Author Topic: Just had a Personal Capital consultation - My thoughts  (Read 9851 times)

Re3iRtH

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Just had a Personal Capital consultation - My thoughts
« on: August 02, 2017, 07:42:16 PM »
So after setting up an account with Personal Capital, I shortly received a call from one of their senior advisors.

They had my portfolio data from being on their platform, he asked me a few questions regarding my goals, when I want to retire, my annual
income, and my risk tolerance.

I just had a follow-up (1 hour) conversation where he presented the tools they offer at Personal Capital, their technology, and asking me if I would be
interested in them managing my portfolio. So, most of my net worth is in real estate equity. He realized I had about $200K in cash, and wanted me to
invest $100K with them, which they will manage for a 0.089% fee (presumably of AUM).

I learned a few things. Personal Capital does not utilize any mutual funds or index funds. They use your money to trade in primarily stocks
and some ETFs. I just moved about $50K to a Vanguard account (I think it was VTSAX).  He kept telling me how I was "at risk" investing in
mutual funds, and I was at risk to be investing in the S&P 500 or the total stock market. The reasoning being, it is too heavily weighted in
technology and maybe finance sectors, and their propriety software would equalize each sector into an equal amount (10% or so).

So, most of the the conversation he was trying to convince me that index fund investing, and passively investing was a bad idea. Basically,
the opposite of what jlcollinsnh would say. So I told him, my rental properties pay me 10-15% income, and stocks only pay a paltry dividend
(he later corrected me saying it was around 2.1%). Wow, a whole 2%! I told him if my property values when to $0, I wouldn't care as I would
still have this income coming in. But, if stocks went to zero, I WOULD have a problem with this.

What are your guys thoughts on this.. has anyone else dealt with Personal Capital? This gentleman I spoke to seemed nice enough. I think Betterment
and Wealthfront probably offer similar services, although he told me Betterment utilizes exclusively mutual funds, while Personal Capital do not use any
mutual funds. I told him I would get back to them.

GenXbiker

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #1 on: August 02, 2017, 08:31:53 PM »
So, most of my net worth is in real estate equity. He realized I had about $200K in cash, and wanted me to
invest $100K with them, which they will manage for a 0.089% fee (presumably of AUM).
This is what jumped out at me.  That's looks pretty low, so I wondered if there were other fees, commissions, etc. that they weren't telling you about.  I did a quick search and quickly found multiple references to the fee being 0.89%, which is 10 times as high as 0.089%.

Re3iRtH

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #2 on: August 02, 2017, 08:44:25 PM »
So, most of my net worth is in real estate equity. He realized I had about $200K in cash, and wanted me to
invest $100K with them, which they will manage for a 0.089% fee (presumably of AUM).
This is what jumped out at me.  That's looks pretty low, so I wondered if there were other fees, commissions, etc. that they weren't telling you about.  I did a quick search and quickly found multiple references to the fee being 0.89%, which is 10 times as high as 0.089%.

My apologies. Wishful thinking I guess. I believe 0.89% is their fee. Any thoughts on their firm or their method of investing (individual stocks), or their tactical weighting approach of equalizing invested funds among different sectors? I would imagine some folks have had success investing with an active manager.

GenXbiker

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #3 on: August 02, 2017, 09:04:58 PM »
So, most of my net worth is in real estate equity. He realized I had about $200K in cash, and wanted me to
invest $100K with them, which they will manage for a 0.089% fee (presumably of AUM).
This is what jumped out at me.  That's looks pretty low, so I wondered if there were other fees, commissions, etc. that they weren't telling you about.  I did a quick search and quickly found multiple references to the fee being 0.89%, which is 10 times as high as 0.089%.

