Please Critique CFP Recommended Portfolio

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Soli
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Please Critique CFP Recommended Portfolio

Post by Soli » Sat Sep 12, 2015 7:00 pm

Dear Boglehead community:
We recently left Ameriprise and hired a local CFP. Our funds are still in the process of being transferred so no trading has started yet. Below is the CFP recommended portfolio for us. I am 66 and retired and my husband is 70, self-employed, and semi-retired.

I would appreciate your comments on the assets and the asset allocation. Are there other portfolios you would suggest for retirees? If so, can you post it, provide a link, or private message me? If anyone has set up a solo 401(K), I would appreciate knowing where you have it and if you are happy with the broker. Thanks so much!

CFP said: When fully invested, your portfolio will comport with your investment policy statement at (firm name). This means you will be invested 50% equity and 50% fixed income in the following manner:


(CFP said there would be no loads for any of the assets.)


8.4% - SCHA – Schwab US Small-Cap ETF

12% - SCHM – Schwab US Mid-Cap ETF

12% - SCHX – Schwab US Large Cap ETF

2.5% - NPFFX – American Funds New Perspective F1

2.5% - OAKGX – Oakmark Global 1

3.8% - IVVYX – Ivy International Core Equity Y

3.8% - SCHF – Schwab International Equity ETF

5% - BREFX – Baron Real Estate Retail

3% - Cash

12% - LALDX – Lord Abbett Short Duration Income A

7.5% - PDBAX –Prudential Total Return Bond A

7.5% - BICAX – Sterling Capital Total Return Bond A

5% - BASIX – BlackRock Strategic Income Opps Inv A

5% - MASAX – Main Stay Unconstrained Bond A

10% - TPINX – Templeton Global Bond A

What do you think, Bogleheads?

livesoft
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Re: Please Critique CFP Recommended Portfolio

Post by livesoft » Sat Sep 12, 2015 7:04 pm

How is the CFP paid? By 12b-1 fees from the funds? Also by you? Fixed fee? Percent of assets under management?

I see no reason to pay what I think will be higher expense ratios for all those funds you listed. Do you mind putting the expense ratios in your post please?

Also it looks like they cannot decide on what bond fund they want you to have, so they picked a few. Weird to me that 2 of them have "total return" in their names.
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retiredjg
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Re: Please Critique CFP Recommended Portfolio

Post by retiredjg » Sat Sep 12, 2015 7:16 pm

Soli wrote:What do you think, Bogleheads?
I think you can do better. Possibly much better.

What has been suggested is a bunch of funds several of which have high expense ratios (annual fees). My guess is that the CFP is going to charge you a fee on top of that to manage your portfolio.

You don't need that many funds and you don't need to pay that much in expenses (unless my guesses are wrong).

ieee488
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Re: Please Critique CFP Recommended Portfolio

Post by ieee488 » Sat Sep 12, 2015 7:17 pm

Soli wrote:What do you think, Bogleheads?
I wouldn't be paying someone money for their advice for this portfolio.
Yuck!
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livesoft
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Re: Please Critique CFP Recommended Portfolio

Post by livesoft » Sat Sep 12, 2015 7:18 pm

Have you asked the CFP if they are working as a fiduciary for you? If they say, Yes, then will they put it in writing?
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Soli
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Re: Please Critique CFP Recommended Portfolio

Post by Soli » Sat Sep 12, 2015 7:20 pm

They are fee-only and charge 1% annually of assets under management. They say they are a fiduciary and when I asked if their fiduciary duty extends to the investment part of our relationship they said yes.

Livesoft, do you mean to list the expense percentage listed on morningstar? Where is the reply button for each post?

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packet
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Re: Please Critique CFP Recommended Portfolio

Post by packet » Sat Sep 12, 2015 7:27 pm

Looks like OP will be paying 1% annually... viewtopic.php?f=1&t=173593&newpost=2621215

Soli,
I think most folks on this forum will suggest you do not go forward with this CFP... and I would agree. I'm not against paying for financial help, but you can do better than 1%/year (plus whatever other skillfully hidden fees there may be). Not to mention collapsing this portfolio down into 3 funds would likely save a ton on fund specific expenses.

Getting Started

I'd go with the Three Fund Portfolio over this mess any day.

But I'm no pro and if you're more comfortable with professional help... perhaps give Vanguard a call and use their Professional Services. They're cheaper, .3%, and I believe you can turn their service on and off at will. So, pay them to get you set up, then shut the service off until you need help again (years later).

