Finding an adviser to pay for advice

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Topic Author
cccheel
Posts: 18
Joined: Tue Jan 17, 2017 11:45 am

Finding an adviser to pay for advice

Post by cccheel » Mon Jul 08, 2019 1:41 pm

Hello all, I have been reading a lot on these forums recently. Looking for advice for my situation. I have about $225K in a bunch of funds through a financial adviser that came on board through my wife when we got married (he'd been handling finances for her family for a long time). I had a lot of my own money in a few Vanguard funds but eventually moved it all over to be managed by him through Raymond James. I like him; he's a nice guy, and I know he's a fiduciary, but I keep wondering whether the 1% fee I am paying him is worth it, as opposed to doing a simple 3-fund portfolio of 4-fund VG portfolio.

I was wondering about trying to find an adviser/person to pay a fee to simply look at all my holdings and tell me whether it'd be better to go at it on my own. Or, should I post it all here and get your collective opinion?

DarkHelmetII
Posts: 335
Joined: Mon Jul 24, 2017 12:25 pm

Re: Finding an adviser to pay for advice

Post by DarkHelmetII » Mon Jul 08, 2019 1:48 pm

1) Post here
2) Find a fee-only, fiduciary advisor who will do a "one-time" sanity check; I did one for $2,000. Not the easiest to find as many want your "Assets Under Management" for the yearly income (exact reason why you as the investor don't want to do that). With a little education there is absolutely nothing wrong with #1 but this option #2 is not horrible if you feel that a more "formal" opinion.

Mike Scott
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Joined: Fri Jul 19, 2013 2:45 pm

Re: Finding an adviser to pay for advice

Post by Mike Scott » Mon Jul 08, 2019 1:50 pm

There is a format for posting here if you want...
viewtopic.php?t=6212

I predict that the general advice will be to move to a three fund (or all in one fund) and manage it yourself if you want. Second place is Vanguard PAS if you still want an advisor.

Topic Author
cccheel
Posts: 18
Joined: Tue Jan 17, 2017 11:45 am

Re: Finding an adviser to pay for advice

Post by cccheel » Mon Jul 08, 2019 1:59 pm

Thank you both for the advice. I forgot to mention, I'd love to hear from anyone that has used the VG PSA service, even if only to start.

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Sandtrap
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Re: Finding an adviser to pay for advice

Post by Sandtrap » Mon Jul 08, 2019 2:12 pm

An actionable path:
At your discretion. . . in this order:

1. Do this to get actionable concrete suggestions regarding your portfolio before you do anything.
Portfolio Review Request
https://www.bogleheads.org/forum/viewt ... =1&t=6212

2. Take the astute forum suggestions from #1 and then decide if you want to:

A. Manage your own portfolio.

B. Take your existing portfolio to Vanguard VPAS Services and get their initial consultation input.

3. If you like "A" more than "B", after getting input from Vanguard, then the forum will help.

4. If you like "B" (Vanguard's VPAS suggestions), the go with them. There is no contract so you can have them set things up then go on your own thereafter if you want. The fee is very very low.

Link to Vanguard Personal Advisory Service (VPAS)
https://investor.vanguard.com/advice/personal-advisor

*As for the 1% AUM fee you are paying right now. Your friendly Financial Advisor and Raymond James are . . . . "Grateful". . . . . :D

j
Wiki Bogleheads Wiki: Everything You Need to Know

Mr.BB
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Joined: Sun May 08, 2016 10:10 am

Re: Finding an adviser to pay for advice

Post by Mr.BB » Mon Jul 08, 2019 4:41 pm

Here is some simple but effective homework to do.
Use this calculator http://www.begintoinvest.com/expense-ratio-calculator/
1) Take the funds your advisor put you in (dollar amount in each fund and expense ratios) and compare it to the funds you were in (with expense ratios) in Vanguard.
2) Use the calculator with your total investment and see what happens when you add in the cost of the 1% a year your advisor cost you, especially after 20-30 years.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

