Would you switch investment advisor to save $3000+/yr?

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markfaix
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Would you switch investment advisor to save $3000+/yr?

Post by markfaix » Wed Jan 18, 2017 5:39 pm

[Please note this topic has been revived a couple years after originally started - moderator prudent]

My father, a retired professor and government employee, has invested with the same passive/DFA type investment advisor for 12-15 years. I have some minor disagreements with the advisor -- I prefer more integrated funds, eg, core funds or MOM+value, whereas the advisor prefers slicing and dicing to the max -- but overall we have been happy with this advisor.

I looked into Derek Tinnin at Altoria, another passive/DFA investment advisor, because they do tax preparation (my dad's CPA is retiring). We discussed my dad's portfolio, and he offered to manage it for a fixed fee. The other advisor charges by AUM. At current asset levels, Altoria would charge about 3000 less per year.

Obviously if two services are identical, you take the cheaper one. But I'm not sure how much better service we would get with switching, as you never know how good someone is until you are their client, and obviously if we left our current person, it would be difficult to go back in case we had problems.

How would you approach this decision?

Jack FFR1846
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Re: Would you switch investment advisor to save $3000+/yr?

Post by Jack FFR1846 » Wed Jan 18, 2017 5:44 pm

How much is the portfolio worth?

I don't use an advisor. I'm unable to save $3k a year because the total of my fees on just about $2MM is $900. So if I were using an advisor and they cost me $3,900 a year, then yes....I'd switch to nobody and save $3k.
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livesoft
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Re: Would you switch investment advisor to save $3000+/yr?

Post by livesoft » Wed Jan 18, 2017 5:46 pm

I seriously doubt it would be difficult to go back because

(a) they want the money, and

(b) it would be a marketing coup to get other clients on board and to stay on board as in "We had a client leave us, but they came back, so clearly we are worth our fees and have a great value proposition." They would not even have to mention any private information about the client who came back. A knowing look would suffice.
Last edited by livesoft on Wed Jan 18, 2017 5:47 pm, edited 2 times in total.
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retiredjg
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Re: Would you switch investment advisor to save $3000+/yr?

Post by retiredjg » Wed Jan 18, 2017 5:46 pm

Ask if people have used Derek Tinnin and/or Altoria and if so what their opinion is?

Use the google search box above to search for earlier threads on the names?

Consider if $3k is a big percentage or a little percentage of the overall fee? Saving $3k on $50k a year might not be as important as saving $3k on $10k a year.

jf89
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Re: Would you switch investment advisor to save $3000+/yr?

Post by jf89 » Wed Jan 18, 2017 5:48 pm

Is there anything the current advisor offers beyond simple account management? Tax loss harvesting? Tax form preparation? Some other form of planning?

Make sure you have all the information before recommending a switch then realizing that you need to pay extra on top of that fixed fee. There is also something to be said for a level of comfort in the person managing your portfolio. Will the switch cause your father to go into the account himself to make changes to things he disagrees with that the new advisor changes?

I'm curious what percentage of the AUM this $3k represents and what the total AUM expense is.
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123
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Re: Would you switch investment advisor to save $3000+/yr?

Post by 123 » Wed Jan 18, 2017 5:53 pm

Will your current adviser reduce fees by $3,000+/yr to match the competition?
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markfaix
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Re: Would you switch investment advisor to save $3000+/yr?

Post by markfaix » Wed Jan 18, 2017 8:51 pm

Thanks for the replies so far.

Portfolio value is ~1.3MM. Current advisor does TLH, pre-fills RMD/Roth conversion forms for signature.

My father is pretty hands off. He basically does whatever the advisor recommends. In 2008, he never once questioned all the rebalancing to the bottom of the bear market.

If I were the only child, I could probably manage the money myself, but since I have multiple siblings, I prefer to have a 3rd party manage it to minimize the risk of future conflict.

Re Derek Tinnin, he posted once upon a time here. Reviews on him were positive, but then I've read positive reviews for other advisors with whom I was underwhelmed when I interviewed them.

I haven't asked the advisor if he'd reduce the fees because now the advisor's minimum account is >> my dad's net worth (my dad was one of the advisor's first clients, so we're getting the original deal, which is not available now).

MoonOrb
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Re: Would you switch investment advisor to save $3000+/yr?