Just my 2c.

:beerCheers,
packet
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Lafder
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Re: Please Critique CFP Recommended Portfolio

Post by Lafder » Sat Sep 12, 2015 7:33 pm

Go back and edit your post above to add the ERs (Expense Ratios) which will be annual fees in addition to the assets under management financial planner fees.

It is too many holdings for my taste :) But some people like complexity, and you may be one of them.

lafder

livesoft
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Re: Please Critique CFP Recommended Portfolio

Post by livesoft » Sat Sep 12, 2015 7:34 pm

Soli wrote:They are fee-only and charge 1% annually of assets under management. They say they are a fiduciary and when I asked if their fiduciary duty extends to the investment part of our relationship they said yes.

Livesoft, do you mean to list the expense percentage listed on morningstar? Where is the reply button for each post?
Yes, the expense ratio is shown in the Expense tab. Here is an example for that NPFFX fund:

Image

One can find the expense ratio on other web sites, too. The 12b-1 fee is a marketing fee that fund companies can use to pay advisors such as the CFP. You might carefully ask the CFP if they are paid something from the funds that they have recommended. If they say yes, then you might asked them to give you the money instead. Basically, I think you are probably paying more than 1% overall to the CFP when these backdoor methods of fees are included.

My take has always been that if the sustained withdrawal rate in retirement is 4%, then paying a 1% fee each year is like an additional 25% tax on my retirement income. I don't like to pay such taxes, so I don't pay anyone to help me with something that I can do myself or with the help of the bogleheads forum.
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packet
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Re: Please Critique CFP Recommended Portfolio

Post by packet » Sat Sep 12, 2015 7:35 pm

Soli wrote:Where is the reply button for each post?
This forum doesn't work quite like that, as in you reply to a specific post. All posts in a thread are "flat", they just run all at the same "level", if that makes sense...
If you want to specifically address something said, use the " button in the upper right on that post... you'll be directed to create a new post with a quote of the post that you clicked the button within. This will also notify the poster whom you are quoting...

:beerCheers,
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livesoft
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Re: Please Critique CFP Recommended Portfolio

Post by livesoft » Sat Sep 12, 2015 7:42 pm

You asked for other portfolios. You suggested an asset allocation of 50% equities and 50% bonds. A simple portfolio would be 100% in one single fund: Vanguard Target Retirement 2015 fund.
https://personal.vanguard.com/us/funds/ ... =INT#tab=2

The expense ratio is 0.16% and there would not be a 1% annual CFP fee either. You could invest in this fund for the rest of your lives.
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Soli
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Re: Please Critique CFP Recommended Portfolio

Post by Soli » Sat Sep 12, 2015 7:42 pm

Livesoft, do I use the first expense ratio number (annual report) given? I will go to morningstar and get those expenses. Stay tuned.

livesoft
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Re: Please Critique CFP Recommended Portfolio

Post by livesoft » Sat Sep 12, 2015 7:44 pm

Soli wrote:Livesoft, do I use the first expense ratio number (annual report) given? I will go to morningstar and get those expenses. Stay tuned.
Yes, that would be fine.
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lack_ey
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Re: Please Critique CFP Recommended Portfolio

Post by lack_ey » Sat Sep 12, 2015 7:46 pm

Soli, you want net expense ratio. Or just take the number from Morningstar. That said, I looked most of them up myself.


50% fixed income, but they're fairly heavy on the credit risk in the bond side. That's paying, what, around 0.80% in expense ratios on average for managers to reach out and take extra risks and invest in bonds and strategies that are liable to take a hit during the next downturn that hits stocks hard. Credit spreads aren't incredibly wide at this time or anything like that.

On the equity side it's cheap ETFs for US exposure with a tilt to smaller, more riskier stocks, plus some international and specialty stock funds. All in all, this kind of fits the narrative of what many investment advisers are pushing these days.

Portfolio 1 here is basically what they have, with some minor substitutions such as older (with more history) ETFs in place of the Schwab ones just to show a slightly longer period:
https://www.portfoliovisualizer.com/bac ... ion17_2=14

Portfolio 2 is very roughly the kinds of exposures they're getting, just in cheaper funds for illustrative purposes. Don't take the exact splits that seriously, especially in the bonds. This is not really what I would recommend, and it's more complicated than it needs to be, but it's just an example. Note the start and end dates—it starts in 2009, most of the way down the crash already. A lot of the bond funds used (check for yourself) lost some in the financial crisis.

