How to fire your adviser

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How to fire your adviser

Postby Rick Ferri » Tue Jun 26, 2012 10:41 pm

Once you adopt a Boglehead philosophy, most people have to cut loose their previous adviser. It's hard to practice a new religion when you still go to the same church. It just doesn't work. Here is how to part ways:

How to Fire Your Adviser

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Mutual fund investing is simple. There is risk, there is return, and there are costs. All else is marketing.
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Re: How to fire your adviser

Postby chaz » Tue Jun 26, 2012 10:59 pm

Nice link, thanks.
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Re: How to fire your adviser

Postby steve roy » Tue Jun 26, 2012 11:19 pm

For me, letting go of my broker/advisor of twenty-plus years wasn't a problem.

I had been quietly seething for some time. Finally there was a meeting in his palatial offices in Newport Beach, California. He and his sons (who worked with him in the palatial offices) rolled out the pretty bar graphs to show how my money had grown. When the presentation ended, I said:

"So how have my accounts done compared to the S & P 500?"

"Oh, we're outpacing the index. By a good 1%"

"Is that before or after you charge your 2%?"

Long pause.

Finally one of the sons said: "Uh, before."

"So if I'd just put my money in an S & P 500 Index fund, I would have done better."

By this time I wasn't getting much eye contact. Finally another of the sons piped up: "Yeah."

Soon thereafter, I vacated the accounts my broker/financial advisor had been managing for two decades. I didn't receive a lot of cooperation with the money transfers, and drove down from Los Angeles to make sure I got the checks.

By that time, firing my advisor wasn't hard at all. In fact, it was a pleasure. There were no farewell lunches.









"
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How to not hire a financial adviser

Postby shawcroft » Wed Jun 27, 2012 12:00 am

Great article, with lots of very practical advice. Best to avoid getting entangled in the first place
Let me add that it is really important NOT to get "sucked into" becoming a client of a friend- or the adult child of a friend- who has just become a financial advisor....
We know two couples who have children just starting "careers" with brokerage organizations. As I feared, soon the calls came- to lunch, or a dinner seminar, or for a meeting to get a second opinion on "the pathway to your future".
Here's my thoughts on what to do should ever occur: Head them off at the pass. Proudly disclose your affection for index funds and admiration for the 50+ years of work by John Bogle. As for financial advisor(s), you have a motley crew called the Bogleheads. If a second opinion is needed, that can come from a fee-only financial planner.
Those of us who frequent the Boglehead Forum are also counseled in very practical ways by the contributions of Rick Ferri, Alan Roth, Bill Bernstein, Taylor Larimore, Mel Lindauer, Laura Dogu, and many others. Drop a few names like that.
Here's the interesting thing: mention this in a private conversation to the newly minted financial advisor and they get what you are saying. However, the parents don't seem to get it at all: "you want do just average- not beat the market?"
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Re: How to fire your adviser

Postby Mrs.Feeley » Wed Jun 27, 2012 1:38 am

"When it’s all over, you’ll be invited to a wonderful restaurant for lunch, where you’ll be encouraged to talk about your family, your children, grandchildren, golf game, vacations, new boat, old boat, fishing, good times, whatever."

Darnitall, I never got the free meal! Or the opportunity (very rare) to talk endlessly about things that interest me that no one else will listen to me talk about. Like my heirloom peony bush collection. Drat! :oops: Or my cat. Double drat! :oops: I knew I should have returned one of the guy's 70+ phone calls after I faxed him the letter terminating his services.

It was at that point, after I failed to return any of his calls, including the ones in which he sounded on the answering machine as if he were sobbing ("I received a letter from Vanguard today. I am very upset about this. <long sigh> They say you have authorized them to transfer your portfolio to Vanguard. I'm not going to transfer anything to Vanguard. Not until we can get together and talk about this...<sob!>..."), that he started calling my husband at work. ("I think your wife is making a serious mistake that is going to adversely effect your chances of ever retiring....<gasp!>...")