My apologies. Wishful thinking I guess. I believe 0.89% is their fee. Any thoughts on their firm or their method of investing (individual stocks), or their tactical weighting approach of equalizing invested funds among different sectors? I would imagine some folks have had success investing with an active manager.
I don't see a problem with the approach, but the fee is higher than I would like.  I checked some online reviews with some searches - recommended if you haven't already.  It looks like the fee is higher than some competitor robo-advisors.  Anyway, reading those will tell you more than I could say in a quick response, and I don't have personal experience with them.

surfhb

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #4 on: August 02, 2017, 09:54:49 PM »
  He kept telling me how I was "at risk" investing in
mutual funds, and I was at risk to be investing in the S&P 500 or the total stock market. The reasoning being, it is too heavily weighted in
technology and maybe finance sectors, and their propriety software would equalize each sector into an equal amount (10% or so).

Rubbish!    How could anyone possibly be more diversified than a total stock fund? 

The first rule to understand when investing in stocks is that NO ONE has any clue on what the market will do.   So basically you are paying a full 1% to someone who has no idea what they are talking about....literally.   

Travis

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #5 on: August 02, 2017, 11:06:47 PM »
Their methodology is to create an index fund, but with each market sector equally weighted rather than leaving it to market forces like it is now. They claim they can squeeze an extra 1% over the market with this technique, but of course nearly .9% is consumed in fees. They also say this methodology will reduce your losses during a downturn, but they haven't been around long enough to prove this except in backtesting.

The Personal Capital guy who did my consult was forced to admit he couldn't sell me on anything since I knew this material as well as him. I also caught him in a bind in that one of the free online tools said the risk/return point of my actual portfolio was better than their hypothetical one. He chalked it up to a glitch in the software.
« Last Edit: August 02, 2017, 11:14:10 PM by Travis »

sisca

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #6 on: August 02, 2017, 11:36:15 PM »
Their methodology is to create an index fund, but with each market sector equally weighted rather than leaving it to market forces like it is now. They claim they can squeeze an extra 1% over the market with this technique, but of course nearly .9% is consumed in fees.

Equal weight portfolio also needs to rebalance frequently, which adds further costs.

K-12FI

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #7 on: August 03, 2017, 04:11:34 AM »
Their methodology is to create an index fund, but with each market sector equally weighted rather than leaving it to market forces like it is now. They claim they can squeeze an extra 1% over the market with this technique, but of course nearly .9% is consumed in fees. They also say this methodology will reduce your losses during a downturn, but they haven't been around long enough to prove this except in backtesting.

The Personal Capital guy who did my consult was forced to admit he couldn't sell me on anything since I knew this material as well as him. I also caught him in a bind in that one of the free online tools said the risk/return point of my actual portfolio was better than their hypothetical one. He chalked it up to a glitch in the software.

This is essentially Paul Merriman's methodology; however, Merriman merely gives you the fund names/asset classes, and recommends motif or just doing it yourself at Vanguard/schwab/etc.

2Birds1Stone

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #8 on: August 03, 2017, 05:37:09 AM »
I sat through their pitch as well.

I was not convinced AT ALL.

dreams_and_discoveries

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #9 on: August 03, 2017, 06:17:28 AM »
See y'all have more patience than me.... I can never last a full sales pitch.

RobFIRE

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #10 on: August 03, 2017, 08:44:22 AM »
I'm sure there are plenty of active investment companies that will charge a fee of 1% or so and claim to have an actively managed fund that will have higher returns and lower risk. And that might be true on some historical data of their choosing. However, as others have said that doesn't mean it will be true in future.

If you're an index investor and/or have property rentals generating good income then I'd just politely tell them to go away.

runewell

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #11 on: August 03, 2017, 08:59:20 AM »

Rubbish!    How could anyone possibly be more diversified than a total stock fund? 


VTSAX is not a total stock fund. 
It is a total US stock fund.
which seems to be tilted toward large caps (although possibly rightfully so because - they are large caps)

The advisor could have been correct if he meant that the guy's portfolio was suffering from home-country bias.

Huskie87

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #12 on: August 03, 2017, 10:25:51 AM »
Equal sector-weight investing is nothing new, and there are plenty of ETFs and mutual funds which offer this.  For example, if you wanted to take an equal weight approach to investing in the S&P 500, you could buy RSP, with an expense ratio of just 0.20%.