All in all, not really an allocation that's bonkers but not something I would pay to have.

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Re: Please Critique CFP Recommended Portfolio

Post by Lafder » Sat Sep 12, 2015 8:08 pm

I am restless and have time on my hands. Here is what I am finding:

8.4% - SCHA – Schwab US Small-Cap ETF ((ER .08))

12% - SCHM – Schwab US Mid-Cap ETF ((ER 0.07))

12% - SCHX – Schwab US Large Cap ETF ((ER 0.04))

((Instead of the above, one could hold simply Vanguard's Total Stock Market Fund VTSAX with ER of 0.05, or the same ETF which is VTI and same ER as Admiral shares. Total stock market is made up of large, mid, and small cap stocks))

2.5% - NPFFX – American Funds New Perspective F1 ((ER 0.82, 50% non US stock, 40% plus US stock, rest other))

2.5% - OAKGX – Oakmark Global 1 ((ER 1.1, 50% US stock, 46% non US stock))

3.8% - IVVYX – Ivy International Core Equity Y (ER 1.27, 92% non US stocks, 5% US stocks, rest other)

3.8% - SCHF – Schwab International Equity ETF

((Instead of the above 4 funds with International stocks, one could hold Vanguard's Total International Stock Market fund VTIAX with an ER of 0.14, or the ETF VXUS))

5% - BREFX – Baron Real Estate Retail ((ER 1.32, 86% US stock/REIT))

((Instead if you want a REIT Vanguard's VGSLX has an ER of 0.12, a tenth of the cost of the above, The ETF is VNQ))

3% - Cash

12% - LALDX – Lord Abbett Short Duration Income A ((It claims a 2.25% load, and an ER of 0.59))

7.5% - PDBAX –Prudential Total Return Bond A ((4.5% load, ER 0.83))

7.5% - BICAX – Sterling Capital Total Return Bond A ((5.75% load, ER 0.81))

5% - BASIX – BlackRock Strategic Income Opps Inv A ((4.0% load, ER 0.90))

5% - MASAX – Main Stay Unconstrained Bond A ((no load, ER 0.98))

10% - TPINX – Templeton Global Bond A ((4.25% load, ER 0.89))

((instead of the above, if for retirement accounts, consider Vanguard's Total Bond Market Index fund VBTLX with an ER of 0.07 and no load. You might want TIPS or tax advantaged bonds if taxable account or in retirement. I use just VBTLX myself))

Overall, the proposed funds have much higher ERs than necessary.

lafder

Soli
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Re: Please Critique CFP Recommended Portfolio

Post by Soli » Sat Sep 12, 2015 8:12 pm

I have now added the expenses for each asset in the CFP’s recommended portfolio. Please provide feedback when you have time. Thanks Livesoft for suggesting that I add the expense ratio!

8.4% - SCHA – Schwab US Small-Cap ETF – 0.08%
12% - SCHM – Schwab US Mid-Cap ETF – 0.07%
12% - SCHX – Schwab US Large Cap ETF – 0.04%
2.5% - NPFFX – American Funds New Perspective F1 – 0.82%
2.5% - OAKGX – Oakmark Global 1 – 1.11%
3.8% - IVVYX – Ivy International Core Equity Y -1.27%
3.8% - SCHF – Schwab International Equity ETF – 0.08%
5% - BREFX – Baron Real Estate Retail – 1.32%
3% - Cash
12% - LALDX – Lord Abbett Short Duration Income A – 0.59%
7.5% - PDBAX –Prudential Total Return Bond A - 0.83%
7.5% - BICAX – Sterling Capital Total Return Bond A – 0.81%
5% - BASIX – BlackRock Strategic Income Opps Inv A - 0.90%
5% - MASAX – Main Stay Unconstrained Bond A - 0.98%
10% - TPINX – Templeton Global Bond A – 0.89%

Soli
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Re: Please Critique CFP Recommended Portfolio

Post by Soli » Sat Sep 12, 2015 8:23 pm

Lafder, awesome reply! Thank you so much. I'll bet you will help other novices with your suggestions, too. I am very lucky that you were restless and gave me the benefit of your knowledge. Reading it made me want to yell, Booyah like Jim Cramer's fans.

