Help Convincing Spouse

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Topic Author
slam
Posts: 10
Joined: Thu Jan 31, 2019 9:40 am

Help Convincing Spouse

Post by slam »

Any advice on convincing the wife that we don’t need to pay an advisor 1% to manage our accounts? We have been with the same guy for 10 years. Definitely moving away from him. He loaded us up with front loads and high expense ratios.

We meet with a CFP last week. She really likes him. He charges 1%. I’m trying to convince her that moving to Vanguard or Fidelity and using the 3 fund approach is the best.

I’m 38. She is 35.

Any advice is much appreciated?
User avatar
leeks
Posts: 876
Joined: Thu Apr 07, 2011 4:33 pm
Location: new york

Re: Help Convincing Spouse

Post by leeks »

Get the "The Bogleheads' Guide to Investing" book. Draft an IPS for discussion/negotiation. https://www.bogleheads.org/wiki/Investm ... _statement
J295
Posts: 2787
Joined: Sun Jan 01, 2012 11:40 pm

Re: Help Convincing Spouse

Post by J295 »

Ask her if she trusts you to handle the finances and work from there to see why she has reluctance. Listen first.
Thecallofduty
Posts: 90
Joined: Sat Jan 19, 2019 10:59 am

Re: Help Convincing Spouse

Post by Thecallofduty »

Draw out the numbers for your spouse and explain in an objective manner how much more money you both will have in retirement if you stick with low cost funds and providers.
-thecallofduty
Every things free
Posts: 67
Joined: Tue Mar 10, 2015 5:28 pm
Location: Rocky Mountains

Re: Help Convincing Spouse

Post by Every things free »

Consider structuring your portfolio so simply that she would feel comfortable managing it herself.
You know when you are rich. You can buy anything you want but want nothing.
onourway
Posts: 2811
Joined: Thu Dec 08, 2016 3:39 pm

Re: Help Convincing Spouse

Post by onourway »

Have you been through the math of how much a 1% drag on your investments costs you over long periods of time, like 30 years? 1% doesn’t sound like much until you really run the numbers.
Topic Author
slam
Posts: 10
Joined: Thu Jan 31, 2019 9:40 am

Re: Help Convincing Spouse

Post by slam »

Forgot to add, I have her reading the following books:

The Simple Path to Wealth by JL Collins
The Bogleheads 3 Fund Portifolio
A few Chapters in The Bogleheads Guide to Investing
dbr
Posts: 34186
Joined: Sun Mar 04, 2007 9:50 am

Re: Help Convincing Spouse

Post by dbr »

Thecallofduty wrote: Sun Feb 03, 2019 10:31 am Draw out the numbers for your spouse and explain in an objective manner how much more money you both will have in retirement if you stick with low cost funds and providers.
This is the crux. Once a person sees the effect of paying that fee they will understand how insane it is to do it. Of course, a possible response from the advisor is that it is worth it because he will earn you more than enough money to make up. There is a chapter in one of Bernsteins books (I think that one) titlesd "Your advisor is not your friend" that helps explain how this works.

No doubt the explanation for the continued theft of investor assets by "advisors" is the presumption that such people are skilled professionals hired for the benefit of the client rather than that they are salesmen skilled and trained at separating people from their money. It is difficult for normal people to recognize that fact.
MathWizard
Posts: 4509
Joined: Tue Jul 26, 2011 1:35 pm

Re: Help Convincing Spouse

Post by MathWizard »

You could do it with papers and pencil or charts, but seeing better results has the best effect.

I convinced myself to move my ROTH IRA to Vanguard by moving 10% of the balance of TIAA-CREF's equity index fund
with its 0.69% ER to Vanguard's VTSAX with its 0.05% ER at the time. My returns went up by the 0.64% difference, so
I moved the rest.

My wife then moved half her ROTH IRA to Vanguard and saw the same thing, and hers is now at Vanguard as well.

If you can somehow do something similar, that should be convincing.
Dottie57
Posts: 9526
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Help Convincing Spouse

Post by Dottie57 »

dbr wrote: Sun Feb 03, 2019 10:42 am
Thecallofduty wrote: Sun Feb 03, 2019 10:31 am Draw out the numbers for your spouse and explain in an objective manner how much more money you both will have in retirement if you stick with low cost funds and providers.
This is the crux. Once a person sees the effect of paying that fee they will understand how insane it is to do it. Of course, a possible response from the advisor is that it is worth it because he will earn you more than enough money to make up. There is a chapter in one of Bernsteins books (I think that one) titlesd "Your advisor is not your friend" that helps explain how this works.