Equal weight investing is a poor-mans version of value investing and small cap investing.  Over long periods of time (say 10+ years) you will have historically outperformed due to the fact that equal weight investing is naturally allocating more dollars to beaten down industries while allocating fewer dollars to popular and potentially over-valued industries.  Since the inception of the S&P 500 equal weight index in January of 1999, the equal-weight index has outperformed the S&P 500 by 2.21% annually.

An example of how out-performance happens:  When oil collapsed in late 2014 and 2015, the energy industry saw most of it's stocks fall a significant amount.  As such, the value of the energy industry relative to the market declined.  A market weight index fund would have done nothing, and allowed energy to now be a smaller percentage of the portfolio.  An equal weight index fund would have been holding their allocation steady by purchasing more energy stocks.  In effect, the equal-weight index is becoming more overweight energy, and buying more energy stocks, the more those stocks go down.  As energy stocks recovered some of their losses, an equal weight index fund would have benefited from having a larger allocation to the sector than a market weight index.

That is an example of when equal weight can outperform.  The opposite would be to look at what healthcare has done as a sector for the past 15 years.  Equal weight indexes would have been consistently selling these stocks as they continue to appreciate, whereas a market index would have allowed those positions to continue to appreciate.

Getting back to my point, this is a poor man's version of value investing.  You are completely blind to individual stock valuations, and simply rely on sector weightings to capture the value premium.  You are also allocating more dollars to smaller companies, and less to larger companies.  Smaller companies are inherently riskier, and therefore offer investors higher long term returns in exchange for higher company specific risk and higher volatility.  For someone that has the risk tolerance and time horizon for allocating more heavily to value and small companies, there are more efficient ways to do this than an equal weight etf or index fund (or PC).  As mentioned earlier, there is lots of trading involved in an equal weight fund, and trading generates costs which lower returns.  You would be much better off allocating more heavily to a value and a small cap index fund to achieve this portfolio dynamic.

This approach that PC is using, over long periods of time, may provide a slightly higher rate of return than the market as a whole, but likely won't justify paying them 0.89% a year to do so when you can easily access the underlying strategy for less than that through mutual funds and etfs.  I would feel more safe in mutual funds and etfs than I would in some companies online proprietary trading system.  Now, if you're in need of tax planning, estate planning, financial planning...if you know that you're prone to the many emotional biases that plague investors...if you're getting into your golden years and are worried about making mistakes or how your SO will manage if you pass away... and if PC can offer you these things, then perhaps the 0.89% fee is justified.

kenaces

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #13 on: August 03, 2017, 12:10:46 PM »
I spent a lot of time last month drilling down on the different robo advisors, as I felt like I was spending way too much time on my portfolio, and that having a well thought out investment plan will help me stick to it when the waters get rough.  I also found happened to read this article and book which convinced me I was on the right track with my thinking.

http://mebfaber.com/2017/07/06/best-way-add-yield-portfolio/

https://www.amazon.com/Laws-Wealth-Psychology-investing-success-ebook/dp/B01E5KWK3A/ref=sr_1_1?ie=UTF8&qid=1501778141&sr=8-1&keywords=investing+and+daniel+crosby

As an experienced DIY investor so I was unsure if the Juice was worth the squeeze. Bottom line for me - Wealthfront is awesome value proposition for taxable accounts.  You can get first 15K managed for free, and then pay 0.25% for assets above that. So you wind up paying ~0.10%(EFTs expense ratio) + 0.25%(wealthfront fee).  For someone like myself I suspect that the tax-loss harvesting, auto rebalancing(new contribution and dividends), and time saved will easily pay for the 0.25%.

I looked at PC, and many others but quickly decided to focus on the big 3. So I compared Schwab, Betterment, and Wealthfront in some detail, and decided that I preferred Wealthfronts approach for several reasons:

- Authors of two of the best investment books written(A Random Walk down Wall Street / Winning the Losers Game) are on Wealthfront's investment advisory committee.  It is a little ironic that two pioneers of DIY index investing are on board with a wealth manager, but is also cool that the two old giants have kept up with the times.

