Is this what a CFP does?

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warfrat
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Is this what a CFP does?

Post by warfrat » Tue Sep 10, 2019 12:55 pm

I am looking for someone to review my parents' portfolio. They are retired and all their investments are with Wells Fargo. (Need I say more? :annoyed) Even with the subpar performance and high fees, they are not ready to move.

I want someone to do a forensic review of their portfolio and explain why the investments they are in are not appropriate in terms of risk/returns/tax considerations/diversification/high fees, etc. - is this what a (fee only) CFP does?

Since I'm someone they once changed diapers for, they don't think I know anything, even though I've been a long-time Boglehead lurker who has greatly benefited from all the wonderful advice from this board. I do not want to manage this money myself, but if the time came they wanted to make a move, would recommend Vanguard PAS. Their investments do not need to be as complicated as they are currently.

WF has them in way too many funds, otherwise I would ask for a portfolio review on here. As it stands I don't want to spend the next week typing it all out, and I wouldn't expect anyone to analyze such a hairball for free.

Many thanks!

mighty72
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Re: Is this what a CFP does?

Post by mighty72 » Tue Sep 10, 2019 1:19 pm

A good CFP would do that. I believe Rick Ferri offer something like this and is well regarded here.

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LilyFleur
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Re: Is this what a CFP does?

Post by LilyFleur » Tue Sep 10, 2019 1:28 pm

If they would agree to meet with a CFP at Schwab, they could get some free advice because the advisor would want to sign them up for Schwab. My Schwab advisor (I do not pay him on an ongoing basis) is a fiduciary and made the transfer process quite painless, supervising me filling out the forms in his office, etc. Schwab is one of the big three that offer low-cost index funds, but unlike Vanguard, offers 24-hour customer service by phone.

There would be some value in having your parents' money in the same institution that you use. Even if you don't want to manage it yourself, you would understand the online portal and be able to talk to them about it. I took my recent college grad son to my Schwab advisor, and he opened a brokerage account and checking account there. That way when I get the age where I am not as able to manage my own money, he will be familiar with Schwab.

It is hard to know who to trust when you get older. I do prefer to receive advice from a fiduciary.

"A fiduciary is a person or organization that acts on behalf of another person or persons to manage assets. ... The highest legal duty of one party to another, being a fiduciary requires being bound ethically to act in the other's best interests." (Investopedia definition of fiduciary)
Last edited by LilyFleur on Tue Sep 10, 2019 1:32 pm, edited 1 time in total.

aristotelian
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Re: Is this what a CFP does?

Post by aristotelian » Tue Sep 10, 2019 1:30 pm

If they will listen to advice from a professional, you might consider a fee-only CFP. While you might regard the fee as a waste of money, it psychologically ensures that they have "skin in the game" and listen to what the CFP says. Vanguard would work if they really want someone else to manage the assets, but that will probably cost more over the long run.

alex_686
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Re: Is this what a CFP does?

Post by alex_686 » Tue Sep 10, 2019 1:31 pm

warfrat wrote:
Tue Sep 10, 2019 12:55 pm
I want someone to do a forensic review of their portfolio and explain why the investments they are in are not appropriate in terms of risk/returns/tax considerations/diversification/high fees, etc. - is this what a (fee only) CFP does?
No, for 2 reasons.

First, this stuff happens routinely at the institutional level. It is hard and complex. You have to do a fairly deep dive on the client's goals, risk tolerance, and market expectations. You then need to break down the asset allocation, re-balancing techniques, and tactical deviations from that plan. Then you need to dig into why the funds were chosen and how those funds operated. The fact that they trailed the actual market means nothing.

It is hard to do at the institutional level with high quality records. For a personal account? I think not. Further, most of this stuff is outside the purview of the CFP program.

Second, and more critically, the way that I am reading this post, you are approaching this with a negative and vindictive mindset. You are interested in rehashing old debates and scoring points. It sounds like you want to hire a aggressive impartial investigator to prove your points. This is almost a contradiction.

I think you would be better off considering that past history is water under the bridge. Rather, look forward to building a better IPS. CFPs are very good at this.

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LilyFleur
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Re: Is this what a CFP does?

Post by LilyFleur » Tue Sep 10, 2019 1:39 pm

alex_686 wrote:
Tue Sep 10, 2019 1:31 pm
warfrat wrote:
Tue Sep 10, 2019 12:55 pm
I want someone to do a forensic review of their portfolio and explain why the investments they are in are not appropriate in terms of risk/returns/tax considerations/diversification/high fees, etc. - is this what a (fee only) CFP does?
No, for 2 reasons.

First, this stuff happens routinely at the institutional level. It is hard and complex. You have to do a fairly deep dive on the client's goals, risk tolerance, and market expectations. You then need to break down the asset allocation, re-balancing techniques, and tactical deviations from that plan. Then you need to dig into why the funds were chosen and how those funds operated. The fact that they trailed the actual market means nothing.

It is hard to do at the institutional level with high quality records. For a personal account? I think not. Further, most of this stuff is outside the purview of the CFP program.

Second, and more critically, the way that I am reading this post, you are approaching this with a negative and vindictive mindset. You are interested in rehashing old debates and scoring points. It sounds like you want to hire a aggressive impartial investigator to prove your points. This is almost a contradiction.

I think you would be better off considering that past history is water under the bridge. Rather, look forward to building a better IPS. CFPs are very good at this.
Vindictive, really?

I am seeing a son who wants his parents to invest well and pay less in fees. He wants the best for them, and they won't listen to him. I sense he may be frustrated. OMG, OP, welcome to aging parents. It can be quite challenging.

They need someone to sketch out the math on a piece of paper (yes, paper and pen speaks well to seniors). They need to see their costs--and the long-term cost--of their present investments. And then they need to see what their costs would be at Vanguard or Schwab or Fidelity, and how much more money they could save. If that doesn't convince them, I think the OP has done his best and just has to accept their decision. Hopefully they have set up a trust and if someday they are incapable of managing their money, a bank trustee has been named to take it over.

HomeStretch
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Re: Is this what a CFP does?

