PAS advisor portfolio [Why did they setup my accounts like this?]

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Topic Author
nanameg
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Joined: Fri Mar 20, 2020 10:57 am

PAS advisor portfolio [Why did they setup my accounts like this?]

Post by nanameg »

I’ve been posting on this forum since late March. I cashed out end of March and two weeks afterward had help from PAS to get back in the market.

The advisor recommended the usual 4 funds that PAS advises ( total US bond, total US stock, total international stock,total international bond ) in a 45/55 AA with 18 % international stocks and 17% international bonds.

We have three accounts, one of which he can’t manage or advise us on for legal reasons since it’s an employer sponsored plan and Vanguard is merely the custodian.

In the two accounts he can manage he has the funds distributed in a way I don’t understand. It seems haphazard and confusing.I will ask him more about it but I wanted to get others point of view beforehand if possible.

All of the accounts are tax advantaged.

1) SEP account
TIB 20%
TIS 14%
TB 46%
TS 18%

2) IRA account

TB 10%
TIB 6%
TIS 31%
TS 51%

These two accounts he manages but I will not be adding any more funds to either of these accounts.

The third account is a pooled 401k which we still contribute to and he cannot manage or advise us on. He’s very clear about that. I have that account at 50/50 total US stock and total US bond. He says that “ should be fine.”

I don’t understand why the 2 accounts he manages aren’t just set according to the AA he recommended in the financial plan he recommended. And why shouldn’t almost a full 1/2 of our entire portfolio which we are also currently contributing to mirror the other two accounts? Why wouldn’t he encourage that instead of just 2 US funds?

What am I missing here?
stan1
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Re: PAS advisor portfolio

Post by stan1 »

Is the IRA a Roth or Traditional?
Topic Author
nanameg
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Re: PAS advisor portfolio

Post by nanameg »

stan1 wrote: Wed Jun 17, 2020 8:35 pm Is the IRA a Roth or Traditional?
Traditional
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Eagle33
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Re: PAS advisor portfolio

Post by Eagle33 »

What is the proportional size of each of the 3 accounts (including 401k) - totaling 100%?
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.
Topic Author
nanameg
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Re: PAS advisor portfolio

Post by nanameg »

Eagle33 wrote: Wed Jun 17, 2020 9:57 pm What is the proportional size of each of the 3 accounts (including 401k) - totaling 100%?
SEP 38%
IRA 15%
401k 47%


I realize that the two managed accounts, the SEP and the IRA , when looked at together do approximate the AA the advisor recommended but why are the accounts skewed as they are especially when they were just set up, not readjusted? Why not have each account follow the AA on their own...since they are all tax advantaged accounts?
dbr
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Re: PAS advisor portfolio

Post by dbr »

Since you are paying PAS for advice, you should ask why they did what they did. In my book part of what they are being paid for is an explanation for what they have done. That should be given you as a matter of course. You should call and ask.

Did he explain whether or not the management of the accounts he has does or does not take into account how you are managing the 401k? That would mean is your overall asset allocation what your plan with PAS arrived at? It is ok for him not to manage that account but it is not ok for him to fail to take into account what is there.
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nanameg
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Re: PAS advisor portfolio

Post by nanameg »

dbr wrote: Thu Jun 18, 2020 9:05 am Since you are paying PAS for advice, you should ask why they did what they did. In my book part of what they are being paid for is an explanation for what they have done. That should be given you as a matter of course. You should call and ask.

Did he explain whether or not the management of the accounts he has does or does not take into account how you are managing the 401k? That would mean is your overall asset allocation what your plan with PAS arrived at? It is ok for him not to manage that account but it is not ok for him to fail to take into account what is there.
I have an appointment to talk to him next Wednesday and plan to ask the question of why he set up the accounts as he did. I’m asking for others point of view if possible before hand. It seems to be the 2 managed accounts should be much more simply laid out and easier to see if they are following the AA he determined.
I’m wondering if it’s making things look more complicated on purpose. I’m a skeptic. But I want to be fair and I don’t know much.

As far as the other 401 account which holds almost 50% of our portfolio and is the active account ( we contribute to it monthly) it makes no sense to me that he agrees to the 50/50 US Funds there but not in the other accounts.

I’ve spoken to this guy 4 times since April and I like him but liking him isn’t good enough to justify a continued relationship if I’m not convinced I’m getting real value for a 3,000+ yearly fee that will only increase with time. Hopefully.

It would have be wonderful if I had this service and this relationship before I locked in 250k in losses late March but what’s done is done and paying for something I don’t need now because I needed it then doesn’t make sense. Recency bias. :)
Miriam2
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Re: PAS advisor portfolio

Post by Miriam2 »

nanameg wrote: It would have be wonderful if I had this service and this relationship before I locked in 250k in losses late March but what’s done is done and paying for something I don’t need now because I needed it then doesn’t make sense. Recency bias. :)
But what happens if late March returns again and you're up at 3:00 am, unable to sleep because you couldn't take it another night? Will you cash out again? Yes, you likely will if left alone . . .

. . . because remember in this thread you observed you went to PAS expressly "to find a way to insure" that you would "never do that again" and further, you said, "I don't trust myself not to." - the "that" is cashing out 2.2 million at 3 am one morning in March because you couldn't sleep and couldn't take it another night.

And we're not judging or blaming you - we've all been up with similar sleepless nights during financial earthquakes. You are fortunate you recognize your risk limits.

Isn't it worth the small fee PAS charges to insure you won't cash out again? Next time may be worse. It could be a bigger drop for a longer period, and you might be newly retired, panicking over your investment balance or sequence of returns risk :shock:
John Bogle, "The Twelve Pillars of [Financial] Wisdom" - Pillar 4: Nothing Ventured, Nothing Gained. Eschewing the risk of stocks, therefore, carries a risk of its own.
Topic Author
nanameg
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Re: PAS advisor portfolio

Post by nanameg »

Miriam2 wrote: Thu Jun 18, 2020 6:25 pm
nanameg wrote: It would have be wonderful if I had this service and this relationship before I locked in 250k in losses late March but what’s done is done and paying for something I don’t need now because I needed it then doesn’t make sense. Recency bias. :)
But what happens if late March returns again and you're up at 3:00 am, unable to sleep because you couldn't take it another night? Will you cash out again? Yes, you likely will if left alone . . .

. . . because remember in this thread you observed you went to PAS expressly "to find a way to insure" that you would "never do that again" and further, you said, "I don't trust myself not to." - the "that" is cashing out 2.2 million at 3 am one morning in March because you couldn't sleep and couldn't take it another night.

And we're not judging or blaming you - we've all been up with similar sleepless nights during financial earthquakes. You are fortunate you recognize your risk limits.

Isn't it worth the small fee PAS charges to insure you won't cash out again? Next time may be worse. It could be a bigger drop for a longer period, and you might be newly retired, panicking over your investment balance or sequence of returns risk :shock:
Yes.

And it’s also probably worth it for my marriage. Cheaper than couples therapy and less effort. My husband is totally hands off investing.He has zero interest..maybe even negative interest. I do need another adult in the room. It’s too heavy a burden for me alone.

Thanks
pkcrafter
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Re: PAS advisor portfolio

Post by pkcrafter »

nanameg wrote: Wed Jun 17, 2020 8:29 pm I’ve been posting on this forum since late March. I cashed out end of March and two weeks afterward had help from PAS to get back in the market.

Hello nanameg, congrats on now having over 200 posts.

The advisor recommended the usual 4 funds that PAS advises ( total US bond, total US stock, total international stock,total international bond ) in a 45/55 AA with 18 % international stocks and 17% international bonds.

18% international is much lower that Vanguard usually recommends. Is 45/55 the overall allocation you wanted, including the account he can't manage, or are you at 50/50 overall?

We have three accounts, one of which he can’t manage or advise us on for legal reasons since it’s an employer sponsored plan and Vanguard is merely the custodian.

What funds (list tickers) are you holding in the employer sponsored plan?.

In the two accounts he can manage he has the funds distributed in a way I don’t understand. It seems haphazard and confusing.I will ask him more about it but I wanted to get others point of view beforehand if possible.

It really doesn't matter how the individual accounts are distributed, you only need to see/know the overall asset allocation of both managed accounts and the employer plan as a single retirement plan/allocation.

All of the accounts are tax advantaged.

