Advice on getting Advice

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Advice on getting Advice

Postby Gwes » Thu May 02, 2013 1:25 pm

HI all.

I've been reading up on getting advice on my retirement strategy, and everytime I search a topic it leads me to this site! Thank you for all that you do here.

I just turned 50 last month and after getting over the shock of it I started hearing Neidermeyer ask me what I was going to do with the rest of my life. :D My wife and I have about 15 years of mostly kid free living to prepare for retirement and I know I've got some catching up to do. That's led me to start looking for some good advice, and to this forum for help in finding it. I'm not looking for the whole plan and enjoy playing an active role in my finances although my history hasn't been too good. I need a coach to at first help me get going in the right direction with regards to accounts, then offer investment mix advice, and finally recommendations of investment choices.

My 401k at work is with Vanguard, so that's the first place I went. They offered me the Personal Online Advisor for free, the Managed Account Program for .40%/.30%/.20%, and a one-time financial plan for $250. They also offer a Roth but I don't have one. After reading some of the comments here it looks like opinion here is mixed on Vanguard's services. I have a rollover account with Schwab and I've talked to the local office some, but they tended to offer me the answer of the day and it was less about me. I could transfer the rollover from Schwab and a portion of my Vanguard to a local independent that has been taking care of my parents and throw in with them, orr I could transfer the Schwab to Vanguard. These are the kind of first steps I need to get resolved. Then I think I know I need a Roth.

So outside of just posting up here, where's the best source for laying out a good strategy to getting to retirement? Or is posting up here enough?

Thanks again for your help.
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Re: Advice on getting Advice

Postby CABob » Thu May 02, 2013 2:27 pm

You've indicated you have doing some reading, but, didn't indicate what you've read. At the risk of repeating what you have already done I would suggest that you start with this forum's Wiki and some of the recommended books listed there.
http://www.bogleheads.org/wiki/Category ... nd_Authors
Of particular note I would suggest the two Boglehead's Guide books.
This might help shape the questions that you ask on the forum.
Bob
An investment in knowledge pays the best interest. -- Benjamin Franklin
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Re: Advice on getting Advice

Postby Johm221122 » Thu May 02, 2013 8:09 pm

Have you tried getting started
http://www.bogleheads.org/wiki/Getting_Started
The Wiki has lots of information
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Re: Advice on getting Advice

Postby gerrym51 » Thu May 02, 2013 8:12 pm

i have no advice :mrgreen:
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Re: Advice on getting Advice

Postby Gwes » Fri May 03, 2013 8:30 am

I'm sorry, I my question was rambling and I think I can make it more succinct:

What are the best options for obtaining advice concerning retirement planning?:

Services offered by Vanguard (online, AUM, or their tailored plan service)
Services offered by broker (Schwab)
Local CFP/broker
Just do it myself
Other option

Thanks.
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Re: Advice on getting Advice

Postby nisiprius » Fri May 03, 2013 9:19 am

I would say that whatever other advice you get, you should include a great big dose of "just do it yourself." It's always hard to figure out just how to use expert opinion. It's your money and ultimately it's your responsibility.

Advice is best when it gets you to see alternatives you might not have discovered for yourself, and notice aspects you might not have noticed. "Tell me what most people do" is at least somewhat helpful. "Just tell me what to do" is dangerous. You need to be able to make some kind of judgement about the advice you are getting.

Once you have spent a little time reading and exploring on your own, then you will know what follow-up questions to ask if an advisor says something like "dividend stocks are less volatile." How certain is this? Compared to what? A lot less volatile or just a little less volatile? Is this something I will be able to see every year in my account, or a small effect that just shows up in long-term statistics? How much did dividend stocks drop in 2008-2009?

It's important to realize that much less is really known about investing than medicine. Financial advice is in about the same stage as medicine in 1800. In the wonderful Patrick O'Brien novels, the fictional Dr. Maturin's skills are valid; he really could repair a hernia, for example. But his beliefs about balancing the four humors were a pack of nonsense.

