Dumb to investing [Portfolio Feedback]

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Topic Author
Iteb
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Joined: Sat Jul 06, 2019 4:01 am

Dumb to investing [Portfolio Feedback]

Post by Iteb » Sat Jul 06, 2019 4:44 am

Let me start by saying that investing has been confusing to me, so when I received the name of my investment advisor from my accountant and read he is a CFP, I thought I'd leave it up to him. Now I'm starting to think that maybe I should do something different.

Last year and now this year mutual funds have matured and he's sent me over new funds to buy with new sales loads. Each time the fees is around 2-4%. I'm not seeing any deferred charges. I didn't realize that these funds would mature and that he'd be having me buy new ones all the time. I've been investing since 2013 and my average return has been about 5%. Here is the break down of the funds fees per year and how much I have invested in each one. I'm not sure if he gets something from that the funds fees too?

CPXAX: Cohen & Steers Preferred Sec & Inc A
1.16%
$27,173.15

SDGAX: DWS Capital Growth A
0.94%
$19,781.38

FATEX: Fidelity Advisor Technology T US Stock
1.31%
$17,936.45

FACTX: Fidelity Advisor Health Care T US Stock
1.32%
$15,516.33

FNICX: Fidelity Advisor New Insights C
1.80%
$23,133.38

FTSDX: Fidelity Advisor Strategic Div & Inc T US Stock
1.26%
$19,025.14

Money Market
FDRXX: Fidelity Cash Reserves US Bond
0.38%
$20,561.32


40174C315: Guggenheim Defined Portfolios Unit 1816 S&P Divid Aristocrats Select 25 Strategy Port Ser 13 Monthly Reinvest
$44,167.24

40174H231: Guggenheim Defined Portfolios Unit 1885 S&P Divid Aristocrats Select 25 Strategy Port Ser 15 Monthly Reinvest
Other
$15,924.98

I'm not sure what the fees are on the Guggenheims. I was so busy with my business before I really didn't have time to look into this kind of stuff and every time I tried I just got confused and since I wasn't losing money I didn't think it was a big deal.

Lately I've had more time and I'd like to learn more about managing my money. Especially now that he is saying that another mutual fund has matured I'm wondering if it's a good idea to move that money over a account I manage myself. I've been reading about lazy portfolios and I was thinking it might be better to invest something more simple that I can do on my own.

If any one has any feedback I'd appreciate it because I still feel a little lost. Should I sell what I currently have or just wait for them to mature? I know I probably sound pretty ignorant here, so I appreciate you taking the time to read this.

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prudent
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Re: Dumb to investing [Portfolio Feedback]

Post by prudent » Sat Jul 06, 2019 5:28 am

Could you explain what you mean when you say the funds have matured?

Topic Author
Iteb
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Re: Dumb to investing [Portfolio Feedback]

Post by Iteb » Sat Jul 06, 2019 5:34 am

He has contacted me twice in the last 7 months saying that a position has matured and then sent me paperwork for a new option to invest in. The new option has all new sales fees. Is this not something that happens? It seemed a little odd to be having to buy them so often.

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Tamarind
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Re: Dumb to investing [Portfolio Feedback]

Post by Tamarind » Sat Jul 06, 2019 5:38 am

:shock:

You are being ripped off. What your advisor is doing to you is shameful. I want to say that as clearly as possible up front. There's no excuse for taking advantage of a client in this way.

Your advisor gets the sales loads every. single. time. He also gets part of the expense ratio from the 12b-1 fees. Also, of the funds you are holding only the Guggenheim bond funds "mature", and there are lots of bond funds available that don't. He's using it as an excuse to get more fees. There is no reason to buy new funds every year except to line your advisor's pockets.
(Edited to strike the bit about funds maturing. Guggenheim does offer bond funds with defined maturity, but these are not bond funds. Either way these are not appropriate for a newer investor. Sorry to be sloppy but this makes me so angry.)

He is also choosing funds that are costing you more in taxes than you should be paying.

If you want someone to handle your investing for you, Vanguard PAS will provide the service for 0.3% of assets plus expense ratios below 0.2%, for a total cost of less than 0.5%. Compare that to 1%+ in expense ratios, and he is churning your account for load fees. :annoyed

I strongly recommend that you call Vanguard on Monday and tell them you want to sell everything and transfer your account to PAS. They will help you with the paperwork to authorize the move. Normally I'd say take a while to learn first but you are being robbed by those fees. You won't owe much of anything in capital gains because he's been churning your account. Once you are away from him, you can learn at your leisure to do it yourself and you may not need PAS anymore.