Post by HomeStretch » Tue Sep 10, 2019 1:43 pm

I think a review by a fee-only advisor or Schwab fiduciary advisor could make sense. It doesn’t need to be too detailed as WF’s AUM fees/ERs and portfolio complexity are just so bad that it’s a no-brainer to recommend moving. But, that’s only if your parents want to do it. I would only push it if their portfolio/income may not be adequate to cover their expenses or if I was providing financial assistance.

If your parents agree to move, their portfolio holdings will most likely not transfer in-kind. Just liquidate and have the receiving brokerage initiate the transfer. Steel yourself for the account closing fees (some brokerages will reimburse you for them).

My parents were paying over 2.5% in fees/ERs at WF and had 48 holdings for a $400k portfolio when they turned to me for help. They were trying to cut expenses to live on their SS and $18k per year RMD while their advisor was getting $10k per year.

My parents are now happily at Vanguard. I handle their finances as POA. But if they were doing it themselves, I would have advised them to use Schwab or Fidelity to have access to a walk-in office and better customer service.

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LilyFleur
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Re: Is this what a CFP does?

Post by LilyFleur » Tue Sep 10, 2019 1:49 pm

HomeStretch wrote:
Tue Sep 10, 2019 1:43 pm
I think a review by a fee-only advisor or Schwab fiduciary advisor could make sense. It doesn’t need to be too detailed as WF’s AUM fees/ERs and portfolio complexity are just so bad that it’s a no-brainer to recommend moving. But, that’s only if your parents want to do it. I would only push it if their portfolio/income may not be adequate to cover their expenses or if I was providing financial assistance.

If your parents agree to move, their portfolio holdings will most likely not transfer in-kind. Just liquidate and have the receiving brokerage initiate the transfer. Steel yourself for the account closing fees (some brokerages will reimburse you for them).

My parents were paying over 2.5% in fees/ERs at WF and had 48 holdings for a $400k portfolio when they turned to me for help. They were trying to cut expenses to live on their SS and $18k per year RMD while their advisor was getting $10k per year.

My parents are now happily at Vanguard. I handle their finances as POA. But if they were doing it themselves, I would have advised them to use Schwab or Fidelity to have access to a walk-in office and better customer service.
OP's parents don't think he knows much, but he does, as he has learned much from this forum. Your parents asked you for help and trust you--and you are willing--to have POA for finances. I'm sure they appreciate how much money you saved them. Unfortunately, these are two entirely different behavioral situations, and OP has his work cut out for him to try to help his parents who appear rather stubborn and set in their ways. Be grateful for your parents.

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Re: Is this what a CFP does?

Post by livesoft » Tue Sep 10, 2019 2:01 pm

I'll say that we have a LOT of assets at WellsFargo in do-it-yourself WellsTrade accounts: taxable and IRAs. The problem is not WF, instead it is using a WF salesrep usually found inside one of the WF branch buildings that is the problem. It is also possible that the parents were previously at a company bought by WF such as Wachovia or someone else.

A salesrep at Schwab, Fidelity, TDAmeritrade, Bank of America, JPMorganChase, EdwardJones, et al. would just be more of the same.

Lots of people on this forum mention having a second set of eyes look at their portfolio. One might use this tactic on the parents: "Would you like a 2nd set of eyes to take a look and see if things are OK or could be better?" I think I recall learning that about 30% of any salesrep's clients actually leave them every year. They need to spend a lot of time drumming up new clients. Clearly, their competitors are doing the same thing. It is all a big game of musical chairs until you stop playing.
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rich126
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Re: Is this what a CFP does?

Post by rich126 » Tue Sep 10, 2019 2:05 pm

The question is, are they open to listen to other options and make a change?

I know from experience that some people just don't understand finance, and are very concern with personal relationships when it comes to investing and financial matters. I hear from coworkers "oh I use {some high priced service}" and if I try to say, "you can do that much cheaper with ...", they usually respond with "but they are a friend of the family" or "they are nice people" or.........

So I know not to really try to help because they really aren't open to changing or wanting the help. They don't understand what money they are losing.

And yeah, the OP does come across as someone trying to prove they know more than the parents do and that isn't helpful here.

How did you find out about all of their investments? Did they ask for help? If so, then maybe you got a chance. Otherwise it may be best to drop it and only bring it up once in a great while. Or occasionally (if they use email) send them an article about low cost investing and how much people lose in fees.

alex_686
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Re: Is this what a CFP does?

Post by alex_686 » Tue Sep 10, 2019 2:05 pm

LilyFleur wrote:
Tue Sep 10, 2019 1:39 pm
Vindictive, really?

I am seeing a son who wants his parents to invest well and pay less in fees. He wants the best for them, and they won't listen to him. I sense he may be frustrated. OMG, OP, welcome to aging parents. It can be quite challenging.
I will agree with what you are saying but still hold my position until I hear more from the OP. It can be true that the parents need help and that the OPs is approaching this with the wrong attitude. I am pointing specifically at his interest in past history and wanting to do a "forensic review". If he were interested in suing for processional negligence, that would be one thing. But I don't think this situation rise to that level nor do I think it would be useful in any meaningful way.

To the OP, don't focus on the past. I have seen situations like this before. You and your parents will get mired in complexity and negative emotions. Help your parents move on and forward.

livesoft
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Re: Is this what a CFP does?

Post by livesoft » Tue Sep 10, 2019 2:08 pm

Another thing the OP can do is read Bogleheads.org over the next year. There are many many posts about helping parents change their advisor. Each one is slightly different, but if one puts 50 of them together one might get ideas about all the ways that caused people to actually do something. Inertia to do nothing is a big deal.
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longleaf
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Re: Is this what a CFP does?

Post by longleaf » Tue Sep 10, 2019 2:14 pm

I have used Wells Fargo Advisors in the past, and I would strongly recommend that your parents move to Vanguard PAS. Feel free to quote this online stranger to them!

Wells Fargo Advisors employs salespeople (NOT financial professionals) who are tasked with earning commissions for themselves and the company. The benefit I believe your parents may enjoy is the in-person contact/friendliness of the salesman. This individual could have any sort of college degree, and it's likely to be unrelated to finance. It's in your parents' best interest to simplify the portfolio, save money on fees, track the market return instead of trying to beat it, and reduce frequency of trading which is done to generate commissions. If they don't want to invest by themselves, Vanguard PAS is the solution hands-down.

Ask the advisor tough questions and force him to answer straight-up. I suspect this will create enough evidence over time.
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Re: Is this what a CFP does?