Topic Author
cccheel
Posts: 18
Joined: Tue Jan 17, 2017 11:45 am

Re: Finding an adviser to pay for advice

Post by cccheel » Wed Jul 10, 2019 1:25 pm

Thank you all for the information and advice. I hope I have done this right. Here is my current portfolio:

Emergency funds: Yes, 4 months ($16000)

Debt:
Mortgage $168K 15-year fixed, 3.75%
Student Loans: $17000, .625% (not a typo)

Tax Filing Status: Married Filing Jointly

Tax Rate: 24% Federal, No State tax

State of Residence: FL

Age: 40

Desired Asset allocation: 75% stocks / 25% bonds
Desired International allocation: 20% of stocks

Total Portfolio approximately $227K

Investment Account #1

0.5% Raymond James Bank Deposit Program (cash; very small amount)
3.4% FIRST TRUST CONSUMER DISCRETIONARY ALPHADEX FUND FXD 0.64%
1.5% FIRST TRUST CONSUMER STAPLES ALPHADEX FUND FXG 0.64%
2.2% FIRST TRUST ENERGY ALPHADEX FUND FXN 0.63%
1.9% FIRST TRUST ETF II INDLS PROD DURABLE FXR 0.62%
3.6% FIRST TRUST FINANCIALS ALPHADEX FUND FXO 0.63%
6.2% FIRST TRUST HEALTH CARE ALPHADEX FUND FXH 0.63%
2% FIRST TRUST TECHNOLOGY ALPHADEX FUND FXL 0.63%
3.6% INVESCO S&P 500 EQUAL WEIGHT FINANCIALS ETF RYF 0.40%
2.1% INVESCO S&P 500 EQUAL WEIGHT TECHNOLOGY ETF RYT 0.40%
4.7% SPDR COMMUNICATION SERVICES SELECT SECTOR FUND XLC 0.13%
3.5% SPDR CONSUMER DISCRETIONARY SELECT SECTOR FUND XLY 0.13%
1.6% SPDR CONSUMER STAPLES SELECT SECTOR FUND XLP 0.13%
2.4% SPDR ENERGY SELECT SECTOR FUND XLE 0.13%
6.2% VANGUARD HEALTH CARE ETF VHT 0.10%
1.9% VANGUARD INDUSTRIALS ETF VIS 0.10%
1.4% VANGUARD MATERIALS ETF VAW 0.10%
1.1% VANGUARD REAL ESTATE ETF VNQ 0.12%
1.0% VANGUARD UTILITIES ETF VPU 0.10%

Investment Account #2 (wife’s from before marriage)

4.2% GOLDMAN SACHS GROWTH & INCOME STRATEGY PORT CLASS C M/F GOICX 1.98%

His Rollover IRA at RJ

3.0% BLACKROCK EQUITY DIVIDEND FUND INST CLASS N/L MADVX 0.73%
1.0% BLACKROCK HEALTH SCIENCES OPPORTUNITIES PORT INST CL N/L SHSSX 0.87%
3.1% FRANKLIN RISING DIVIDENDS FD ADVISOR CLASS N/L FRDAX 0.63% 0.92%
1.5% JOHN HANCOCK REGIONAL BANK FUND CLASS I N/L JRBFX 0.92%
3.1% JOHN HANCOCK US GLOBAL LEADERS GROWTH FUND CLASS I N/L USLIX 0.91%
3.0% JPMORGAN GROWTH ADVANTAGE FUND CLASS I N/L JGASX 0.89%
1.6% MFS MID CAP GROWTH FUND CLASS I N/L OTCIX 0.88%
3.0% PACER TRENDPILOT US LARGE CAP ETF PTLC 0.60%
1.4% PACER TRENDPILOT US MID CAP ETF PTMC 0.62%
1.5% PGIM JENNISON SMALL COMPANY FD INC CL Z N/L PSCZX 0.81%
3.2% PUTNAM GROWTH OPPORTUNITIES FUND CLASS Y N/L PGOYX 0.66%
2.1% TORTOISE MLP & PIPELINE FUND INSTITUTIONAL CLASS N/L TORIX 0.96%
2.9% TRANSAMERICA LARGE CAP VALUE FD CLASS I N/L TWQIX 0.80%