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Re: Please Critique CFP Recommended Portfolio

Post by livesoft » Sat Sep 12, 2015 8:24 pm

I guess I cannot rationalize why the CFP recommended most of the these funds when they state they are a fiduciary to you and you will pay them a 1% of AUM fee on top of the fees of the expense ratios that you will be paying. They could have recommended a small ETF portfolio (say VTI, VXUS, VNQ, BND, VCSH) which would have been simpler and better. So why did they make this complicated and expensive? I cannot see any reason to recommend these funds, so I can only conclude that they may be incompetent or misinformed or greedy or something else.

You might ask them for a portfolio using funds that had expense ratios of 0.15% or less only.
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Re: Please Critique CFP Recommended Portfolio

Post by kenner » Sat Sep 12, 2015 8:55 pm

Soli wrote:I have now added the expenses for each asset in the CFP’s recommended portfolio. Please provide feedback when you have time. Thanks Livesoft for suggesting that I add the expense ratio!

8.4% - SCHA – Schwab US Small-Cap ETF – 0.08%
12% - SCHM – Schwab US Mid-Cap ETF – 0.07%
12% - SCHX – Schwab US Large Cap ETF – 0.04%
2.5% - NPFFX – American Funds New Perspective F1 – 0.82%
2.5% - OAKGX – Oakmark Global 1 – 1.11%
3.8% - IVVYX – Ivy International Core Equity Y -1.27%
3.8% - SCHF – Schwab International Equity ETF – 0.08%
5% - BREFX – Baron Real Estate Retail – 1.32%
3% - Cash
12% - LALDX – Lord Abbett Short Duration Income A – 0.59%
7.5% - PDBAX –Prudential Total Return Bond A - 0.83%
7.5% - BICAX – Sterling Capital Total Return Bond A – 0.81%
5% - BASIX – BlackRock Strategic Income Opps Inv A - 0.90%
5% - MASAX – Main Stay Unconstrained Bond A - 0.98%
10% - TPINX – Templeton Global Bond A – 0.89%
This is one of the worst, highest-cost investment portfolios I have seen in decades. Almost anyone on this forum could easily construct a better portfolio at about 1/10th the yearly cost. Those savings add up over the years.

40 years ago, certain types of people invested the way your advisor suggests, because they did not know any better.

The Schwab recommendations are fine, the rest is obscene.

If you want to enrich your so-called advisor, follow his advice. If you want to enrich your own life, look elsewhere.
Last edited by kenner on Sat Sep 12, 2015 9:09 pm, edited 1 time in total.

Soli
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Re: Please Critique CFP Recommended Portfolio

Post by Soli » Sat Sep 12, 2015 9:08 pm

You guys are awesome! I am learning so much. Keep the good advice coming!

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Re: Please Critique CFP Recommended Portfolio

Post by Dale_G » Sat Sep 12, 2015 9:24 pm

The reason some advisors put more funds than necessary in a portfolio is to make investing look complicated and beyond the ability of mere humans. Occasionally, we see 30 or more funds in an advisor recommended portfolio. You got off lucky with only 15 funds:D.

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Lafder
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Re: Please Critique CFP Recommended Portfolio

Post by Lafder » Sat Sep 12, 2015 10:22 pm

Simply put, if you know your desired AA, you can create a low cost portfolio using:

Total Stock Market
Total International Stock Market
Total Bond Market

With or without
Total International Bond Market
REIT

and design a better portfolio with less fees than the one proposed by the financial planners :)

lafder

Miriam2
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Re: Please Critique CFP Recommended Portfolio

Post by Miriam2 » Sat Sep 12, 2015 11:03 pm

Soli -
I'm just learning, but I know enough to know that a "load" is financial-speak for the sales commission YOU pay your Certified Financial Planner to plan your stream of commissions and fees out of your account - to him. All for funds you can select the non-load equivalent of on your own at Vanguard or Fidelity.

Remember, the more you pay him, the less you have in your account to compound up over time. The higher the expense ratio of the fund, the less you have in your account and it snowballs the wrong way.

John Bogle wrote in "The Little Book of Common Sense Investing":
Over the long term, the miracle of compounding returns is overwhelmed by the tyranny of compounding costs.

In the investment field, time doesn't heal all wounds. It makes them worse. Where returns are concerned, time is your friend. But where costs are concerned, time is your enemy.
Use the Boglehead forum search engine to find threads on the impact of fees on accounts. :annoyed

livesoft
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Re: Please Critique CFP Recommended Portfolio

Post by livesoft » Sat Sep 12, 2015 11:40 pm

The loads are waived in this portfolio as reported by the OP, so loads are not really in consideration here. It's the expense ratios that are high on these funds.