Post by dbr » Tue Sep 10, 2019 2:15 pm

They could get on this forum themselves and ask for a portfolio review. If you want a forensic analysis this forum would do that for sure.

The downside is there would be so many suggestions that it can become like asking what car to buy, but at least they would see input from people who have no vested interest in the answer.

Reading some of the starter Boglehead books on investing might provide some insight for them if they are willing to accept the idea that what they are doing may not be the best plan.

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Re: Is this what a CFP does?

Post by MichCPA » Tue Sep 10, 2019 2:22 pm

dbr wrote:
Tue Sep 10, 2019 2:15 pm
They could get on this forum themselves and ask for a portfolio review. If you want a forensic analysis this forum would do that for sure.

The downside is there would be so many suggestions that it can become like asking what car to buy, but at least they would see input from people who have no vested interest in the answer.

Reading some of the starter Boglehead books on investing might provide some insight for them if they are willing to accept the idea that what they are doing may not be the best plan.
Ephasis added above

I think sending OPs aging parents to a website with conflicting and highly opinionated posters is a good way to upset them. You need ONE person who is a good teacher, not 100 hot takes about how they can't afford to drive a Corolla with their $5 million portfolio.

dbr
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Re: Is this what a CFP does?

Post by dbr » Tue Sep 10, 2019 2:27 pm

MichCPA wrote:
Tue Sep 10, 2019 2:22 pm
dbr wrote:
Tue Sep 10, 2019 2:15 pm
They could get on this forum themselves and ask for a portfolio review. If you want a forensic analysis this forum would do that for sure.

The downside is there would be so many suggestions that it can become like asking what car to buy, but at least they would see input from people who have no vested interest in the answer.

Reading some of the starter Boglehead books on investing might provide some insight for them if they are willing to accept the idea that what they are doing may not be the best plan.
Ephasis added above

I think sending OPs aging parents to a website with conflicting and highly opinionated posters is a good way to upset them. You need ONE person who is a good teacher, not 100 hot takes about how they can't afford to drive a Corolla with their $5 million portfolio.
You might be right. Maybe the reading part is a better approach.

frcabot
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Re: Is this what a CFP does?

Post by frcabot » Tue Sep 10, 2019 2:28 pm

Yeah, I’m not seeing the vindictiveness either. I agree with the suggestions of either doing a Schwab review or a fee-based CFP who is going to recommend low-cost funds/ETFs and who can identify how much money they will save in fees/expenses. Frankly, they could even put their info into the Betterment calculator and Betterment will spit out how much in fees/expenses they could save even with Betterment’s 0.25% cut.
Last edited by frcabot on Tue Sep 10, 2019 3:25 pm, edited 1 time in total.

MichCPA
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Re: Is this what a CFP does?

Post by MichCPA » Tue Sep 10, 2019 2:39 pm

frcabot wrote:
Tue Sep 10, 2019 2:28 pm
Yeah, I’m not seeing the vindictiveness either. I agree with the suggestions of either doing a Schwab review or a few-based CFP who is going to recommend low-cost funds/ETFs and who can identify how much money they will save in fees/expenses. Frankly, they could even put their info into the Betterment calculator and Betterment will spit out how much in fees/expenses they could save even with Betterment’s 0.25% cut.
Vindictive is the wrong word, but OP certainly needs to balance being an advocate for the parents vs attempting to control the finances. As long as they are of sound mind it is their decision. Op might want to try working collaboratively with siblings or aunt/uncle's rather than trying to drive this one solo. Its not as much of a finance problem as OP thinks. Its an inter-personal issue.

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Re: Is this what a CFP does?

Post by Stinky » Tue Sep 10, 2019 2:42 pm

warfrat wrote:
Tue Sep 10, 2019 12:55 pm
Even with the subpar performance and high fees, they are not ready to move.
Warfrat, welcome to the Forum! Glad that you've been reading here, and decided to post your question.

I think that this sentence from your original post says it all. As the old saying goes, "You can lead a horse to water, but you can't make him drink".

Unless your parents are mentally unable to make competent decisions, your best approach may be to leave this alone - for now, at least. You can keep on throwing in comments about Boglehead philosophies when appropriate, but I can't imagine someone who is "not ready to move" actually opening their books and records up to a financial advisor that they don't know.
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alex_686
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Re: Is this what a CFP does?

Post by alex_686 » Tue Sep 10, 2019 2:47 pm

MichCPA wrote:
Tue Sep 10, 2019 2:39 pm
Vindictive is the wrong word, ....
To clarify, I think the OP has a vindictive attitude towards WF and the FA involved. Or at least strident. I was not referring to the OP's relationship with their parents - but there does seem to be some issues there as well.

MichCPA
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Re: Is this what a CFP does?

Post by MichCPA » Tue Sep 10, 2019 2:56 pm

alex_686 wrote:
Tue Sep 10, 2019 2:47 pm
MichCPA wrote:
Tue Sep 10, 2019 2:39 pm
Vindictive is the wrong word, ....
To clarify, I think the OP has a vindictive attitude towards WF and the FA involved. Or at least strident. I was not referring to the OP's relationship with their parents - but there does seem to be some issues there as well.
Fair enough, I don't know that there is a clear standard for when charging more becomes immoral, but OP seems to think it has passed that point. Ultimately, OPs parents are the ones who get to decide if they are paying too much. In my experience, its important to say your piece once, let people make a decision, and the most important part is that you need to be able to deal with that decision.

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Re: Is this what a CFP does?

Post by Wiggums » Tue Sep 10, 2019 3:05 pm

Stinky wrote:
Tue Sep 10, 2019 2:42 pm
warfrat wrote:
Tue Sep 10, 2019 12:55 pm
Even with the subpar performance and high fees, they are not ready to move.
Warfrat, welcome to the Forum! Glad that you've been reading here, and decided to post your question.

I think that this sentence from your original post says it all. As the old saying goes, "You can lead a horse to water, but you can't make him drink".

Unless your parents are mentally unable to make competent decisions, your best approach may be to leave this alone - for now, at least. You can keep on throwing in comments about Boglehead philosophies when appropriate, but I can't imagine someone who is "not ready to move" actually opening their books and records up to a financial advisor that they don't know.
I agree. Change is hard for some people. Attention to details is hard also. As long as the boat is still floating, it’s best to let the parents do as they see fit.