Keep in mind this description of the "traditional advisor," from this paper Bobcat2 referred to in a posting:
the Traditional advisor usually holds a strong belief in the long-term advantage of stocks over bonds and in reversion to the mean in stock returns; this view is implicit in the typical application of the concept of risk tolerance. Since stocks are deemed less risky in the long run, boosting client stock exposure to improve the odds of meeting financial goals is seen as actually prudent, and stock market price declines mainly trigger advisor coaching to ‘stay the course’. Thus, in the Traditional paradigm, risk perception is skewed to the extent of the belief that stocks are not risky in the long run.
Is that right? Is that wrong? Arguments about it are perennial in this forum. You will need to form an opinion for yourself.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Re: Advice on getting Advice

Postby JW Nearly Retired » Fri May 03, 2013 10:14 am

Gwes wrote: I'm not looking for the whole plan and enjoy playing an active role in my finances although my history hasn't been too good. I need a coach to at first help me get going in the right direction with regards to accounts, then offer investment mix advice, and finally recommendations of investment choices.

The trouble with the "I need a coach" idea is you can't afford a coach, they are horrible drain on your investment returns. Coaches need to make a living and it all comes out of your account. The kind of broker "coach" a naïve investor goes to sells them funds that pay the coach high fees, and then he/she charges them an AUM fee on top of that. Typical to end up paying 2% total in annual coach + fund fees on the investment portfolio. That amounts to a quarter or a third of your likely gross investment return before fees. It's half the classical "safe" 4% drawdown rate from a retiree nest egg. How can anyone possibly afford that?

Another way to look at it. Do you have a paid personal coach who gives you advice about how to do your job better and charges you 25% of your gross salary for it? Of course not it would be madness! ..... but how is that different from high fee coached investing?

IMO, just doing it yourself with the free coaching you can get here is the only decent option.
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Re: Advice on getting Advice

Postby WhyNotUs » Fri May 03, 2013 10:17 am

The depending on the size of your account, you may be able to get a free personal plan from Vanguard. What you can get online and what you can get on this board will be similar- 3 fund portfolio sometimes with small nuances to provide flavor (ex. small value tilt).
The Vanguard personal service is helpful in that is requires you to look at everything at once, have someone to talk to about your unique situation, and will help you think through impacts of transitioning portfolio that might involve tax issues. At some point, you or with the help of an advisor will need to look in the mirror and determine your best long term interests and needs. A fee-only advisor in your area can help with that. The risk is that you will end of with someone who thinks that the market can be beat- and at 50 you do not have much more time to learn that lesson. The beauty of this board or a Vanguard advisor is that most of the the people here have already surrendered and can provide support for your surrender.

Your comment about enjoying active management and reference to that not always serving you well are where I would put my energy. After lurking on this board for quite a while, I just recently started posting. For me, the list or a personal advisor are like a 12 step program to help me be ok with passive investing- " God grant me the serenity to accept the things that I cannot change and courage to change the things that I can, and the wisdom to know the difference". There are studies proving that our natural instincts do not serve us well in investing - we buy high and sell low. Acknowledging and accepting that I am not smarter than the market came really slow to me and like ongoing AA meetings, I read the board to help me remember that active trading was not good for me in the long run. I have the historical trade confirmations to provide it.

So what do I need the courage to change? Saving and spending habits and my personal wellness. That is the part of the equation that is under my control. The market will do what the market will do.
If "cold turkey" is not for you, you can always put 90% of your savings into a 3 or 4 fund portfolio (see sticky) and keep 10% for your active mgmt as the flavor. When you decide to throw the last 10% into AA, then you will have surrendered. :happy
I own the next hot stock- VTSAX
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Re: Advice on getting Advice

Postby BL » Fri May 03, 2013 10:36 am

There are people here that are willing to give you great, unbiased advice if you present your situation in the requested format. Vanguard also can give you advice. The Bogleheads Guide to Investing (and to Retirement) are good resources as are other recommended books. Unless you are eager to fund your local broker's retirement, why would you share it with him? Also read the Three-Fund Portfolio thread here for a nice, boring investment portfolio.
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Re: Advice on getting Advice

Postby YDNAL » Fri May 03, 2013 10:45 am

Gwes wrote:I just turned 50 last month and after getting over the shock of it I started hearing Neidermeyer ask me what I was going to do with the rest of my life. :D My wife and I have about 15 years of mostly kid free living to prepare for retirement and I know I've got some catching up to do.
Gwes wrote:I'm sorry, my question was rambling and I think I can make it more succinct:

What are the best options for obtaining advice concerning retirement planning?:

Services offered by Vanguard (online, AUM, or their tailored plan service)
Services offered by broker (Schwab)
Local CFP/broker
Just do it myself
Other option

Thanks.