Post by MoonOrb » Wed Jan 18, 2017 9:02 pm

If your dad is happy with him and he is giving him good advice, no, I wouldn't urge him to change, even for $3k a year. Your dad's peace of mind and convenience and the competent management of his money is a good value in this case. I say this as someone who pays $0 to manage a portfolio of comparable size.

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celia
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Re: Would you switch investment advisor to save $3000+/yr?

Post by celia » Wed Jan 18, 2017 9:10 pm

Why are you asking us? Ask your dad what HE wants, then support his decision!

LarryAllen
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Re: Would you switch investment advisor to save $3000+/yr?

Post by LarryAllen » Wed Jan 18, 2017 9:11 pm

Sometimes better to let things be. Also, I have seen situations where the well intended kid is seeing as overreaching a bit. The possibly overreaching child never sees it as that but others might. If I were you I'd leave it and let dad handle more of his own business. Just my two cents....

tim1999
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Re: Would you switch investment advisor to save $3000+/yr?

Post by tim1999 » Wed Jan 18, 2017 9:16 pm

I'd switch but only if after explaining your reasoning to him, he agrees 100%. Do not force your opinion on him or make it sound like the current advisor is ripping him off. I don't know you or your dad, but I know my dad, and he would see this as me trying to cut costs to maximize my inheritance.

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Wildebeest
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Re: Would you switch investment advisor to save $3000+/yr?

Post by Wildebeest » Wed Jan 18, 2017 9:39 pm

celia wrote:Why are you asking us? Ask your dad what HE wants, then support his decision!
If it was my decision: Sure for $ 3000 I would switch investment advisors. Except I never paid for an investment advisor and what is more, it is not my decision.


I agree with Celia: What ever your dad wants and be supportive.
The Golden Rule: One should treat others as one would like others to treat oneself.

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whodidntante
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Re: Would you switch investment advisor to save $3000+/yr?

Post by whodidntante » Wed Jan 18, 2017 11:53 pm

I might need to see a large denominator to feel comfort with 3 grand total in advisor fees, never mind extra. It would depend on what that person is doing for me.

Can you buy the DFA funds you want while you still have access, transfer out in kind, and then slum rebalance with ETFs for the rest of your days? If you can, I would.

daveydoo
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Re: Would you switch investment advisor to save $3000+/yr?

Post by daveydoo » Thu Jan 19, 2017 12:17 am

I agree that $3000 a year isn't that much. But times ten or twenty years -- before you know it -- that sounds like actual money to me. And I would think that irrespective of portfolio size. I look for cheap gas when I'm driving my nicer car and when I'm driving the family beater; I don't think of it in terms of the percentage of vehicle cost.
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BrandonBogle
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Re: Would you switch investment advisor to save $3000+/yr?

Post by BrandonBogle » Thu Jan 19, 2017 12:18 am

whodidntante wrote:I might need to see a large denominator to feel comfort with 3 grand total in advisor fees, never mind extra. It would depend on what that person is doing for me.

Can you buy the DFA funds you want while you still have access, transfer out in kind, and then slum rebalance with ETFs for the rest of your days? If you can, I would.
Considering the Op said before that Dad is completely hands off (the advisor even preparing any necessary paperwork) and the Op not wanting it to avoid any potential thoughts of conflict of interest by the siblings, I doubt this is feasible while still maintaining those two goals.

I am with the others. If this was my own funds or my parent was completely on board with it, sure. However, for a parent who you are trying to keep an arms length away from the investments, just ask Dad and follow his wishes.

inbox788
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Re: Would you switch investment advisor to save $3000+/yr?

Post by inbox788 » Thu Jan 19, 2017 2:21 am

markfaix wrote:Portfolio value is ~1.3MM. Current advisor does TLH, pre-fills RMD/Roth conversion forms for signature.

My father is pretty hands off. He basically does whatever the advisor recommends. In 2008, he never once questioned all the rebalancing to the bottom of the bear market.
You don't say how much TOTAL fees are at either advisor. Are we talking about $4000 vs $1000 or $13000 vs $10000? :shock:

How good or lucky has the advisor been? What was the return in 2008? 2009? 2013? How does it compare to the SP500?

Dec. 31, 2013 32.39%
Dec. 31, 2012 16.00%
Dec. 31, 2011 2.11%
Dec. 31, 2010 15.06%
Dec. 31, 2009 26.46%
Dec. 31, 2008 -37.00%

What is your fathers tax bracket? Expected tax bracket in retirement? TLH isn't always the best course. There's sometimes opportunity for tax gain harvesting (TGH).
https://www.bogleheads.org/wiki/Tax_gain_harvesting

https://www.bogleheads.org/wiki/Tax_los ... est_losses

If it were me, I'd bail both and DIY, but that's what I already do.