I suggest never speaking to your advisor again, just as you would not call and confront someone who tricked you into sending them money for a scam. Trust me, he won't be surprised when you go.
Last edited by Tamarind on Sat Jul 06, 2019 5:46 am, edited 2 times in total.

Topic Author
Iteb
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Re: Dumb to investing [Portfolio Feedback]

Post by Iteb » Sat Jul 06, 2019 5:39 am

I think it may have been a UIT for one or both.

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Iteb
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Re: Dumb to investing [Portfolio Feedback]

Post by Iteb » Sat Jul 06, 2019 5:46 am

Thank you for the feedback, I thought it was a little odd to be having to buy so often. This is actually for my SEP account so gains shouldn't be a problem. It's so frustrating trying to figure this stuff out sometimes, I thought since he is a CFP that he was required to give good financial advice. I always read that Vanguard is the best so I will give them a call. Thank you for your feedback, I really appreciate you taking the time to respond.

3-20Characters
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Re: Dumb to investing [Portfolio Feedback]

Post by 3-20Characters » Sat Jul 06, 2019 6:13 am

Iteb wrote:
Sat Jul 06, 2019 5:46 am
Thank you for the feedback, I thought it was a little odd to be having to buy so often. This is actually for my SEP account so gains shouldn't be a problem. It's so frustrating trying to figure this stuff out sometimes, I thought since he is a CFP that he was required to give good financial advice. I always read that Vanguard is the best so I will give them a call. Thank you for your feedback, I really appreciate you taking the time to respond.
I would contact vanguard and get everything moved pronto. Then check back here when it’s done. Post in this thread. Since it’s a sep account, I would sell everything and put it all in a single target date or lifestyle fund. How old are you?

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dwickenh
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Re: Dumb to investing [Portfolio Feedback]

Post by dwickenh » Sat Jul 06, 2019 6:46 am

Welcome here Iteb,

You have made a great decision to learn about investing your assets without someone taking advantage of you.
You will receive good advice here and learn from people that have been investing their own funds for years.

This first step will be a change for the better.

Best wishes,

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

Topic Author
Iteb
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Re: Dumb to investing [Portfolio Feedback]

Post by Iteb » Sat Jul 06, 2019 6:56 am

I will call first thing on Monday, I certainly don't want him making anymore money off me. I had a feeling something wasn't right after him telling me another position matured. I researched the new fund he sent over it was clear that Vanguard has a superior fund with less fees that is similar. Then I started looking more closely at what I currently have and the 1.80 fees on that one fund seems like a lot. He also set up a annuity and I think that has penalties for early withdrawal, so I'll have to see what Vanguard says about that.

I'm 45, wish I had been investing for longer, but I had challenging times with my business and I'm now able to do more. I did set up a robo advisor account last year, outside of my SEP and a Roth with Ally for 2018. I was already feeling like my money should be doing more than he's been doing with it. So much to learn.

I want to thank you again for going out of your way to respond, it was very kind of you...I really appreciate it!

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Tamarind
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Re: Dumb to investing [Portfolio Feedback]

Post by Tamarind » Sat Jul 06, 2019 7:07 am

The CFP organization recently added a fiduciary standard for advisors who provide financial planning - meaning he is supposed to act in your financial best interests if he made a financial plan for you. Even if he didn't he should adhere to the lower standard of suggesting appropriate investments. Depending on the work he did for you he might be censured or fined for treating you the way he did. It is probably worth paying any surrender fees on annuities, etc, for the sake of stopping the bleeding. An annuity inside a tax-advantaged account...... This guy has some nerve.

You may wish to look him up here: https://brokercheck.finra.org/. It's possible this isn't his first run in with ethics violations.

The 1.8% fee is not the only one that's a lot. Equivalents to all of those funds can be had from many companies for 20-30% of the fee and no sales loads.
Last edited by Tamarind on Sat Jul 06, 2019 7:14 am, edited 1 time in total.

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Re: Dumb to investing [Portfolio Feedback]

Post by oldcomputerguy » Sat Jul 06, 2019 7:14 am

Iteb wrote:
Sat Jul 06, 2019 4:44 am
Let me start by saying that investing has been confusing to me, so when I received the name of my investment advisor from my accountant and read he is a CFP, I thought I'd leave it up to him. Now I'm starting to think that maybe I should do something different.
You're absolutely right, you should. Tamarind hit it on the head. This conduct by your "advisor" is so egregious that words fail me. As far as I know, mutual funds never "mature"; you can hold shares of a fund for as long as you like, generally the longer the better.
I've been investing since 2013 and my average return has been about 5%.
I hate to mention this, because it'll likely just exacerbate your pain and discontent, but you should be aware that the average annualized return of the S&P500 since 2013 has been around 10.5% (with dividends reinvested, it's closer to 12.6%). If you had simply held VFIAX (Vanguard S&P500 Index Fund), you'd have had much higher returns with much lower fees (0.04% expense ratio, no 12b-1 fee or loads).