At one point I did have to call him because he kept refusing to transfer our accounts to Vanguard, and my husband refused to continue taking his calls, nor did he wish to speak to him again. After a bit of arguing he became angry and accused "I bet you don't have any plan at Vanguard, do you? You don't have a bit of a plan! You're transferring your accounts there with absolutely no plan! That's not a very smart thing to do, you know!" What makes these guys think their former customers owe them an explanation of their plans? I was thinking 'You know perfectly well why we transferred everything to Vanguard, but I'm not going to give you an opportunity to launch an argument against indexing.' I said only "I'm sure we'll figure something out eventually."

In the end it was like a really, really, really bad boyfriend-girlfriend breakup. I bet it's that way for a lot of financial advisory firm customers. You have captured that angst, drama--and foolishness quite nicely in your article. :beer
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Re: How to fire your adviser

Postby mlebuf » Wed Jun 27, 2012 2:21 am

Firing my adviser of 10 plus years was easy and amicable. I simply told him that during my wealth accumulating years, his advice was very useful and needed. However, after pretty much retiring I had done enough research that I felt comfortable managing my own money. The money was immediately transferred to Vanguard without any acrimony and we parted as friends.

When I tell people who have brokers about the benefits of low cost investing, I get excuses for not changing such as:
"He's my friend."
"He takes me to lunch."
"He throws parties for his clients and we have a great time."

I've learned that it does little or no good to evangelize. They don't seem to be interested in learning how many friends they could take to lunch or throw parties for with the money that the broker makes off of them in just one year. When the student is ready, the teacher will appear.
Best wishes, | Michael | | Invest your time actively and your money passively.
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Re: How to fire your adviser

Postby steve_14 » Wed Jun 27, 2012 2:56 am

Great article. I'd only add that it often isn't necessary to fire your advisor face to face if you don't feel like it. You can simply fill out the account transfer forms at Vanguard or wherever and let them suck the money or securities out of your accounts.
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Re: How to fire your adviser

Postby TheGreyingDuke » Wed Jun 27, 2012 6:26 am

It went very easily for me, I sent an email along with the Vanguard account information and it was done in five days (I did fax some authorization.) The advisor was quite competent, but my aims and needs had changed.
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Re: How to fire your adviser

Postby bertilak » Wed Jun 27, 2012 6:49 am

steve_14 wrote:Great article. I'd only add that it often isn't necessary to fire your advisor face to face if you don't feel like it. You can simply fill out the account transfer forms at Vanguard or wherever and let them suck the money or securities out of your accounts.


Yes, that is the simplest method. It's what I did when coming from Schwab to Vanguard. Only a few calls from Schwab, offering me a cash reward for returning and some reduced rates on trades. There was no threat of not cooperating in the transfer as that is a legal issue that could have got them in trouble. Most of the calls came after the transfer trying to lure me back.

Now I'm a polite guy (usually) so I did talk with the agent and told him the truth. If I was still interested in active trading I would certainly stay with Schwab and I have no problem recommending them to those who are active traders. They really do have a great system for that. They even make it quite easy to set up complex option strategies via a few mouse clicks in their desktop program. Their website works well too, but their desktop app is far superior.

Of course I missed the free meal!
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Re: How to fire your adviser

Postby Taylor Larimore » Wed Jun 27, 2012 7:14 am

Hi Rick:

Great article. I can relate it to the time we left our long-time "friend" and adviser at Merrill Lynch. Funny how his friendship seemed to evaporate after transferring our account to Vanguard (our very best investment decision).

Rick, you are unique. Not many financial advisers would write an article titled: Firing Your Adviser is Easy.

Best wishes.
Taylor
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Re: How to fire your adviser

Postby VGSailor » Wed Jun 27, 2012 8:24 am

Firing my adviser was easy too.

I sent him an email and said I was transferring my assets to another institution due to personal reasons (which was a result of finding this forum and learning to do it myself). I didn't even explain this and just went with, it's not you, it's me. I don't want to talk about it beyond that. Haha.

I then got the phone call, which at first was not very friendly. The guy basically said, you can handle the transfer yourself. You just fired me so I'm not helping you at all. I guess he then must have talked to his superiors because ten minutes later, he called back and said he didn't want to burn bridges so he would help me with the transfer. He also said he hoped to work with me again some time. He'll be waiting on the other end of that bridge for a long time!! Then he said that he had already put in a lot of work (3 months into the year) and he would only give me back 15% of the fee that I paid for the year. I said ok, then went and proceeded to call customer service and got back 75% of the fee that I paid for the year.