No doubt the explanation for the continued theft of investor assets by "advisors" is the presumption that such people are skilled professionals hired for the benefit of the client rather than that they are salesmen skilled and trained at separating people from their money. It is difficult for normal people to recognize that fact.

This. Most people don’t realized the same dollar will pay 1% each and every year.
User avatar
vineviz
Posts: 8492
Joined: Tue May 15, 2018 1:55 pm

Re: Help Convincing Spouse

Post by vineviz »

slam wrote: Sun Feb 03, 2019 10:20 am Any advice on convincing the wife that we don’t need to pay an advisor 1% to manage our accounts? We have been with the same guy for 10 years. Definitely moving away from him. He loaded us up with front loads and high expense ratios.

We meet with a CFP last week. She really likes him. He charges 1%. I’m trying to convince her that moving to Vanguard or Fidelity and using the 3 fund approach is the best.

I’m 38. She is 35.

Any advice is much appreciated?
A CFP is (or should be) providing much more than just investment advice, so moving to a 3-fund portfolio doesn't nearly replicate what a CFP is (or should be) doing for you.

However, it seems to me that a couple at your age probably does NOT have financial situation complicated enough that you need to keep a CFP on retainer (which is effectively what a 1% asset-based fee is doing). I'd look around for a CFP that will work with on an hourly basis: after an initial round of planning, you'd probably only need to check in every year or two, maybe more often if things change (e.g. there is an inheritance, new children, significant increase or decrease in income).

William Baldwin maintains a list of planners who said they will work on an hourly basis (not all of them will be CFPs, so check credentials): https://docs.google.com/spreadsheets/d/ ... edit#gid=0

The CFP Board has a search tool that allows you to filter only fee-only planners as well as ones that will work with your level of net worth: http://www.letsmakeaplan.org/choose-a-c ... fessional/
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
uclalien
Posts: 89
Joined: Tue Dec 23, 2014 9:13 pm

Re: Help Convincing Spouse

Post by uclalien »

My in laws were in a similar situation. They asked me to look at their portfolio and give them some advice. What I uncovered were a bunch of expensive funds with front loads, despite the promise that if they paid a sizeable upfront fee (which they did), they would never have to pay any management fees going forward.

I told them that a 3-fund would be simple to manage and bought them "The Bogleheads' Guide to Investing." After at least 2 years of indecision, I sensed that they lacked the confidence/desire to go at it on their own, so I recommended that they check out Vanguard's Personal Advisor Services. With an AUM fee of 0.30%, they could significantly reduce their costs and still get the advice and comfort they desire.

I just learned that they made the switch a couple months back and are extremely happy with the service. Despite the lower cost, they are getting much better service than they ever received from their advisor.

This is a long way of saying that you could use Vanguard's Personal Advisor Services as an intermediate step to reducing your costs and providing your wife with the comfort she needs at this time. Worst case, she never gets comfortable with the idea of going at it alone and you are stuck with a Vanguard advisor forever. Best case, after some time, you show her (or she recognizes) just how easy the Vanguard advisor's portfolio is to replicate and is open to the two of you managing the portfolio without an advisor.
HomeStretch
Posts: 5373
Joined: Thu Dec 27, 2018 3:06 pm

Re: Help Convincing Spouse

Post by HomeStretch »

Listen to your spouse and understand her concerns first.
1. Lack of confidence in her investing skills? Have her read the Bogleheads guide and/or the BH site.
2. Lack of confidence in your investing skills? Explain what you have done to educate yourself.
3. Wants someone independent to oversee investments at least initially until she gains confidence? Vanguard PAS services are .3% rather than 1% plus no high fund fees or front/back loads.
4. Likes being able to deal with investing matters face-face? Fidelity or Schwab with local offices may be a better choice.
5. Definitely show her current investment fees versus fees with proposed plan. Show how those fee $ increase as portfolio increases and add up over the 30 years until she reaches age 65.

Having gone through a similar situation, you might try implementing your plan slowly in stages. Create a simple monthly financial report so spouse can see where every piece of your portfolio is located. As you set up new accounts, sit with her to make sure she sets up her online access and bookmarks website pages. Complete POAs so each of you has the authority to act for the other especially in case of incapacity. Keep good paper or electronic files with a folder for each investment’s statements etc.