1) SEP account
TIB 20%
TIS 14%
TB 46%
TS 18%

2) IRA account

TB 10%
TIB 6%
TIS 31%
TS 51%

Please list tickers for the above funds. Note, all 3 accounts together should add up to 100%. Please list them that way.


These two accounts he manages but I will not be adding any more funds to either of these accounts.

The third account is a pooled 401k which we still contribute to and he cannot manage or advise us on. He’s very clear about that. I have that account at 50/50 total US stock and total US bond. He says that “ should be fine.”

I don’t understand why the 2 accounts he manages aren’t just set according to the AA he recommended in the financial plan he recommended. And why shouldn’t almost a full 1/2 of our entire portfolio which we are also currently contributing to mirror the other two accounts? Why wouldn’t he encourage that instead of just 2 US funds?

Again, you have to look at all three accounts to see your overall AA. Mirroring isn't necessary and often adds redundancy duplication and complexity. Since he doesn't do anything with the employer account, it's up to you to know the AA of the entire portfolio (all 3 accounts) overall.

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.
Topic Author
nanameg
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Re: PAS advisor portfolio

Post by nanameg »

pkcrafter wrote: Fri Jun 19, 2020 9:54 am
nanameg wrote: Wed Jun 17, 2020 8:29 pm I’ve been posting on this forum since late March. I cashed out end of March and two weeks afterward had help from PAS to get back in the market.

Hello nanameg, congrats on now having over 200 posts.

The advisor recommended the usual 4 funds that PAS advises ( total US bond, total US stock, total international stock,total international bond ) in a 45/55 AA with 18 % international stocks and 17% international bonds.

18% international is much lower that Vanguard usually recommends. Is 45/55 the overall allocation you wanted, including the account he can't manage, or are you at 50/50 overall?

We have three accounts, one of which he can’t manage or advise us on for legal reasons since it’s an employer sponsored plan and Vanguard is merely the custodian.

What funds (list tickers) are you holding in the employer sponsored plan?.

In the two accounts he can manage he has the funds distributed in a way I don’t understand. It seems haphazard and confusing.I will ask him more about it but I wanted to get others point of view beforehand if possible.

It really doesn't matter how the individual accounts are distributed, you only need to see/know the overall asset allocation of both managed accounts and the employer plan as a single retirement plan/allocation.

All of the accounts are tax advantaged.

1) SEP account
TIB 20%
TIS 14%
TB 46%
TS 18%

2) IRA account

TB 10%
TIB 6%
TIS 31%
TS 51%

Please list tickers for the above funds. Note, all 3 accounts together should add up to 100%. Please list them that way.


These two accounts he manages but I will not be adding any more funds to either of these accounts.

The third account is a pooled 401k which we still contribute to and he cannot manage or advise us on. He’s very clear about that. I have that account at 50/50 total US stock and total US bond. He says that “ should be fine.”

I don’t understand why the 2 accounts he manages aren’t just set according to the AA he recommended in the financial plan he recommended. And why shouldn’t almost a full 1/2 of our entire portfolio which we are also currently contributing to mirror the other two accounts? Why wouldn’t he encourage that instead of just 2 US funds?

Again, you have to look at all three accounts to see your overall AA. Mirroring isn't necessary and often adds redundancy duplication and complexity. Since he doesn't do anything with the employer account, it's up to you to know the AA of the entire portfolio (all 3 accounts) overall.

Paul


Thanks Paul. Funny that I have over 200 posts.I hope I’m learning something.

This is what’s hard about the advisor only being able legally to manage the 2 essentially inactive accounts. I’m paying a fee but still having to figure out things on my own.

I wonder if I should just hire an outside person who can help set up all three accounts. Or get simpler with a 50/50 US stock/ bond portfolio for all three accounts that I manage on my own.

That’s what I wanted to do but the advisor didn’t agree. I don’t know if I’m being bamboozled. I definitely had to make some kind of change since I had made such a big behavioral error in March.

He also put our portfolio through the “ Vanguard Capital Markets Model” and according to that we have a 99% success rate of meeting our goal for retirement. I don’t know how meaningful a predictor that “VCMM” is.

I’m talking to the advisor again this Wednesday and I’d like to change our AA from 45/55 to 50/50. That’s easier for me to track and a reasonable AA from what I’ve read here for our age and risk tolerance. I found out I had zero risk tolerance in March but I think I understand more now. We were 60/40 then but I had no idea what our “ number “ was and now I have a better sense of what our retirement spending will most likely be and the risk that holding stocks entails.

SEP VBTLX 434,401
VTABX 185,794
VTIAX 138,803
VTSAX 169,620

IRA VBTLX 38,942
VTABX 26,563
VTIAX 119,053
VTSAX 198,414

401k VBTLX 548,468
VTSAX 599,748

I really like the 2 fund 401k that I chose.It’s so easy to see what’s happening at a glance.

If I do keep international funds I think I’ll dispense with the international bond fund just for the ease of tracking as well. PAS will not keep you as a client if you don’t hold international stocks I believe. At least that’s the impression I got which I will clarify. They also are pushing hard for ETF’s if you’re a client of PAS. I prefer my mutual funds.
Outer Marker
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Re: PAS advisor portfolio

Post by Outer Marker »

nanameg wrote: Fri Jun 19, 2020 8:35 pm Or get simpler with a 50/50 US stock/ bond portfolio for all three accounts that I manage on my own.

That’s what I wanted to do but the advisor didn’t agree. I don’t know if I’m being bamboozled. I definitely had to make some kind of change since I had made such a big behavioral error in March.

I really like the 2 fund 401k that I chose.It’s so easy to see what’s happening at a glance.

If I do keep international funds I think I’ll dispense with the international bond fund just for the ease of tracking as well. PAS will not keep you as a client if you don’t hold international stocks I believe. At least that’s the impression I got which I will clarify. They also are pushing hard for ETF’s if you’re a client of PAS. I prefer my mutual funds.
These are all fine ideas. If you can avoid repeating the behavioral error, you'll be in great shape for the long haul. There is very little difference between 45/55 and 50/50. I think Vanguard is heavy on the international allocation (if it is needed at all) and I really don't understand their new bent on international bonds.
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nanameg
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Re: PAS advisor portfolio

Post by nanameg »

Outer Marker wrote: Sat Jun 20, 2020 7:17 am
nanameg wrote: Fri Jun 19, 2020 8:35 pm Or get simpler with a 50/50 US stock/ bond portfolio for all three accounts that I manage on my own.

That’s what I wanted to do but the advisor didn’t agree. I don’t know if I’m being bamboozled. I definitely had to make some kind of change since I had made such a big behavioral error in March.

I really like the 2 fund 401k that I chose.It’s so easy to see what’s happening at a glance.

If I do keep international funds I think I’ll dispense with the international bond fund just for the ease of tracking as well. PAS will not keep you as a client if you don’t hold international stocks I believe. At least that’s the impression I got which I will clarify. They also are pushing hard for ETF’s if you’re a client of PAS. I prefer my mutual funds.
These are all fine ideas. If you can avoid repeating the behavioral error, you'll be in great shape for the long haul. There is very little difference between 45/55 and 50/50. I think Vanguard is heavy on the international allocation (if it is needed at all) and I really don't understand their new bent on international bonds.
Yes, I don’t understand the international bond piece either..it just seems to add some complexity without much benefit? I guess it’s choosing “ the whole hay stack” model at the expense of “ simplicity “.
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nanameg
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Re: PAS advisor portfolio

Post by nanameg »

nanameg wrote: Sat Jun 20, 2020 7:21 am
Outer Marker wrote: Sat Jun 20, 2020 7:17 am
nanameg wrote: Fri Jun 19, 2020 8:35 pm Or get simpler with a 50/50 US stock/ bond portfolio for all three accounts that I manage on my own.

That’s what I wanted to do but the advisor didn’t agree. I don’t know if I’m being bamboozled. I definitely had to make some kind of change since I had made such a big behavioral error in March.

I really like the 2 fund 401k that I chose.It’s so easy to see what’s happening at a glance.

