helping us get to FI/RE even faster than his old job!  So in that regard, it's great for us, super great.  But somewhere along the way are the mass of clients who are paying the silly ridiculous fees so he can have a cushy job in a cushy office.  It's weird how we're sort dancing on the edge there between the two.  On one hand, it's great for us, and on the other, I feel terrible that so many people are paying in to this giant thing.  If it were us, we'd never have our money at this place, and yet..they pay us to be able to gtfo quicker, more comfortably.  Circle of [corporate]  life, I guess.

I think I'm feeling a little funny trying to reconcile the two.

But I'm super happy you woke up and made the change!!!  :D

boarder42

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Re: So I fired Northwestern Mutual and Merrill Lynch today
« Reply #4 on: January 30, 2018, 02:10:53 PM »
congrats always good to see those guys hitting the bricks.  great move your future self will thank you.

GOFU

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Re: So I fired Northwestern Mutual and Merrill Lynch today
« Reply #5 on: January 30, 2018, 02:53:13 PM »
That is wonderful, GOFU!  Woohoo!!

This was really interesting for me to read because my SO, who got laid off last June, got hired at one of the two companies you mention.  He makes really good money, excellent benefits, has a beautiful campus.  It's helping us get to FI/RE even faster than his old job!  So in that regard, it's great for us, super great.  But somewhere along the way are the mass of clients who are paying the silly ridiculous fees so he can have a cushy job in a cushy office.  It's weird how we're sort dancing on the edge there between the two.  On one hand, it's great for us, and on the other, I feel terrible that so many people are paying in to this giant thing.  If it were us, we'd never have our money at this place, and yet..they pay us to be able to gtfo quicker, more comfortably.  Circle of [corporate]  life, I guess.

I think I'm feeling a little funny trying to reconcile the two.

But I'm super happy you woke up and made the change!!!  :D

Some of the people at these firms have a decent opportunity to help people. And mine at Merrill was sorta, kinda, once in a while a little bit helpful. But nearly $600 a month? Please. And all their strategies were complicated. Buy this, buy that, annuities, insurance, this is a new product we're really excited about, blah blah blah. Everything they ever recommended for me meant a cut of my money for them. I think they are under great pressure by their companies to generate so much that even the non-greedy ones can get swept up selling shit to people who don't need it, don't understand it and can't afford it. Count me out, thank you very much.

I am really attuned to this now. They bury the expenses that drain your wealth in a mountain of information. Well, GOFU is back in control and I won't just be handing my shit over to others to take care of any more.

So now my advisor writes and says why are you leaving? We have you up 19% in 2017. Wow. Impressive. My own self-directed portion of my portfolio is up 17.5%. That 1.5% is the cost of their fee, so how does that help me?

The guy at NWM was a complete turd.

What's done is done. Onward and upward.


Mighty-Dollar

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Re: So I fired Northwestern Mutual and Merrill Lynch today
« Reply #6 on: January 30, 2018, 11:02:48 PM »
Technically you can't "fire" Northwestern Mutual and Merrill Lynch because they are salesmen -- not fee-only fiduciaries who legally work for you.

Mr Mark

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Re: So I fired Northwestern Mutual and Merrill Lynch today
« Reply #7 on: January 31, 2018, 03:50:49 AM »
well done picking off the ticks on your financial hide GOFU!

I see ML, Fidelity et al are now trying to directly stop people using Vanguard ETFs or charging them a premium to do so. http://www.pantagraph.com/business/investment/markets-and-stocks/fidelity-is-adding-an-extra-fee-on-vanguard-funds-in/article_ea8cb86c-8bef-577b-b339-f3454c73dc76.html


GOFU

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Re: So I fired Northwestern Mutual and Merrill Lynch today
« Reply #8 on: January 31, 2018, 03:59:56 AM »
Technically you can't "fire" Northwestern Mutual and Merrill Lynch because they are salesmen -- not fee-only fiduciaries who legally work for you.

Heh. Technically I can fire them, and I did, just like I fired my last two girlfriends.

well done picking off the ticks on your financial hide GOFU!

I see ML, Fidelity et al are now trying to directly stop people using Vanguard ETFs or charging them a premium to do so. http://www.pantagraph.com/business/investment/markets-and-stocks/fidelity-is-adding-an-extra-fee-on-vanguard-funds-in/article_ea8cb86c-8bef-577b-b339-f3454c73dc76.html

Thank you very much.