Good luck. It took me a year to complete our transition and by the end my spouse was completely on board!
User avatar
RickBoglehead
Posts: 5608
Joined: Wed Feb 14, 2018 9:10 am
Location: In a house

Re: Help Convincing Spouse

Post by RickBoglehead »

slam wrote: Sun Feb 03, 2019 10:40 am Forgot to add, I have her reading the following books:

The Simple Path to Wealth by JL Collins
The Bogleheads 3 Fund Portifolio
A few Chapters in The Bogleheads Guide to Investing
If she reads those books and still doesn't want to switch, then you have a pretty clear answer.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.
cherijoh
Posts: 6591
Joined: Tue Feb 20, 2007 4:49 pm
Location: Charlotte NC

Re: Help Convincing Spouse

Post by cherijoh »

leeks wrote: Sun Feb 03, 2019 10:25 am Get the "The Bogleheads' Guide to Investing" book. Draft an IPS for discussion/negotiation. https://www.bogleheads.org/wiki/Investm ... _statement
I would recommend downloading Dr. Bill Bernstein's booklet If You Can and having her read it. It is short and to the point.
User avatar
cheese_breath
Posts: 10046
Joined: Wed Sep 14, 2011 7:08 pm

Re: Help Convincing Spouse

Post by cheese_breath »

Put together a quick Excel spreadsheet showing the numbers side by side. Once column using VG expenses, one column using the FA's expenses. The FA will try to convince her that he's delivering better results so it's worth the extra expense, so you need to have a study handy to show her that's not true.
The surest way to know the future is when it becomes the past.
Gadget
Posts: 457
Joined: Fri Mar 17, 2017 1:38 pm

Re: Help Convincing Spouse

Post by Gadget »

I always thought this was the simplest chart showing why an AUM fee is terrible in the long run.

viewtopic.php?t=217026
delamer
Posts: 10654
Joined: Tue Feb 08, 2011 6:13 pm

Re: Help Convincing Spouse

Post by delamer »

I agree with the above suggestion to use the Vanguard service as a compromise.

Assuming these are not all joint accounts, another possibility is to let her keep her accounts with the advisor and move yours. When my husband and I were having a disagreement about allocation, as a last resort I suggested that he handle his accounts and I handle mine. Fortunately we were able to reach a compromise, aided by the fact that he knew that he didn’t want the responsibility.

For a short read, ask her to go review this: https://www.etf.com/docs/IfYouCan.pdf
Mister A
Posts: 132
Joined: Tue Oct 21, 2014 4:17 pm

Re: Help Convincing Spouse

Post by Mister A »

A potentially helpful talking point was pointing out that the adviser's 1% fee is not simply going to fail to produce 1% of additional returns, but will not magically prevent 1% of losses during a downturn, and may even cause an additional 1% of losses. The adviser does not share in your losses and so is not strongly incentivized to prevent them.

In this conversation we had, I think there was a mental sticking point that an adviser has some special insight that will allow them to "do something" during a financial crisis which will save the nest egg, when the reality is that you're paying them good money to do nothing.

You, too, can remain calm, stay the course, and refuse to start clicking random buttons - free.
Last edited by Mister A on Sun Feb 03, 2019 1:05 pm, edited 1 time in total.
Topic Author
slam
Posts: 10
Joined: Thu Jan 31, 2019 9:40 am

Re: Help Convincing Spouse

Post by slam »

All great advice. Thank You!
Austintatious
Posts: 878
Joined: Thu Sep 13, 2012 7:01 pm

Re: Help Convincing Spouse

Post by Austintatious »

slam,

someone up there recommended Bill Bernstein's short, simple and right to the point piece "If You Can". I agree with the recommendation. But there's another option that I think could be even better for your situation. It's Dan Solin's "The Smartest Investment Book You'll Ever Read". Though it's more pages than Bernstein's little work, I think it's actually easier to read and understand, and it's just as compelling. If I were to recommend a single resource in an effort to educate a new investor about the potential negatives in paying an advisor, the simplicity and practicality of doing it yourself, and the basics of investing in broadly diversified, low cost index funds along with some clear recommendations, this book would be it. And, as you can see in the highlighted text just below, it comes highly recommended by Bill Bernstein, himself.
Book Overview
What Are You Waiting For? This book will change the way you think about investing-and the results will prove it! "This is the simple hands-on, how-to and why book many readers have been looking for." -Scott Burns, syndicated columnist Daniel Solin cuts through the financial hype to show you exactly how to invest-with an easy-to-follow four-step plan that lets you create and monitor your investment portfolio in ninety minutes or less...and put your investment earnings in the top 5 percent of all professionally managed money. If you want to gamble, go to Las Vegas-or try stock picking and market timing. If you want to be a Smart Investor, follow this effortless and effective plan. "The Smartest Investment Book You'll Ever Read will provide the enlightenment and gumption to free yourself from the clutches of the investment industry and the wisdom and direction necessary to get yourself back on track." -William Bernstein, author of A Splendid Exchange and The Four Pillars of Investing Every day you wait costs you money. Take control of your financial future now!
The book may be purchased from Amazon for $12-13. And you can get it in used but quite usable condition from Thriftbooks for less than $4. I often buy from Thriftbooks and I've found them to be quite reliable.
timewarp
Posts: 11
Joined: Mon Apr 02, 2018 8:35 pm