For example, my in-laws ask me for financial advice, but they have yet to follow one suggestion. They are horrible with money. If they ask me a direct question, I offer my opinion and no more.

What else can you do?

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Re: Is this what a CFP does?

Post by NotWhoYouThink » Tue Sep 10, 2019 3:34 pm

A few things.

First, people on this forum frequently use the term "fee only" when they mean "advice only." Someone charging an AUM fee of 1% to manage your money is "fee only." Someone who advises you but does not manage your investments is "advice only."

Also, paying someone to tell your parents they have wasted their money is going to be hard, and will accomplish nothing. If you want you can tell this board what their investments are, we'll tell you that's terrible, and you can feel good about being right. Because you are right. But no one wants to be told, especially in front of their kid, that they have been foolish and have been taken advantage of and that they are not smart enough to see that for themselves. It's painful and embarrassing, and people will fight that story hard. So even if they hear it they won't be willing to believe it. Also, no one wants to trash the work of a colleague, even a CFP or FA. It's just not professional to say "my competitor is a dishonest abuser of his financial authority." It's better to say, "I would recommend something different."

Third, people are allowed to do foolish things with their own money. Some people fritter money away on things you wouldn't pay for, like landlines and cable tv and annual trips to Disney World. Some people make investments that have higher fees than you would pay. But you know what? It's their money and their choice. Also, sometimes these terrible portfolios perform better than the low-cost index fund you would recommend. Because you would probably recommend something like 30/70 for your risk averse parents, and the FA might have them closer to 80/20. Which will perform better in a bull market.
So your parents will say "but my portfolio did better than the one you proposed! I have more money! My FA was right and you were wrong!"
And you will say "but risk!!!"
And they will say "but more money!!!"
And they win. Until the market tanks, but the FA will probably tell them a good story about that.

So maybe take up guitar lessons and don't worry so much about someone else's money.

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warfrat
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Re: Is this what a CFP does?

Post by warfrat » Tue Sep 10, 2019 3:36 pm

OP again...

Thanks to everyone for your replies.

Maybe the term "forensic review" means something that I didn't intend for it to mean in my original post, and I apologize for that. I don't want to pursue any legal action against Wells Fargo. I just want someone to look at the big picture of my parents' financial situation in terms of risk/returns/tax considerations/diversification/fees, etc. in their current portfolio. I'm not wanting someone to examine every last transaction, trade, previous holdings, etc.

As to whether my parents have asked for my opinions regarding their accounts, yes, pretty much every month when the statements come out and especially around tax time due to large capital gains. The kicker is their WF advisor is a family friend.

Do I feel some resentment against WF? Yes. I realize they are in business to make money, and I don't begrudge them making money for providing a service, but for what my parents are paying for in fees, they are not getting their money's worth.

My parents are financially comfortable for now, though not so much that we shouldn't be concerned about the high fees and the risk level of the funds they're currently in. They live pretty frugally - I guess that's the thing that bugs me the most about this. I'd rather they get to enjoy more of their money than their AF advisor.

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Re: Is this what a CFP does?

Post by Meg77 » Tue Sep 10, 2019 3:39 pm

Yes plenty of CFP Professionals can do that, and many charge by the hour these days versus by AUM if you want true objective advice. But if your parents are happy with Wells and don't want to move, I wouldn't necessarily waste your breath badgering them about it. It's their money after all, and there are a lot worse things they could be doing with it than paying above average expense ratios.
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JoeRetire
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Re: Is this what a CFP does?

Post by JoeRetire » Tue Sep 10, 2019 3:44 pm

warfrat wrote:
Tue Sep 10, 2019 12:55 pm
I want someone to do a forensic review of their portfolio and explain why the investments they are in are not appropriate in terms of risk/returns/tax considerations/diversification/high fees, etc. - is this what a (fee only) CFP does?
Yes. A good CFP would do that, and a lot more if you wanted.

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Re: Is this what a CFP does?

Post by Stinky » Tue Sep 10, 2019 3:48 pm

warfrat wrote:
Tue Sep 10, 2019 3:36 pm
OP again...


As to whether my parents have asked for my opinions regarding their accounts, yes, pretty much every month when the statements come out and especially around tax time due to large capital gains......

My parents are financially comfortable for now, though not so much that we shouldn't be concerned about the high fees
One additional thought from me. If your parents are asking for your opinion about their accounts, you could tell them:

"This year you have paid $X,XXX in fees directly to WF. In addition, you have paid $Y,YYY in excessive expense charges on the mutual funds, compared to what you could get with (Vanguard/Schwab/Fidelity). Total amount you've paid is $Z,ZZZ. How does that compare to (the biggest expense in their budget - vacations, house payment, etc.)"

When the % fee, or the monthly drip-drip-drip of fees, is translated into a $ amount, and then summed up over a year, it can catch people's attention.
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alex_686
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Re: Is this what a CFP does?

Post by alex_686 » Tue Sep 10, 2019 3:50 pm

JoeRetire wrote:
Tue Sep 10, 2019 3:44 pm
warfrat wrote:
Tue Sep 10, 2019 12:55 pm
I want someone to do a forensic review of their portfolio and explain why the investments they are in are not appropriate in terms of risk/returns/tax considerations/diversification/high fees, etc. - is this what a (fee only) CFP does?
Yes. A good CFP would do that, and a lot more if you wanted.
I will second that. You should be able to hire a CFP for a review for a one time fee. However, they will most likely come up with their own plan. Many won't evaluate WF's plan - different ball of wax. So ask specifically for that service and expect to pay extra.

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Re: Is this what a CFP does?

Post by JoeRetire » Tue Sep 10, 2019 3:53 pm

alex_686 wrote:
Tue Sep 10, 2019 3:50 pm
JoeRetire wrote:
Tue Sep 10, 2019 3:44 pm
warfrat wrote:
Tue Sep 10, 2019 12:55 pm
I want someone to do a forensic review of their portfolio and explain why the investments they are in are not appropriate in terms of risk/returns/tax considerations/diversification/high fees, etc. - is this what a (fee only) CFP does?
Yes. A good CFP would do that, and a lot more if you wanted.
I will second that. You should be able to hire a CFP for a review for a one time fee. However, they will most likely come up with their own plan. Many won't evaluate WF's plan - different ball of wax. So ask specifically for that service and expect to pay extra.
When I was first looking at CFPs, the very first thing they did was review all of what I had and point out what was good and what was not so good. It didn't cost extra at all.