If I do keep international funds I think I’ll dispense with the international bond fund just for the ease of tracking as well. PAS will not keep you as a client if you don’t hold international stocks I believe. At least that’s the impression I got which I will clarify. They also are pushing hard for ETF’s if you’re a client of PAS. I prefer my mutual funds.
These are all fine ideas. If you can avoid repeating the behavioral error, you'll be in great shape for the long haul. There is very little difference between 45/55 and 50/50. I think Vanguard is heavy on the international allocation (if it is needed at all) and I really don't understand their new bent on international bonds.
Yes, I don’t understand the international bond piece either..it just seems to add some complexity without much benefit? I guess it’s choosing “ the whole hay stack” model at the expense of “ simplicity “.
Avoiding a repeat of my behavioral error is key I know and I’m not sure how to do that. I’m not totally convinced the advisor model will help me with that in the long haul since most likely the advisor I have now from PAS will not be the advisor I have later. They do move on.

It’s also going to get more expensive over time and I’m paying someone to just be in the wings and tell me not to sell? It probably makes more sense for me to simply lower my risk by my asset allocation than to try to depend on some magical someone to keep me calm in the next downturn.
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Re: PAS advisor portfolio

Post by Outer Marker »

nanameg wrote: Sat Jun 20, 2020 7:29 am Avoiding a repeat of my behavioral error is key I know and I’m not sure how to do that. I’m not totally convinced the advisor model will help me with that in the long haul since most likely the advisor I have now from PAS will not be the advisor I have later. They do move on.

It’s also going to get more expensive over time and I’m paying someone to just be in the wings and tell me not to sell? It probably makes more sense for me to simply lower my risk by my asset allocation than to try to depend on some magical someone to keep me calm in the next downturn.
Agree. Its a lot to pay over time for hand-holding - particularly for a strategy you do not fully agree with. You can always come here for free support as many do in turbulent times! And, just because your PAS tells you not to do it, doesn't guarantee you won't do it.

One thought to avoid behavioral error is to pick an all-in-one fund close to your allocation. This helped a lot with my dearly departed mom who wanted to panic sell on every market dip. Having the roller coaster of equities obscured a bit in the broader balanced fund made a big difference. She happily held target retirement income from age 75-91.
retiredjg
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Re: PAS advisor portfolio

Post by retiredjg »

nanameg wrote: Wed Jun 17, 2020 8:29 pm And why shouldn’t almost a full 1/2 of our entire portfolio which we are also currently contributing to mirror the other two accounts? Why wouldn’t he encourage that instead of just 2 US funds?

What am I missing here?
Perhaps he didn't encourage that because he is not allowed to advise you on how to invest assets held outside the PAS agreement.

Telling you that what you have "is fine" is probably the most he can say that could not be construed as some kind of investment advice.


While it may not seem logical, there is nothing wrong with how the investments are split up between the two accounts. It simply does not matter what is in the SEP IRA and what is in the traditional IRA. In fact, I don't see why they are not combined into 1 account unless the SEP has some kind of creditor protection that the tIRA does not have. You might want to ask the advisor about combining them, especially if that would make you more comfortable.

As for your fears the advisor is trying to bamboozle you, that seems HIGHLY unlikely with Vanguard's PAS (although I believe it can and does happen with others). The PAS advisors don't make commissions by selling you this or that or how much of the other they put your money in. What possible incentive could he have to do anything but what is thought best for you?


At some point, you may be able to manage your own assets. The nature of your questions and the tone of your post indicate you are not there yet. You should give this some time and try to relax and learn about it rather than be considering a change at this point.
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nanameg
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Re: PAS advisor portfolio

Post by nanameg »

Outer Marker wrote: Sat Jun 20, 2020 7:48 am
nanameg wrote: Sat Jun 20, 2020 7:29 am Avoiding a repeat of my behavioral error is key I know and I’m not sure how to do that. I’m not totally convinced the advisor model will help me with that in the long haul since most likely the advisor I have now from PAS will not be the advisor I have later. They do move on.

It’s also going to get more expensive over time and I’m paying someone to just be in the wings and tell me not to sell? It probably makes more sense for me to simply lower my risk by my asset allocation than to try to depend on some magical someone to keep me calm in the next downturn.
Agree. Its a lot to pay over time for hand-holding - particularly for a strategy you do not fully agree with. You can always come here for free support as many do in turbulent times! And, just because your PAS tells you not to do it, doesn't guarantee you won't do it.

One thought to avoid behavioral error is to pick an all-in-one fund close to your allocation. This helped a lot with my dearly departed mom who wanted to panic sell on every market dip. Having the roller coaster of equities obscured a bit in the broader balanced fund made a big difference. She happily held target retirement income from age 75-91.
Yes, but I also like to see more than just a balance. I like to see things playing out. I may start out with the two fund idea and maybe eventually change to the balanced fund. It is 60/40 and right now I’m more comfortable with 50/50
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Re: PAS advisor portfolio

Post by Outer Marker »

nanameg wrote: Sat Jun 20, 2020 7:57 am Yes, but I also like to see more than just a balance. I like to see things playing out. I may start out with the two fund idea and maybe eventually change to the balanced fund. It is 60/40 and right now I’m more comfortable with 50/50
Not sure what you mean. You can track and chart any mutual fund on a daily basis on yahoo finance, etc. Following it too closely seems hazardous to your wealth. I wasn't suggesting The Balanced Fund, but a balanced fund with your preferred 50/50 ratio. For example, https://investor.vanguard.com/mutual-fu ... olio/vtwnx
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nanameg
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Re: PAS advisor portfolio

Post by nanameg »

Outer Marker wrote: Sat Jun 20, 2020 8:06 am
nanameg wrote: Sat Jun 20, 2020 7:57 am Yes, but I also like to see more than just a balance. I like to see things playing out. I may start out with the two fund idea and maybe eventually change to the balanced fund. It is 60/40 and right now I’m more comfortable with 50/50
Not sure what you mean. You can track and chart any mutual fund on a daily basis on yahoo finance, etc. Following it too closely seems hazardous to your wealth. I wasn't suggesting The Balanced Fund, but a balanced fund with your preferred 50/50 ratio. For example, https://investor.vanguard.com/mutual-fu ... olio/vtwnx
I see. Thank you.
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nanameg
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Re: PAS advisor portfolio

Post by nanameg »

retiredjg wrote: Sat Jun 20, 2020 7:54 am
nanameg wrote: Wed Jun 17, 2020 8:29 pm And why shouldn’t almost a full 1/2 of our entire portfolio which we are also currently contributing to mirror the other two accounts? Why wouldn’t he encourage that instead of just 2 US funds?

What am I missing here?
Perhaps he didn't encourage that because he is not allowed to advise you on how to invest assets held outside the PAS agreement.

Telling you that what you have "is fine" is probably the most he can say that could not be construed as some kind of investment advice.

While it may not seem logical, there is nothing wrong with how the investments are split up between the two accounts. It simply does not matter what is in the SEP IRA and what is in the traditional IRA. In fact, I don't see why they are not combined into 1 account unless the SEP has some kind of creditor protection that the tIRA does not have. You might want to ask the advisor about combining them, especially if that would make you more comfortable.

As for your fears the advisor is trying to bamboozle you, that seems HIGHLY unlikely with Vanguard's PAS (although I believe it can and does happen with others). The PAS advisors don't make commissions by selling you this or that or how much of the other they put your money in. What possible incentive could he have to do anything but what is thought best for you?


At some point, you may be able to manage your own assets. The nature of your questions and the tone of your post indicate you are not there yet. You should give this some time and try to relax and learn about it rather than be considering a change at this point.
I think it’s very possible and most likely probable that Vanguard PAS advisors have an incentive to keep clients ..and their jobs...and hence a “ relationship “ that wouldn’t be necessary if I followed a simple 2 or even 3 fund portfolio rather than the four fund portfolio they suggest. Vanguard pushes the PAS service quite hard on the web site. Why is that? There must be a reason and profit rather than “ what is thought best for you” is probably the reason, no?

I hope the nature of my questions and my tone imply that I want to understand and I want to do the best with our money going forward. I very much appreciate the responses here. I agree I need to learn more.
retiredjg
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Re: PAS advisor portfolio

Post by retiredjg »

nanameg wrote: Fri Jun 19, 2020 8:35 pm
SEP VBTLX 434,401
VTABX 185,794
VTIAX 138,803
VTSAX 169,620

IRA VBTLX 38,942
VTABX 26,563
VTIAX 119,053
VTSAX 198,414
You have $625,890 in stocks and $685,700 in bonds. That is 48% stocks and 52% in bonds. That is within what is considered a normal wandering range of your target of 45% stocks and 55% bonds. Everything is just what you have agreed on. It does not matter what percentage of what fund is in which account.