As noted by many, the Schwab ETFs are probably fine, but those actively-managed funds with their high expense ratios are to be avoided. They are probably not tax efficient either. So if they are held in a taxable account, then that would make them even worse for the OP.
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Miriam2
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Re: Please Critique CFP Recommended Portfolio

Post by Miriam2 » Sat Sep 12, 2015 11:58 pm

livesoft wrote:The loads are waived in this portfolio as reported by the OP, so loads are not really in consideration here. It's the expense ratios that are high on these funds.
Thank you for the correction on the loads! Can the OP believe the CFP when they tell them there will be no loads? Or is there a way to sneak them in?

2comma
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Re: Please Critique CFP Recommended Portfolio

Post by 2comma » Sun Sep 13, 2015 12:00 am

It looks like your "fees" would be somewhere around 1.5% annually. Take a look at what that is going to cost you over the next 30 years or so and decide if you think the added value is worth it to you. http://buyupside.com/calculators/feesdec07.htm. If the CFP is only managing your portfolio I hardly think it is worth it. Compare that to setting up your own three fund portfolio, or using an all-in-one fund. It isn't that difficult, they'll have a very hard time beating your results with those fees and opportunity costs and if you don't have some knowledge you'll never be able to figure out who a good advisor is. The best part is you can get all the advice you'll need here and it won't cost a cent!
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kiddoc
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Re: Please Critique CFP Recommended Portfolio

Post by kiddoc » Sun Sep 13, 2015 12:34 am

I vote for not working with this CFP. This is not an asset allocation I would recommend to my parents when they retire (next year).
When you account for AUM fees and high ERs, you are paying around 2% extra on this portfolio than what you would pay using low cost funds and not having a CFP. This 2% loss will continue as long as you work with him, regardless of whether markets are going up, down, or flat. It takes money from your profits, adds to your losses and transfers it to the pocket of the CFP and Wall Street.

This sounds like a case of, "When an investor uses this CFP, his firm and the Wall Street, 3 out of those 4 will always make money".

Try out the suggestions above of the target 2015 retirement fund or the 3 fund portfolio. If your risk tolerance is high, add a low cost REIT fund which is not this ridiculous. 1.32%!!!
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Re: Please Critique CFP Recommended Portfolio

Post by BetaTracker » Sun Sep 13, 2015 2:49 am

What a mess! And an expensive one at that.
If you feel a need for an advisor, why not try Vanguard's personal advisor service? They charge a fraction of the fees and give you a well-diversified, low-cost and very straightforward portfolio. You can call them or set up a video conference when you've got questions. It might be a serious alternative to what you're looking at now.
The ideal course of action is to take control over your own finances and do it yourself. Depending on how much you've got at Vanguard, you can get free help on an ad-hoc basis. You might also want to check out other advisors who charge on an hourly basis. That might cost you a few hundred every once in awhile, but it sure won't add up like the thousands of dollars you're going to pay someone to look after your portfolio and do some simple rebalancing and tax-loss harvesting once a year!
This forum, of course, is always free. The recommended reading list put together by the Bogleheads is also a tremendously self-empowering resource that you might want to take advantage of in the future.
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peterinjapan
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Re: Please Critique CFP Recommended Portfolio

Post by peterinjapan » Sun Sep 13, 2015 3:35 am

Vanguard is super anal though, and will do things like refuse you if you (gasp!) have a passport and live outside the U.S. Imagine! People owning passports, traveling and living abroad, while thinking they could maintain a Vanguard account. I had to make other plans.

SleepKing
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Re: Please Critique CFP Recommended Portfolio

Post by SleepKing » Sun Sep 13, 2015 7:46 am

I agree with others to use Vanguard advisory service. Your CFP portfolio is laden with high fees and overcomplex structure. Unless you have a real need for local, integrated financial services (i.e. CFP, accountant, tax attorney) all under one roof or have a unique and complex situation....please strongly consider vanguard service.

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Re: Please Critique CFP Recommended Portfolio

Post by SamB » Sun Sep 13, 2015 7:52 am

You mean people get paid for this?