I'm so glad I broke free.
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Re: How to fire your adviser

Postby azanon » Wed Jun 27, 2012 8:51 am

Taylor Larimore wrote:Rick, you are unique. Not many financial advisers would write an article titled: Firing Your Adviser is Easy...........Taylor


Rick is also not the type of financial advisor that would typically need to be fired, especially if the client had considerable assets, which is probably why he felt comfortable writing that. The typical wealthy person would do themselves a favor to pay 0.25% to have someone manage their money instead of tinkering with it at the wrong times, and having the wrong funds/ETFs/stocks in their portfolio. As Bill Bernstein said in his last print book, the type of person that has all of the necessary ingredients to be a successful investor is quite rare.

Vanguard probably has one big secret. That is, about 8 out of 10 people probably have no business buying the funds themselves unless their buying the applicable target fund and just putting all of their money into it. I know from experience (people I work with), that most people need help full-time.
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Re: How to fire your adviser

Postby NMK1 » Wed Jun 27, 2012 8:54 am

Great article as usual Rick, thanks. I thankfully found indexing and an interest in learning about my finances at the very beginning of my investing life and have never been with an "advisor". I received my investment licensees in college for what I thought would be a career in finance, but became too disenfranchised with the industry and left.

Personally, if I did have an advisor and one day I woke up to realize they were taking fees without much benefit and putting me in sometimes inferior funds then there wouldn't be much of a conversation with the advisor. I would start the paperwork with where I wanted to move my money and if the advisor would not transfer my funds I would call a manager and ask who the FINRA person I am about to call should talk with.
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Re: How to fire your adviser

Postby ResNullius » Wed Jun 27, 2012 9:03 am

Another way would be to simply tell him that you just found out what a worthless, low-down, scum sucker he has been for all these years. Just a thought.
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Re: How to fire your adviser

Postby bertilak » Wed Jun 27, 2012 9:06 am

VGSailor wrote:I'm so glad I broke free.


Before I was using Schwab (see my post above) I was using a broker from Smith Barney, whom I followed from Merill Lynch. He was my father's broker before me and HIS father was my fathers broker before he (the senior broker) retired, so it was a bit hard to break free from that. But when I did, that's when I had that so-glad-to-be-free feeling!

Although the SB broker was making a pile of money off of me and my father, he actually was on our side, as best he could be. He felt he was of value for my father who had little interest in doing it himself and was of value to me -- at first. He is the one who told me that it was time for me to spread my wings and fly from his nest! I give him credit for that. At the time, both he and I thought I would continue to do things as he taught me -- pick hot stocks or funds and time the market. I have a shelf full of books telling me how to do that! (And I probably AM as good at it as he is.)

And, appropriate for this thread, it was Rick Ferri's Power of Passive Investing where I saw the light. Not the very first book I read on the subject, but the one where it "clicked." So thanks Rick!
No-one really listens to anyone else, and if you try it sometime you will see why. | -- Mignon McLaughlin
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Re: How to fire your adviser

Postby jayars35 » Wed Jun 27, 2012 9:28 am

Letting go of mine was easy in every respect. My account was way less than when I started with them. She pushed me really hard to open a margin account. Their customer service was lousy as in my advisor failed to show for appointments twice. Once was to pick up a friend's dog and take it home. Second time was she "..got really busy with something". I wrote a letter to her and told her to sell everything and send me a check. She never even called to ask why. I then started over at 20th Century and T Rowe Price then a few years ago found Vanguard.

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Re: How to fire your adviser

Postby dhodson » Wed Jun 27, 2012 9:49 am

i think this is a little more difficult then as presented. For most folks, if they go to that lunch or meeting with the advisor, they will wind up staying in their abusive relationship. Better to handle everything in writing even if its email.
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Re: How to fire your adviser

Postby NAD83 » Wed Jun 27, 2012 9:58 am

When I left my advisor, I just called up the national customer assistance number to cancel the automatic withdrawals and other details. They were very helpful and responsive. I also had the ability, as with most large companies, to move money around within my account and withdrawal/transfer it. So I did that and after all the money was out, sent my advisor and email saying thanks and goodbye. Quite easy. He was a friend of a friend, but I had no hard feelings about it.
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Re: How to fire your adviser

Postby chaz » Wed Jun 27, 2012 10:31 am

I couldn't fire my advisor because I was advising myself (no fee).
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Re: How to fire your adviser

Postby dbr » Wed Jun 27, 2012 10:47 am

It strikes me that having a meeting/lunch in which the issue of staying with the advisor is argued would hardly be the ideal process.