Re: Help Convincing Spouse

Post by timewarp »

It is as simple as picking a 3 fund portfolio and sticking with it. No getting around it, the stock market goes up, the stock market goes down.

This simple Vanguard chart of typical historical returns puts it very simple: https://personal.vanguard.com/us/insigh ... ns?lang=en
anil686
Posts: 1110
Joined: Thu May 08, 2014 12:33 pm

Re: Help Convincing Spouse

Post by anil686 »

You may want to consider using Vanguard PAS as a stop gap and in the interim have her read books and understand why costs matter. This way she feel secure that a CFP is looking after the portfolio and supervising a “complicated” financial situation until she feels comfortable with it.

Also, an easy way to show her the difference between actively manage costs and a do it yourself portfolio would be to use portfolio visualizer..com - it should be pretty clear by saving the loads in advisory fees, you would come out much further ahead With index funds. JMO though...
dbr
Posts: 34186
Joined: Sun Mar 04, 2007 9:50 am

Re: Help Convincing Spouse

Post by dbr »

leeks wrote: Sun Feb 03, 2019 10:25 am Get the "The Bogleheads' Guide to Investing" book. Draft an IPS for discussion/negotiation. https://www.bogleheads.org/wiki/Investm ... _statement
I would also reinforce this. Coming up with an IPS causes a person to learn enough about what they are doing to avoid a salesman. Also you can't gain anything from an advisor without thinking through what amounts to an IPS in the process.
User avatar
Sandtrap
Posts: 12331
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona
Contact:

Re: Help Convincing Spouse

Post by Sandtrap »

slam wrote: Sun Feb 03, 2019 10:20 am Any advice on convincing the wife that we don’t need to pay an advisor 1% to manage our accounts? We have been with the same guy for 10 years. Definitely moving away from him. He loaded us up with front loads and high expense ratios.

We meet with a CFP last week. She really likes him. He charges 1%. I’m trying to convince her that moving to Vanguard or Fidelity and using the 3 fund approach is the best.

I’m 38. She is 35.

Any advice is much appreciated?
Avoid information overload.
Number numbness.
Stick to the objective.
Which is to ditch the FA.


Just Do This


Visual Aid with Simplified numbers.

Line down the center |

At the top of the page: "Money We Have"

Left side: label: "Money We Have WITH Financial Advisor (at the end of 10 years)

Right side: label: "Money We Have WITHOUT Financial Advisor (at the end of 10 years)

Left side: Enter ONE number. IE: $800,000

Right side: Enter ONE number. IE: $ . . .1 MILLION DOLLARS

The difference is the entire cost of what the Financial advisor takes including expenses, commissions, trade costs, opportunity costs, etc.
Do not go into these details, or minimal when asked. The main thing is just what's on the paper. Give it to her or leave on her desk. Plant the "seed" (mental fact). Let it grow on its own for now.
Do not try to "convince".

Just: "Do you want to have $8 or $10????
Done.

One thing at a time.
For now it's "what/why".
Later is "how".

j
Wiki Bogleheads Wiki: Everything You Need to Know
aristotelian
Posts: 8559
Joined: Wed Jan 11, 2017 8:05 pm

Re: Help Convincing Spouse

Post by aristotelian »

I agree with the above recommendation for "If You Can" essay. Great intro to DIY investing.

That said, approaching it from a standpoint of trying to "convince" the spouse is always tough. In 12+ years of marriage, I have not once been successful with that approach.

