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How 'bad' are American Funds through UBS?

Posted: Mon Apr 16, 2018 10:19 am
by davos8923
A family member has maybe ~$600k or so invested with UBS via their American Funds offerings. This is the entirety of their retirement portfolio and they really value having an 'in person' human they can talk to and obtain advice from through their local UBS advisor. They also really like 'tinkering' with holdings at the suggestions of the UBS advisor (perhaps the illusion of control). I believe most/all holdings are some way split between AF's Balanced Fund (AMBFX) and Growth Fund of America (GFFFX).

Reading what I do about the Boglehead way pains me that so many fees are likely going to this UBS advisor (who I feel like likely can't give better advice than I can for free via the 'Boglehead way') in addition to the AF expense ratios and whatever else they charge.

This family member is rather prideful in their knowledge of investing, and seems uninterested and closed off when discussing why low cost, passive index funds can be superior.

Is there any simple reading that would speak specifically to UBS/AF versus Vanguard that I could source? This might be more believable than coming from me. Perhaps also best to just let it go; I'm unsure if transfer fees and other headaches would be involved in a move to Vanguard and don't want to add stress or trouble. Thoughts?

Re: How 'bad' are American Funds through UBS?

Posted: Mon Apr 16, 2018 10:23 am
by fposte
Let it go. Not only haven't they asked for your help, they actively don't want it.

Re: How 'bad' are American Funds through UBS?

Posted: Mon Apr 16, 2018 10:27 am
by UpperNwGuy
fposte wrote:
Mon Apr 16, 2018 10:23 am
Let it go. Not only haven't they asked for your help, they actively don't want it.
+1

Re: How 'bad' are American Funds through UBS?

Posted: Mon Apr 16, 2018 10:28 am
by dbr
fposte wrote:
Mon Apr 16, 2018 10:23 am
Let it go. Not only haven't they asked for your help, they actively don't want it.
This is probably true.

About American Funds in general, the funds are well run and the expense ratios are significant but not absolutely outrageous. I think the one egregious issue with AF is having front end loads. Your friends are probably losing 5.75% one time up front of every dollar invested (except maybe not reinvested dividends) which goes to pay the advisor and his investment company. There may not be trading commissions, which would have to be checked.

What are ya gonna do?

Re: How 'bad' are American Funds through UBS?

Posted: Mon Apr 16, 2018 10:31 am
by voodoo72
davos8923 wrote:
Mon Apr 16, 2018 10:19 am
A family member has maybe ~$600k or so invested with UBS via their American Funds offerings. This is the entirety of their retirement portfolio and they really value having an 'in person' human they can talk to and obtain advice from through their local UBS advisor. They also really like 'tinkering' with holdings at the suggestions of the UBS advisor (perhaps the illusion of control). I believe most/all holdings are some way split between AF's Balanced Fund (AMBFX) and Growth Fund of America (GFFFX).

Reading what I do about the Boglehead way pains me that so many fees are likely going to this UBS advisor (who I feel like likely can't give better advice than I can for free via the 'Boglehead way') in addition to the AF expense ratios and whatever else they charge.

This family member is rather prideful in their knowledge of investing, and seems uninterested and closed off when discussing why low cost, passive index funds can be superior.

Is there any simple reading that would speak specifically to UBS/AF versus Vanguard that I could source? This might be more believable than coming from me. Perhaps also best to just let it go; I'm unsure if transfer fees and other headaches would be involved in a move to Vanguard and don't want to add stress or trouble. Thoughts?
They could do alot worse than AF, yes they probably pay the advisor a higher fee and the AF may have a higher ER than many would like here, but all in all they arent the worst mutual funds in the world and have a decent track record, not everyone is into the boglehead way. For now leave it alone if they ever have questions then you can help.

Re: How 'bad' are American Funds through UBS?

Posted: Mon Apr 16, 2018 10:34 am
by lack_ey
A lot of times loads are waived when investing through advisors or even just in a number of other circumstances. Many times not. If not paying loads, in tax-advantaged accounts, it's not bad (other than the advisor fee; I mean the investment products themselves). These have been pretty stable, boring funds, some of which have actually done pretty well for themselves though not as much with the huge asset bases and many sub-advisors the last 10 years or more.

Re: How 'bad' are American Funds through UBS?

Posted: Mon Apr 16, 2018 10:34 am
by Jack FFR1846
fposte wrote:
Mon Apr 16, 2018 10:23 am
Let it go. Not only haven't they asked for your help, they actively don't want it.
There ya go. A couple years ago, my mom set up a meeting with her adviser so I would understand where she's got her investments and that they're being handled well. The adviser explained that beneficiaries were all set (my sister or me) and which were tax free and which were taxable when inherited. The funds used and annuities in place were also discussed (mostly set up by my dad when he was alive). I would do things differently but overall, just decided "It's fine". We did ask that 529s for my kids be moved to Vanguard as they had front end loads. That was done and the rest of it remain as before. Any questions are quickly answered by the adviser and even getting 529s moved to change beneficiary and then get checks from Vanguard were done at no charge by the adviser.

For me, cost is everything. For others, that's not their first priority. You do have to take that into account.

Re: How 'bad' are American Funds through UBS?