The case where the advisor is also a long time "friend," especially a family friend is difficult. That is one reason why a cardinal rule is to never, ever, do business with friends, relatives, and social associates.
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Re: How to fire your adviser

Postby Sidney » Wed Jun 27, 2012 10:56 am

dbr wrote:The case where the adviser is also a long time "friend," especially a family friend is difficult. That is one reason why a cardinal rule is to never, ever, do business with friends, relatives, and social associates.

Agree. It always makes it awkward if you have to fire them or have a dispute. The only exception we make is that we do buy Girl Scout cookies from one of our neighbor's children.
I always wanted to be a procrastinator.
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Re: How to fire your adviser

Postby chaz » Wed Jun 27, 2012 11:05 am

Sidney wrote:
dbr wrote:The case where the adviser is also a long time "friend," especially a family friend is difficult. That is one reason why a cardinal rule is to never, ever, do business with friends, relatives, and social associates.

Agree. It always makes it awkward if you have to fire them or have a dispute. The only exception we make is that we do buy Girl Scout cookies from one of our neighbor's children.

A good exception.
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Re: How to fire your adviser

Postby bertilak » Wed Jun 27, 2012 11:33 am

Sidney wrote:The only exception we make is that we do buy Girl Scout cookies from one of our neighbor's children.

Livin' on the edge! :happy
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Re: How to fire your adviser

Postby LarryG » Wed Jun 27, 2012 12:22 pm

About 15 years ago I spoke with my advisor (salesman) ,at a major brokerage firm, and said that I wanted a portfolio that would match the 500 Index Fund. He assured me that it would be no problem and he would get back to me in about 4 days. After 2 weeks I called him and he said that he had been very busy, but would get back to me in a few days. After another 2 weeks, I transferred my pension account, my private account, my son's and both daughter's accounts to Vanguard.
I still haven't heard from him.

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Re: How to fire your adviser

Postby Petrocelli » Wed Jun 27, 2012 12:26 pm

Firing your adviser is simple. Ask him or her how to get a skunk out from under your house. When the adviser answers, tell him it's the wrong answer, and fire them.

http://www.bogleheads.org/forum/viewtopic.php?f=11&t=98567&newpost=1426361
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Re: How to fire your adviser

Postby i<3Investing » Wed Jun 27, 2012 12:52 pm

I guess I got it easy. My financial adviser fell off the face of the earth so I didn't have much of a choice. Very lucky turn of events since that led to me doing my own research and eventually finding this forum.
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Re: How to fire your adviser

Postby windaar » Wed Jun 27, 2012 12:53 pm

I called VG and they handled everything; I never had to talk with my "adviser" again.
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Re: How to fire your adviser

Postby thinkingmama » Wed Jun 27, 2012 2:15 pm

Great article. We fired our adviser last month. We sent an email explaining that we valued the input of our investing team, but noting how our interest in index investing had grown over recent years, and how we wanted to try this. There was a follow up phone call, and our adviser, who was a business associate and friend prior to being our adviser, didn't argue at all. He and his team were very helpful in expediting the transfer, and we felt so relieved once the funds were safely at Vanguard.

I second the advice of those who warn against doing business with friends. The personal relationship made the decision to pull the plug much harder than if we had only had a business relation ship with the adviser.

Yes, those lunches and visits for portfolio reviews were enjoyable, but in retrospect, extremely expensive, and we paid for them many times over. Glad to be at Vanguard, and plan to stay a long long time.
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Re: How to fire your adviser

Postby Fallible » Wed Jun 27, 2012 2:32 pm

Rick Ferri wrote:Once you adopt a Boglehead philosophy, most people have to cut loose their previous adviser. It's hard to practice a new religion when you still go to the same church. It just doesn't work. Here is how to part ways: ...