But if you are forced between the 2 poor choices (bad and worse), seems like a gimme. What do you lose by switching to the fixed priced advisor?

http://altiora.com/pricing.html

Their tax preparation seems very high especially for simple filers.

I think this is the same Derek Tinnin referred in this article:
Richard A. Ferri
High-Fee Passive Advisor Hypocrisy
All were against me except one true low-fee advisor, Derek Tinnin of Purpose Wealth Management, who took my side in the discussion.
http://www.forbes.com/2010/09/09/high-f ... ferri.html

TigerNest
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Re: Would you switch investment advisor to save $3000+/yr?

Post by TigerNest » Thu Jan 19, 2017 3:01 am

$3,000 is $3,000. It's a lot of money. It doesn't matter how much it is as a percentage of AUM. Think about it as a percentage of your year it would take you to earn that much post-tax.

MathWizard
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Re: Would you switch investment advisor to save $3000+/yr?

Post by MathWizard » Thu Jan 19, 2017 6:58 pm

Yes. My situation is similar to your father's except that I can't move my money yet as I am still employed with
money in a 403b.

I already moved IRA money to save $500/yr.

Once I retire, I expect to move money from my 403b unless I can get a better ER than I currently have.
I'm currently paying in the neighborhood of $2500/yr.

So clearly, I'm ready to move money to save $3K as soon as I can.

mgueret
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Re: Would you switch investment advisor to save $3000+/yr?

Post by mgueret » Mon Mar 19, 2018 4:16 pm

Hi MarkFaix,
I am curious if you ended up with Derek Tinnin (or if anyone else has used Derek). My wife and I are thinking of going with him. We've been with am AUM advisor and really liked Derek's style and his investment & fee philosophy. Has anyone used him and if so, can you share your experience? Thanks.

markfaix
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Re: Would you switch investment advisor to save $3000+/yr?

Post by markfaix » Mon Mar 19, 2018 4:31 pm

mgueret wrote:
Mon Mar 19, 2018 4:16 pm
Hi MarkFaix,
I am curious if you ended up with Derek Tinnin (or if anyone else has used Derek). My wife and I are thinking of going with him. We've been with am AUM advisor and really liked Derek's style and his investment & fee philosophy. Has anyone used him and if so, can you share your experience? Thanks.
We did not, for reasons unrelated to Derek.

DiehardDisciple
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Re: Would you switch investment advisor to save $3000+/yr?

Post by DiehardDisciple » Sun Apr 15, 2018 11:21 pm

I use Derek. I am not being paid here though I think Derek knows who I am. I have been with him since 2009 I think. He is very smart and quantitatively wonky but also very easygoing. Every time I call him out of the blue, he sounds so relaxed like he is on a beach. A very good listener. Like me, he is almost meek sometimes in spoken conversations because he doesn’t want to be confrontational but rather collaborative. He is also a very good writer and responds in depth to my short email questions.

You may want to read this that I wrote:
viewtopic.php?t=95377&start=50

If you ask me if I am happy with him, I am. But that is mostly because I trust him thoroughly and don’t follow the markets anymore. Could I have had a better performance with a different adviser? Perhaps (and perhaps not), but I did my best possible vetting in that moment, and I now I am living more fully in the other areas of my life.

He is a very humble and modest guy.

For equities, I think I’m all DFA. For bonds, VMLUX, some DFA, and an Ishares etf. No em, mid-term, long-term, or TIPS for bonds. No REITs. No commodities nor gold.

If Derek is one of your final two choices, I strongly urge you to fly or drive to him and take him out to lunch like I did. (He was the one to whom I drove through a snowstorm at night over the Appalachian Mountains. Sure, it was a pain, but peace of mind is priceless.)

My late father and my father’s father were trusty investment advisers who passed up higher fees in order to have better-quality relationships with their clients, and Derek reminded me of them. In another world, he would make a good psychotherapist.

I am trying to say everything here so that I don’t have to answer follow-up questions. I’m just the guy here that walks the horse to the river. You have to be Indiana Jones in “Indiana Jones and the Last Crusade” and do that leap of faith on your own. In a way, it’s a bit like marital vows.

inbox788
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Re: Would you switch investment advisor to save $3000+/yr?