His Roth IRA at RJ

1.1% Raymond James Bank Deposit Program

Her IRA at RJ

0.2% Raymond James Bank Deposit Program
3.2% EUROPACIFIC GROWTH FUND CLASS F2 - AMERICAN FUNDS N/L AEPFX 0.58%
3.0% MFS RESEARCH FUND CLASS I N/L MRFIX 0.57%
2.7% VANGUARD 500 INDEX FUND ADMIRAL SHARES N/L VFIAX 0.04%
2.2% WASATCH SMALL CAP VALUE FUND INST CLASS N/L WICVX 1.06%

529 Account

2.5% JOHN HANCOCK FREEDOM 529 PORTFOLIO 2033-2036 CLS A M/F JENFX

Notes:
  • I was a bit confused on what to put for the annual contributions part. I have not been consistent with putting money into investments (part of the reason I am here).
    I have a very stable job (tenured professor) at a University that has a retirement plan that is a defined benefit plan (basically a pension), so I have not included that money here.
    My wife has an old retirement plan from her days in the public school system that is not reflected here. I am going to move it over, but I wanted to make the decision regarding our current financial advisor vs something like VG before doing anything to it.
    I am also paying Florida Pre-Paid for the kiddo, in addition to the 529.
    I do have a Roth listed above, but it's only a small amount and due to accidentally over-funding my IRA one year, so it's just been sitting as cash.
Questions:
  • Should I just close everything with RJ and move it all to VG in a 3 or 4-fund portfolio?
    I have liquid assets I can invest right now. I wanted to make this decision first.

Thank you in advance.

ExitStageLeft
Posts: 1438
Joined: Sat Jan 20, 2018 4:02 pm

Re: Finding an adviser to pay for advice

Post by ExitStageLeft » Wed Jul 10, 2019 1:42 pm

Mr.BB wrote:
Mon Jul 08, 2019 4:41 pm
Here is some simple but effective homework to do.
Use this calculator http://www.begintoinvest.com/expense-ratio-calculator/
1) Take the funds your advisor put you in (dollar amount in each fund and expense ratios) and compare it to the funds you were in (with expense ratios) in Vanguard.
2) Use the calculator with your total investment and see what happens when you add in the cost of the 1% a year your advisor cost you, especially after 20-30 years.
Do this. Many of the RJ funds have much higher expense ratios than a Vanguard three-fund portfolio, so you should use a cost of 1.25% or so to represent the higher fees those funds charge. The accumulated cost of the 1% AUM fee and expensive funds will come close to half a million after 30 years.

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FelixTheCat
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Re: Finding an adviser to pay for advice

Post by FelixTheCat » Wed Jul 10, 2019 1:57 pm

Is there a reason why the FA makes things so complicated? One broad based fund like Vanguard Total Stock Market index fund could replace most of your sector specific funds.
Felix is a wonderful, wonderful cat.

Topic Author
cccheel
Posts: 18
Joined: Tue Jan 17, 2017 11:45 am

Re: Finding an adviser to pay for advice

Post by cccheel » Wed Jul 10, 2019 2:15 pm

FelixTheCat wrote:
Wed Jul 10, 2019 1:57 pm
Is there a reason why the FA makes things so complicated? One broad based fund like Vanguard Total Stock Market index fund could replace most of your sector specific funds.
From our meetings, he uses his own algorithms to design portfolios, including buying and selling in different sectors.

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Tyler Aspect
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Re: Finding an adviser to pay for advice

Post by Tyler Aspect » Wed Jul 10, 2019 3:05 pm

cccheel wrote:
Wed Jul 10, 2019 1:25 pm
Thank you all for the information and advice. I hope I have done this right. Here is my current portfolio:

Emergency funds: Yes, 4 months ($16000)

Debt:
Mortgage $168K 15-year fixed, 3.75%
Student Loans: $17000, .625% (not a typo)

Tax Filing Status: Married Filing Jointly

Tax Rate: 24% Federal, No State tax

State of Residence: FL

Age: 40

Desired Asset allocation: 75% stocks / 25% bonds
Desired International allocation: 20% of stocks

Your target allocation results in:
60% US stock (VTI or VOO)
15% International stock (VEA or VEU)
25% US bond (BND)

Take a look at the example portfolio below.