This is so right on about what the advisor will tell you to make you stay that I laughed all the way through. For me it was trying to escape the family stockbroker some 24 years ago and his pitch to keep my business was just the same as you describe here. In the end, I got out but wish I'd had the advice you offer here about explaining why I wanted out. After telling the broker I was going into low-cost index funds, I just let him talk on until he was done and then I thanked him and asked what it would take and how long to make my move. Then I just stuck to that. Oh, and there was no lunch at a "wonderful restaurant," thank heavens. :wink:
"The first principle is that you must not fool yourself - and you are the easiest person to fool." ~ Richard Feynman
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Re: How to fire your adviser

Postby Fallible » Wed Jun 27, 2012 3:11 pm

bertilak wrote:
VGSailor wrote:I'm so glad I broke free.


Before I was using Schwab (see my post above) I was using a broker from Smith Barney, whom I followed from Merill Lynch. He was my father's broker before me and HIS father was my fathers broker before he (the senior broker) retired, so it was a bit hard to break free from that. ...


That's similar to my situation (in my earlier post) in breaking away from the family stockbroker and it does make it much harder as it's also a break, in a way, from the family. You would think the broker could understand that and show some sympathy, but it's always money first. Actually, the fact that he didn't care how hard it was for me made it easier for me to get out. I should've thanked him!
"The first principle is that you must not fool yourself - and you are the easiest person to fool." ~ Richard Feynman
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Re: How to fire your adviser

Postby plannerman » Wed Jun 27, 2012 7:15 pm

Taylor Larimore wrote:Hi Rick:


Rick, you are unique. Not many financial advisers would write an article titled: Firing Your Adviser is Easy.

Best wishes.
Taylor


Rick is not a financial manager he is an investment manager.

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Re: How to fire your adviser

Postby SnapShots » Wed Jun 27, 2012 8:39 pm

First thing I say, I own Vanguard Mutual funds and I'm not transferring or buying any other products. Usually, that does it. It's not worth a nice lunch.
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Re: How to fire your adviser

Postby pkcrafter » Wed Jun 27, 2012 9:41 pm

Is there a song? Fifty ways to leave your loser?


Paul
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Correction.

Postby Taylor Larimore » Wed Jun 27, 2012 10:02 pm

Plannerman:

Thank you for the correction.

Best wishes.
Taylor
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Re: How to fire your adviser

Postby tryingtogetoufdebtguy » Thu Jun 28, 2012 2:13 am

Great article. After all of the help of the Bogleheads I sent an email saying thanks, but it's time to move on to better pastures. Now I need to get paperwork to surrender my WL policy and somehow get the money either into USAA index funds or open a Vanguard account with my new assets. :sharebeer
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Re: How to fire your adviser

Postby BC_Doc » Fri Jun 29, 2012 2:32 am

Ask him, "Where are all the customers' yachts?", then submit the paperwork to have all of your investments transferred out in-kind.
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Re: How to fire your adviser

Postby tphp99 » Fri Jun 29, 2012 8:41 am

dbr wrote:The case where the adviser is also a long time "friend," especially a family friend is difficult. That is one reason why a cardinal rule is to never, ever, do business with friends, relatives, and social associates.


My CFP was referred by a good colleague. We run into him socially and I find it so difficult to cut all ties as I still have my DI with him. And as a "compromise", I kept a small amount with him AND monthly DCA into a few funds. Worse yet, I feel so bad whenever we go to lunch, I pick up the tab. Crazy, huh?

That's a great article, but I think I'm sadly beyond help.
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Re: How to fire your adviser

Postby dbr » Fri Jun 29, 2012 10:20 am

tphp99 wrote:
dbr wrote:The case where the adviser is also a long time "friend," especially a family friend is difficult. That is one reason why a cardinal rule is to never, ever, do business with friends, relatives, and social associates.


My CFP was referred by a good colleague. We run into him socially and I find it so difficult to cut all ties as I still have my DI with him. And as a "compromise", I kept a small amount with him AND monthly DCA into a few funds. Worse yet, I feel so bad whenever we go to lunch, I pick up the tab. Crazy, huh?

That's a great article, but I think I'm sadly beyond help.