Unless....you own one and your husband owns the other and you guys want it to be same-same. In that case, you should ask if you can have that, realizing that it means every time a rebalance is needed that both accounts would have to be rebalanced separately. They may allow it or they may have a policy to rebalance only in 1 account when possible.

This might be how the accounts came to be different - rebalancing might have occurred in only one account and that took care of the two accounts overall.

401k VBTLX 548,468
VTSAX 599,748
This is fine as well. Holding just the two funds in the 401k simply reduces the percentages of the foreign stocks and foreign bonds in your overall portfolio and it sounds like you would not mind that anyway.

There is nothing wrong with your portfolio. There is nothing to be fixed. The only thing that needs "work" is for you to learn enough that you can stop worrying about it. :happy

At this point, you need the "hand holding" from VPAS to help you avoid making mistakes that could cost you a lot of money. The cost of that hand holding is that you have to use what they advise rather that the 2 fund portfolio you might prefer. It is a very small price to pay. Compromises are everywhere in life and this is just one of them.
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Horton
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Re: PAS advisor portfolio

Post by Horton »

You should just put the SEP and the IRA in one of Vanguard's target date funds. You save the PAS fee, you don't see the underlying performance of the individual funds, and you don't have to worry about different asset allocations across accounts (which seems to be the worry triggering the OP).

Then, you should create a super complicated password, download KeePass, get a YubiKey, and store your password in KeePass. This has the benefit of keeping your account extra secure and also making it a time consuming process to access your account to check on performance.
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nanameg
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Re: PAS advisor portfolio

Post by nanameg »

retiredjg wrote: Sat Jun 20, 2020 7:54 am
nanameg wrote: Wed Jun 17, 2020 8:29 pm And why shouldn’t almost a full 1/2 of our entire portfolio which we are also currently contributing to mirror the other two accounts? Why wouldn’t he encourage that instead of just 2 US funds?

What am I missing here?
Perhaps he didn't encourage that because he is not allowed to advise you on how to invest assets held outside the PAS agreement.

Telling you that what you have "is fine" is probably the most he can say that could not be construed as some kind of investment advice.


While it may not seem logical, there is nothing wrong with how the investments are split up between the two accounts. It simply does not matter what is in the SEP IRA and what is in the traditional IRA. In fact, I don't see why they are not combined into 1 account unless the SEP has some kind of creditor protection that the tIRA does not have. You might want to ask the advisor about combining them, especially if that would make you more comfortable.

As for your fears the advisor is trying to bamboozle you, that seems HIGHLY unlikely with Vanguard's PAS (although I believe it can and does happen with others). The PAS advisors don't make commissions by selling you this or that or how much of the other they put your money in. What possible incentive could he have to do anything but what is thought best for you?


At some point, you may be able to manage your own assets. The nature of your questions and the tone of your post indicate you are not there yet. You should give this some time and try to relax and learn about it rather than be considering a change at this point.
I can’t combine the sep and IRA. The IRA is mine, the SEP is my husbands. Sorry I didn’t make that clear.

I think it doesn’t make sense for almost 1/2 of our assets to not be managed if I'm going to be managed at all. But I’m not sure where to go for that. I start going backwards then trying to find a outside financial advisor and choosing one I’m comfortable with. That’s a lot of work. PAS is much simpler but I’m not sure it makes sense.

The reason I’d like to be able to more clearly understand the way the managed accounts are set up...the reason it “ matters” to me ...is so that I can more simply follow that plan the PAS set out with the unmanaged account rather than have it completely on a different track...the 50/50 VTSAX/ VBTLX that I set up.
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Horton
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Re: PAS advisor portfolio

Post by Horton »

nanameg wrote: Sat Jun 20, 2020 8:31 am I think it doesn’t make sense for almost 1/2 of our assets to not be managed if I'm going to be managed at all. But I’m not sure where to go for that. I start going backwards then trying to find a outside financial advisor and choosing one I’m comfortable with. That’s a lot of work. PAS is much simpler but I’m not sure it makes sense.

The reason I’d like to be able to more clearly understand the way the managed accounts are set up...the reason it “ matters” to me ...is so that I can more simply follow that plan the PAS set out with the unmanaged account rather than have it completely on a different track...the 50/50 VTSAX/ VBTLX that I set up.
You are making this all way too complicated and fretting about things that are largely inconsequential. Just make a decision:

1. Keep using PAS
2. Use the three fund portfolio across all accounts
3. Choose a target date fund each account

All three options are fine as long as you stop tweaking.

Perfect is the enemy of good, and you are currently on a voyage to find perfect.
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nanameg
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Re: PAS advisor portfolio

Post by nanameg »

retiredjg wrote: Sat Jun 20, 2020 8:15 am
nanameg wrote: Fri Jun 19, 2020 8:35 pm
SEP VBTLX 434,401
VTABX 185,794
VTIAX 138,803
VTSAX 169,620

IRA VBTLX 38,942
VTABX 26,563
VTIAX 119,053
VTSAX 198,414
You have $625,890 in stocks and $685,700 in bonds. That is 48% stocks and 52% in bonds. That is within what is considered a normal wandering range of your target of 45% stocks and 55% bonds. Everything is just what you have agreed on. It does not matter what percentage of what fund is in which account.

Unless....you own one and your husband owns the other and you guys want it to be same-same. In that case, you should ask if you can have that, realizing that it means every time a rebalance is needed that both accounts would have to be rebalanced separately. They may allow it or they may have a policy to rebalance only in 1 account when possible.

This might be how the accounts came to be different - rebalancing might have occurred in only one account and that took care of the two accounts overall.

401k VBTLX 548,468
VTSAX 599,748
This is fine as well. Holding just the two funds in the 401k simply reduces the percentages of the foreign stocks and foreign bonds in your overall portfolio and it sounds like you would not mind that anyway.

There is nothing wrong with your portfolio. There is nothing to be fixed. The only thing that needs "work" is for you to learn enough that you can stop worrying about it. :happy

At this point, you need the "hand holding" from VPAS to help you avoid making mistakes that could cost you a lot of money. The cost of that hand holding is that you have to use what they advise rather that the 2 fund portfolio you might prefer. It is a very small price to pay. Compromises are everywhere in life and this is just one of them.
I agree completely that I need to learn enough to stop worrying about it. But I wonder does that happen? Can you learn enough to stop worrying? I barely paid attention before...just looking quarterly and never actively rebalancing since it didn’t seem I needed to.

But not knowing enough about investing caused me to panic in March and make a very costly mistake that I’m still psychologically recovering from. Hence all my worry. And also most likely why the PAS service, though it rankles a bit, is probably doing more for my psychological state than my pocketbook at this point. And both are very much connected as I’ve learned the hard way.
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nanameg
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Re: PAS advisor portfolio

Post by nanameg »

Horton wrote: Sat Jun 20, 2020 8:38 am
nanameg wrote: Sat Jun 20, 2020 8:31 am I think it doesn’t make sense for almost 1/2 of our assets to not be managed if I'm going to be managed at all. But I’m not sure where to go for that. I start going backwards then trying to find a outside financial advisor and choosing one I’m comfortable with. That’s a lot of work. PAS is much simpler but I’m not sure it makes sense.

The reason I’d like to be able to more clearly understand the way the managed accounts are set up...the reason it “ matters” to me ...is so that I can more simply follow that plan the PAS set out with the unmanaged account rather than have it completely on a different track...the 50/50 VTSAX/ VBTLX that I set up.
You are making this all way too complicated and fretting about things that are largely inconsequential. Just make a decision:

1. Keep using PAS
2. Use the three fund portfolio across all accounts
3. Choose a target date fund each account

All three options are fine as long as you stop tweaking.

Perfect is the enemy of good, and you are currently on a voyage to find perfect.
What keeps me twisting in this is international. All of the 3 options you suggest include international.

Do I or don’t I? And if I do what percentage? And that’s a question that’s not unique to me nor does it seem to be solvable from all the threads I’ve read here going back years.

At our age (64) and our portfolio ( low 7 figure) is the international question arguing about inconsequential?



According to the “ Vanguard Capital Markets Model” we have enough to live comfortably till I’m 100. If that’s reliable It is based on the 4 fund portfolio they suggest.