That's funny because my Merrill "advisor" had me in some Vanguard funds (not ETFs). Imagine charging me 1.5% to hold Vanguard. Blood sucking ticks indeed.

Yes, I fired them.

Funk

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Re: So I fired Northwestern Mutual and Merrill Lynch today
« Reply #9 on: January 31, 2018, 09:12:57 AM »
Hey Guys,



I've been going through threads looking for advice.  This topic is right along with the question I have.  If it is a waste of your time, I apologize!  Ive spent the last few days reading, and I feel like I am already so far behind!  You all seem to have it figured out, and I am definitely on the clueless side.  I am sure this is a very basic question that has been answered a million times, but the more threads I read the more confused I got.

I have had a roth for about 7 or 8 years now through Lincoln Financial.  It has a little less than 70,000 in the account.  I have a couple questions.  First question is how can I find out the fee I am paying.  I searched the website and couldn't find it/ figure it out.

Second Question:  Is there any possible reason I should still be with Lincoln, or should I be moving my money ASAP?  I am guessing move it ASAP, but want to make sure I am not overlooking anything.

Third and Final Question:  Vanguard, Wealthfront, or Betterment?  I've gone through old posts, old comments, and old threads.  My financial knowledge base is very limited.  If I should be moving my money out of Lincoln, where should I be moving it?

Thanks so much!!

Wayward

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Re: So I fired Northwestern Mutual and Merrill Lynch today
« Reply #10 on: January 31, 2018, 10:27:57 AM »
I have had a roth for about 7 or 8 years now through Lincoln Financial.  It has a little less than 70,000 in the account.  I have a couple questions.  First question is how can I find out the fee I am paying.  I searched the website and couldn't find it/ figure it out.

Second Question:  Is there any possible reason I should still be with Lincoln, or should I be moving my money ASAP?  I am guessing move it ASAP, but want to make sure I am not overlooking anything.

Third and Final Question:  Vanguard, Wealthfront, or Betterment?  I've gone through old posts, old comments, and old threads.  My financial knowledge base is very limited.  If I should be moving my money out of Lincoln, where should I be moving it?

Thanks so much!!
It would depend, is this Roth in a 401k from a current employer?  You can't usually transfer any funds until you terminate employment.

I'm not sure what the fees are at Lincoln, you may want to see if your "adviser" can give you more information or sign up for a free Personal Capital account.  You basically "link" all your accounts (they can't access or change anything) and run the fee estimator.  I would wager their fees are too high and you should move it if you can.

As to where to move your money, I would suggest reading:
http://jlcollinsnh.com/stock-series/
https://www.bogleheads.org/wiki/Three-fund_portfolio

Wealthfront or Betterment offer a simpler interface and more hand-holding, but the fees will be slightly higher.  I don't have experience with either so perhaps someone else can fill in?  Don't rush, do some more reading and ask some more questions before jumping into anything.

GOFU

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Re: So I fired Northwestern Mutual and Merrill Lynch today
« Reply #11 on: January 31, 2018, 03:04:13 PM »

First, read the Jim Collins series recommended by Wayward. Then read it again. Then read it again. It's getting in to your brain but it may take a while until you are able to get it back out in a coherent fashion. Keep reading and it will start making sense. It was like when I first started studying modes in music theory. I read the same material a hundred times and did not get it. And I hit a lot of sour notes in the process. Now, mixolydian is my friend. It is the same with all this financial and investing stuff. The mistakes I have made make me cringe.

I have had a roth for about 7 or 8 years now through Lincoln Financial.  It has a little less than 70,000 in the account.  I have a couple questions.  First question is how can I find out the fee I am paying.  I searched the website and couldn't find it/ figure it out.

If it is employer-sponsored you may not be able to move so quickly, but you should be able to change your selections within the account to minimize costs. Employer-sponsored plans also generally have steep expenses associated with them too, so consider whether the benefit you get from participating in an employer plan is worth it compared to doing it with your own tax-deferred accounts. For example, does the employer match part of your contribution?

I don't have any experience with Lincoln, but if there is an "advisor" connected to your account it's pretty much a guarantee he is bleeding you. Examine your account year-end statement closely and look for "advisory fee" or some such. That's how much your "advisor" is taking from you to build his own wealth and pay for those shiny offices. Calculate the percentage of your total balance in the account. I bet it is at least 1%, perhaps as high as 2%. If you are paying an advisory fee you need to get detached from it if you can.

In addition your "advisor" may very well be buying and selling funds inside your account if he has that authority. If he is, that churning has costs associated with it too. 