Just be clear about specifically what you want when you engage one. And ask specifically what you will have to pay to get it.

alex_686
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Re: Is this what a CFP does?

Post by alex_686 » Tue Sep 10, 2019 3:58 pm

JoeRetire wrote:
Tue Sep 10, 2019 3:53 pm
When I was first looking at CFPs, the very first thing they did was review all of what I had and point out what was good and what was not so good. It didn't cost extra at all.
If you are talking about what you currently have - then yes. It gives clues about who you are, what your risk tolerance is, what your cost basis is, etc. It is almost a prerequisite. And of course they are going to make comments about what you currently have. It develops client rapport - another critical skill for them to make money.

If you are talking about evaluating your current IPS and if your holdings match the IPS - then no. That is a very different matter. Now you are talking about getting a second opinion. Now the CFP needs to dissect both your parents goals and needs, but also the IPS and plan that WF put together.

elainet7
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Re: Is this what a CFP does?

Post by elainet7 » Tue Sep 10, 2019 4:48 pm

With the history of Wells Fargo’s many misdeeds, get their money out of there asap

JoeRetire
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Re: Is this what a CFP does?

Post by JoeRetire » Tue Sep 10, 2019 4:56 pm

alex_686 wrote:
Tue Sep 10, 2019 3:58 pm
JoeRetire wrote:
Tue Sep 10, 2019 3:53 pm
When I was first looking at CFPs, the very first thing they did was review all of what I had and point out what was good and what was not so good. It didn't cost extra at all.
If you are talking about what you currently have - then yes. It gives clues about who you are, what your risk tolerance is, what your cost basis is, etc. It is almost a prerequisite. And of course they are going to make comments about what you currently have. It develops client rapport - another critical skill for them to make money.

If you are talking about evaluating your current IPS and if your holdings match the IPS - then no. That is a very different matter. Now you are talking about getting a second opinion. Now the CFP needs to dissect both your parents goals and needs, but also the IPS and plan that WF put together.
The OP wrote "I am looking for someone to review my parents' portfolio. "

And I disagree that a CFP wouldn't agree to provide a second opinion. I know for a fact that they will (they did).

MaryO
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Location: New Jersey

Re: Is this what a CFP does?

Post by MaryO » Tue Sep 10, 2019 5:28 pm

I don't see Warfrat as being vindictive. I see a son/daughter looking out for mom and dad. Maybe "forensic review" was a term that evoked aggressive investigation followed by legal actions.....that's not what he/she wants. Just some facts to present to the parents to help them stop the bleeding. It's no different than stopping someone from falling for a con man's scam. If you love your parents, it's maddening to see them get ripped off.

I like Stinky's idea of just showing some numbers. If they let you have access to those statements you can do a few ballpark estimates on your own, and then suggest a pro come in with that second set of eyes. I think this forum will be too intimidating for them until they read up on the Boglehead theories. Just the number of acronyms thrown around here might make their heads spin. I'm on the old side (60) and loved Larry Swedroe's The Only Guide to a Winning Investment Strategy You'll Ever Need. My copy is from 2005. Pick it up for them. The writing is lively and entertaining. Full of wonderful quotes and analogies. Your parents won't feel like you've handed them a textbook.

Another suggestion would be to present a blunder that you uncover in their portfolio with an admission (make it up if you have to :) ) that you made the same mistake, and thousands of others did as well. Talk up how cutting those fees can make retirement more comfortable. More golf. More travel. Whatever they enjoy.

tibbitts
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Re: Is this what a CFP does?

Post by tibbitts » Tue Sep 10, 2019 6:01 pm

MaryO wrote:
Tue Sep 10, 2019 5:28 pm
I don't see Warfrat as being vindictive. I see a son/daughter looking out for mom and dad. Maybe "forensic review" was a term that evoked aggressive investigation followed by legal actions.....that's not what he/she wants. Just some facts to present to the parents to help them stop the bleeding. It's no different than stopping someone from falling for a con man's scam. If you love your parents, it's maddening to see them get ripped off.

I like Stinky's idea of just showing some numbers. If they let you have access to those statements you can do a few ballpark estimates on your own, and then suggest a pro come in with that second set of eyes. I think this forum will be too intimidating for them until they read up on the Boglehead theories. Just the number of acronyms thrown around here might make their heads spin. I'm on the old side (60) and loved Larry Swedroe's The Only Guide to a Winning Investment Strategy You'll Ever Need. My copy is from 2005. Pick it up for them. The writing is lively and entertaining. Full of wonderful quotes and analogies. Your parents won't feel like you've handed them a textbook.

Another suggestion would be to present a blunder that you uncover in their portfolio with an admission (make it up if you have to :) ) that you made the same mistake, and thousands of others did as well. Talk up how cutting those fees can make retirement more comfortable. More golf. More travel. Whatever they enjoy.
I had the same WF problem (through many decades of its predecessors) and never succeeded in getting any funds away from them. My parent had a relationship with the same rep almost as old as with me, and you have to understand that you're telling a parent that someone they trusted expert for so many decades and was seemingly successful all of a sudden shouldn't be trusted. They have obviously stolen money and there has always been money available from investments when needed. If you haul out some other investment professional with a second opinion, why should that opinion be better than the one they already have? And you know if you bring someone in for a third opinion it's going to be exactly that - different than the other two. I'm not talking about obvious fraud situations, but situations where Bogleheads feel outraged by a higher-cost approach than they would have taken, and maybe results that have been below reasonable index benchmarks. In my case I would say that the results were worse than any reasonable benchmark by well into six figures, roughly the full amount of the portfolio that was left at the end. But ultimately my mother had enough to get through her life and do the things she wanted. I presented an alternate approach on a few occasions through published materials, discussions, etc. that she didn't want to pursue. I think it was partly a generational thing, where investments were considered complicated and something only professionals could understand. Obviously some older people moved past that, but others never felt the need to.

dbr
Posts: 30091
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Re: Is this what a CFP does?