I like the 2 fund portfolio. It’s so simple to see what’s going on at a glance. I’m leaning toward that but I’m afraid and the advisor of course suggests not using it ...except that he considers it “ fine” for the half our portfolio that he can’t manage. That remark doesn’t inspire confidence in his advice overall.

I think, given the trauma of locking in losses of 250k, and the conflicting advice by the advisor and on these international threads here, it possible to see why I’m fretting. I don’t want to tweak. I do want to set up something I can live with reasonably comfortably in the next downturn and not even be tempted to repeat my mistake.
retiredjg
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Re: PAS advisor portfolio

Post by retiredjg »

nanameg wrote: Sat Jun 20, 2020 8:46 am I agree completely that I need to learn enough to stop worrying about it. But I wonder does that happen? Can you learn enough to stop worrying?
Yes. :happy But it takes time, more time than just since March.

I really think looking for another advisor at this time would be a huge mistake. There is only 1 kind of advisor who would do what you want - the kind who gives advice for a set fee and leaves the portfolio management up to you.

That kind of advisor offers you no benefit at the present time. You already know what you want to do ( a simple portfolio you can understand). What you need is someone to calm the panic when (not if) the bad times come again. This is the most valuable service an advisor can provide and it is the one service you really need.

There are thousands of people out there who will do that. The problem is that most will put in you a very complicated portfolio, the funds may have high expense ratios, the funds may have loads, the funds may not be portable if you want to leave, they might try to sell you products like annuities that you don't need (those commissions again), and their costs are usually much higher than VPAS.

Maybe it would be helpful to discuss your current portfolio. What is it that is bewildering you? Or is it that you just don't want the international exposure. Do you realize just how little you have?
Outer Marker
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Re: PAS advisor portfolio

Post by Outer Marker »

nanameg wrote: Sat Jun 20, 2020 9:11 am What keeps me twisting in this is international. ... Do I or don’t I? And if I do what percentage? And that’s a question that’s not unique to me nor does it seem to be solvable from all the threads I’ve read here going back years.

At our age (64) and our portfolio ( low 7 figure) is the international question arguing about inconsequential?
. . .
I like the 2 fund portfolio. It’s so simple to see what’s going on at a glance. I’m leaning toward that but I’m afraid and the advisor of course suggests not using it ...except that he considers it “ fine” for the half our portfolio that he can’t manage. That remark doesn’t inspire confidence in his advice overall.

I think, given the trauma of locking in losses of 250k, and the conflicting advice by the advisor and on these international threads here, it possible to see why I’m fretting. I don’t want to tweak. I do want to set up something I can live with reasonably comfortably in the next downturn and not even be tempted to repeat my mistake.
International is totally optional, and has had a negative (mid-term past) impact on performance. Most of the companies in the S&P 500 have international operations and draw from those economies. Jack Bogle didn't think international was necessary. Neither does Warren Buffet. So, you're in good company. If you can stick with the two fund portfolio and not sell your equities at the next downturn, then go for it. If you don't trust yourself, an all-in-one fund is a reasonable alternative. There is plenty of good reading out there on stay-the-course investing which may help you steel your resolve, e.g. the Boglehead's Guide to Investing.
retiredjg
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Re: PAS advisor portfolio

Post by retiredjg »

nanameg wrote: Sat Jun 20, 2020 9:11 am What keeps me twisting in this is international. All of the 3 options you suggest include international.

Do I or don’t I? And if I do what percentage? And that’s a question that’s not unique to me nor does it seem to be solvable from all the threads I’ve read here going back years.

At our age (64) and our portfolio ( low 7 figure) is the international question arguing about inconsequential?
Here's your portfolio.
  • Total US Stock (VTSAX) 39.5%
    Total Bond (VBTLX) 41.7%
    Total International Stock (VTIAX) 10.5%
    Total International Bond (VTABX) 8.7%
Less that 20% of your portfolio is in international investments. That is not a consequential amount, especially if holding it gets you something you want or need (the "keep me from doing things in a panic" part of investment advisory services).

It is also the magical number that Taylor suggests using the logic that some people (Jack Bogle) suggest 0% to 20% and others suggest from 20% to 50%). When people do not agree, where they do agree might be a good spot to be.


Perhaps you do not realize that the vast majority of the risk and return of your portfolio is determined by the stock to bond ratio (of whatever type). The fact that you do or do not have a certain amount of international exposure is much less consequential.

I like the 2 fund portfolio. It’s so simple to see what’s going on at a glance. I’m leaning toward that but I’m afraid and the advisor of course suggests not using it ...except that he considers it “ fine” for the half our portfolio that he can’t manage. That remark doesn’t inspire confidence in his advice overall.
Have you not yet realized that he cannot put you in a 2 fund portfolio? What he has done is set things up as close to what you want as possible.

Your choices seem to be these.
  • Stay with VPAS and tolerate a low percentage of international because he cannot set you up any other way.

    Leave VPAS and manage on your own. You won't hold any international, but you will be responsible for managing it all and not succumbing to panic when a real downturn comes along (I don't consider the 30 second downturn last March to be a true test of an investor's ability to stay the course). If you do leave PAS, an all in one fund would be a good choice, but they have even higher allocations to international than what you have now.

    Leave VPAS and take your chances with the vultures out there.

My suggestion is that you stay as you are for at least a year. Let us help you understand what you have, how to manage it, and why it is not so different from what you think you want.

Don't rush into another poor decision. It is very likely to be a "frying pan into the fire" choice.
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nanameg
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Re: PAS advisor portfolio

Post by nanameg »

retiredjg wrote: Sat Jun 20, 2020 9:27 am
nanameg wrote: Sat Jun 20, 2020 8:46 am I agree completely that I need to learn enough to stop worrying about it. But I wonder does that happen? Can you learn enough to stop worrying?
Yes. :happy But it takes time, more time than just since March.

I really think looking for another advisor at this time would be a huge mistake. There is only 1 kind of advisor who would do what you want - the kind who gives advice for a set fee and leaves the portfolio management up to you.

That kind of advisor offers you no benefit at the present time. You already know what you want to do ( a simple portfolio you can understand). What you need is someone to calm the panic when (not if) the bad times come again. This is the most valuable service an advisor can provide and it is the one service you really need.

There are thousands of people out there who will do that. The problem is that most will put in you a very complicated portfolio, the funds may have high expense ratios, the funds may have loads, the funds may not be portable if you want to leave, they might try to sell you products like annuities that you don't need (those commissions again), and their costs are usually much higher than VPAS.

Maybe it would be helpful to discuss your current portfolio. What is it that is bewildering you? Or is it that you just don't want the international exposure. Do you realize just how little you have?
Yes I do realize I have very little international. And I want to either commit to it or have none. A little seems silly.

International is the first thing I bailed on in March because I was never convinced it was right...I remembered Bogle saying it wasn’t necessary but I went with it after a review of my portfolio by Vanguard in 2015.

And it went from bad to worst. I mean once I sold international a few nights later I sold everything. It was a gatekeeper of sorts for me. I don’t ever want to be in that state again.

I want to have a clear understanding of just how much it’s possible to lose so I’m not shocked again like I was in March.

We were 60/ 40 then and went down 237,000 by 3/12 and were still plummeting...I panicked because I was number 1 naive and number 2 afraid we were losing all source of income as well.

I think Adrians rule can help me understand just how much we can lose.

I was struck by an analogy by Jason Zweig...u can think you’re not afraid of snakes..till one gets thrown in your lap.
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nanameg
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Re: PAS advisor portfolio

Post by nanameg »

retiredjg wrote: Sat Jun 20, 2020 10:05 am
nanameg wrote: Sat Jun 20, 2020 9:11 am What keeps me twisting in this is international. All of the 3 options you suggest include international.

Do I or don’t I? And if I do what percentage? And that’s a question that’s not unique to me nor does it seem to be solvable from all the threads I’ve read here going back years.

At our age (64) and our portfolio ( low 7 figure) is the international question arguing about inconsequential?
Here's your portfolio.
  • Total US Stock (VTSAX) 39.5%
    Total Bond (VBTLX) 41.7%
    Total International Stock (VTIAX) 10.5%
    Total International Bond (VTABX) 8.7%
Less that 20% of your portfolio is in international investments. That is not a consequential amount, especially if holding it gets you something you want or need (the "keep me from doing things in a panic" part of investment advisory services).

It is also the magical number that Taylor suggests using the logic that some people (Jack Bogle) suggest 0% to 20% and others suggest from 20% to 50%). When people do not agree, where they do agree might be a good spot to be.