- I really prefer the asset allocation model at Wealthfront.  Schwab has too much of a cash drag, and betterment has more asset classes( INT bonds, EM bond, Corp bonds in taxable account) than necessary which adds cost/complexity with little to no benefit imo.  I also don't like that Schwab does sell/rebalancing with only 1% drift.

- I didn't like that the ER cost of Schwab's "free" robo was 0.20% as they use a lot of pricey ETFs, and they also hold large % in cash earning next to nothing.  Betterment's ER was 0.12%, and Wealthfront was 0.10%

- I had a bunch of technical problem with betterment site in syncing accounts and they were slow to respond / fix

- I didn't open the account for this reason but I really like the site, and their simple retirement planning tool.

If anyone want to help a fellow MMMer this is my referral link where you can get first 15K free at Wealthfront and I get additional 5K managed for free - thanks

https://wlth.fr/2vCPl2o

Re3iRtH

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #14 on: August 03, 2017, 12:43:40 PM »
Equal sector-weight investing is nothing new, and there are plenty of ETFs and mutual funds which offer this.  For example, if you wanted to take an equal weight approach to investing in the S&P 500, you could buy RSP, with an expense ratio of just 0.20%.

Equal weight investing is a poor-mans version of value investing and small cap investing.  Over long periods of time (say 10+ years) you will have historically outperformed due to the fact that equal weight investing is naturally allocating more dollars to beaten down industries while allocating fewer dollars to popular and potentially over-valued industries.  Since the inception of the S&P 500 equal weight index in January of 1999, the equal-weight index has outperformed the S&P 500 by 2.21% annually.

An example of how out-performance happens:  When oil collapsed in late 2014 and 2015, the energy industry saw most of it's stocks fall a significant amount.  As such, the value of the energy industry relative to the market declined.  A market weight index fund would have done nothing, and allowed energy to now be a smaller percentage of the portfolio.  An equal weight index fund would have been holding their allocation steady by purchasing more energy stocks.  In effect, the equal-weight index is becoming more overweight energy, and buying more energy stocks, the more those stocks go down.  As energy stocks recovered some of their losses, an equal weight index fund would have benefited from having a larger allocation to the sector than a market weight index.

That is an example of when equal weight can outperform.  The opposite would be to look at what healthcare has done as a sector for the past 15 years.  Equal weight indexes would have been consistently selling these stocks as they continue to appreciate, whereas a market index would have allowed those positions to continue to appreciate.

Getting back to my point, this is a poor man's version of value investing.  You are completely blind to individual stock valuations, and simply rely on sector weightings to capture the value premium.  You are also allocating more dollars to smaller companies, and less to larger companies.  Smaller companies are inherently riskier, and therefore offer investors higher long term returns in exchange for higher company specific risk and higher volatility.  For someone that has the risk tolerance and time horizon for allocating more heavily to value and small companies, there are more efficient ways to do this than an equal weight etf or index fund (or PC).  As mentioned earlier, there is lots of trading involved in an equal weight fund, and trading generates costs which lower returns.  You would be much better off allocating more heavily to a value and a small cap index fund to achieve this portfolio dynamic.

This approach that PC is using, over long periods of time, may provide a slightly higher rate of return than the market as a whole, but likely won't justify paying them 0.89% a year to do so when you can easily access the underlying strategy for less than that through mutual funds and etfs.  I would feel more safe in mutual funds and etfs than I would in some companies online proprietary trading system.  Now, if you're in need of tax planning, estate planning, financial planning...if you know that you're prone to the many emotional biases that plague investors...if you're getting into your golden years and are worried about making mistakes or how your SO will manage if you pass away... and if PC can offer you these things, then perhaps the 0.89% fee is justified.