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Re: Please Critique CFP Recommended Portfolio

Post by Jack FFR1846 » Sun Sep 13, 2015 8:00 am

I think this CFP lied to you when he said he works as a fiduciary for you. I reviewed my mom's investments at her request and asked her advisor if he could move everything to Vanguard. His answer was "I don't have a retail relationship with Vanguard". That means.....he is NOT acting as a fiduciary but instead is selling choices where he gets paid by the funds or by the holder of the funds or both.

I have a very, very general rule when looking at funds, unless you're captive within a 401k with only bad choices. If the net ER is more than 0.2%, you are being ripped off. Sticking with Vanguard Admiral index funds or Fidelity Spartan Advantage index funds gives you all the choices you could possibly dream up for under 0.2%.
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Re: Please Critique CFP Recommended Portfolio

Post by midareff » Sun Sep 13, 2015 8:21 am

ieee488 wrote:
Soli wrote:What do you think, Bogleheads?
I wouldn't be paying someone money for their advice for this portfolio.
Yuck!

double Yuck!

retiredjg
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Re: Please Critique CFP Recommended Portfolio

Post by retiredjg » Sun Sep 13, 2015 8:38 am

Soli, if you are interested in seeing if you want to do this yourself, you could post your information and let people show you how to set up the portfolio and manage it. The format to use for this type of question is found in the link at the bottom of this message. It's some work, but you will learn a great deal by doing the exercise.

Even if you decide not to do it yourself, by doing the exercise you will learn enough to have a better understanding of why the CFP's portfolio is not that great and how and why you can do much better than that. And if you do decide to use Vanguard's Personal Advisor Service, you will know exactly what they are going - it will not be a mystery to you any more.

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Re: Please Critique CFP Recommended Portfolio

Post by midareff » Sun Sep 13, 2015 8:59 am

Soli wrote:Dear Boglehead community:
We recently left Ameriprise and hired a local CFP. Our funds are still in the process of being transferred so no trading has started yet. Below is the CFP recommended portfolio for us. I am 66 and retired and my husband is 70, self-employed, and semi-retired.

I would appreciate your comments on the assets and the asset allocation. Are there other portfolios you would suggest for retirees? If so, can you post it, provide a link, or private message me? If anyone has set up a solo 401(K), I would appreciate knowing where you have it and if you are happy with the broker. Thanks so much!

CFP said: When fully invested, your portfolio will comport with your investment policy statement at (firm name). This means you will be invested 50% equity and 50% fixed income in the following manner:


(CFP said there would be no loads for any of the assets.) TPINX has a 4.25% load + .90% annual fees + .25% 12b-1 fees

8.4% - SCHA – Schwab US Small-Cap ETF Vanguard has a comparable small cap ETF

12% - SCHM – Schwab US Mid-Cap ETF Vanguard has a comparable mid cap ETF

12% - SCHX – Schwab US Large Cap ETF Vanguard has a comparable large cap ETF.

above 32% US equities .. fees very low, around .08% annual. Nothing terrible here but you could basically duplicate all of this in one Vanguard Fund.. the Total Stock Market Fund. After that things go down hill fast.

2.5% - NPFFX – American Funds New Perspective F1 fees .82% annually, way to high and @ 2.5% of total why bother? Bad advice IMHO.

2.5% - OAKGX – Oakmark Global 1 fees 1.11% annually, way to high and @ 2.5% of total why bother? Bad advice IMHO. Vanguards Total International Fund has expenses of .12%

3.8% - IVVYX – Ivy International Core Equity Y fees 1.27% annually, way to high and @ 3.8% of total why bother? Bad advice IMHO. Again, see Vanguards Total International @ .12% for comparison

3.8% - SCHF – Schwab International Equity ETF fees are low but if you want international exposure at costs that can be lived with 3.8% is a wrong number. Bad advice IMHO.

5% - BREFX – Baron Real Estate Retail fees 1.32% annually, way to high and @ 5.0% of total will barely move the needle if at all. Vanguards real estate ETF, VNQ has annual fees of .12% This is VERY Bad advice IMHO.

3% - Cash reasonable IMO

12% - LALDX – Lord Abbett Short Duration Income A In bond funds costs are key since interest rates are low to start with. This fund charges .59% annually. Compare it to Vanguards Short Term Bond Index at .10% fees.

7.5% - PDBAX –Prudential Total Return Bond A Another expensive (to you) with an annual fee of .83%, compare to Vanguards Total Bond Market Fund which has a .07% annual fee.

7.5% - BICAX – Sterling Capital Total Return Bond A Another expensive (to you) call .. with an annual fee of .81%, compare to Vanguards Total Bond Market Fund which has a .07% annual fee.