One option would be to compromise and manage "your" accounts yourself and let her do what she wants with "hers". Or start putting new money into a DIY portfolio until you have proven that your performance can match the professional.
123
Posts: 6714
Joined: Fri Oct 12, 2012 3:55 pm

Re: Help Convincing Spouse

Post by 123 »

Offer to put 50 -100% of what you were paying the adviser into a wardrobe fund for her/house redecorating fund/vacation fund. Let her know that there are lots of good alternatives to paying for an adviser!
The closest helping hand is at the end of your own arm.
delamer
Posts: 10654
Joined: Tue Feb 08, 2011 6:13 pm

Re: Help Convincing Spouse

Post by delamer »

Deleted
Last edited by delamer on Sun Feb 03, 2019 8:49 pm, edited 1 time in total.
Topic Author
slam
Posts: 10
Joined: Thu Jan 31, 2019 9:40 am

Re: Help Convincing Spouse

Post by slam »

Just finished the spreadsheet. Even giving the CFP the benefit of doubt and saying he beats the market, the difference is positive $1.28M towards using Index Funds over advisor. This is over a 20 year period.
Pioneer
Posts: 39
Joined: Sat Nov 24, 2018 9:34 am

Re: Help Convincing Spouse

Post by Pioneer »

Good advice already in this thread, however, I'd consider another method that replicates the in-person advising your wife is used to. Find a local fiduciary advisor that charges a flat rate per hour. Mention, "It's never a bad idea to get a second opinion." Have the fiduciary review your current advisor's fees. They should come to the same conclusion as you and be able to explain it to your partner. Agree to meet with your advisor 1x or 2x a year, as needed, with your wife. In my area, it's only a couple hundred for this type of service. Well worth it. Once you get in the groove of it, you may even be able to drop the advisor altogether and use that money on a vacation.
Pioneer
Posts: 39
Joined: Sat Nov 24, 2018 9:34 am

Re: Help Convincing Spouse

Post by Pioneer »

slam wrote: Sun Feb 03, 2019 7:57 pm Just finished the spreadsheet. Even giving the CFP the benefit of doubt and saying he beats the market, the difference is positive $1.28M towards using Index Funds over advisor. This is over a 20 year period.

This is compelling, however, I'd still recommend getting a fiduciary advisor to run the numbers and present them to your partner. There's something magical about an authority figure backing up your position and providing a neutral backdrop for questions.
User avatar
celia
Posts: 11808
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: Help Convincing Spouse

Post by celia »

We had two years when DH heard about how "good" a specific tax preparer was although I knew I could do the taxes. (One was other teachers raving about someone who got them "large refunds"--since they were grossly overwithheld. The other case was a family friend who several of his relatives used.) In both cases, we agreed that he would collect the data for the tax preparers while I would also do our taxes and we would see who came out better. Since I knew our finances forwards and backwards, I claimed a few small things (tax credits) that we were eligible for that the tax preparer hadn't inquired about.

Then there was the case of a free phone consultation back in the day when Vanguard offered them. We were both in on the conference call and I brought up a thing or two that the advisor was not aware of. DH was impressed and since then has always referred to me as his financial advisor when speaking to others about money.
:sharebeer

So my suggestion is to know the little ins and outs of your own situation. No one will care about your money as much as you do. Then, when the opportunity arises, you can show your wife you can do better than the financial advisor.


Another thought: Why not divide your largest account in half and you manage half while the advisor manages half for a year or two. Of course, you have to both invest with the same goal in mind, which wouldn't be to see who makes the most money, since you would both take extra risk. But it would be fair to decide on the same Asset Allocation for both halves. Put any new money you want to invest during that time into a third account.
Maven
Posts: 143
Joined: Sat Dec 08, 2018 4:01 pm

Re: Help Convincing Spouse

Post by Maven »

All good advice here. I might also recommend podcasts. I learned a great deal from the first season, if you will, of the SO MONEY podcast. Many of the guests promote low cost index fund investing as their own personal financial strategy. I also enjoyed The Millionaire Plan and The Dough Roller. I love all the books others have mentioned but I can imagine they may be challenging to get through if you don't enjoy the topic.

Another good point to bring up to her is that managing your money at your ages isn't rocket science. The industry leads us to believe we can't do it on our own and need a professional's help. I'm sure she's very capable of understanding the spreadsheet and the numbers but if she lacks confidence in your/her ability to do it because she is convinced it's too complicated, she may linger onto the value of that 1%.

Good luck to you! I work daily at educating my husband so I can relate to your struggle. :happy
GmanJeff
Posts: 678
Joined: Sun Jun 11, 2017 7:12 am

Re: Help Convincing Spouse

Post by GmanJeff »

HomeStretch wrote: Sun Feb 03, 2019 11:12 am Listen to your spouse and understand her concerns first.
1. Lack of confidence in her investing skills? Have her read the Bogleheads guide and/or the BH site.
2. Lack of confidence in your investing skills? Explain what you have done to educate yourself.
3. Wants someone independent to oversee investments at least initially until she gains confidence? Vanguard PAS services are .3% rather than 1% plus no high fund fees or front/back loads.
4. Likes being able to deal with investing matters face-face? Fidelity or Schwab with local offices may be a better choice.
5. Definitely show her current investment fees versus fees with proposed plan. Show how those fee $ increase as portfolio increases and add up over the 30 years until she reaches age 65.