Get away from this guy as fast as possible.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

HomeStretch
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Re: Dumb to investing [Portfolio Feedback]

Post by HomeStretch » Sat Jul 06, 2019 7:29 am

It was not clear from your post if your accountant recommended the investment advisor.

If yes, consider giving feedback (edit - after you move your account to Vanguard) to your accountant about the costly fees/churn you experienced. Perhaps your accountant will reconsider recommending this advisor especially if it reflects poorly on the accountant.

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Re: Dumb to investing [Portfolio Feedback]

Post by 3-20Characters » Sat Jul 06, 2019 7:52 am

Iteb wrote:
Sat Jul 06, 2019 6:56 am
I will call first thing on Monday, I certainly don't want him making anymore money off me. I had a feeling something wasn't right after him telling me another position matured. I researched the new fund he sent over it was clear that Vanguard has a superior fund with less fees that is similar. Then I started looking more closely at what I currently have and the 1.80 fees on that one fund seems like a lot. He also set up a annuity and I think that has penalties for early withdrawal, so I'll have to see what Vanguard says about that.

I'm 45, wish I had been investing for longer, but I had challenging times with my business and I'm now able to do more. I did set up a robo advisor account last year, outside of my SEP and a Roth with Ally for 2018. I was already feeling like my money should be doing more than he's been doing with it. So much to learn.

I want to thank you again for going out of your way to respond, it was very kind of you...I really appreciate it!
At 45 years old, a target date fund that is 15-20 years from retirement will put you in roughly 75-80%+ equities. You can pick a more conservative fund if you prefer by selecting a different retirement year.
https://investor.vanguard.com/mutual-fu ... etirement/#/

Consider your overall portfolio AA when deciding. I would personally feel very comfortable being in a target date fund while I take my time to do more studying and research. Since in it’s a sep, you can change your mind without tax consequences.

Topic Author
Iteb
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Re: Dumb to investing [Portfolio Feedback]

Post by Iteb » Sat Jul 06, 2019 8:04 am

That accountant actually changed industries, but I will let the firm know in case they are still referring people.

Needless to say this is frustrating, I missed out on what could have been some decent returns. I had a feeling something wasn't right. You all have given me such great advice and feedback, thanks for that! I still have so much to learn.

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Re: Dumb to investing [Portfolio Feedback]

Post by bradinsky » Sat Jul 06, 2019 8:07 am

I actually agree with HomeStretch. This certainly reflects poorly on your accountant. If there is any indication that the accountant was aware of the CFP action, I would find also myself a new accountant. He is retained by you, and should only have your best interests at heart. On the CFP’s end, there is absolutely no excuse for this, except greed!

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Iteb
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Re: Dumb to investing [Portfolio Feedback]

Post by Iteb » Sun Jul 07, 2019 3:33 pm

I found this article:

https://www.google.com/amp/s/www.cnbc.c ... hares.html

It's about the SEC and that they are going to be fining firms that have been advising investors to purchase these high fee mutual funds. I feel that my advisor was having me purchase investments with the intention of them maturing or having me sell bad investments later so that he could keep making commission on new ones. I looked up the annuity he put me in and it looks like the commission was probably over 6%. I and think the fees for that annuity are over 3%. Seems like a terrible investment for when I was still in my 30's. I would think this all would have to be a conflict for a CFP.

I'm going to download all my statements and once I transfer everything to Vanguard look into who I need to report him to. I've been doing the math on what I've lost out on and it's ridiculous, especially since the bulk of my investments were made in the first few years.

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Re: Dumb to investing [Portfolio Feedback]

Post by pkcrafter » Sun Jul 07, 2019 5:34 pm

Iteb wrote:
Sat Jul 06, 2019 4:44 am
Let me start by saying that investing has been confusing to me, so when I received the name of my investment advisor from my accountant and read he is a CFP, I thought I'd leave it up to him. Now I'm starting to think that maybe I should do something different.

Last year and now this year mutual funds have matured and he's sent me over new funds to buy with new sales loads. Each time the fees is around 2-4%. I'm not seeing any deferred charges. I didn't realize that these funds would mature and that he'd be having me buy new ones all the time. I've been investing since 2013 and my average return has been about 5%. Here is the break down of the funds fees per year and how much I have invested in each one. I'm not sure if he gets something from that the funds fees too?