I enjoyed reading your reply, thanks. So for the guy who know nothing or care about the stock market, it seems like you don't see much of an advantage of using something like PC vs. just putting money in a broad index fund like VTSAX.

alexpkeaton

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #15 on: August 03, 2017, 12:50:13 PM »
Hey all, first post.

I wouldn't pay Personal Capital's management fees, but what they give away for free is pretty useful: Account aggregation and net worth tracking. I've previously used Mint, but it focused mostly on budgeting which I can't be bothered with. Just tracking net worth and seeing a graph going up and to the right is valuable to me. And it's a lot of work to update numbers in a spreadsheet by hand.

PC has called me a number of times, but usually I just don't answer the phone if it's a non-local number. I have no interest in listening to their sales pitch. Also, I don't believe they employ any real automation to their management, which is why the fee is so high, but I could be wrong on that.

jlcnuke

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #16 on: August 03, 2017, 12:51:33 PM »
So after setting up an account with Personal Capital, I shortly received a call from one of their senior advisors.

They had my portfolio data from being on their platform, he asked me a few questions regarding my goals, when I want to retire, my annual
income, and my risk tolerance.

I just had a follow-up (1 hour) conversation where he presented the tools they offer at Personal Capital, their technology, and asking me if I would be
interested in them managing my portfolio. So, most of my net worth is in real estate equity. He realized I had about $200K in cash, and wanted me to
invest $100K with them, which they will manage for a 0.089% fee (presumably of AUM).

I learned a few things. Personal Capital does not utilize any mutual funds or index funds. They use your money to trade in primarily stocks
and some ETFs. I just moved about $50K to a Vanguard account (I think it was VTSAX).  He kept telling me how I was "at risk" investing in
mutual funds, and I was at risk to be investing in the S&P 500 or the total stock market. The reasoning being, it is too heavily weighted in
technology and maybe finance sectors, and their propriety software would equalize each sector into an equal amount (10% or so).

So, most of the the conversation he was trying to convince me that index fund investing, and passively investing was a bad idea. Basically,
the opposite of what jlcollinsnh would say. So I told him, my rental properties pay me 10-15% income, and stocks only pay a paltry dividend
(he later corrected me saying it was around 2.1%). Wow, a whole 2%! I told him if my property values when to $0, I wouldn't care as I would
still have this income coming in. But, if stocks went to zero, I WOULD have a problem with this.

What are your guys thoughts on this.. has anyone else dealt with Personal Capital? This gentleman I spoke to seemed nice enough. I think Betterment
and Wealthfront probably offer similar services, although he told me Betterment utilizes exclusively mutual funds, while Personal Capital do not use any
mutual funds. I told him I would get back to them.

I did the first call with them and scheduled the second. I listened to their speech and the advisor sent me their "white paper" (automatically generated for me it seemed) on their investment methods. For all their talk of "index funds like VTI are overweight financials/tech" and "this way has better returns and reduces risk" I couldn't help but notice two things that threw up MASSIVE red flags for me:

1. Every comparison of their methods to something else in their white paper used relatively small, and different from any other comparison, time periods. Something that screams "this was the best case scenario we could find for our method to try and convince you to use us.
2. They seem to only use a large number of small cap ETFs as well as stocks which are selected primarily on beta and momentum for each industry. As anyone familiar with the basics of investing will know, small caps tend to be more volatile and momentum stocks behave similarly.

Thus the lackluster performance they show from 1990 to 2016, beating the S&P by a whopping 1.2% over those particular 26 years per their claims (not to be confused with the 2011-2016 data they used elsewhere to justify their methods, or the 2013-now data they sued for discussing their diversification/rebalancing methods) did nothing to assuage my concerns about their methods or make me think it would be worth having them manage my assets per their desired allocation instead of mine. I'm also not afraid of having a portfolio that isn't 95% equal weighted across industries (in fact, I don't want one set up that way personally).

gluskap

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #17 on: August 03, 2017, 01:09:20 PM »
Yeah I listened to their sales pitch and didn't think their services warranted the 0.89% management fee. 