Good luck. It took me a year to complete our transition and by the end my spouse was completely on board!
This. It's little use in urging someone to reject the use of an advisor when they are clearly motivated to do so, perhaps because because they recognize that neither they nor their partner/spouse has sufficient knowledge, focus, energy, discipline, or interest. Understanding the reasons for not wanting to undertake self-management is necessary; simply asserting that advisory fees are an expense is not helpful. Some advisors charge fees which may be disproportionately excessive relative to the value they add, while others may be well worth their cost.
User avatar
Wiggums
Posts: 3093
Joined: Thu Jan 31, 2019 8:02 am

Re: Help Convincing Spouse

Post by Wiggums »

Tons of good advice here. Fees matter is the bottom line. I can’t see any reason to pay a front end fee these days. Too many other good options available. If the portfolio gets too complex, that will be another headache later on. Once the funds are selected, high fees seem unreasonable to pay year after year. You can like the FA but there should be value for the service and fees you pay.

Maybe she feels better having someone else make the fund selections. That’s not a criticism of you. She would have the FA to blame for poor performance ???

Good luck to you...
User avatar
midareff
Posts: 7322
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Help Convincing Spouse

Post by midareff »

It's money and should be treated as money. Read the books in the wiki.. start with Bogle.
User avatar
CyclingDuo
Posts: 3905
Joined: Fri Jan 06, 2017 9:07 am

Re: Help Convincing Spouse

Post by CyclingDuo »

slam wrote: Sun Feb 03, 2019 10:20 am Any advice on convincing the wife that we don’t need to pay an advisor 1% to manage our accounts? We have been with the same guy for 10 years. Definitely moving away from him. He loaded us up with front loads and high expense ratios.

We meet with a CFP last week. She really likes him. He charges 1%. I’m trying to convince her that moving to Vanguard or Fidelity and using the 3 fund approach is the best.

I’m 38. She is 35.

Any advice is much appreciated?
Are the two of you near one of the local Bogleheads Chapters? Perhaps plan a visit to an upcoming meeting that you can both attend, talk shop, and spark an interest for your wife.
viewforum.php?f=19
"Save like a pessimist, invest like an optimist." - Morgan Housel
User avatar
celia
Posts: 11808
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: Help Convincing Spouse

Post by celia »

Ask your wife: If the advisor gets 1% of our money each year, how much will he have taken in 10 years? 25 years?

Although the "real answers" aren't 10% and 25%, it will be enough to make her think.

The reason those aren't the real answers are that you lose more than that because of compounding. If you lose 1% the first year, in the following year you also lose out on the growth on that first 1% you don't have plus the 1% for the second year. It snowballs each year.

A similar way of looking at it is if the advisor invests that money for herself, she gets 1% the first year. In the second year, she gets growth on the existing money in her account, plus another 1%. In the third year, she gets growth on the existing money in her account, plus another 1%. Rinse and repeat. All that money could have been yours.


You're the only one here who knows your wife and if the following would work, but have the two of you ever discussed which doctors you like? Some people only go to those who are known to have the best "bedside manner" even if the care isn't the best. If the doctor recommends something they don't want to do (for example, lose weight), they change doctors. At the other extreme, others want the best specialists that are available to them and follow all doctor suggestions. In comparison to your finances, it seems like she likes the personality of the new "advisor", where you are looking at the numbers to get a more likely optimal result. (Note that it is harder to compare doctors than account balances.)
Last edited by celia on Mon Feb 04, 2019 2:28 pm, edited 1 time in total.
ddurrett896
Posts: 1433
Joined: Wed Nov 05, 2014 3:23 pm

Re: Help Convincing Spouse

Post by ddurrett896 »

slam wrote: Sun Feb 03, 2019 10:20 am I’m 38. She is 35.

Any advice is much appreciated?
Money talks. Use Excel and make a column of years (like 1-35) until you retire. Add current value of portfolio + estimated add each year and sub out the expense ratio and other fees for each.

At the bottom, you can clearly see the difference between both example. If that doesn't do it my only suggestion would be to just move your money.
NotWhoYouThink
Posts: 3260
Joined: Fri Dec 26, 2014 4:19 pm

Re: Help Convincing Spouse

Post by NotWhoYouThink »

What are "our" accounts?

You can move your IRA and any taxable accounts in your name, she can choose not to.