Posted: Mon Apr 16, 2018 10:38 am
by dbr
lack_ey wrote:
Mon Apr 16, 2018 10:34 am
A lot of times loads are waived when investing through advisors or even just in a number of other circumstances. Many times not. If not paying loads, in tax-advantaged accounts, it's not bad (other than the advisor fee; I mean the investment products themselves). These have been pretty stable, boring funds, some of which have actually done pretty well for themselves though not as much with the huge asset bases and many sub-advisors the last 10 years or more.
My guess is they are paying either an advisor fee with waived loads or loads and no additional fee for the advisor. You may be right that it is the former.

Re: How 'bad' are American Funds through UBS?

Posted: Mon Apr 16, 2018 10:45 am
by deltaneutral83
dbr wrote:
Mon Apr 16, 2018 10:38 am
My guess is they are paying either an advisor fee with waived loads or loads and no additional fee for the advisor. You may be right that it is the former.
I tend to agree, loads with no adviser AUM on "A" shares is not even close to being a bad deal with AF's in terms of comparisons within the active community. If the adviser is taking 1% AUM on top of the loads that's a problem. 25 bps of the A shares expense ratio is 12b-1 going straight into the adviser's pocket anyhow.

Re: How 'bad' are American Funds through UBS?

Posted: Mon Apr 16, 2018 10:55 am
by jminv
Many people like having an investing 'guy' to help them out/reassure them and some of those people also like the image/faux exclusivity of it ('he's from UBS'). Since your relative doesn't want to talk about it, it's probably not worth talking about with them particularly if they don't even care they've been paying high front end load. Of course, your relative is being ripped off and the advisor is making out which is unfortunate but the advisory sector exists for people such as your relative.

Re: How 'bad' are American Funds through UBS?

Posted: Mon Apr 16, 2018 11:24 am
by ruralavalon
davos8923 wrote:
Mon Apr 16, 2018 10:19 am
A family member has maybe ~$600k or so invested with UBS via their American Funds offerings. This is the entirety of their retirement portfolio and they really value having an 'in person' human they can talk to and obtain advice from through their local UBS advisor. They also really like 'tinkering' with holdings at the suggestions of the UBS advisor (perhaps the illusion of control). I believe most/all holdings are some way split between AF's Balanced Fund (AMBFX) and Growth Fund of America (GFFFX).

Reading what I do about the Boglehead way pains me that so many fees are likely going to this UBS advisor (who I feel like likely can't give better advice than I can for free via the 'Boglehead way') in addition to the AF expense ratios and whatever else they charge.

This family member is rather prideful in their knowledge of investing, and seems uninterested and closed off when discussing why low cost, passive index funds can be superior.

Is there any simple reading that would speak specifically to UBS/AF versus Vanguard that I could source? This might be more believable than coming from me. Perhaps also best to just let it go; I'm unsure if transfer fees and other headaches would be involved in a move to Vanguard and don't want to add stress or trouble. Thoughts?
The funds are not "bad". They are fairly low cost and well diversified, even though actively managed.

American Funds Balanced Fund F2 (AMBFX) has an expense ratio of 0.39% and no sales load.

American Funds Growth Fund of America F2 (GFFFX) has an expense ratio of 0.43% and no sales load.

Since this family member seems not to want your advice, don't insist on giving them advice.

Re: How 'bad' are American Funds through UBS?

Posted: Mon Apr 16, 2018 11:35 am
by nisiprius
American Funds are not bad. William J. Bernstein remarked that privately held fund companies (including American and Fidelity), which only have to satisfy the company owner, seem to have lower fees and be generally less greedy than the public companies that have to answer to their shareholders. I wouldn't fuss about it, especially if they are not paying a sales load. And if their advisor has really put them, mostly, into only two funds, that suggests a decent advisor.

There's no point in being too much of a purist. Someone buying American Funds through an advisor is not a situation that calls for intervention. John C. Bogle makes no secret of the fact that he holds a large position in the (actively managed) Wellington fund.

Re: How 'bad' are American Funds through UBS?

Posted: Mon Apr 16, 2018 11:48 am
by PFInterest
davos8923 wrote:
Mon Apr 16, 2018 10:19 am
A family member has maybe ~$600k or so invested with UBS via their American Funds offerings. This is the entirety of their retirement portfolio and they really value having an 'in person' human they can talk to and obtain advice from through their local UBS advisor. They also really like 'tinkering' with holdings at the suggestions of the UBS advisor (perhaps the illusion of control). I believe most/all holdings are some way split between AF's Balanced Fund (AMBFX) and Growth Fund of America (GFFFX).

Reading what I do about the Boglehead way pains me that so many fees are likely going to this UBS advisor (who I feel like likely can't give better advice than I can for free via the 'Boglehead way') in addition to the AF expense ratios and whatever else they charge.

This family member is rather prideful in their knowledge of investing, and seems uninterested and closed off when discussing why low cost, passive index funds can be superior.

Is there any simple reading that would speak specifically to UBS/AF versus Vanguard that I could source? This might be more believable than coming from me. Perhaps also best to just let it go; I'm unsure if transfer fees and other headaches would be involved in a move to Vanguard and don't want to add stress or trouble. Thoughts?
let it go. mention bogleheads.com at most. move on.