I find that the best source for our "retirement planning" is oneself - after all, no one knows (should know) us better.

I also believe that we all need a road map and not much more than this:
http://www.bogleheads.org/wiki/Investme ... _Statement
Basic sections of an IPS

Financial account information
Where are your financial assets located?
How much is in tax-advantaged accounts (IRA, Roth IRA, 401(k), etc) versus taxable accounts?
How much will you be contributing to these accounts?

Investment objectives, time horizon, risk tolerance
Short-term financial goals and liquidity needs
Long-term financial goals and retirement
Time-frame for funding these goals Length of time assets will be needed Amount of assets to be needed

Asset classes to be used and those to be avoided
Asset classes I must include in my overall investment portfolio
    U.S. Stocks
    International Stocks
    U.S. Bonds
    International Bonds
Asset classes I would rather avoid due to excessive risk, high expenses, or large tax liabilities, etc.
    Hedge funds
    Actively-managed funds with high taxable turnover or distributions
    Consider under-weighting tech sector due to my employment there
Asset allocation targets and re-balancing ranges
Target allocation between stocks and bonds
Target allocation for international investments
Time-frame for altering these allocations
Minimum and maximum deviations from these targets that will trigger portfolio re-balancing

Monitoring and control procedures
Frequency of monitoring
Benchmark for comparison of portfolio returns
Acceptable deviation from benchmark (amount and time)
Concrete procedures for future changes to IPS
    Financial reasons for changing IPS
    Lifestyle reasons for changing IPS
    Reasons not to change IPS (e.g. short-term market performance)
Landy
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Re: Advice on getting Advice

Postby livesoft » Fri May 03, 2013 10:52 am

One of the tenets that the paid advisors on this forum write about often is that they provide the mental fortitude to stay-the-course for folks who cannot do that on their own. Basically, they say they provide hand-holding to panicky investors.

I wonder if places like Vanguard or Schwab would provide the same level of hand-holding to help prevent behavioral and emotional lapses in investing judgement? Sure Vanguard can give you a set of investments to use (I myself wouldn't even start to call that a plan), but can they make sure you implement it and follow it through thick and thin? In this regard, do these places really "coach"?
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Advice on getting Advice

Postby Oddlot » Fri May 03, 2013 11:29 am

Here's all you need to know:
1. Max out tax advantaged accounts.
2. Invest for the long term in index funds.
3. Allocate across asset classes appropriate for your age and risk tolerance.
4. Don't overspend on houses and cars.
5. Place tax-inefficient investments in tax advantaged accounts.
6. Invest in your career.
7. Enjoy your retirement.

If only I had known this stuff forty years ago :oops:
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Re: Advice on getting Advice

Postby JW Nearly Retired » Fri May 03, 2013 1:54 pm

livesoft wrote: One of the tenets that the paid advisors on this forum write about often is that they provide the mental fortitude to stay-the-course for folks who cannot do that on their own. Basically, they say they provide hand-holding to panicky investors.

I wonder if places like Vanguard or Schwab would provide the same level of hand-holding to help prevent behavioral and emotional lapses in investing judgement? Sure Vanguard can give you a set of investments to use (I myself wouldn't even start to call that a plan), but can they make sure you implement it and follow it through thick and thin? In this regard, do these places really "coach"?

I've never had a paid advisor, but my impression from posters on this forum who did is mostly they didn't get "coaching" either. They just got somebody who told them to buy this or that fund with a high fee because it was what the firm was pushing at the moment. I'm pretty skeptical of the self serving hand-holding advisor tales about saving panic stricken investors. Somebody correct me if I'm wrong.

Are there any one time panic stricken investors reading this that can say they or family members were talked out of selling at the bottom in 08/09 by an advisor? Would love to hear from one.
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Re: Advice on getting Advice

Postby JW Nearly Retired » Sun May 05, 2013 10:55 am

JW Nearly Retired wrote:
Are there any one time panic stricken investors reading this that can say they or family members were talked out of selling at the bottom in 08/09 by an advisor? Would love to hear from one.
JW

The deafening silence to this question seems pretty telling.
JW
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Re: Advice on getting Advice

Postby Peter Foley » Sun May 05, 2013 11:21 am

While I think a second opinion is valuable, you need enough knowledge to ascertain whether the advice you are receiving is appropriate for you. While I am a firm believer of the DIY approach, I recognize this is not for everyone and an independent outside view may spot thing a DIY investor may miss.

