Author Topic: Firing my Adviser!!  (Read 7533 times)

GerryS

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Firing my Adviser!!
« on: July 27, 2015, 04:18:21 PM »
Hey everyone,
This is my first post on the forum outside of the Welcome thread.
I've been reading MMM blog for a couple of weeks, as has the wife, and we're converts. We make good professional salaries and want to FIRE sooner rather than later.
My first step in being a badass...I went through all my various Ameriprise funds and have discovered I've been bamboozled. Well not really, I discovered I was lazy an uninformed, but MMM adn this forum has changed that.

I'm paying roughly 1.1% in fund ER across my ~120k portfolio. About half of the funds have a 5.75 load as well. DAMMIT!! The icing on the cake is on top of that I have a 1.25% wrap fee. FML. WTF have I been doing there for the better part of 10 years? Anyway, I'm firing them and moving to Vanguard.

I had to share and i hope this is the appropriate thread.

Thanks,
GS

trailrated

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Re: Firing my Adviser!!
« Reply #1 on: July 27, 2015, 04:39:35 PM »
Holy shit!!!! Do yourself a favor and don't look at what the funds could be worth if they were at vanguard the whole time. Glad you saw the light!

MauiNut

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Re: Firing my Adviser!!
« Reply #2 on: July 27, 2015, 04:42:53 PM »
Good move.  Pat yourself on the back.  Money in your pocket and not in that of some "financial advisor" (i.e., salesman) having an Associate's Degree in Peruvian Literature.

Been with Vanguard a very long time.  Not a single complaint.

Don't look back and kick yourself in the keester over past decisions.  What's done is done.  Seems to me like you've seen the light and are on the right path.  Good enough for now.

Next step, if applicable.  Dump any Whole (Hole) Life insurance that you might have and buy Term Life.  Even more bucks in your pocket.

G-dog

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Re: Firing my Adviser!!
« Reply #3 on: July 27, 2015, 04:58:32 PM »
Hey everyone,
This is my first post on the forum outside of the Welcome thread.
I've been reading MMM blog for a couple of weeks, as has the wife, and we're converts. We make good professional salaries and want to FIRE sooner rather than later.
My first step in being a badass...I went through all my various Ameriprise funds and have discovered I've been bamboozled. Well not really, I discovered I was lazy an uninformed, but MMM adn this forum has changed that.

I'm paying roughly 1.1% in fund ER across my ~120k portfolio. About half of the funds have a 5.75 load as well. DAMMIT!! The icing on the cake is on top of that I have a 1.25% wrap fee. FML. WTF have I been doing there for the better part of 10 years? Anyway, I'm firing them and moving to Vanguard.

I had to share and i hope this is the appropriate thread.

Thanks,
GS

I tried googling, but didn't find a good source to define your load or wrap fees.
I found front load vs. end load, etc., but nothing on wrap fee. Would appreciate it if someone could define further, share equivalent terms, timing, etc....

Way to go! Great to educate yourself and take control - don't look back. Investing is almost always better than not investing, so now you are just optimizing 😊

Mrs. Pomodoro

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Re: Firing my Adviser!!
« Reply #4 on: July 27, 2015, 05:11:20 PM »
Good for you. It's never too late to make your money work harder!

If it makes you feel any better, I dollar-cost-averaged American Funds from 2006 to 2009. (A financial firm recommended by MegaCorp HR must be good, right?!) It's mind blowing when I realized they were making money off of my assets while I'm LOSING money. I stopped contributing right after "discovering" that, got out as soon as I figured out what to do with the money, (downpayment for our house and Vanguard) and claimed capital loss for the next 6 years... It's an expensive lesson to learn (I still don't want to find out what "could've been") but we're in a good place now on the final stretch of FIRE. Bad investment sucks but you'll recover fast enough!

forummm

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Re: Firing my Adviser!!
« Reply #5 on: July 27, 2015, 05:12:09 PM »
Congrats on getting away from the clutches of this drain on your portfolio. What robbery!

markbike528CBX

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Re: Firing my Adviser!!
« Reply #6 on: July 27, 2015, 08:35:01 PM »
I tried googling, but didn't find a good source to define your load or wrap fees.
...I found front load vs. end load, etc., but nothing on wrap fee. Would appreciate it if someone could define.....

Wrap fee is advisor fee, unlikely to found publicly ( only a client paying close attention).

---Advisor fees are in addition to any mutual fund or other fees.
« Last Edit: July 27, 2015, 09:19:09 PM by markbike528CBX »

Zamboni

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Re: Firing my Adviser!!
« Reply #7 on: July 27, 2015, 09:15:23 PM »
Well done and good riddance!