Perhaps you do not realize that the vast majority of the risk and return of your portfolio is determined by the stock to bond ratio (of whatever type). The fact that you do or do not have a certain amount of international exposure is much less consequential.

I like the 2 fund portfolio. It’s so simple to see what’s going on at a glance. I’m leaning toward that but I’m afraid and the advisor of course suggests not using it ...except that he considers it “ fine” for the half our portfolio that he can’t manage. That remark doesn’t inspire confidence in his advice overall.
Have you not yet realized that he cannot put you in a 2 fund portfolio? What he has done is set things up as close to what you want as possible.

Your choices seem to be these.
  • Stay with VPAS and tolerate a low percentage of international because he cannot set you up any other way.

    Leave VPAS and manage on your own. You won't hold any international, but you will be responsible for managing it all and not succumbing to panic when a real downturn comes along (I don't consider the 30 second downturn last March to be a true test of an investor's ability to stay the course). If you do leave PAS, an all in one fund would be a good choice, but they have even higher allocations to international than what you have now.

    Leave VPAS and take your chances with the vultures out there.

My suggestion is that you stay as you are for at least a year. Let us help you understand what you have, how to manage it, and why it is not so different from what you think you want.

Don't rush into another poor decision. It is very likely to be a "frying pan into the fire" choice.
Thank you I think that’s very good advice. I enjoy talking to the advisor, I’m learning a lot here and I will read more books as well.

Thanks for your time, advice and encouragement.
little_star
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Re: PAS advisor portfolio

Post by little_star »

The original post asked about the different AA allocations in the different IRA accounts. It is likely set up this way so that the IRA with a smaller balance has a more aggressive allocation (more stocks, less bonds) while still retaining the overall AA for the total account balance. Statistically, this should increase the value of the smaller IRA more quickly, bringing the two IRAs closer to equivalent total value over time. Since a later post in this thread indicates that the IRAs are for different individuals, this type of re-balancing makes sense to build towards a more equitable distribution of the funds in the two IRAs under PAS management. Once the two IRAs have similar total value, you can revert to identical AA allocations in both IRAs. If you disagree with this approach (i.e., prefer to leave the funds with inequitable total value), then ask to have identical AA allocations right now.
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Re: PAS advisor portfolio

Post by Katietsu »

I see nothing wrong with putting the 401k in a 50 US Stock/US Bond mix and letting PAS determine how to adjust the other accounts to meet an overall allocation.

I agree with others that suggest keeping PAS and following their advice. I will be more blunt than some of the others. First of all, you suggest changing allocations, both what it includes and how it is distributed, because it is easier for you to look at. You have been given a simple but well thought out plan. It is a plan that is consistent with the current recommendations of smart people who do this for a living. I think you should have a better reason to deviate than it is just annoying to you to see anything but 50 US equities/50 US Bonds in every account. In one sentence, you are questioning paying anything for advice and suggesting that you go it alone. But then you talk about looking for an outside advisor who is willing to manage all 3 plans. You want something simple and that you might be able to manage and stay invested in on your own. But, you do not want to use a single all in one fund and your reason again seems to be one based on feelings not objectivity. I think you are in a good place. I think the things that have you questioning your current plan are exactly the reasons you should stay with PAS.

And congratulations on being set for retirement. You have obviously done a lot of things right. Could it be nearing retirement is making you nervous? I know that I have a harder time with the emotional aspects of retirement investing now that I can count the likely years to retirement on one hand.
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Horton
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Re: PAS advisor portfolio

Post by Horton »

In some sense your quandary is the same as everyone else. You ask: will international work? Others ask:

Will small value work?
Will factors work?
Will emerging markets work?
Will long term Treasuries work?
(The list goes on and on and on)

It’s a different question for each person. The answers are unknowable, except in retrospect. We don’t have the ability to divine the future.

The key is to develop a plan that is likely to help you meet your goals. Then, you monitor that plan to make changes periodically. Note though that periodically is quarterly or annually, not daily. If your portfolio decreases in value, then adjust your spending.
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Re: PAS advisor portfolio

Post by pkcrafter »

nanameg wrote: Fri Jun 19, 2020 8:35 pm
I’m talking to the advisor again this Wednesday and I’d like to change our AA from 45/55 to 50/50. That’s easier for me to track and a reasonable AA from what I’ve read here for our age and risk tolerance. I found out I had zero risk tolerance in March but I think I understand more now. We were 60/40 then but I had no idea what our “ number “ was and now I have a better sense of what our retirement spending will most likely be and the risk that holding stocks entails.

SEP VBTLX 434,401
VTABX 185,794
VTIAX 138,803
VTSAX 169,620

IRA VBTLX 38,942
VTABX 26,563
VTIAX 119,053
VTSAX 198,414

401k VBTLX 548,468
VTSAX 599,748

I really like the 2 fund 401k that I chose.It’s so easy to see what’s happening at a glance.

If I do keep international funds I think I’ll dispense with the international bond fund just for the ease of tracking as well. PAS will not keep you as a client if you don’t hold international stocks I believe. At least that’s the impression I got which I will clarify. They also are pushing hard for ETF’s if you’re a client of PAS. I prefer my mutual funds.
OK, nanameg, I've broken down your accounts and calculated holdings as ONE account

Assets (all tax deferred) $2,459,700. This means you an do a safe withdrawal rate of -98k/year.

Overall asset allocation = ~49.5% stock, 51.5% bond (might be off by half percent because I rounded)

SEP 38%
IRA 15.5%
4101k 46.5%

Stock
VTSAX = 39%
VTIAX = 10.5%
Bond
VBTLX = 41.5%
VTABX = 9%

Portfolio is fine, but if you want to simplify, you can use Target funds, Lifestrategy funds, or balanced funds. All of these auto rebalance.


Paul

Edit: I just finished reading additional posts and the bottom line is you are not in bad shape. If your withdrawal rate will be 4% or less, you can get by with 35-40% in equity. You don't need 50%, and that may help reduce your anxiety.

For international stock, most here, including me, recommend about 20-25% of equity. You are lower than that and you can just leave it there. Having some exposure for diversification purposes is a good idea. It really is that simple.

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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sergeant
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Re: PAS advisor portfolio

Post by sergeant »

OP, you have about 250 posts. I went back and read most of them. You should definitely stick with VPAS and your current portfolio. Do not attempt to do this on your own. I sense too much emotion and too little knowledge. Try to relax and know that your total portfolio is right in the sweet spot most experts recommend. Please stop tinkering. Give this portfolio some time. You will see that it is a solid portfolio. There is no perfect portfolio.
AA- 20+ Years of Expenses Fixed Income/The remainder in Equities.
dbr
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Re: PAS advisor portfolio

Post by dbr »

nanameg wrote: Sat Jun 20, 2020 9:11 am


According to the “ Vanguard Capital Markets Model” we have enough to live comfortably till I’m 100. If that’s reliable It is based on the 4 fund portfolio they suggest.
That is really not so. Your chances of success are based on how much money you have and how fast you plan to spend it. They have a model that looks at those things. While big changes in how you are invested might eventually change your retirement success, whether or not you have some money in international bonds is utterly irrelevant and so is your asset allocation up to a couple of tens of percent one way or the other.

A confusion here is that financial planning is one thing and investing is another thing. For the money you pay them you get some financial planning and you also get some investment advice and some investment management. But the financial plan is not highly dependent on exactly what investment selection they make for you.

As I suggested in a previous post I think the job of financial advising should include educating the customer on what the situation is and why the results and recommendations are what they are. Apparently Vanguard does not agree with me.