Post by dbr » Tue Sep 10, 2019 6:13 pm

tibbitts wrote:
Tue Sep 10, 2019 6:01 pm
MaryO wrote:
Tue Sep 10, 2019 5:28 pm
I don't see Warfrat as being vindictive. I see a son/daughter looking out for mom and dad. Maybe "forensic review" was a term that evoked aggressive investigation followed by legal actions.....that's not what he/she wants. Just some facts to present to the parents to help them stop the bleeding. It's no different than stopping someone from falling for a con man's scam. If you love your parents, it's maddening to see them get ripped off.

I like Stinky's idea of just showing some numbers. If they let you have access to those statements you can do a few ballpark estimates on your own, and then suggest a pro come in with that second set of eyes. I think this forum will be too intimidating for them until they read up on the Boglehead theories. Just the number of acronyms thrown around here might make their heads spin. I'm on the old side (60) and loved Larry Swedroe's The Only Guide to a Winning Investment Strategy You'll Ever Need. My copy is from 2005. Pick it up for them. The writing is lively and entertaining. Full of wonderful quotes and analogies. Your parents won't feel like you've handed them a textbook.

Another suggestion would be to present a blunder that you uncover in their portfolio with an admission (make it up if you have to :) ) that you made the same mistake, and thousands of others did as well. Talk up how cutting those fees can make retirement more comfortable. More golf. More travel. Whatever they enjoy.
I had the same WF problem (through many decades of its predecessors) and never succeeded in getting any funds away from them. My parent had a relationship with the same rep almost as old as with me, and you have to understand that you're telling a parent that someone they trusted expert for so many decades and was seemingly successful all of a sudden shouldn't be trusted. They have obviously stolen money and there has always been money available from investments when needed. If you haul out some other investment professional with a second opinion, why should that opinion be better than the one they already have? And you know if you bring someone in for a third opinion it's going to be exactly that - different than the other two. I'm not talking about obvious fraud situations, but situations where Bogleheads feel outraged by a higher-cost approach than they would have taken, and maybe results that have been below reasonable index benchmarks. In my case I would say that the results were worse than any reasonable benchmark by well into six figures, roughly the full amount of the portfolio that was left at the end. But ultimately my mother had enough to get through her life and do the things she wanted. I presented an alternate approach on a few occasions through published materials, discussions, etc. that she didn't want to pursue. I think it was partly a generational thing, where investments were considered complicated and something only professionals could understand. Obviously some older people moved past that, but others never felt the need to.
The only solution to that is for people to see or be shown that there existed and exists an alternative that did not involve all those costs. Decades ago that was not so true, but the first Vanguard funds have been around for a long time.

MaryO
Posts: 11
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Location: New Jersey

Re: Is this what a CFP does?

Post by MaryO » Tue Sep 10, 2019 6:25 pm

Tibbits, it's generational to some extent. But also influenced by disposition. Some people will go into an upscale department store and use a personal shopper who charges commission. Others will enjoy exploring the clearance racks. Both walk away feeling successful. One feels pampered & understood. One feels like he/she scored great bargains. I know you tried with your family, but there is so much to unravel about those relationships before a wise course of action can be put in place. If ever :shock:

123
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Re: Is this what a CFP does?

Post by 123 » Tue Sep 10, 2019 6:31 pm

Is their current Wells Fargo adviser stationed in a bank branch where they can walk in and talk to him as they please? If they are used to the neighborhood in-person experience it may be hard to get them away from that, it works for Edward Jones and Raymond James as well, so you can appreciate what you may be up against. It's worthwhile for these kinds of advisers to be readily available to their customers because of the fees and revenue they rake in. Discount services are not going to be as convenient and that may be a real hurdle for your parents.
The closest helping hand is at the end of your own arm.

usagi
Posts: 122
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Re: Is this what a CFP does?

Post by usagi » Tue Sep 10, 2019 9:09 pm

warfrat wrote:
Tue Sep 10, 2019 12:55 pm
I am looking for someone to review my parents' portfolio. They are retired and all their investments are with Wells Fargo. (Need I say more? :annoyed) Even with the subpar performance and high fees, they are not ready to move.

I want someone to do a forensic review of their portfolio and explain why the investments they are in are not appropriate in terms of risk/returns/tax considerations/diversification/high fees, etc. - is this what a (fee only) CFP does?

Since I'm someone they once changed diapers for, they don't think I know anything, even though I've been a long-time Boglehead lurker who has greatly benefited from all the wonderful advice from this board. I do not want to manage this money myself, but if the time came they wanted to make a move, would recommend Vanguard PAS. Their investments do not need to be as complicated as they are currently.

WF has them in way too many funds, otherwise I would ask for a portfolio review on here. As it stands I don't want to spend the next week typing it all out, and I wouldn't expect anyone to analyze such a hairball for free.

Many thanks!
While I was never a CFP I was ChFC (decades ago), think of ChFC as a CFP with better knowledge but looser morals (LOL); IMO the later is why the market has become so inundated with CFPs vs ChFCs. There is a very mistaken impression going on. A CFP would not likely be willing to do a forensic analysis. While a CFP may choose to specialize in an area of investments, they normally are generalist and act as a single point of contact and coordinate the activities of specialist. If you look at how the larger CFP firms are run, your CFP is pretty much a client executive/sales person. They essentially take information from you in an interview, then pass the info to a group of back office specialist who then churn out a plan, often simply using software that requires limited if any human intervention. then they print out the plan and it is presented by your CFP. Smaller shops are usually just a salesman who uses a canned software packages loaded with products of whatever group he is affiliated with. They input the data, print it out and term it a customized plan.

If I wanted a real customized investment plan, I would find a CFA who constructs portfolios. Other than that, let us be honest, there really is no mystery left in term of what someone should do. A two or three fund portfolio is hard to knock. Slicing and dicing or individual stock selection is for idiots like me who think they can game the system with their superior knowledge, the results are always out on that one as there is always one more tweak, some new factor, so new way...yada, yada. The big thing is to get the asset allocation right and then the placement of the assets in regard to taxes.

But, my advice, is let the past go, because ultimately you have no real recourse and move forward. You would well advised to either write an ISP for them or pay a fee only financial planner to write one. Then take it to Fideltiy,Schwab, or T Rowe (or whomever) and have them implement it. I don't think Vanguard would be willing to do your implementation if they were advising.