AM43

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Re: Firing my Adviser!!
« Reply #8 on: July 28, 2015, 08:32:47 AM »
Hey everyone,
This is my first post on the forum outside of the Welcome thread.
I've been reading MMM blog for a couple of weeks, as has the wife, and we're converts. We make good professional salaries and want to FIRE sooner rather than later.
My first step in being a badass...I went through all my various Ameriprise funds and have discovered I've been bamboozled. Well not really, I discovered I was lazy an uninformed, but MMM adn this forum has changed that.

I'm paying roughly 1.1% in fund ER across my ~120k portfolio. About half of the funds have a 5.75 load as well. DAMMIT!! The icing on the cake is on top of that I have a 1.25% wrap fee. FML. WTF have I been doing there for the better part of 10 years? Anyway, I'm firing them and moving to Vanguard.

I had to share and i hope this is the appropriate thread.

Thanks,
GS

After being with Ameriprise for over 10 years, we closed all of our accounts and moved everything to Vanguard.
Our story is similar.
We were little lazy and uninformed as well paying over 1% in fees.
Ended up paying surrender charges of almost 3K and do not regret it.
With Vanguard our fees are less than half if not more than Ameriprise.

GerryS

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Re: Firing my Adviser!!
« Reply #9 on: July 28, 2015, 10:24:37 AM »
Thanks for all the positive feedback. It's encouraging! I'm surprisingly not upset about "what could have been". Thankfully the bulk of the money has only been in there for 3.5 years so fees haven't completely gobbled it up. It was a 401(k) rollover when I left my last company and it did grow from 83k to 120k. Prior to the rollover I was a smaller fish so I didn't lose too much skin.

My wife and I feel empowered with the new knowledge we have and confident of "going it alone". After all it's not very complicated when you set up 3-4 core diversified funds with Vanguard and let everything just sit there and grow.

I doubt I'll have surrender fees, but if so I'll pay them. To her credit, my adviser, has never pushed some of the more spurious vehicles like annuities, or whole/universal life. My wife and I each have vanilla 20 yr term life at pretty affordable rates.


wkumtrider

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Re: Firing my Adviser!!
« Reply #10 on: July 28, 2015, 10:44:37 AM »
I'm in the same boat.  I have my Roth IRA with an adviser and I was not aware of the all the fees (I was aware of one of them) until after discovering MMM and reading other blogs.  Problem is the adviser is a close friend and I will feel guilty if I leave.  I don't want to hurt the friendship, but it will probably put a strain on it.

Tyson

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Re: Firing my Adviser!!
« Reply #11 on: July 28, 2015, 11:53:27 AM »
I'm in the same boat.  I have my Roth IRA with an adviser and I was not aware of the all the fees (I was aware of one of them) until after discovering MMM and reading other blogs.  Problem is the adviser is a close friend and I will feel guilty if I leave.  I don't want to hurt the friendship, but it will probably put a strain on it.

Is that friendship worth your family's future?  Because that's what it comes down to.  Besides, if he's a professional, he'll take it in stride. 

Dexterous

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Re: Firing my Adviser!!
« Reply #12 on: July 28, 2015, 09:38:52 PM »
I'm in the same boat.  I have my Roth IRA with an adviser and I was not aware of the all the fees (I was aware of one of them) until after discovering MMM and reading other blogs.  Problem is the adviser is a close friend and I will feel guilty if I leave.  I don't want to hurt the friendship, but it will probably put a strain on it.

Is that friendship worth your family's future?  Because that's what it comes down to.  Besides, if he's a professional, he'll take it in stride.

Plus, if he was a true friend he shouldn't be taking your money for the "advice".  I advise my true friends all the time... about low expense funds (TSP & Vanguard) and let them invest themselves.

patrickza

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Re: Firing my Adviser!!
« Reply #13 on: July 28, 2015, 11:58:35 PM »
Wow your adviser was a borderline criminal! You we're robbed! How long were you with him?

trailrated

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Firing my Adviser!!
« Reply #14 on: July 29, 2015, 12:16:11 AM »
I'm in the same boat.  I have my Roth IRA with an adviser and I was not aware of the all the fees (I was aware of one of them) until after discovering MMM and reading other blogs.  Problem is the adviser is a close friend and I will feel guilty if I leave.  I don't want to hurt the friendship, but it will probably put a strain on it.

Is that friendship worth your family's future?  Because that's what it comes down to.  Besides, if he's a professional, he'll take it in stride.

+1 is avoiding one awkward conversation more valuable than financially supporting your family? Because he's supporting his off of you right now...