I also agree with some other posters that for all of this you are going to be just fine and I would not worry about the details of what Vanguard is suggesting.
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nanameg
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Re: PAS advisor portfolio

Post by nanameg »

little_star wrote: Sat Jun 20, 2020 11:17 am The original post asked about the different AA allocations in the different IRA accounts. It is likely set up this way so that the IRA with a smaller balance has a more aggressive allocation (more stocks, less bonds) while still retaining the overall AA for the total account balance. Statistically, this should increase the value of the smaller IRA more quickly, bringing the two IRAs closer to equivalent total value over time. Since a later post in this thread indicates that the IRAs are for different individuals, this type of re-balancing makes sense to build towards a more equitable distribution of the funds in the two IRAs under PAS management. Once the two IRAs have similar total value, you can revert to identical AA allocations in both IRAs. If you disagree with this approach (i.e., prefer to leave the funds with inequitable total value), then ask to have identical AA allocations right now.
That’s interesting. I will discuss with the advisor thank you.
dbr
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Re: PAS advisor portfolio

Post by dbr »

nanameg wrote: Sat Jun 20, 2020 3:24 pm
little_star wrote: Sat Jun 20, 2020 11:17 am The original post asked about the different AA allocations in the different IRA accounts. It is likely set up this way so that the IRA with a smaller balance has a more aggressive allocation (more stocks, less bonds) while still retaining the overall AA for the total account balance. Statistically, this should increase the value of the smaller IRA more quickly, bringing the two IRAs closer to equivalent total value over time. Since a later post in this thread indicates that the IRAs are for different individuals, this type of re-balancing makes sense to build towards a more equitable distribution of the funds in the two IRAs under PAS management. Once the two IRAs have similar total value, you can revert to identical AA allocations in both IRAs. If you disagree with this approach (i.e., prefer to leave the funds with inequitable total value), then ask to have identical AA allocations right now.
That’s interesting. I will discuss with the advisor thank you.
Now, that speculation might be true, but for gosh sakes the advisor could explain to you that is what he is doing. The other speculation was that it was about rebalancing some how.
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nanameg
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Re: PAS advisor portfolio

Post by nanameg »

Katietsu wrote: Sat Jun 20, 2020 12:06 pm I see nothing wrong with putting the 401k in a 50 US Stock/US Bond mix and letting PAS determine how to adjust the other accounts to meet an overall allocation.

I agree with others that suggest keeping PAS and following their advice. I will be more blunt than some of the others. First of all, you suggest changing allocations, both what it includes and how it is distributed, because it is easier for you to look at. You have been given a simple but well thought out plan. It is a plan that is consistent with the current recommendations of smart people who do this for a living. I think you should have a better reason to deviate than it is just annoying to you to see anything but 50 US equities/50 US Bonds in every account. In one sentence, you are questioning paying anything for advice and suggesting that you go it alone. But then you talk about looking for an outside advisor who is willing to manage all 3 plans. You want something simple and that you might be able to manage and stay invested in on your own. But, you do not want to use a single all in one fund and your reason again seems to be one based on feelings not objectivity. I think you are in a good place. I think the things that have you questioning your current plan are exactly the reasons you should stay with PAS.

And congratulations on being set for retirement. You have obviously done a lot of things right. Could it be nearing retirement is making you nervous? I know that I have a harder time with the emotional aspects of retirement investing now that I can count the likely years to retirement on one hand.
Thank you for being blunt and yes I’m definitely emotional because of nearing retirement and my husband having to shutter his dental practice so abruptly. It was a very emotional time. I’m very upset with myself too for making such a huge mistake and pulling out as I did. No one likes to make mistakes. Especially if that magnitude and consequence.

I’m not in the least “annoyed “ by trying to follow four funds in the accounts... I was overwhelmed by it under pressure and don’t want that experience ever again. That’s why I wanted to go down to 2. And like all of us I’m only getting older... and my husband is completely computer challenged. He could never follow these accounts if I go before him. Yet another reason to have PAS in place I suppose. We are still young ish and healthy but life is totally unpredictable.

I will take the advice offered here and I thank you all.
little_star
Posts: 43
Joined: Tue Jun 16, 2020 5:08 pm

Re: PAS advisor portfolio

Post by little_star »

dbr wrote: Sat Jun 20, 2020 3:26 pm
nanameg wrote: Sat Jun 20, 2020 3:24 pm
little_star wrote: Sat Jun 20, 2020 11:17 am The original post asked about the different AA allocations in the different IRA accounts. It is likely set up this way so that the IRA with a smaller balance has a more aggressive allocation (more stocks, less bonds) while still retaining the overall AA for the total account balance. Statistically, this should increase the value of the smaller IRA more quickly, bringing the two IRAs closer to equivalent total value over time. Since a later post in this thread indicates that the IRAs are for different individuals, this type of re-balancing makes sense to build towards a more equitable distribution of the funds in the two IRAs under PAS management. Once the two IRAs have similar total value, you can revert to identical AA allocations in both IRAs. If you disagree with this approach (i.e., prefer to leave the funds with inequitable total value), then ask to have identical AA allocations right now.
That’s interesting. I will discuss with the advisor thank you.
Now, that speculation might be true, but for gosh sakes the advisor could explain to you that is what he is doing. The other speculation was that it was about rebalancing some how.
It is also possible that this distribution is just what was spit out of the monte carlo simulation and the advisor did not want to "adjust" what the computer said was the best distribution for the two separate IRAs. I do not have a lot of personal experience with financial advisors, but I do recall the "odd" allocations recommended by the TIAA representative that I consulted a while ago. In that case, I had two accounts: the employer sponsored account and the one with my pre-tax contributions. I desired a similar AA in both. The recommendation for allocations of funds within each account was quite different, even though they had the same tax advantage and same desired AA. Further, their monte carlo simulation indicated that with their recommended allocation I would have a 98% probability of having sufficient funds in retirement. The kicker? Their monte carlo simulation indicated that I would have 99% probability of having sufficient funds in retirement if I stayed with the allocation I started with (only a few CREF accounts and some in TIAA-traditional). Not surprisingly, I did not change my fund selection and have "stayed the course" since then with my much simpler allocations. This single interaction has made me wary of advice from financial advisors (even those that are supposedly salaried, not commission-based), but it was educational in its own right.

So, in regard to the OP: the fact that VPAS is recommending only a few funds is good because it makes it easier for you to see what is happening in your accounts. You should clarify with the advisor whether the difference in allocation is deliberate, as per my initial suggestion, or accidental. Regardless, you should consider whether you want to have a more aggressive allocation in the smaller IRA (as it is currently) or if you would prefer the same AA in both. Since both are tax advantaged, you should be able to re-balance to your preferred AA without a tax consequence.
Topic Author
nanameg
Posts: 434
Joined: Fri Mar 20, 2020 10:57 am

Re: PAS advisor portfolio

Post by nanameg »

little_star wrote: Sat Jun 20, 2020 4:03 pm
dbr wrote: Sat Jun 20, 2020 3:26 pm
nanameg wrote: Sat Jun 20, 2020 3:24 pm
little_star wrote: Sat Jun 20, 2020 11:17 am The original post asked about the different AA allocations in the different IRA accounts. It is likely set up this way so that the IRA with a smaller balance has a more aggressive allocation (more stocks, less bonds) while still retaining the overall AA for the total account balance. Statistically, this should increase the value of the smaller IRA more quickly, bringing the two IRAs closer to equivalent total value over time. Since a later post in this thread indicates that the IRAs are for different individuals, this type of re-balancing makes sense to build towards a more equitable distribution of the funds in the two IRAs under PAS management. Once the two IRAs have similar total value, you can revert to identical AA allocations in both IRAs. If you disagree with this approach (i.e., prefer to leave the funds with inequitable total value), then ask to have identical AA allocations right now.
That’s interesting. I will discuss with the advisor thank you.
Now, that speculation might be true, but for gosh sakes the advisor could explain to you that is what he is doing. The other speculation was that it was about rebalancing some how.
It is also possible that this distribution is just what was spit out of the monte carlo simulation and the advisor did not want to "adjust" what the computer said was the best distribution for the two separate IRAs. I do not have a lot of personal experience with financial advisors, but I do recall the "odd" allocations recommended by the TIAA representative that I consulted a while ago. In that case, I had two accounts: the employer sponsored account and the one with my pre-tax contributions. I desired a similar AA in both. The recommendation for allocations of funds within each account was quite different, even though they had the same tax advantage and same desired AA. Further, their monte carlo simulation indicated that with their recommended allocation I would have a 98% probability of having sufficient funds in retirement. The kicker? Their monte carlo simulation indicated that I would have 99% probability of having sufficient funds in retirement if I stayed with the allocation I started with (only a few CREF accounts and some in TIAA-traditional). Not surprisingly, I did not change my fund selection and have "stayed the course" since then with my much simpler allocations. This single interaction has made me wary of advice from financial advisors (even those that are supposedly salaried, not commission-based), but it was educational in its own right.