Huskie87

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #18 on: August 03, 2017, 01:22:21 PM »
I enjoyed reading your reply, thanks. So for the guy who know nothing or care about the stock market, it seems like you don't see much of an advantage of using something like PC vs. just putting money in a broad index fund like VTSAX.

I'll put it this way...  If you DIY, you'll likely have <0.25% in annual expenses.  If you hire PC, it sounds like you'll have 0.89% in expenses.  If you hire a great fiduciary RIA, you'll likely have 1.50% in expenses.  If you hire an average financial advisor, you'll likely have >2.00% in annual expenses.

I believe that the value proposition of PC for someone who is a capable DIY investor is weak.  You can do 95% of what they do with a handful of low cost index funds.

I believe that people who are not capable of being a DIY investor are more often better off with a great fiduciary RIA, than with PC, as the service provided will extend well beyond just the investment management and will justify the additional cost above what PC charges.  When it comes to financial planning, tax planning, estate planning, and a host of other services, PC isn't designed to compete with the great advisors.  PC is superior to your average Ameriprise or Edward Jones, hands down, but not to the top RIAs in the country.  CNBC has one of the rare rating methodologies that are independent, and are not pay-to-play for the firms ranked here.  This would be a good starting point.

https://www.cnbc.com/cnbc-charts-the-top-100-firms/

You have to decide whether you are capable of being a DIY investor.  I don't know anything about you, but I'll say that putting 100% of your assets into VTSAX is a poor decision for any investor.  If you're young, you'll be losing out on lots of additional returns by not diversifying globally and investing in small companies.  If you're middle age, you need to balance your stocks with bonds...and about 100 other important things come to mind.

So, if you believe you can be an intelligent, diciplined DIY investor, then DIY>fiduciary RIA>PC>average advisor
If you don't believe you have that skillset, then I'd say fiduciary RIA>PC>DIY>average advisor
« Last Edit: August 03, 2017, 01:25:47 PM by Huskie87 »

Rocketman

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #19 on: August 03, 2017, 02:31:14 PM »
I have been using Personal Capital for a few years.  I like them for the part I have invested with them.  One nice item is they have managed to sell enough losing stocks so every tax year I get the 3k stcg deduction on my taxes.  They also helped me pick the funds in my 401k and all other investments. Could I save some of the fee by DIY- sure.  But they work for me.

surfhb

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #20 on: August 03, 2017, 02:51:13 PM »

Rubbish!    How could anyone possibly be more diversified than a total stock fund? 


VTSAX is not a total stock fund. 
It is a total US stock fund.
which seems to be tilted toward large caps (although possibly rightfully so because - they are large caps)

The advisor could have been correct if he meant that the guy's portfolio was suffering from home-country bias.

That's correct but I wasn't necessarily  talking about VTSAX.   Regardless, 1% is a hefty bet  that his advisor will beat the market indexes over the long term. 

kenaces

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #21 on: August 03, 2017, 02:59:51 PM »
I enjoyed reading your reply, thanks. So for the guy who know nothing or care about the stock market, it seems like you don't see much of an advantage of using something like PC vs. just putting money in a broad index fund like VTSAX.

I'll put it this way...  If you DIY, you'll likely have <0.25% in annual expenses.  If you hire PC, it sounds like you'll have 0.89% in expenses.  If you hire a great fiduciary RIA, you'll likely have 1.50% in expenses.  If you hire an average financial advisor, you'll likely have >2.00% in annual expenses.

I believe that the value proposition of PC for someone who is a capable DIY investor is weak.  You can do 95% of what they do with a handful of low cost index funds.

