Looking for Advice on portfolio and PAS

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BoardOnline
Posts: 5
Joined: Fri Jul 13, 2018 12:03 pm

Looking for Advice on portfolio and PAS

Post by BoardOnline » Fri Jul 13, 2018 1:20 pm

This is my first post to Bogleheads forum. I have been reading as much as I can on the forum over the last few months.
However, despite all the advice I have been able to pick up I am still lost - hence the post. I have been a steady saver since my youth and have thankfully been able to save up a modest amount (~1MM). However, I was never an active or "interested" investor. I started by maxing out my 401K then adding a bit more as my salary increased. Once I had a number I felt was larger than I could handle I moved it to a personal adviser - same guy my father used. Just seemed like the easy thing to do at the time. However, as I started gaining some knowledge on fees, etc. I realized he was not a fit and I left. My wife works for a university so I was able to move my money to TIAA. They seemed to have a decent assortment of options and the adviser I initially worked with seemed reliable and was quite upfront. Unfortunately, he has since left the firm and I am less than impressed with the current adviser. I know I can ask for a new adviser, but being they are all remote it would a crap shoot anyway. Therefore, based on what I have been able to gather from the forum, and reading on my own, it seems I now have three options but an unsure which is the best for me. From my viewpoint it seems I can stick with TIAA, move to Vanguard PAS, or Schwab PAS.

My goal is simplicity, avoiding large fees and of course to see my investments grow for a secure retirement. As a note I have ~20 years until retirement if that help factor into the decision as well.

Below are details on the account I was looking to move. I would like to get feedback on the current allocation and if you feel it is too complex and filled with fees. However, that is not always the simplest course of action. Especially if I have exposure here to something that may not be available in another institution.

I would be able to transfer $500K+ so I would assume that would get me a batter rate for AUM. Any other opinions or feedback please let me know. Being that this is my first post I tried to be thorough but if you need any further info please feel free to ask.

My current account with TIAA.
AMERICAN CENTURY VALUE FUND CLASS I 9.633065647%
TCW RELATIVE VALUE LARGE CAP FUND CLASS I 9.566230681%
WELLS FARGO SPECIAL MID CAP VALUE FUND CLASS I 8.553490482%
ARTISAN INTERNATIONAL FUND ADVISOR CLASS 7.974138677%
HARDING LOEVNER INTERNATIONAL EQUITY PORTFOLIO 7.786966143%
JENSEN QUALITY GROWTH FUND CLASS I 7.374874901%
CLEARBRIDGE AGGRESSIVE GROWTH FUND CLASS I 6.985119697%
AMG MANAGERS FAIRPOINTE MID CAP FUND CLASS I 6.434510391%
LAZARD DEVELOPING MARKETS EQUITY PORTFOLIO INSTL SHRS 5.979132254%
THE OAKMARK INTERNATIONAL SMALL-CAP FUNDINVESTOR CLASS 5.57933449%
HOTCHKIS & WILEY SMALL-CAP VALUE FUND CLASS I 3.932181556%
COHEN & STEERS REAL ESTATE SECURITIES FUND CLASS I 3.529786578%
TIAA-CREF LARGE CAP VALUE INDEX FUND INSTITUTIONAL CLASS 3.026792857%
WASATCH SMALL CAP GROWTH FUND INSTL CLASS 2.479300207%
TIAA-CREF LARGE CAP GROWTH INDEX FUND INSTITUTIONAL CLASS 2.306498921%
TIAA-CREF INTERNATIONAL EQUITY INDEX FUND INSTITUTIONAL CLASS 2.124867109%
ISHARES TR RUSSELL MID-CAP VALUE ETF 1.318172531%
ISHARES TR RUSSELL MID-CAP GROWTH ETF 1.134982391%
ISHARES TR MSCI EAFESMALL CAP ETF 0.910756274%
TIAA CREF EMERGING MARKETS EQUITY INDEX FUND INSTITUTIONAL CLASS 0.872317511%
Money Market Fund 0.853617572%
ISHARES TR RUSSELL 2000 VALUE ETF 0.674236679%
SPDR SER TR DOW JONES REIT ETF 0.491565981%
ISHARES TR RUSSELL 2000 GROWTH ETF 0.476155847%

deltaneutral83
Posts: 910
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Re: Looking for Advice on portfolio and PAS

Post by deltaneutral83 » Fri Jul 13, 2018 2:52 pm

Simplicity and low fees(?), consider the three fund portfolio all over this site which is a US Total Stock Market index, Intl index, and bonds. Without knowing more info, your portfolio is extremely complex (You have 5 funds that constitute less than 1% each of your portfolio, what could an adviser say to explain this?). I didn't see expense ratios but I can assume they are higher than a generic 3F that you can get at nearly every institution and commission free.

ExitStageLeft
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Re: Looking for Advice on portfolio and PAS

Post by ExitStageLeft » Fri Jul 13, 2018 4:37 pm

Welcome to the forum! Congratulations on being an effective wealth builder. Now would be a great time to ensure that you keep as much of that wealth working for you rather than paying for a financial adviser's new car.

Is this portfolio with TIAA in a taxable account or is it in one or more retirement accounts? Anything in a retirement account can be sold or exchanged for a different fund with no tax implications. Anything in a taxable account will generate a loss or gain that you will need to understand and plan for.

The thing about a portfolio loaded down with a variety of stocks and managed funds is that pretty soon it starts to resemble a total stock market portfolio. The downside with this complex portfolio is that while it may be able to capture much of the total market earnings, that comes with a high price in fund fees and asset manager fees.