So, in regard to the OP: the fact that VPAS is recommending only a few funds is good because it makes it easier for you to see what is happening in your accounts. You should clarify with the advisor whether the difference in allocation is deliberate, as per my initial suggestion, or accidental. Regardless, you should consider whether you want to have a more aggressive allocation in the smaller IRA (as it is currently) or if you would prefer the same AA in both. Since both are tax advantaged, you should be able to re-balance to your preferred AA without a tax consequence.
Thank you for this and u confirm what I was wondering about. Although the advisor is not commission based i assume he does have an interest in something other than my well being. It’s nice if they correlate but I can’t just assume they do that’s all. I want to understand.
epictetus
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Joined: Sat Mar 10, 2007 6:43 pm

Re: PAS advisor portfolio

Post by epictetus »

if you could find one of the all-in-one funds you were comfortable with and buy it everywhere you would be set.

if you buy a Target Date fund it will become increasingly conservative over time.

if you buy a Lifestrategy Fund it will maintain the same asset allocation over time.
Focus on what you can control
retired@50
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Location: Living in the U.S.A.

Re: PAS advisor portfolio

Post by retired@50 »

nanameg wrote: Sat Jun 20, 2020 4:27 pm
Thank you for this and u confirm what I was wondering about. Although the advisor is not commission based i assume he does have an interest in something other than my well being. It’s nice if they correlate but I can’t just assume they do that’s all. I want to understand.
What led you to this assumption?

See link. Ask these questions of your VPAS adviser. See if they pass or fail the test.

https://jasonzweig.com/the-19-questions ... l-adviser/

Regards,
This is one person's opinion. Nothing more.
Topic Author
nanameg
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Re: PAS advisor portfolio

Post by nanameg »

retired@50 wrote: Sat Jun 20, 2020 5:01 pm
nanameg wrote: Sat Jun 20, 2020 4:27 pm
Thank you for this and u confirm what I was wondering about. Although the advisor is not commission based i assume he does have an interest in something other than my well being. It’s nice if they correlate but I can’t just assume they do that’s all. I want to understand.
What led you to this assumption?

See link. Ask these questions of your VPAS adviser. See if they pass or fail the test.

https://jasonzweig.com/the-19-questions ... l-adviser/

Regards,
Thank you I will read this link. I just posted two reasons why I question the motives of the PAS. I’m not saying they are nefarious... I’m saying it’s a business and they want clients. They don’t want you to opt out in TDF or another balanced fund.
little_star
Posts: 43
Joined: Tue Jun 16, 2020 5:08 pm

Re: PAS advisor portfolio

Post by little_star »

OP - There is nothing on the record to suggest that your PAS advisor has nefarious intentions. He should be willing and able to explain the different AAs in the two IRAs. In the meantime, he has provided exactly the AA that you requested for the funds under PAS management. Your current angst regarding international funds may ultimately be a deal breaker, but that is not related to the advice provided by your advisor thus far, as it appears to be a more recent concern. Ultimately, only you can determine what risks and allocations you are comfortable with for your money. If they do not align with the advice you are receiving from PAS, then you should not use their service. At the same time, as others have said, if you are willing to pull $2m from the market at market lows, it is probably a good idea to use some type of financial service that will help you avoid repeating this emotional response to similar news in the future.
Topic Author
nanameg
Posts: 434
Joined: Fri Mar 20, 2020 10:57 am

Re: PAS advisor portfolio

Post by nanameg »

little_star wrote: Sat Jun 20, 2020 5:38 pm OP - There is nothing on the record to suggest that your PAS advisor has nefarious intentions. He should be willing and able to explain the different AAs in the two IRAs. In the meantime, he has provided exactly the AA that you requested for the funds under PAS management. Your current angst regarding international funds may ultimately be a deal breaker, but that is not related to the advice provided by your advisor thus far, as it appears to be a more recent concern. Ultimately, only you can determine what risks and allocations you are comfortable with for your money. If they do not align with the advice you are receiving from PAS, then you should not use their service. At the same time, as others have said, if you are willing to pull $2m from the market at market lows, it is probably a good idea to use some type of financial service that will help you avoid repeating this emotional response to similar news in the future.
Little star I said exactly that..I’m not accusing him of nefarious intentions. I’m saying it’s a business relationship and I can’t assume it’s all to my good. I’m also concerned that Vanguard pushes PAS as hard as they do..ads pop up immediately on the web site and have for some time. What’s that about?

The advisor told me himself the advisor service is growing in leaps and bounds...why is that?

I thought Vanguard was all about DIY simplicity.
Topic Author
nanameg
Posts: 434
Joined: Fri Mar 20, 2020 10:57 am

Re: PAS advisor portfolio

Post by nanameg »

little_star wrote: Sat Jun 20, 2020 5:38 pm OP - There is nothing on the record to suggest that your PAS advisor has nefarious intentions. He should be willing and able to explain the different AAs in the two IRAs. In the meantime, he has provided exactly the AA that you requested for the funds under PAS management. Your current angst regarding international funds may ultimately be a deal breaker, but that is not related to the advice provided by your advisor thus far, as it appears to be a more recent concern. Ultimately, only you can determine what risks and allocations you are comfortable with for your money. If they do not align with the advice you are receiving from PAS, then you should not use their service. At the same time, as others have said, if you are willing to pull $2m from the market at market lows, it is probably a good idea to use some type of financial service that will help you avoid repeating this emotional response to similar news in the future.
Mea culpa mea culpa mea maxim culpa on the pulling my funds out ...but in a way having PAS now is like locking the barn after the cow or horse or whatever the saying is is already gone.

But agreed..much to learn on my part. And until I’m more knowledgeable I’m staying with PAS..and maybe I’ll just stay with them forever for my and my husbands emotional well being.
little_star
Posts: 43
Joined: Tue Jun 16, 2020 5:08 pm

Re: PAS advisor portfolio

Post by little_star »

nanameg wrote: Sat Jun 20, 2020 6:12 pm Little star I said exactly that..I’m not accusing him of nefarious intentions. I’m saying it’s a business relationship and I can’t assume it’s all to my good. I’m also concerned that Vanguard pushes PAS as hard as they do..ads pop up immediately on the web site and have for some time. What’s that about?

The advisor told me himself the advisor service is growing in leaps and bounds...why is that?

I thought Vanguard was all about DIY simplicity.
It is often good to be skeptical, but not all business relationships must be adversarial. In this case, Vanguard likely realizes that some of its investors could use some guidance. It is charging a modest amount for this service. The business model is not complicated: the more people who sign up for this service, the more Vanguard earns in fees, and the more likely current investors will stay with Vanguard. It is in their interests to make you happy with their services, so that you continue to pay the fees and stay invested at Vanguard. At the same time, they are trying to get people to sign up for their service who have specifically selected Vanguard due to their low fee structure and "stay the course" philosophy. That is a hard sell! For those who benefit from this service, however, I think it is a great deal: low cost and straightforward allocations that are easy to follow.
Topic Author
nanameg
Posts: 434
Joined: Fri Mar 20, 2020 10:57 am

Re: PAS advisor portfolio

Post by nanameg »

little_star wrote: Sat Jun 20, 2020 6:39 pm
nanameg wrote: Sat Jun 20, 2020 6:12 pm Little star I said exactly that..I’m not accusing him of nefarious intentions. I’m saying it’s a business relationship and I can’t assume it’s all to my good. I’m also concerned that Vanguard pushes PAS as hard as they do..ads pop up immediately on the web site and have for some time. What’s that about?

The advisor told me himself the advisor service is growing in leaps and bounds...why is that?

I thought Vanguard was all about DIY simplicity.
It is often good to be skeptical, but not all business relationships must be adversarial. In this case, Vanguard likely realizes that some of its investors could use some guidance. It is charging a modest amount for this service. The business model is not complicated: the more people who sign up for this service, the more Vanguard earns in fees, and the more likely current investors will stay with Vanguard. It is in their interests to make you happy with their services, so that you continue to pay the fees and stay invested at Vanguard. At the same time, they are trying to get people to sign up for their service who have specifically selected Vanguard due to their low fee structure and "stay the course" philosophy. That is a hard sell! For those who benefit from this service, however, I think it is a great deal: low cost and straightforward allocations that are easy to follow.
Agreed. I’m not adversarial...quite the opposite. I just want to understand the reasons for everything..that’s what I’m paying for.

And I am a skeptic. I have had bad experiences with Insurance brokers and I have that bias.
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