My recommendation is to read a couple of good books (Both the Boglehead books and Rick Ferri's All About Asset Allocation come to mind). Construct a basic approach and run it by folks here. If you then want a second opinion try Vanguard or Schwab.

I got a free plan from Schwab about a year ago. It was specifically related to Roth conversions and withdrawal strategies. I have a 6 figure account at Schwab and they are hoping I will move additional assets there now that I have retired. They have never suggested managing my assets.

Vanguard will also do plans and I have seen some of the recommendations discussed here.
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Re: Advice on getting Advice

Postby nedsaid » Sun May 05, 2013 12:35 pm

What makes investing hard to do is all the conflicting opinions out there.

Thus it is a great idea to step back and look at the very big picture. Next, develop a good plan and stick to it. I have found the Investment Policy Worksheet at the Morningstar Web site to be helpful.

What will happen is that whatever investment decision you make, you will see something in the financial media that says whatever you just did is all wrong. So if you decide on a Boglehead strategy with index funds, the next day you will see an article that "Buy and Hold is Dead" and that we are in a "Stock pickers market". If you review your investment plan and decide you have too much in stocks and rebalance a small portion of the stocks into bonds, I guarantee you will see an article or see something on TV that warns you about the "bond bubble" and the upcoming collapse of the bond market. If you increase your international allocation, the next day an article will warn that Europe and the Euro are doomed and investments in the European stock markets are dead money. And on and on. You will feel the horrible "Oh my Gosh, What have I done?" feeling. Buyers remorse and all that.

So you have to learn to tune a lot of this stuff out. Otherwise, you will not be able to stick to a plan. You need to learn about how markets work and how the different asset classes have performed in the past. See the big picture and set your plans accordingly. Don't get distracted by all the noise from the financial media.
A fool and his money are good for business.
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Re: Advice on getting Advice

Postby DiscoBunny1979 » Sun May 05, 2013 12:54 pm

nedsaid wrote:So you have to learn to tune a lot of this stuff out. Otherwise, you will not be able to stick to a plan. You need to learn about how markets work and how the different asset classes have performed in the past. See the big picture and set your plans accordingly. Don't get distracted by all the noise from the financial media.

---------

While I agree one has to tune out the media, I don't believe that one needs to learn how markets work or how the different asset classes have performed in the past. First, past performance is not indicative of future results. While the past shows how an Index since inception as done, it's only a snap shot of the past. There is no way to know whether the DOW or S&P500 will be at 28,000 ten years from now or back to 10,000. I don't believe it's healthy to assume that because the stock market has 'always' recovered that such recovery and similar results will be a sure thing. You can loose money investing in the stock market. There is no guarantee of making money. The only guarantee is that the news of day determines market direction. That's it. You don't have to learn how markets work because 1) investing for the long-term takes care of bull and bear markets, and 2) individuals have no control over the markets - only market makers do. We, the investor are small fish in a big ocean and only the BIG fish have control. We are on for the ride. The best you can do is set an asset allocation, save within that asset allocation and whatever is there, is there.
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Re: Advice on getting Advice

Postby Gwes » Mon May 06, 2013 3:23 pm

Thank you so much for the responses. Yesterday was a very rainy day and gave me a lot of time to read and research based upon your comments. From that I believe I will continue on my own but make a few changes:

I'm going to move the Schwab account to Vanguard. This narrows my investment opportunities but choice is where I have performed poorly in the past. Sometimes less is more.
I ran Vanguard's online analysis and while my risk level and performance were good I adjusted my future contributions some.
I'm going to pass on the Roth and instead increase my 401k contributions to the catch up limit
I'm going to re-visit my investments more often.

I think the line from above struck home, "The trouble with the "I need a coach" idea is you can't afford a coach." I had read a Fidelity article arguing that AUM was a terrible drain on your return and that you should consider an hourly advisor instead. My thought was what is the difference? Both are drains on your returns.

Lots of "I" in this post so it must be on me to make this happen. That's probably how it should be anyway.

Thanks again.
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