As a comparison, look at your portfolio compared to Vanguard's Total Stock Market fund: PortfolioVisualizer
Your portfolio underperformed the total US market by 25%. Why pay extra to get less than what the market delivers?

I suggest you call Vanguard PAS today and consult on what it would take to get you into a three-fund portfolio consisting of 60% US stocks, 20% international stocks, and 20% US bonds. This portfolio outperformed yours over the last 18 months while providing substantially more diversification and also maintaining a 20% bond portion that will allow you to weather the market volatility much better.

Once you have moved over to Vanguard and and gone through the process of selling your taxable holdings, you can drop the PAS altogether and keep an additional 0.3% of your portfolio evey year.

BoardOnline
Posts: 5
Joined: Fri Jul 13, 2018 12:03 pm

Re: Looking for Advice on portfolio and PAS

Post by BoardOnline » Fri Jul 13, 2018 6:11 pm

Thank you for the post and recommendations. That PortfolioVisualizer is amazing - it was a great way to truly see how the my allocation compares as opposed to using three Vanguard funds.

In the closing paragraph you mentioned using the PAS and then doing it on my own to save the .3%. While I like this idea, and have seen a number or other posts which mention this strategy as well, my question is how do you rebalance the portfolio. From my understanding the PAS would do this for you as well as help with any tax-loss harvesting. I believe it is not automatic with Vanguard but is with Schwab, which was one of the reasons I looked at them as well.

If I met with the PAS and then went on my own how would I ensure I am rebalancing the portfolio in an appropriate manner?

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bertilak
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Re: Looking for Advice on portfolio and PAS

Post by bertilak » Fri Jul 13, 2018 9:26 pm

BoardOnline wrote:
Fri Jul 13, 2018 6:11 pm
[M]y question is how do you rebalance the portfolio. From my understanding the PAS would do this for you as well as help with any tax-loss harvesting. I believe it is not automatic with Vanguard but is with Schwab, which was one of the reasons I looked at them as well.

If I met with the PAS and then went on my own how would I ensure I am rebalancing the portfolio in an appropriate manner?
My Opinion:
I think a great deal of drift is acceptable, minimizing the need for re-balancing.
  • Target allocations are somewhat arbitrary, meaning no one can say if a few percentage points one way or the other is better or worse, so there is no justification for high precision or frequent adjustment. There is also the opinion that momentum is a good thing (don’t sell winners) and should not only be accepted but welcomed.
  • If one's target allocation is middle-of-the-road (say from 60/40 to 40/60), you are not pushing any limits so are unlikely to drift into any dangerous areas.
  • Selling assets is tax-inefficient so there needs to be a very good reason to do so and re-balancing is generally not a good enough reason. There are other ways to stay close to targets: when buying or selling for other reasons (e.g. investing dividends or other new money or paying expenses) one can do so in ways that tend to move the portfolio towards the target percentages, minimizing (if not eliminating) drift, and that’s close enough.
I think it is reasonable to want a PAS to keep you out of trouble but a good idea might be to try a PAS for a year then decide if you want to go it alone.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker, the Cowboy Poet

mhalley
Posts: 6325
Joined: Tue Nov 20, 2007 6:02 am

Re: Looking for Advice on portfolio and PAS

Post by mhalley » Fri Jul 13, 2018 11:29 pm

You would create a spreadsheet that figures out the rebalancing for you, or use the vanguard website or other aggregator such as personal capital or sigfig.
The wiki has links to several spreadsheets.
https://www.bogleheads.org/wiki/Rebalancing
This forum thread discusses using vanguards portfolio watch for rebalancing.
viewtopic.php?f=1&t=150267

megabad
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Re: Looking for Advice on portfolio and PAS

Post by megabad » Sat Jul 14, 2018 2:14 pm

BoardOnline wrote:
Fri Jul 13, 2018 6:11 pm
In the closing paragraph you mentioned using the PAS and then doing it on my own to save the .3%. While I like this idea, and have seen a number or other posts which mention this strategy as well, my question is how do you rebalance the portfolio. From my understanding the PAS would do this for you as well as help with any tax-loss harvesting. I believe it is not automatic with Vanguard but is with Schwab, which was one of the reasons I looked at them as well.

If I met with the PAS and then went on my own how would I ensure I am rebalancing the portfolio in an appropriate manner?
I was going to ask what you are hoping to get out of an advisor, but this clarifies it for me. If your only goal is rebalancing in a retirement account than why not simply use a Target Retirement Fund? These will certainly rebalance faster and more accurately than any human advisor ever could. This level of "advice" will cost you 0.05%-0.1% as opposed to 0.3% or more for PAS. There are, of course, other potential benefits to a human advisor though.

BoardOnline
Posts: 5
Joined: Fri Jul 13, 2018 12:03 pm

Re: Looking for Advice on portfolio and PAS

Post by BoardOnline » Sat Jul 14, 2018 3:24 pm

Thanks again for all the feedback and advice. I will certainly look into all of the options - especially the wiki and posts related to rebalancing. While I did looks into target funds as well I think meeting with a PAS and then staying with him for a year or going on my own is probably the way to go for me. I just am concerned around "messing" it up. I think that the main goal is for me to get comfortable with the process until I am in a position to run things on my own. Parting of gaining that knowledge will be from continuing to educate myself from this board. Thanks again to all that replied.

Enjoy the weekend - :beer

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