Not to be an ass, but my close friend sold me a universal life policy and once I became informed of how much it was a bad deal for me I cancelled right away. Our friendship is still intact but I won't do business with him again.
« Last Edit: July 29, 2015, 12:18:02 AM by trailrated »

kaizen soze

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Re: Firing my Adviser!!
« Reply #15 on: July 31, 2015, 11:29:55 AM »
It has occurred to me that one reason people think they need to save a bajillion dollars to retire is that financial advisors, mutual fund salesmen, and your employer's 401k administrators are taking so much out in fees.  Those high, unjustified, fees are then used  to justify recommendations to save huge amounts of money in order to retire, which of course makes them more money in the long-term. 

If you hire a financial advisor who charges you 1% of your invested assets every year to manage your affairs, and he recommends actively managed mutual funds and individual stocks and you end up paying another 1% in mutual fund and broker's fees, then you are paying 2% each year to have someone manage your money. He will also recommend an accountant, tax lawyer, estate planning lawyer, and insurance salesman on top of all that (who will in turn refer work back to him).  4% SWR is meaningless in this conventional retirement scenario, because you're paying half of your portfolio's income potential to financial professionals rather than using the money to buy groceries and trips to Machu Picchu.   To fund all that, the financial advisor has to tell you to save $4M minimum to retire, knowing that you would otherwise risk running out of money paying for his kids college tuition.  Compare with investing in Vanguard total stock market, which charges something like .17%.  A MMM-style retiree avoids all this nonsense and therefore can live off of 4% - .17% = 3.83% of his or her savings. 
« Last Edit: July 31, 2015, 11:37:29 AM by kaizen soze »

markbike528CBX

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Re: Firing my Adviser!!
« Reply #16 on: July 31, 2015, 01:01:24 PM »
......  Problem is the adviser is a close friend and I will feel guilty if I leave.  I don't want to hurt the friendship, but it will probably put a strain on it.

I had a close (since high school) friend who got me into a "managed money" account (Davis Advisors) with a big fee.   
Fortunately, he moved jobs and I took my money along and found cheaper stuff.   

Look on the bright side.
Your friend gave you a financial education for a small fee along with managing your money :-)

cheddarpie

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Re: Firing my Adviser!!
« Reply #17 on: August 02, 2015, 01:35:27 PM »
Congratulations! I did this a year ago ... it makes me sad to think about what could have been for the 10+ years I had my money in the wrong place and didn't know what to do with it, but all we can do now is look forward and know we are on the right track!

radtek2112

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Re: Firing my Adviser!!
« Reply #18 on: August 02, 2015, 06:39:42 PM »
We fired Edward Jones (10 years with them) back in the spring and transferred everything to Vanguard.  It is maddening to think of all the money we coulda, shoulda had if we would have never used EJ.  5% loads, annual maintenance fees, and high fees for their recommended mutual funds.  I think about it this way though.  If we didn't have an adviser to help us get the ball rolling we may have never really started investing in the first place. You have to jump into the pool in order to learn to swim.  I think many people who don't enjoy personal finance as much as the average mustachian benefit from someone who can advise them for a fee.  Granted, I'm not condoning the Edward Jones high fee business model, just saying that saving and investing is a long learning process and you just have to view all those fees as water (or money) under the bridge and unfortunately part of the process.  You've now made another step in the right direction to financial freedom, so congrats!  I feel so free handling things on my own now.  You'll be pleased with your move.

cheddarpie

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Re: Firing my Adviser!!
« Reply #19 on: August 02, 2015, 06:53:31 PM »
That's a great way to look at it. I was also with Edward Jones, and my advisor was a close family friend, followed by her daughter (also a close friend) when she retired. I don't doubt that they recommended some good options, but the fee model is atrocious. Without that experience, though, and their hand-holding up front, I might never have gained the level of interest and knowledge I have now. When I left EJ, my friend/advisor was actually very supportive -- she was quick to acknowledge that EJ is not a good choice for DIY-type investors who want more control over their money and that their business model is geared towards the more passive types. :) I'm also grateful to have figured this out when I did, even if a big part of me wishes it was sooner...

libertarian4321

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Re: Firing my Adviser!!
« Reply #20 on: August 03, 2015, 01:37:52 AM »
A lot of us probably paid too much when we first started and didn't know any better.

I was in some ridiculously expensive funds early on (huge loads, high fees). 

The good thing is you've figured it out, now you just need to go to one of the low cost guys.

GerryS

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Re: Firing my Adviser!!
« Reply #21 on: August 05, 2015, 10:27:31 AM »
Hi Everyone,

I thought I would post an update...the "firing", "break-up", whatever you want to call it officially occurred yesterday. I went in to my advisers office for our regular mid-year meeting. After 10-15min of the usual catching up and family talk the meeting started in earnest.