By the way if I sound like I am knocking the industry, I am not, I am knocking the part where people view a CFP or ChFC as an investment advisor verses a financial adviser. There is a huge difference. There is a lot of value in having someone assess you liability exposure, making sure your will, trust, POD are in order, working out long term care ideas with you, asset protection, do a tax assessment, broach end of life management, estate planning, etc and a financial planner can and should assist in all of this.

In summary if you want investment advice, in particular portfolio construction and asset allocation, go with a CFA essentially they design the programs the CFP is using.

usagi
Posts: 122
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Re: Is this what a CFP does?

Post by usagi » Tue Sep 10, 2019 9:35 pm

Stinky wrote:
Tue Sep 10, 2019 3:48 pm
One additional thought from me. If your parents are asking for your opinion about their accounts, you could tell them:

"This year you have paid $X,XXX in fees directly to WF. In addition, you have paid $Y,YYY in excessive expense charges on the mutual funds, compared to what you could get with (Vanguard/Schwab/Fidelity). Total amount you've paid is $Z,ZZZ. How does that compare to (the biggest expense in their budget - vacations, house payment, etc.)"

When the % fee, or the monthly drip-drip-drip of fees, is translated into a $ amount, and then summed up over a year, it can catch people's attention.
Love it.

Topic Author
warfrat
Posts: 3
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Re: Is this what a CFP does?

Post by warfrat » Wed Sep 11, 2019 9:35 am

Stinky wrote:
Tue Sep 10, 2019 3:48 pm
warfrat wrote:
Tue Sep 10, 2019 3:36 pm
OP again...


As to whether my parents have asked for my opinions regarding their accounts, yes, pretty much every month when the statements come out and especially around tax time due to large capital gains......

My parents are financially comfortable for now, though not so much that we shouldn't be concerned about the high fees
One additional thought from me. If your parents are asking for your opinion about their accounts, you could tell them:

"This year you have paid $X,XXX in fees directly to WF. In addition, you have paid $Y,YYY in excessive expense charges on the mutual funds, compared to what you could get with (Vanguard/Schwab/Fidelity). Total amount you've paid is $Z,ZZZ. How does that compare to (the biggest expense in their budget - vacations, house payment, etc.)"

When the % fee, or the monthly drip-drip-drip of fees, is translated into a $ amount, and then summed up over a year, it can catch people's attention.
YES - THIS is what I'm looking for! :happy I realize I could do this myself, but I don’t want to. For one, it will be time consuming and a big pain. I’d rather pay someone to do this and have the benefit of an outside expert opinion. Also, I'm not entirely sure of myself that I would do it correctly.

I have no interest in proving anything. In the past, when they’ve asked me to look at their statements and tell them what I think, I’ve side-stepped the issue due to the fact that their advisor is a (child of a) family friend, and I didn't want to make this person look bad.

I have mentioned to my parents that their annual fees seem high, especially when coupled with the amount of trading and capital gains. I’ve said that I use index funds, and while the gains might not appear as high, it more than makes up the difference with lower fees and capital gains.

I conclude by saying that I don’t have a personal financial advisor, but to some people, a financial advisor is worth the extra money. Then I ask them “Do you think <family friend> is giving you your money’s worth?” It’s gone from “Yes, definitely” to “Our money doesn’t seem to be growing”, “Why are our capital gains so high?”, etc.

My parents are old – late 80’s and never going to use a computer. They are sharp for their age, but I see evidence of decline. Their day to day living expenses are covered by pension, IRA, and social security.

My concern is their investment account seems to have a lot of activity that creates large capital gains, which they then have to pay taxes on, and this means liquidating more investments and more capital gains. :oops: I think this account could be better managed from a tax standpoint. Both I and my parents wonder why the WF advisor has not done this? (At this point, yes, I am feeling resentful of WF advisor/family friend.)

dbr
Posts: 30091
Joined: Sun Mar 04, 2007 9:50 am

Re: Is this what a CFP does?

Post by dbr » Wed Sep 11, 2019 12:25 pm

warfrat wrote:
Wed Sep 11, 2019 9:35 am
Stinky wrote:
Tue Sep 10, 2019 3:48 pm
warfrat wrote:
Tue Sep 10, 2019 3:36 pm
OP again...


As to whether my parents have asked for my opinions regarding their accounts, yes, pretty much every month when the statements come out and especially around tax time due to large capital gains......

My parents are financially comfortable for now, though not so much that we shouldn't be concerned about the high fees
One additional thought from me. If your parents are asking for your opinion about their accounts, you could tell them:

"This year you have paid $X,XXX in fees directly to WF. In addition, you have paid $Y,YYY in excessive expense charges on the mutual funds, compared to what you could get with (Vanguard/Schwab/Fidelity). Total amount you've paid is $Z,ZZZ. How does that compare to (the biggest expense in their budget - vacations, house payment, etc.)"

When the % fee, or the monthly drip-drip-drip of fees, is translated into a $ amount, and then summed up over a year, it can catch people's attention.
YES - THIS is what I'm looking for! :happy I realize I could do this myself, but I don’t want to. For one, it will be time consuming and a big pain. I’d rather pay someone to do this and have the benefit of an outside expert opinion. Also, I'm not entirely sure of myself that I would do it correctly.

That makes sense. Also, you are correct that tabulating what is what and adding it all up to a correct number could be a daunting chore. My guess is that you are not going to find a professional planner or advisor who can be paid to assess what someone else is charging on an account.

One is reluctant to suggest that your parents ask the advisor they have for a cost accounting. Unfortunately there are so many ways to confuse costs, even innocently, that this may not be productive and may not be taken well.

I honestly think if you are concerned you would have to do this yourself. But it doesn't have to be perfect. It should be possible to lay out the parts you can do accurately as a baseline to make your point. As an example, just comparing fund ERs would work. If there is an AUM it should be easy to see where it is paid. Etc.

tibbitts
Posts: 9141
Joined: Tue Feb 27, 2007 6:50 pm

Re: Is this what a CFP does?

Post by tibbitts » Wed Sep 11, 2019 10:28 pm

warfrat wrote:
Wed Sep 11, 2019 9:35 am
Stinky wrote:
Tue Sep 10, 2019 3:48 pm
warfrat wrote:
Tue Sep 10, 2019 3:36 pm
OP again...