Total Portfolio approximately $227K

Investment Account #1
This account has 50.8% of the total. (His Vanguard taxable account)
VTI : 38.0%
VEA : 12.8%

0.5% Raymond James Bank Deposit Program (cash; very small amount)
3.4% FIRST TRUST CONSUMER DISCRETIONARY ALPHADEX FUND FXD 0.64%
1.5% FIRST TRUST CONSUMER STAPLES ALPHADEX FUND FXG 0.64%
2.2% FIRST TRUST ENERGY ALPHADEX FUND FXN 0.63%
1.9% FIRST TRUST ETF II INDLS PROD DURABLE FXR 0.62%
3.6% FIRST TRUST FINANCIALS ALPHADEX FUND FXO 0.63%
6.2% FIRST TRUST HEALTH CARE ALPHADEX FUND FXH 0.63%
2% FIRST TRUST TECHNOLOGY ALPHADEX FUND FXL 0.63%
3.6% INVESCO S&P 500 EQUAL WEIGHT FINANCIALS ETF RYF 0.40%
2.1% INVESCO S&P 500 EQUAL WEIGHT TECHNOLOGY ETF RYT 0.40%
4.7% SPDR COMMUNICATION SERVICES SELECT SECTOR FUND XLC 0.13%
3.5% SPDR CONSUMER DISCRETIONARY SELECT SECTOR FUND XLY 0.13%
1.6% SPDR CONSUMER STAPLES SELECT SECTOR FUND XLP 0.13%
2.4% SPDR ENERGY SELECT SECTOR FUND XLE 0.13%
6.2% VANGUARD HEALTH CARE ETF VHT 0.10%
1.9% VANGUARD INDUSTRIALS ETF VIS 0.10%
1.4% VANGUARD MATERIALS ETF VAW 0.10%
1.1% VANGUARD REAL ESTATE ETF VNQ 0.12%
1.0% VANGUARD UTILITIES ETF VPU 0.10%

Investment Account #2 (wife’s from before marriage)
(Wife's Vanguard taxable)
VOO : 2.0%
VEA : 2.2%

4.2% GOLDMAN SACHS GROWTH & INCOME STRATEGY PORT CLASS C M/F GOICX 1.98%

His Rollover IRA at RJ
This account is 30.4% of total. (His Vanguard Rollover IRA)
VOO: 10.4%
BND: 20.0%


3.0% BLACKROCK EQUITY DIVIDEND FUND INST CLASS N/L MADVX 0.73%
1.0% BLACKROCK HEALTH SCIENCES OPPORTUNITIES PORT INST CL N/L SHSSX 0.87%
3.1% FRANKLIN RISING DIVIDENDS FD ADVISOR CLASS N/L FRDAX 0.63% 0.92%
1.5% JOHN HANCOCK REGIONAL BANK FUND CLASS I N/L JRBFX 0.92%
3.1% JOHN HANCOCK US GLOBAL LEADERS GROWTH FUND CLASS I N/L USLIX 0.91%
3.0% JPMORGAN GROWTH ADVANTAGE FUND CLASS I N/L JGASX 0.89%
1.6% MFS MID CAP GROWTH FUND CLASS I N/L OTCIX 0.88%
3.0% PACER TRENDPILOT US LARGE CAP ETF PTLC 0.60%
1.4% PACER TRENDPILOT US MID CAP ETF PTMC 0.62%
1.5% PGIM JENNISON SMALL COMPANY FD INC CL Z N/L PSCZX 0.81%
3.2% PUTNAM GROWTH OPPORTUNITIES FUND CLASS Y N/L PGOYX 0.66%
2.1% TORTOISE MLP & PIPELINE FUND INSTITUTIONAL CLASS N/L TORIX 0.96%
2.9% TRANSAMERICA LARGE CAP VALUE FD CLASS I N/L TWQIX 0.80%