Adviser: "Have there been any changes or do you have any questions I can answer?"
GS: "Yes as a matter fact there are some changes. The wife and I have been doing a lot of reading and studying on investment principles, market basics, etc. We've come to the decision that we want to take control and ownership of our financial investments. We plan to move our money to Vanguard and invest in low-fee, no-load index funds. I calculated my overall expenses and last year I paid close to 2% (1% ER; 1% wrap). Thats just too high and it will eventually drain my earnings."

I had some sympathy for her because she was totally blindsided and couldn't believe what she was hearing. I explained that we were now comfortable managing our own affairs and that we really wanted to simplify our investments and stop trying to outperform the market.

Adviser: "Yes, I agree there are other low-cost options and you are right about fees. They erode your earnings, but I provide value by offering other alternative investments. I was planning to recommend an exclusive hedged account that was less prone to market volatility...
GS: "I'm sure that is suitable for others, but not us. We both now believe a simple index strategy will help us efficiently reach our goals.

She actually got pretty emotional when we shook hands and said fare well. She started crying...I couldn't believe it. Said it felt like a family member was leaving. Last I checked my mom gives pretty good advice and doesn't charge me 1.1% AUM for it.

Anyway, to echo several of the more recent posts...I made my peace with the 10 yrs I spent with her. I got my start investing there and got the ball rolling. Now I'm ready to accelerate the rolling. I'm looking ahead and not back. She was also helpful in spurring us to set up proper estate documents (we have small children) and in urging us to find proper insurance. So it wasn;t all bad, but it's also not worth the added expense.

For anyone considering this move, $hit or get off the pot already (I say it with love - hehe). The conversation isn't that bad. You're the one with all the power. To quote Seinfeld..."you have HAND". haha.

Best of luck!

G-dog

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Re: Firing my Adviser!!
« Reply #22 on: August 05, 2015, 11:14:54 AM »
Glad to hear you executed on your plan.
Her tears may have been genuine (I am a skeptic, but don't know) - but that is a really hard situation for you too! But you held strong, were polite and professional, but stuck with your plan. It would have been easy to cave to the tears.....

grettman

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Re: Firing my Adviser!!
« Reply #23 on: August 05, 2015, 01:38:07 PM »
..And those tears were because she was sad to see your money go away and the negative impact losing your account has on her stats.

Never confuse those tears with personal emotions about seeing you leave.

Based on your post, it doesn't seem you take it that way.

But others, less disciplined folks who are not badasses, might fall for her bullshit.

EricP

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Re: Firing my Adviser!!
« Reply #24 on: August 05, 2015, 01:49:20 PM »
..And those tears were because she was sad to see your money go away and the negative impact losing your account has on her stats.

Never confuse those tears with personal emotions about seeing you leave.

Based on your post, it doesn't seem you take it that way.

But others, less disciplined folks who are not badasses, might fall for her bullshit.

Thinking the same thing.  That or one last pathetic attempt to sucker you back in.  The "exclusive fund" had me cracking up. I'm sure there was an exclusive fund that you wanted to offer to me and that this isn't just a last ditch effort to continue stealing money.

mom22boys

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Re: Firing my Adviser!!
« Reply #25 on: August 05, 2015, 08:44:40 PM »
Funny, I just had the same conversation over email with my Ameriprise advisor! Right before I left on vacation, I moved all my money to Vanguard. She sent me a nice email saying she was disappointed that I had moved my money. She was civil, and so was I, as I explained that the fees were too high and that I wont be continuing with her services. Now of only she hadn't suckered me into that stupid universal whole life policy......doooh! Live and learn I guess.

Potterquilter

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Re: Firing my Adviser!!
« Reply #26 on: August 07, 2015, 01:18:36 PM »
years ago I got a small inheritance. I put it with a high fee firm, because I did not know any better.  I liked their big shiny building, nice plush waiting room with pastries and coffee. Duh. After a few years, when I started becoming more informed I called vanguard and they did all the paperwork for me and I moved it over. I lost about 20% the original 10,000 to fees.   The.broker called me and was just short of abusive, I wrote a letter of complaint to the company but heard nothing of course. But it was the best lesson I ever got. It saved me from many years of poor decisions.

I actually check Morningstar and similar reports for everything every six months. Even my vanguard admiral shares. I pay very close attention to fees and loads, and overall have made buckets of cash that someone else would have stolen from me by lining their own pockets. 

TonyV.

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Re: Firing my Adviser!!
« Reply #27 on: August 07, 2015, 04:45:05 PM »
I am just now starting to look at investments other than my current IRA through work. I am working with my best friend that I've known since we were toddlers. I'm happy to say though, we are working together on this and he also agrees completely with the index funds. I take his advise very seriously, but will always look at more/better options when they're available so I can consult with him and make the best choice for ME. (yes, he's doing it free of charge because we're friends and just because he loves doing it)

Congratulations on your improvements btw! :)