5% - BASIX – BlackRock Strategic Income Opps Inv A Another bad set of expenses... .90% annual + .25% 12-B1 fees, compare to Vanguards Total Bond Market Fund which has a .07% annual fee.

5% - MASAX – Main Stay Unconstrained Bond A .98% annual fee... you know what I'm going to say by now.

10% - TPINX – Templeton Global Bond A .. 4.25% load, .90 annual fee + .25% 12b-1

What do you think, Bogleheads?

don't walk away... RUN! 14 funds to do the job of 3 or 4 just confuses the issue. What do I think... either you are a $ sign to him or he should not be giving advise. I can not see this portfolio being in your best interests. ...... but at (another) 1% annually as fees to them + their take on the 12b-1 fees, I fail to see any fiduciary influence in this recommendation.
Last edited by midareff on Sun Sep 13, 2015 9:29 am, edited 2 times in total.

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goingup
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Re: Please Critique CFP Recommended Portfolio

Post by goingup » Sun Sep 13, 2015 9:05 am

Soli wrote: We recently left Ameriprise and hired a local CFP.
What do you think, Bogleheads?
I think you may have jumped out of the frying pan and into the fire, as the saying goes. :)

A portfolio should not be so expensive or complicated.

livesoft's suggestion of the Vanguard Target 2015 is very good.

Tamales
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Re: Please Critique CFP Recommended Portfolio

Post by Tamales » Sun Sep 13, 2015 9:21 am

livesoft wrote:Have you asked the CFP if they are working as a fiduciary for you? If they say, Yes, then will they put it in writing?
I just don't see why that matters. "Fiduciary" means very little per the regs. As along as they avoid outright fraud, they (as a stated and documented fiduciary) are permitted many conflicts of interest, as long as they are disclosed. Many of the permitted practices would surely make people here cringe, but they are allowed in the US. Few people read the long document they are given, with the conflicts of interest section toward the end.

It seems all too common for CFPs and various other designations to recommend redundant portfolios of 1-2 dozen funds. They will make the "quantity = diversification" argument (which of course it doesn't).

edit: see for example this past discussion: http://www.bogleheads.org/forum/viewtop ... y#p2364458
Last edited by Tamales on Sun Sep 13, 2015 9:30 am, edited 1 time in total.

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TomatoTomahto
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Re: Please Critique CFP Recommended Portfolio

Post by TomatoTomahto » Sun Sep 13, 2015 9:22 am

goingup wrote:
Soli wrote: We recently left Ameriprise and hired a local CFP.
What do you think, Bogleheads?
I think you may have jumped out of the frying pan and into the fire, as the saying goes. :)

A portfolio should not be so expensive or complicated.

livesoft's suggestion of the Vanguard Target 2015 is very good.
Soli, that's not a recommended portfolio, it's a dog's breakfast. Livesoft's suggestion is good, the suggestion of a Three Fund Portfolio is good also.

With a fiduciary like him, who needs thieves?

retiredjg
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Re: Please Critique CFP Recommended Portfolio

Post by retiredjg » Sun Sep 13, 2015 9:30 am

It is nice to have a topic every once in awhile where everybody agrees. :happy

radiowave
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Re: Please Critique CFP Recommended Portfolio

Post by radiowave » Sun Sep 13, 2015 9:57 am

Soli

You may want to consider saving this thread as a PDF, send to your CFP, and ask for his feedback. That should be interesting.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

Farmboyslim83
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Re: Please Critique CFP Recommended Portfolio

Post by Farmboyslim83 » Sun Sep 13, 2015 10:30 am

Schwab also has their U.S. Broad Market ETF, SCHB. Not quite the same as VTI, tracks Dow 2500. Still could use it instead of the 3 indidual Schwab ETF's. .04% ER.

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Re: Please Critique CFP Recommended Portfolio

Post by abuss368 » Sun Sep 13, 2015 10:42 am

Hi Soli,

In my opinion, there are too many funds to manage. Vanguard recommends 4 or so funds. If there are only 4 funds with the appropriate asset allocation, there is less complexity and cost.

Best.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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abuss368
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Re: Please Critique CFP Recommended Portfolio

Post by abuss368 » Sun Sep 13, 2015 10:43 am

Hi Soli,

Consider a total markets approach. Total U.S. and International stocks and bonds. You can add U.S. and International REITs is wanted. Nothing else is needed.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

TravelGeek
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Re: Please Critique CFP Recommended Portfolio

Post by TravelGeek » Sun Sep 13, 2015 11:04 am

Ah yes, "The more the merrier" school of portfolio design.