His Roth IRA at RJ
(His Vanguard Roth IRA)
VOO : 1.1%


1.1% Raymond James Bank Deposit Program

Her IRA at RJ
This account has 11.3% of total. (Her Vanguard Traditional IRA)
VOO : 6.3%
BND : 5%


0.2% Raymond James Bank Deposit Program
3.2% EUROPACIFIC GROWTH FUND CLASS F2 - AMERICAN FUNDS N/L AEPFX 0.58%
3.0% MFS RESEARCH FUND CLASS I N/L MRFIX 0.57%
2.7% VANGUARD 500 INDEX FUND ADMIRAL SHARES N/L VFIAX 0.04%
2.2% WASATCH SMALL CAP VALUE FUND INST CLASS N/L WICVX 1.06%

529 Account
NY 529 Direct Moderate Age-based : 2.5%
2.5% JOHN HANCOCK FREEDOM 529 PORTFOLIO 2033-2036 CLS A M/F JENFX

Notes:
  • I was a bit confused on what to put for the annual contributions part. I have not been consistent with putting money into investments (part of the reason I am here).
    I have a very stable job (tenured professor) at a University that has a retirement plan that is a defined benefit plan (basically a pension), so I have not included that money here.
    My wife has an old retirement plan from her days in the public school system that is not reflected here. I am going to move it over, but I wanted to make the decision regarding our current financial advisor vs something like VG before doing anything to it.
    I am also paying Florida Pre-Paid for the kiddo, in addition to the 529.
    I do have a Roth listed above, but it's only a small amount and due to accidentally over-funding my IRA one year, so it's just been sitting as cash.
Questions:
  • Should I just close everything with RJ and move it all to VG in a 3 or 4-fund portfolio?
    I have liquid assets I can invest right now. I wanted to make this decision first.

Thank you in advance.
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.

cashboy
Posts: 42
Joined: Tue Sep 11, 2018 5:03 pm

Re: Finding an adviser to pay for advice

Post by cashboy » Wed Jul 10, 2019 3:17 pm

consider reading post #1 of the thread below and see if that helps you - regarding all of the funds you have, and if it makes sense to pay 1% for an FA.

viewtopic.php?t=88005

That thread and that post changed my financial management life 'just in time'. my sister had contacted fidelity and uses them as her FA. she pays 1% and they have her in 17 of their funds with high ERs and a lot of overlap. I was about to do the same thing as her until i found this forum and that thread.

so, i now have a 3-fund portfolio and i manage it myself - with relative 'ease'. i save 1% by not having the FA, AND using index funds the ERs are much much lower; I save thousands every year and have a solid portfolio.

as far as where to get advice, bogleheads forum is a great place. the 'collective' advice is deep and wide :sharebeer and very supportive.
Last edited by cashboy on Wed Jul 10, 2019 3:36 pm, edited 1 time in total.

SuperSaver1975
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Joined: Wed Apr 24, 2019 1:33 pm

Re: Finding an adviser to pay for advice

Post by SuperSaver1975 » Wed Jul 10, 2019 3:36 pm

You can definitely ditch the financial adviser.

My family started a major financial tune up at the beginning of this year, and we went to a financial adviser that was highly recommended by a friend. The adviser worked for Northwestern Mutual and was very friendly and very smart. We paid a few thousand dollars to get started (for a year's worth of service, whether we stayed or left), and as we ran simulations, tuned things up, etc, we got closer and closer to a decision point to have the adviser manage the "Assets Under Management".

I'll get to the point. The advisor produced for us this thick binder, mostly about selling us insurance products, and one part had his recommended portfolio. I learned about the "3 Fund Portfolio" here, and decided to compare side by side. I used this portfolio backtest analyzer:

https://www.portfoliovisualizer.com/backtest-portfolio

The adviser had a portfolio with 16 funds from 13 different companies. I compared to a 3-fund portfolio with the same stock/bond asset allocation, and lo and behold, the 3-fund portfolio performed better, while also obviously being so much simpler to implement.