As to whether my parents have asked for my opinions regarding their accounts, yes, pretty much every month when the statements come out and especially around tax time due to large capital gains......

My parents are financially comfortable for now, though not so much that we shouldn't be concerned about the high fees
One additional thought from me. If your parents are asking for your opinion about their accounts, you could tell them:

"This year you have paid $X,XXX in fees directly to WF. In addition, you have paid $Y,YYY in excessive expense charges on the mutual funds, compared to what you could get with (Vanguard/Schwab/Fidelity). Total amount you've paid is $Z,ZZZ. How does that compare to (the biggest expense in their budget - vacations, house payment, etc.)"

When the % fee, or the monthly drip-drip-drip of fees, is translated into a $ amount, and then summed up over a year, it can catch people's attention.
YES - THIS is what I'm looking for! :happy I realize I could do this myself, but I don’t want to. For one, it will be time consuming and a big pain. I’d rather pay someone to do this and have the benefit of an outside expert opinion. Also, I'm not entirely sure of myself that I would do it correctly.

I have no interest in proving anything. In the past, when they’ve asked me to look at their statements and tell them what I think, I’ve side-stepped the issue due to the fact that their advisor is a (child of a) family friend, and I didn't want to make this person look bad.

I have mentioned to my parents that their annual fees seem high, especially when coupled with the amount of trading and capital gains. I’ve said that I use index funds, and while the gains might not appear as high, it more than makes up the difference with lower fees and capital gains.

I conclude by saying that I don’t have a personal financial advisor, but to some people, a financial advisor is worth the extra money. Then I ask them “Do you think <family friend> is giving you your money’s worth?” It’s gone from “Yes, definitely” to “Our money doesn’t seem to be growing”, “Why are our capital gains so high?”, etc.

My parents are old – late 80’s and never going to use a computer. They are sharp for their age, but I see evidence of decline. Their day to day living expenses are covered by pension, IRA, and social security.

My concern is their investment account seems to have a lot of activity that creates large capital gains, which they then have to pay taxes on, and this means liquidating more investments and more capital gains. :oops: I think this account could be better managed from a tax standpoint. Both I and my parents wonder why the WF advisor has not done this? (At this point, yes, I am feeling resentful of WF advisor/family friend.)
Specifically with regards to tax management, in my case I don't believe the WF adviser considered taxes in portfolio management, just based on my interactions with him in the final stages when I was trying to initiate tax-loss-harvesting.

tibbitts
Posts: 9141
Joined: Tue Feb 27, 2007 6:50 pm

Re: Is this what a CFP does?

Post by tibbitts » Wed Sep 11, 2019 10:47 pm

dbr wrote:
Tue Sep 10, 2019 6:13 pm
tibbitts wrote:
Tue Sep 10, 2019 6:01 pm
MaryO wrote:
Tue Sep 10, 2019 5:28 pm
I don't see Warfrat as being vindictive. I see a son/daughter looking out for mom and dad. Maybe "forensic review" was a term that evoked aggressive investigation followed by legal actions.....that's not what he/she wants. Just some facts to present to the parents to help them stop the bleeding. It's no different than stopping someone from falling for a con man's scam. If you love your parents, it's maddening to see them get ripped off.

I like Stinky's idea of just showing some numbers. If they let you have access to those statements you can do a few ballpark estimates on your own, and then suggest a pro come in with that second set of eyes. I think this forum will be too intimidating for them until they read up on the Boglehead theories. Just the number of acronyms thrown around here might make their heads spin. I'm on the old side (60) and loved Larry Swedroe's The Only Guide to a Winning Investment Strategy You'll Ever Need. My copy is from 2005. Pick it up for them. The writing is lively and entertaining. Full of wonderful quotes and analogies. Your parents won't feel like you've handed them a textbook.

Another suggestion would be to present a blunder that you uncover in their portfolio with an admission (make it up if you have to :) ) that you made the same mistake, and thousands of others did as well. Talk up how cutting those fees can make retirement more comfortable. More golf. More travel. Whatever they enjoy.
I had the same WF problem (through many decades of its predecessors) and never succeeded in getting any funds away from them. My parent had a relationship with the same rep almost as old as with me, and you have to understand that you're telling a parent that someone they trusted expert for so many decades and was seemingly successful all of a sudden shouldn't be trusted. They have obviously stolen money and there has always been money available from investments when needed. If you haul out some other investment professional with a second opinion, why should that opinion be better than the one they already have? And you know if you bring someone in for a third opinion it's going to be exactly that - different than the other two. I'm not talking about obvious fraud situations, but situations where Bogleheads feel outraged by a higher-cost approach than they would have taken, and maybe results that have been below reasonable index benchmarks. In my case I would say that the results were worse than any reasonable benchmark by well into six figures, roughly the full amount of the portfolio that was left at the end. But ultimately my mother had enough to get through her life and do the things she wanted. I presented an alternate approach on a few occasions through published materials, discussions, etc. that she didn't want to pursue. I think it was partly a generational thing, where investments were considered complicated and something only professionals could understand. Obviously some older people moved past that, but others never felt the need to.
The only solution to that is for people to see or be shown that there existed and exists an alternative that did not involve all those costs. Decades ago that was not so true, but the first Vanguard funds have been around for a long time.
I think I understand how she felt: she had a system that she believed worked for her, and in fact it did work, for roughly forty years. She wasn't looking to optimize, she was looking to avoid making some of the much, much worse financial mistakes she'd seen other people make. Some of them had been victims of outright fraud that resulted in criminal convictions, but no financial recovery - their lives were really destroyed. So in comparison, her WF adviser was a financial genius and saint.

I also learned that a child or even someone a child recommends isn't the best place for financial advice to come from - even when the child is also getting up there in years.

Northern Flicker
Posts: 4540
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Re: Is this what a CFP does?

Post by Northern Flicker » Wed Sep 11, 2019 11:50 pm

See if they would agree to a free consultation with Vanguard Personal Advisor Services. Maybe when they see how much they can save in fees they will realize there are better options, and if they get to that place in their thinking, that might be when they may be receptive to DIY options.

Some investors believe the goal of investing is to beat the market and that there are professionals who know what will outperform. If that is true of your parents, you may have to just let it go.
Risk is not a guarantor of return.

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