Can the advisor explain what role each fund plays in the portfolio?

jay22
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Re: Please Critique CFP Recommended Portfolio

Post by jay22 » Sun Sep 13, 2015 11:07 am

Why do you need so many funds? In a portfolio, anything over 6-8 funds is overkill and creates a lot of redundancy. Start with a 3 fund portfolio and you can slice & dice it later to add 3-4 more funds if you'd like.

PatW86
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Re: Please Critique CFP Recommended Portfolio

Post by PatW86 » Sun Sep 13, 2015 1:15 pm

The expense ratios on some of these are very high and this portfolio is superfluously sliced and diced. All of the advice on here - Target Date Funds, Three Fund Portfolio, Using Vanguard advisory services (which you can turn off when you want), etc - is superior to this portfolio and will save you money in the long haul and produce better returns.

if you are the kind of person who prefers working with a CFP I would suggest you seek out one who had principals more in line with passive investing; I might also suggest if you are coming to this site and reading the wiki you probably don't need to pay one as you are already more educated than the vast majority of the investing public and can do just fine on your own. The choice is all yours of course. Best of luck!
"October:This is one of the particularly dangerous months to invest in stocks. Other dangerous months are July, January, September, April, November, May, March, June, December..."- Mark Twain

Soli
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Re: Please Critique CFP Recommended Portfolio

Post by Soli » Sun Sep 13, 2015 4:58 pm

Quick question for the community. I will be calling Vanguard on Monday and wonder what is the best thread for new questions as I begin my relationship with my Vanguard advisor. Where should new Vanguard account members go to post? I will continue checking this thread for more advice from everyone so please continue recommending low-cost funds, books, and other resources to help me learn. My plan is to start with the Vanguard advisor and then cut him/her loose when I no longer need the training wheels. I am overwhelmed by all of your help and will be rereading all comments, highlighting your questions, and trying to get those answered soon. Best to you.

retiredjg
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Re: Please Critique CFP Recommended Portfolio

Post by retiredjg » Sun Sep 13, 2015 5:12 pm

Probably the "Help with Personal Investments" forum, just like you first posted. Don't worry about it - if you post in the wrong place, the mods will move it.

Good to hear you are considering using the Vanguard service as opposed to the CFP you are currently considering. Your expenses will be considerably lower. Don't be surprised if your local CFP is grumpy about this and tries to talk you out of it. But the bottom line is there is really no reason to give away 1% for any portfolio, especially the portfolio that was suggested.

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Re: Please Critique CFP Recommended Portfolio

Post by packet » Sun Sep 13, 2015 5:14 pm

Soli wrote:...My plan is to start with the Vanguard advisor and then cut him/her loose when I no longer need the training wheels. ....
Congratulations.
An excellent decision.
Soli wrote:...Where should new Vanguard account members go to post?
I would say keep posting in the Help with Personal Investments forum.

You could continue to add to this thread. However, I'd recommend starting new thread(s) as you have distinct questions/issues to address.

Just to be clear, these are not forums specifically for new Vanguard account members at all... they're for folks who are seeking help with investments. If you read around enough you'll find plenty of recommendations using Fidelity, Schwab, and sometimes others. The big point is low cost and doing it (or at least fully understanding it) yourself.

:beerCheers,
packet

PS,
I do believe I forgot to say ... welcome to Bogleheads!
Last edited by packet on Mon Sep 14, 2015 8:08 am, edited 1 time in total.
First round’s on me.

kenner
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Re: Please Critique CFP Recommended Portfolio

Post by kenner » Sun Sep 13, 2015 7:46 pm

Soli wrote: I will be calling Vanguard on Monday and wonder what is the best thread for new questions as I begin my relationship with my Vanguard advisor. Where should new Vanguard account members go to post? I will continue checking this thread for more advice from everyone so please continue recommending low-cost funds, books, and other resources to help me learn. My plan is to start with the Vanguard advisor and then cut him/her loose when I no longer need the training wheels. I am overwhelmed by all of your help and will be rereading all comments, highlighting your questions, and trying to get those answered soon. Best to you.
Congratulations. It is heart-warming that you have reached this decision.

Some of us suffered at the hands of the financial industry for many years before finding a better way.

All the best to you and your loved ones.

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