In tighter knit social groups, maybe small towns, there is an understanding that everybody "cheats" everybody else and it isn't cheating because it is the mutual exchange of business benefits -- you build my house, I sell you insurance, we both see Dr. Smith, who buys his cars from Jim, etc. When we don't live in a completely closed small group the parity can be destroyed, which leaves some people unfairly preying on others. So what does your CFP do to benefit your business/career in return?
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Re: How to fire your adviser

Postby Dealmaster00 » Fri Jun 29, 2012 10:28 am

windaar wrote:I called VG and they handled everything; I never had to talk with my "adviser" again.

this
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Re: How to fire your adviser

Postby abuss368 » Fri Jun 29, 2012 1:37 pm

Taylor Larimore wrote:Hi Rick:

Great article. I can relate it to the time we left our long-time "friend" and adviser at Merrill Lynch. Funny how his friendship seemed to evaporate after transferring our account to Vanguard (our very best investment decision).

Rick, you are unique. Not many financial advisers would write an article titled: Firing Your Adviser is Easy.

Best wishes.
Taylor


Hi Taylor,

You said it best. We too had an "investment advisor" and "friend" when our accounts were with Merrill Lynch. He invited us to seminars and events that were only for his clients (or so we were told). Once we transferred assets, somehow the relationship ended too.

Thanks.
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Re: How to fire your adviser

Postby abuss368 » Fri Jun 29, 2012 1:38 pm

Petrocelli wrote:Firing your adviser is simple. Ask him or her how to get a skunk out from under your house. When the adviser answers, tell him it's the wrong answer, and fire them.

http://www.bogleheads.org/forum/viewtopic.php?f=11&t=98567&newpost=1426361



That was good.
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Re: How to fire your adviser

Postby HearDoc » Fri Jun 29, 2012 7:58 pm

steve roy wrote:For me, letting go of my broker/advisor of twenty-plus years wasn't a problem.

I had been quietly seething for some time. Finally there was a meeting in his palatial offices in Newport Beach, California. He and his sons (who worked with him in the palatial offices) rolled out the pretty bar graphs to show how my money had grown. When the presentation ended, I said:

"So how have my accounts done compared to the S & P 500?"

"

So you were all invested in 100% large cap equities? Because that's what you compared your returns and risks to. If you had any asset allocation at all your
question was illogical.
Last edited by HearDoc on Sat Jun 30, 2012 8:26 am, edited 1 time in total.
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Re: How to fire your adviser

Postby nonnie » Fri Jun 29, 2012 8:10 pm

I know there is lots of confusion over various titles-- registered investment advisor, investment manager, financial advisor but I was astounded at how many folks considered their broker (salesman) a financial advisor.
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Re: How to fire your adviser

Postby plannerman » Sat Jun 30, 2012 6:23 pm

nonnie wrote:I know there is lots of confusion over various titles-- registered investment advisor, investment manager, financial advisor but I was astounded at how many folks considered their broker (salesman) a financial advisor.


+1

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Re: How to fire your adviser

Postby Taylor Larimore » Sat Jun 30, 2012 6:37 pm

plannerman wrote:
nonnie wrote:I know there is lots of confusion over various titles-- registered investment advisor, investment manager, financial advisor but I was astounded at how many folks considered their broker (salesman) a financial advisor.


+1

plannerman


Nonnie:

I just figured out why Merrill Lynch titled my former broker as an Investment "Consultant." :twisted:

Thank you and best wishes
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: How to fire your adviser

Postby Grasshopper » Sun Jul 01, 2012 6:48 pm

Hummm, I don't always beat the S&P, because I have 35% fixed income funds.
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Re: How to fire your adviser

Postby fx24 » Thu Jul 12, 2012 11:03 pm

Today I left my Advisor of 9 years. The fee seemed small, a mere 0.7%. However, over the 9 years, the cumulative fee paid equalled 40% of my total return (pre tax). For me, the most important realization was understanding how I had all the investment risk and uncertainity while the Advisor earned a dependable and riskless fee. It is no wonder why, the Advisor was always relaxed and "above" the din. I mistakenly thought this was some personality quality.

In summary regarding Advisors: you pay a dependable and riskless fee to someone for them to help expose you to risk and uncertainity.
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