I believe that people who are not capable of being a DIY investor are more often better off with a great fiduciary RIA, than with PC, as the service provided will extend well beyond just the investment management and will justify the additional cost above what PC charges.  When it comes to financial planning, tax planning, estate planning, and a host of other services, PC isn't designed to compete with the great advisors.  PC is superior to your average Ameriprise or Edward Jones, hands down, but not to the top RIAs in the country.  CNBC has one of the rare rating methodologies that are independent, and are not pay-to-play for the firms ranked here.  This would be a good starting point.

https://www.cnbc.com/cnbc-charts-the-top-100-firms/

You have to decide whether you are capable of being a DIY investor.  I don't know anything about you, but I'll say that putting 100% of your assets into VTSAX is a poor decision for any investor.  If you're young, you'll be losing out on lots of additional returns by not diversifying globally and investing in small companies.  If you're middle age, you need to balance your stocks with bonds...and about 100 other important things come to mind.

So, if you believe you can be an intelligent, diciplined DIY investor, then DIY>fiduciary RIA>PC>average advisor
If you don't believe you have that skillset, then I'd say fiduciary RIA>PC>DIY>average advisor

+1

I will add that we all think we are smarter, and more disciplined than we really are. There can be real value to having a very good advisor especially during tough/scary times.  I think I read a white paper from Vanguard that argued the value of a good advisor is more than 1%/yr on average.

Also I think you can get access to phone advisor at Betterment for 0.50%, or you can just pay 0.25% for investment management at Wealthfront like I mentioned above.  Either of which is less than 0.89%

kenaces

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #22 on: August 03, 2017, 03:05:46 PM »
I have been using Personal Capital for a few years.  I like them for the part I have invested with them.  One nice item is they have managed to sell enough losing stocks so every tax year I get the 3k stcg deduction on my taxes.  They also helped me pick the funds in my 401k and all other investments. Could I save some of the fee by DIY- sure.  But they work for me.

This tax loss harvesting in why I am using Wealthfront for my taxable account.  This kind of service is available from several robo advisors for significantly lower fee.

Re3iRtH

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Re: Just had a Personal Capital consultation - My thoughts
« Reply #23 on: August 03, 2017, 04:29:35 PM »
I enjoyed reading your reply, thanks. So for the guy who know nothing or care about the stock market, it seems like you don't see much of an advantage of using something like PC vs. just putting money in a broad index fund like VTSAX.

I'll put it this way...  If you DIY, you'll likely have <0.25% in annual expenses.  If you hire PC, it sounds like you'll have 0.89% in expenses.  If you hire a great fiduciary RIA, you'll likely have 1.50% in expenses.  If you hire an average financial advisor, you'll likely have >2.00% in annual expenses.

I believe that the value proposition of PC for someone who is a capable DIY investor is weak.  You can do 95% of what they do with a handful of low cost index funds.

I believe that people who are not capable of being a DIY investor are more often better off with a great fiduciary RIA, than with PC, as the service provided will extend well beyond just the investment management and will justify the additional cost above what PC charges.  When it comes to financial planning, tax planning, estate planning, and a host of other services, PC isn't designed to compete with the great advisors.  PC is superior to your average Ameriprise or Edward Jones, hands down, but not to the top RIAs in the country.  CNBC has one of the rare rating methodologies that are independent, and are not pay-to-play for the firms ranked here.  This would be a good starting point.

https://www.cnbc.com/cnbc-charts-the-top-100-firms/

You have to decide whether you are capable of being a DIY investor.  I don't know anything about you, but I'll say that putting 100% of your assets into VTSAX is a poor decision for any investor.  If you're young, you'll be losing out on lots of additional returns by not diversifying globally and investing in small companies.  If you're middle age, you need to balance your stocks with bonds...and about 100 other important things come to mind.

So, if you believe you can be an intelligent, diciplined DIY investor, then DIY>fiduciary RIA>PC>average advisor
If you don't believe you have that skillset, then I'd say fiduciary RIA>PC>DIY>average advisor

Real estate has already given me financial independence in less than 5 years (I'm early 30s), both from an income and net worth perspective. I was never good with budgetting. I am of the opinion that the more $ you spend for travel and growth, the more you will learn to earn. That has never failed me.

The stocks are more something to play with for less than 20% of my portfolio. I read jlcollinsnh and thought it was an interesting concept.