Did you read this piece on how "advisors" and their investment fees will mercilessly deplete your returns?

 https://www.physicianonfire.com/investment-fees-will-cost-millions/

You have to look at the funds themselves that are held in your account to see what expense ratio you are paying on those. Whether your $70k is comprised of one or more mutual funds, each will have its own expense ratio. Probably less than one percent, but it could be higher. Also look to see if any of those funds charge a 12B-1 fee. That is what the fund charges for marketing and advertising. That could be another .25% up to 1%.

Add that up: 1.5% to your "advisor" + .6% expense ratio to the fund, plus a 12B-1 of .5%. On a fund with 8% returns that is nearly a third of returns going to fees.

In terms of trying to make progress that's like pulling a big sled of bricks up an icy hill in your stocking feet with a mouth full of porcupine quill.

Second Question:  Is there any possible reason I should still be with Lincoln, or should I be moving my money ASAP?  I am guessing move it ASAP, but want to make sure I am not overlooking anything.


Only you can decide if you need to move, but I personally have had my eyes opened to the damage that expenses can do to your returns and therefore your financial life. Nobody can beat Vanguard on expense ratios. A lot of smart people own a lot of other funds besides Vanguard, but no other fund family beats them on expense ratios.

Third and Final Question:  Vanguard, Wealthfront, or Betterment?  I've gone through old posts, old comments, and old threads.  My financial knowledge base is very limited.  If I should be moving my money out of Lincoln, where should I be moving it?


I have been with Vanguard for over 20 years for portions of my portfolio. I have no loyalty to Vanguard except the fact that their fees are low and I am familiar with them. I know nothing about those others. They may be better, they may be worse. Vanguard has lots of information to educate yourself too so whether you buy their funds or not you can go to their site and read.

It's your money. Nobody has more at stake in it than you do, and there is a whole industry full of people who will gladly fleece you of it if you let them.

Good luck.


Funk

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Re: So I fired Northwestern Mutual and Merrill Lynch today
« Reply #12 on: February 01, 2018, 07:36:20 AM »
Thank you so much to those of you who have taken the time to respond to my questions so far.  I really appreciate it.

smoghat

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Re: So I fired Northwestern Mutual and Merrill Lynch today
« Reply #13 on: February 01, 2018, 11:05:05 AM »
I don't get it. So you didn't approve this advisor? I have some money in Vanguard, some in ML. I have zero fees in ML. They wanted to have me take an advisor (they even suggested personal wealth management with US Trust), but I told them no no and no. They were just glad the money was there in our self-directed accounts. I just looked, nope no fees of any sort. I mean it's fine to leave ML for Vanguard, but for us it made more sense to split our accounts a little. Vanguard also wanted to set me up with an advisor. I had her talk to me and she basically told me her plan was the same kind of thing that ML, DB, Morgan Stanely, and everybody else was telling us to do. And it wasn't what I wanted (thank goodness too, it was so bond heavy, I'd have been screwed today…past performance is not a guarantee of future success!).

 

Mighty-Dollar

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Re: So I fired Northwestern Mutual and Merrill Lynch today
« Reply #14 on: February 03, 2018, 01:30:41 PM »
Technically you can't "fire" Northwestern Mutual and Merrill Lynch because they are salesmen -- not fee-only fiduciaries who legally work for you.

Heh. Technically I can fire them, and I did, just like I fired my last two girlfriends.
That's like saying "I fired my car salesman". Only a fee-only fiduciary legally works for you and your best interests.

FenderBender

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Re: So I fired Northwestern Mutual and Merrill Lynch today
« Reply #15 on: February 03, 2018, 10:17:39 PM »
Don't blame ML and the like, they are there to help lazy oooops I mean busy people. 

GOFU

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Re: So I fired Northwestern Mutual and Merrill Lynch today
« Reply #16 on: February 04, 2018, 04:26:28 AM »
Technically you can't "fire" Northwestern Mutual and Merrill Lynch because they are salesmen -- not fee-only fiduciaries who legally work for you.

Heh. Technically I can fire them, and I did, just like I fired my last two girlfriends.
That's like saying "I fired my car salesman". Only a fee-only fiduciary legally works for you and your best interests.

Oh I fired them alright. You know what I said? I said, "You're fired!!!"

Don't blame ML and the like, they are there to help lazy oooops I mean busy people. 

Yeah, "busy" was my justification/excuse. Indeed, I was just being lazy and it cost me a bloody fortune.