While it's good to start saving early, it's not critical to your financial future to make all your moves this week. You can agree to disagree now on how to manage things, and talk over what her concerns are with your proposals, and vice versa.

And stay humble. Sometimes the managed account does really well, in spite of the fees.
NewOldGuy
Posts: 181
Joined: Mon Jul 30, 2018 12:37 am

Re: Help Convincing Spouse

Post by NewOldGuy »

That 1% doesn't seem as painful in a bull market, but it feels exponentially worse in a bear market. Adding salt to the wound.
Topic Author
slam
Posts: 10
Joined: Thu Jan 31, 2019 9:40 am

Re: Help Convincing Spouse

Post by slam »

CyclingDuo wrote: Mon Feb 04, 2019 9:07 am
slam wrote: Sun Feb 03, 2019 10:20 am Any advice on convincing the wife that we don’t need to pay an advisor 1% to manage our accounts? We have been with the same guy for 10 years. Definitely moving away from him. He loaded us up with front loads and high expense ratios.

We meet with a CFP last week. She really likes him. He charges 1%. I’m trying to convince her that moving to Vanguard or Fidelity and using the 3 fund approach is the best.

I’m 38. She is 35.

Any advice is much appreciated?
Are the two of you near one of the local Bogleheads Chapters? Perhaps plan a visit to an upcoming meeting that you can both attend, talk shop, and spark an interest for your wife.
viewforum.php?f=19
We live in the Orlando area.
MisterMister
Posts: 323
Joined: Thu Nov 01, 2018 9:50 pm

Re: Help Convincing Spouse

Post by MisterMister »

I am much older and retired but dealing with a similar situation. My spouse has full confidence in my ability to manage our portfolio, and I'll do that using a simple 3-4 fund portfolio (e.g. BogleHeads' Guide to the Three-Fund Portfolio, by Taylor Larimore).

I've considered using AUM and decided it is too expensive, with the possible exception of Vanguards' .3% service.

For now I will manage the balancing myself. But I know my wife has no interest or aptitude for doing that, so I will prepare a written strategy for moving to Vanguard's PAS when the time comes when I can no longer manage the portfolio. I maintain an up-to-date financial document in a safe deposit box with all account information, passwords, etc, and this will just be one more thing that I need to add to that.

I don't believe any amount of reading would make my wife feel comfortable in handling this portfolio herself, so I have to come up with something which will deal with eventualities where I cannot do it. In the meantime, I want to avoid the expense of PAS.
User avatar
BlueSkies
Posts: 55
Joined: Sat Oct 19, 2013 8:32 pm
Contact:

Re: Help Convincing Spouse

Post by BlueSkies »

--Paying 1% of a $100,000 estate to a financial manager is$1,000/year or $83/month
--Over 30 years that‘s $30,000 paid in fees
--Instead, if you invested that $83/month in the market with a 7% annual return compounded
semi-annually over 30 years, you’d have

$97,865 additional in your account.

(Starting with $0.00 at the beginning of the first year.)
Compound interest!
Check the math.
The services of a financial advisor are well worth it to some folks and not to others. Simply know what services you get.

Grandma Sylvia
https://grandmasinvestingforbeginners.blog/
mrc
Posts: 1473
Joined: Sun Jan 10, 2016 6:39 am

Re: Help Convincing Spouse

Post by mrc »

This was the picture that convinced me to turn Boglehead, and I convinced my spouse the moment I showed it to her:

From the Bogleheads® investment philosophy: #6 Keep Costs Low

Check out the graph for Extra Spending 10+ Years
By the time you know enough to choose a good financial adviser, you don't need one. | bogleheads.org is my advisor: The ER is 0.0% and the advice always solid.
MathWizard
Posts: 4509
Joined: Tue Jul 26, 2011 1:35 pm

Re: Help Convincing Spouse

Post by MathWizard »

NewOldGuy wrote: Mon Feb 04, 2019 2:49 pm That 1% doesn't seem as painful in a bull market, but it feels exponentially worse in a bear market. Adding salt to the wound.
+1 . My wife was really convinced when we had 50% in a CREF market index IRA with a 0.69% ER and 50% in VTSAX with 0.05% ER.

The difference in performance was exactly the difference in ERs, and

VTSAX gained money while the CREF IRA lost money.

(The index grew at more than a 0.05% annual rate, but less than 0.69% annual rate.)