The financial advisers come up with these huge portfolios to make it look like they have some magic sauce. We parted ways with the adviser. He was going to charge 1.2% annually for AUM. Little by little we realized that the friend who recommended the adviser was getting his pockets cleaned out, while feeling great about it, having no idea. We almost got suckered into Whole Life Insurance and other scams.

SuperSaver1975
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Re: Finding an adviser to pay for advice

Post by SuperSaver1975 » Wed Jul 10, 2019 3:39 pm

cashboy wrote:
Wed Jul 10, 2019 3:17 pm
as far as where to get advice, bogleheads forum is a great place. the 'collective' advice is deep and wide :sharebeer and very supportive.
This site is pretty amazing. Just about any financial question I can think of has already been debated in at least 10 to 50 threads, with pros and cons and analyzed from every angle. By the time I reach retirement this site will have easily saved me several hundred thousand dollars.

Topic Author
cccheel
Posts: 18
Joined: Tue Jan 17, 2017 11:45 am

Re: Finding an adviser to pay for advice

Post by cccheel » Thu Jul 11, 2019 9:55 am

Thank you for all of the advice, fellow Bogleheads. I am going to dump the adviser and move everything into VG finds, probably 3 or 4-fund portfolio. I've been listening to Taylor's audiobook on the 3-fund portfolio and am currently reading the Bogleheads Guide to Investing.

It's so awesome that so many people are willing to give of their time and wisdom to help others.

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Stinky
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Location: Sweet Home Alabama

Re: Finding an adviser to pay for advice

Post by Stinky » Thu Jul 11, 2019 10:21 am

cccheel wrote:
Wed Jul 10, 2019 2:15 pm
FelixTheCat wrote:
Wed Jul 10, 2019 1:57 pm
Is there a reason why the FA makes things so complicated? One broad based fund like Vanguard Total Stock Market index fund could replace most of your sector specific funds.
From our meetings, he uses his own algorithms to design portfolios, including buying and selling in different sectors.
What a worthless statement from your FA. It's intended to make you think that he, alone, can outperform the market. And that justifies his fee.

Of course, your FA is wrong. Following your instincts and take control of your money.
It's a GREAT day to be alive - Travis Tritt

pkcrafter
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Location: CA
Contact:

Re: Finding an adviser to pay for advice

Post by pkcrafter » Thu Jul 11, 2019 12:29 pm

cccheel wrote:
Mon Jul 08, 2019 1:41 pm
Hello all, I have been reading a lot on these forums recently. Looking for advice for my situation. I have about $225K in a bunch of funds through a financial adviser that came on board through my wife when we got married (he'd been handling finances for her family for a long time). I had a lot of my own money in a few Vanguard funds but eventually moved it all over to be managed by him through Raymond James. I like him; he's a nice guy, and I know he's a fiduciary, but I keep wondering whether the 1% fee I am paying him is worth it, as opposed to doing a simple 3-fund portfolio of 4-fund VG portfolio.

I was wondering about trying to find an adviser/person to pay a fee to simply look at all my holdings and tell me whether it'd be better to go at it on my own. Or, should I post it all here and get your collective opinion?
You definitely should post information here to get grounded and have a reference point. Once you do that you can consult with an advisor on a one-time basis and then decide if you want to self manage. At least at this point you will have a good idea about what a potential advisor is talking about. Remember, financial advisors will offer what appears to be a sophisticated, complex portfolio that will quickly make you think there is no way you could do it yourself. Imagine what would happen if they offered a simple 3-fund portfolio. You would look at them and say, well heck, I can do that myself.

What you probably want is a one-time review and broad financial plan from an FA. This usually costs between $2000 and $4000.

You can check at Garrett Financial Network

https://garrettplanningnetwork.com/abou ... an-advisor

On your own or hire an advisor

https://investingroadmap.wordpress.com/ ... n-advisor/
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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