CPXAX: Cohen & Steers Preferred Sec & Inc A
1.16%
$27,173.15

SDGAX: DWS Capital Growth A
0.94%
$19,781.38

FATEX: Fidelity Advisor Technology T US Stock
1.31%
$17,936.45

FACTX: Fidelity Advisor Health Care T US Stock
1.32%
$15,516.33

FNICX: Fidelity Advisor New Insights C
1.80%
$23,133.38

FTSDX: Fidelity Advisor Strategic Div & Inc T US Stock
1.26%
$19,025.14

Money Market
FDRXX: Fidelity Cash Reserves US Bond
0.38%
$20,561.32


40174C315: Guggenheim Defined Portfolios Unit 1816 S&P Divid Aristocrats Select 25 Strategy Port Ser 13 Monthly Reinvest
$44,167.24

40174H231: Guggenheim Defined Portfolios Unit 1885 S&P Divid Aristocrats Select 25 Strategy Port Ser 15 Monthly Reinvest
Other
$15,924.98

I'm not sure what the fees are on the Guggenheims. I was so busy with my business before I really didn't have time to look into this kind of stuff and every time I tried I just got confused and since I wasn't losing money I didn't think it was a big deal.

Lately I've had more time and I'd like to learn more about managing my money. Especially now that he is saying that another mutual fund has matured I'm wondering if it's a good idea to move that money over a account I manage myself. I've been reading about lazy portfolios and I was thinking it might be better to invest something more simple that I can do on my own.

If any one has any feedback I'd appreciate it because I still feel a little lost. Should I sell what I currently have or just wait for them to mature? I know I probably sound pretty ignorant here, so I appreciate you taking the time to read this.
Some of the above funds are straight-forward mutual funds with tickers and no maturity dates, although some of them have deferred loads (class B) and some ongoing loads (class C) and some front-end loads (class A). The front end loads may be waived, but the ongoing ones and back-end loads will apply. The Guggenheim investments do not have tickers, so they are not standard mutual funds and they may even have maturity dates. How much is this advisor charging for management?

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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Iteb
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Re: Dumb to investing [Portfolio Feedback]

Post by Iteb » Thu Jul 11, 2019 6:12 am

I contacted Vanguard this week set up my account and have sold everything that advisor put me. I have an appointment next week with Vanguard to discuss how to invest the funds that are being transferred over. I feel like a weight has been lifted, I felt like something wasn't right and I wanted to thank everyone again for such good advice.

I think I'll let Vanguard PAS handle my SEP while I start trying to invest on my own with my Roth account until I get more comfortable doing it all. Now that I'm able to understand what he was doing I'm not happy about it. I just purchased the Boglehead book on Amazon and have found lots of great links on this site that I'm excited to learn from.

I really appreciate everyone that took the time to respond, you've been such a great help!

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Tamarind
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Re: Dumb to investing [Portfolio Feedback]

Post by Tamarind » Thu Jul 11, 2019 6:27 am

I'm so glad to hear you got loose from the advisor. Sounds like you are taking all the right steps.

We're always here if you have questions. :beer

retiredjg
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Re: Dumb to investing [Portfolio Feedback]

Post by retiredjg » Thu Jul 11, 2019 8:27 am

For those who are wondering, here is some information from the SEC on UIT's (mentioned above by our original poster).

https://www.sec.gov/fast-answers/answersuithtm.html

This is not a type of investing I have ever heard of and it seems pretty evil to me. But it might explain some of the "your stuff has matured and you need a new one" advice you have gotten.

Your decision to move to Vanguard's PAS is a good one. Once they get you on track with an intelligent and reasonable portfolio, you may find that you are able to take on the management of it yourself. Managing a simple portfolio is not hard.

Let us know how it goes.

esteen
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Re: Dumb to investing [Portfolio Feedback]

Post by esteen » Thu Jul 11, 2019 9:29 am

Iteb wrote:
Thu Jul 11, 2019 6:12 am
I contacted Vanguard this week set up my account and have sold everything that advisor put me. I have an appointment next week with Vanguard to discuss how to invest the funds that are being transferred over. I feel like a weight has been lifted, I felt like something wasn't right and I wanted to thank everyone again for such good advice.

I think I'll let Vanguard PAS handle my SEP while I start trying to invest on my own with my Roth account until I get more comfortable doing it all. Now that I'm able to understand what he was doing I'm not happy about it. I just purchased the Boglehead book on Amazon and have found lots of great links on this site that I'm excited to learn from.

I really appreciate everyone that took the time to respond, you've been such a great help!
Congratulations! You have educated yourself and are taking the right steps. Enjoy the Bogleheads book and don't fret too much about what might have been in the past, instead pat yourself on the back for improving your financial future!

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