I couldn't have picked a better example:
Do you want to gain money or loss money?
Loss aversion really helped there.
GmanJeff
Posts: 678
Joined: Sun Jun 11, 2017 7:12 am

Re: Help Convincing Spouse

Post by GmanJeff »

MisterMister wrote: Mon Feb 04, 2019 3:15 pm I am much older and retired but dealing with a similar situation. My spouse has full confidence in my ability to manage our portfolio, and I'll do that using a simple 3-4 fund portfolio (e.g. BogleHeads' Guide to the Three-Fund Portfolio, by Taylor Larimore).

I've considered using AUM and decided it is too expensive, with the possible exception of Vanguards' .3% service.

For now I will manage the balancing myself. But I know my wife has no interest or aptitude for doing that, so I will prepare a written strategy for moving to Vanguard's PAS when the time comes when I can no longer manage the portfolio. I maintain an up-to-date financial document in a safe deposit box with all account information, passwords, etc, and this will just be one more thing that I need to add to that.

I don't believe any amount of reading would make my wife feel comfortable in handling this portfolio herself, so I have to come up with something which will deal with eventualities where I cannot do it. In the meantime, I want to avoid the expense of PAS.
While appealing on the surface, a risk with this approach is that you may go for a very extended period of time within which your spouse is expecting you to be competently monitoring and managing your portfolio yet you may not actually be doing so, and may not even be aware of your declining ability and focus. Having your written strategy presumes you're clearly incompetent or unable to act due to disability or death, but it's not uncommon for people to very gradually just stop paying attention. At the same time, a similarly elderly spouse may not be as aware of your decline or, if she is, may not then have the capacity to remember about your strategy or to implement it.
MisterMister
Posts: 323
Joined: Thu Nov 01, 2018 9:50 pm

Re: Help Convincing Spouse

Post by MisterMister »

GmanJeff wrote: Mon Feb 04, 2019 4:26 pm
MisterMister wrote: Mon Feb 04, 2019 3:15 pm I am much older and retired but dealing with a similar situation. My spouse has full confidence in my ability to manage our portfolio, and I'll do that using a simple 3-4 fund portfolio (e.g. BogleHeads' Guide to the Three-Fund Portfolio, by Taylor Larimore).

I've considered using AUM and decided it is too expensive, with the possible exception of Vanguards' .3% service.

For now I will manage the balancing myself. But I know my wife has no interest or aptitude for doing that, so I will prepare a written strategy for moving to Vanguard's PAS when the time comes when I can no longer manage the portfolio. I maintain an up-to-date financial document in a safe deposit box with all account information, passwords, etc, and this will just be one more thing that I need to add to that.

I don't believe any amount of reading would make my wife feel comfortable in handling this portfolio herself, so I have to come up with something which will deal with eventualities where I cannot do it. In the meantime, I want to avoid the expense of PAS.
While appealing on the surface, a risk with this approach is that you may go for a very extended period of time within which your spouse is expecting you to be competently monitoring and managing your portfolio yet you may not actually be doing so, and may not even be aware of your declining ability and focus. Having your written strategy presumes you're clearly incompetent or unable to act due to disability or death, but it's not uncommon for people to very gradually just stop paying attention. At the same time, a similarly elderly spouse may not be as aware of your decline or, if she is, may not then have the capacity to remember about your strategy or to implement it.
That's a good point. But I am just newly retired and in mid-sixties and good health. I plan to simplify my retirement funds and so all that should be required is an annual or semi-annual rebalance; not too taxing and many much older people here are doing that. I look forward to the day when I am not paying much attention; if anything I am paying too much attention right now. Curious about how others who self-manage have "insured" themselves against the risk you point out. A topic for another thread, but clearly something I'll have to give some thought to.
Luke Duke
Posts: 1088
Joined: Tue Jun 18, 2013 11:44 am
Location: Texas

Re: Help Convincing Spouse

Post by Luke Duke »

Image
NotWhoYouThink
Posts: 3260
Joined: Fri Dec 26, 2014 4:19 pm

Re: Help Convincing Spouse

Post by NotWhoYouThink »

The charts showing the impact of fees are nice, but they only work if you assume that your advisor would have you invested in the same funds, at the same AA, that you would choose for yourself.

Maybe OP's spouse thinks the advisor would do a better job picking which funds and sectors to invest in. In that case, he'd be earning his fee. Maybe he would be, I don't know OP at all. But his spouse doesn't trust his investing acumen.

OK, we're all here on this board and we all think we're smart. But if we're going to convince other people we're smart we'll have to do better than those charts.

Not everyone is ready to dig through all the reading to see the light of the boglehead way. And not everyone trusts a spouse with investments. You don't get to win all your arguments just because you are really really sure you are right. Sometimes you have to accept a loss or two, and press on.
Post Reply