Post by inbox788 » Mon Apr 16, 2018 1:57 am

How many hours a year does he talk to the investment advisor? How many hours of offline work are involved in managing the account? If quarterly meetings/phone calls, annual reviews and additional consultations were involved, plus expertise in tax efficiency and taking care of things on the backend, then I'd consider paying it. If after the first year, communications was once a year and there wasn't much to do with the portfolio or planning, either because the investment advisor lacked things to do or a perfect 3 fund portfolio were already setup, then I'd ask what added value you get for the fees. Is the advisor being paid $150/hr for 20 hours of work or $1500/hour for two? And is he worth that kind of rate?

Valuethinker
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Re: Would you switch investment advisor to save $3000+/yr?

Post by Valuethinker » Mon Apr 16, 2018 3:23 am

markfaix wrote:
Wed Jan 18, 2017 8:51 pm
Thanks for the replies so far.

Portfolio value is ~1.3MM. Current advisor does TLH, pre-fills RMD/Roth conversion forms for signature.

My father is pretty hands off. He basically does whatever the advisor recommends. In 2008, he never once questioned all the rebalancing to the bottom of the bear market.

If I were the only child, I could probably manage the money myself, but since I have multiple siblings, I prefer to have a 3rd party manage it to minimize the risk of future conflict.

Re Derek Tinnin, he posted once upon a time here. Reviews on him were positive, but then I've read positive reviews for other advisors with whom I was underwhelmed when I interviewed them.

I haven't asked the advisor if he'd reduce the fees because now the advisor's minimum account is >> my dad's net worth (my dad was one of the advisor's first clients, so we're getting the original deal, which is not available now).
Hi I am going to PM you.

But generally I would say if:

- the adviser is not doing anything unethical

- the adviser is following generally the right strategy by the principles we hold here

- the adviser has your father's absolute trust, and could plausibly continue with, say, your mother (if relevant) if your father died or was mentally incapacitated

then

$3k pa is really very cheap on $1.3m

denovo
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Re: Would you switch investment advisor to save $3000+/yr?

Post by denovo » Mon Apr 16, 2018 3:31 am

markfaix wrote:
Wed Jan 18, 2017 8:51 pm
Thanks for the replies so far.

Portfolio value is ~1.3MM. Current advisor does TLH, pre-fills RMD/Roth conversion forms for signature.

My father is pretty hands off. He basically does whatever the advisor recommends. In 2008, he never once questioned all the rebalancing to the bottom of the bear market.

If I were the only child, I could probably manage the money myself, but since I have multiple siblings, I prefer to have a 3rd party manage it to minimize the risk of future conflict.

Re Derek Tinnin, he posted once upon a time here. Reviews on him were positive, but then I've read positive reviews for other advisors with whom I was underwhelmed when I interviewed them.

I haven't asked the advisor if he'd reduce the fees because now the advisor's minimum account is >> my dad's net worth (my dad was one of the advisor's first clients, so we're getting the original deal, which is not available now).

Why not Vanguard Personal Advisory Services if you can't do it?
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gasdoc
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Re: Would you switch investment advisor to save $3000+/yr?

Post by gasdoc » Mon Apr 16, 2018 7:09 am

denovo wrote:
Mon Apr 16, 2018 3:31 am
markfaix wrote:
Wed Jan 18, 2017 8:51 pm
Thanks for the replies so far.

Portfolio value is ~1.3MM. Current advisor does TLH, pre-fills RMD/Roth conversion forms for signature.

My father is pretty hands off. He basically does whatever the advisor recommends. In 2008, he never once questioned all the rebalancing to the bottom of the bear market.

If I were the only child, I could probably manage the money myself, but since I have multiple siblings, I prefer to have a 3rd party manage it to minimize the risk of future conflict.

Re Derek Tinnin, he posted once upon a time here. Reviews on him were positive, but then I've read positive reviews for other advisors with whom I was underwhelmed when I interviewed them.

I haven't asked the advisor if he'd reduce the fees because now the advisor's minimum account is >> my dad's net worth (my dad was one of the advisor's first clients, so we're getting the original deal, which is not available now).

Why not Vanguard Personal Advisory Services if you can't do it?
This is my approach- Vanguard Personal advisory Services. But I wouldn't push the issue at all. He has done a good job saving and protecting the money. He should stay with whomever he is comfortable.

gasdoc

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