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

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
User avatar
patrick013
Posts: 2930
Joined: Mon Jul 13, 2015 7:49 pm

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

Post by patrick013 » Sat Jun 27, 2020 4:34 pm

The advised portfolio isn't as confusing as some. Robo-advisors can
be quite diversified in funds that are higher risk than usual.

One poster says VG advised 100% stock fund a few weeks back assuming
bond yields would remain ultra low going forward.

Being anti-Intl I wouldn't go more than 10% in any Intl category, stock or
bond index. Having money overseas is diversified but a casino is still
a casino investment-wise.

A 2-fund portfolio with LC and ST-IT bonds handles all needs well, from
return, diversification, and foreign exposure.
age in bonds, buy-and-hold, 10 year business cycle

retiredjg
Posts: 40882
Joined: Thu Jan 10, 2008 12:56 pm

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

Post by retiredjg » Sat Jun 27, 2020 4:43 pm

The things I learn here always amaze me. :happy

User avatar
nedsaid
Posts: 13474
Joined: Fri Nov 23, 2012 12:33 pm

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

Post by nedsaid » Sat Jun 27, 2020 5:18 pm

nanameg wrote:
Sat Jun 27, 2020 3:27 pm
I may be a backseat driver. But this is my dilemma.

I got a PAS portfolio in 2015 and 2018 and just followed that rather than sign up for the service. I panicked. Why did I panic? Because I was following a FORMULA I didn’t understand.

I’m trying to UNDERSTAND and agree rather than have someone drive me.

And I’m forced to be a “ back seat driver” since PAS can’t legally advise me on a full 1/2 of our portfolio which is the active part...my husbands 401k that Vanguard is the custodian of.

I’ll be a lot less “ skittish “ if I understand and agree ..I’ve had this formula before and didn’t understand or really agree, I just went along. That didn’t work. I panicked because of it.

I never fully understood if international stocks were necessary and felt ambivalent because I had read bogle’s books and remembered him saying they weren’t necessary. They were the first fund I sold and the rest was history as the market kept plunging. I wanted a time out.

It was a costly mistake but I made it, I own it and I want to do better. I don’t think just handing the keys over to someone who can’t even manage 1/2 our assets is the foolproof answer.

And as I’ve said, I can barely get my husband to sit through a phone conversation with the advisor. I think I’m probably better off just going with a single fund of funds for the three accounts if I can make an informed decision about which one for our future and his if I’m out of the picture.
Part of what an advisor is supposed to do for you is to explain things. Another aspect of the advisor's role is to get to know you. There is a survey that is taken to determine your risk profile. The advisor asks you about your goals. You share your personal financial situation with the advisor. A plan is developed and investments are recommended based upon this process. Projections are made regarding the performance of the recommended investments and the range of potential outcomes.

There gets to be the moment of truth. Do you buy in to the plan the advisor presented to you or do you reject the advisors plan? I have often said that it is very important that you have a philosophical alignment with the advisor, doesn't mean you agree on everything but enough agreement that you can follow through with the plan.

I think a lot of the problem is that there is a lack of clarity as to what you really want. Do you want somebody to run the portfolio for you? Or do you just want somebody to bounce ideas off of? Or do you want something else?

Another part of the problem is that somehow you didn't understand why the advisor recommended certain things. It could be that the advisor didn't explain things very well. You also have the responsibility to ask questions and it doesn't hurt to do some meeting preparation to make best use of your time and the advisor's time.

So pretty much, if you aren't sure about what you really want, it is pretty hard for us to help you either. Perhaps you should write up an Investment Policy Statement. The Wiki has a good article and Morningstar has a really good worksheet. If you don't know where you are going, how will you know when you get there? I think you need to really think some things through and put some of that down on paper.
A fool and his money are good for business.

Broken Man 1999
Posts: 4526
Joined: Wed Apr 08, 2015 11:31 am
Location: West coast of Florida, inland on high ground!

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

Post by Broken Man 1999 » Sat Jun 27, 2020 5:32 pm

Are there any Vanguard Target Retirement ETFs? I thought they were only available as mutual funds, though I could be wrong.

So, if there are not Vanguard Target Retirement ETFs available for PAS, they couldn't recommend them, as the PAS service uses ETFs.

OP, you have had a couple of years to familiarize yourself with investing. Take a deep breath and do some reading. You can do this. But you have to stop bouncing around and being overwhelmed.

You say you want to learn, so spend some time doing so.

Start by taking time to learn about Asset Allocation (AA). That information is necessary in setting up your portfolio properly. AA should be tailored to your (and your husband's) financial circumstances/retirement hopes/expectations.

When you think you have mastered the idea of AA, come back.

If you DON'T educate yourself, you are going to continue second-guessing any recommendation you receive and implement.

At this point, not educating yourself is just going to keep you on your current path.

KNOWLEDGE IS POWER!

Good luck!

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go. " -Mark Twain

Topic Author
nanameg
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Sat Jun 27, 2020 6:22 pm

retiredjg wrote:
Sat Jun 27, 2020 4:43 pm
The things I learn here always amaze me. :happy
Ditto

Topic Author
nanameg
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Sat Jun 27, 2020 6:37 pm

Broken Man 1999 wrote:
Sat Jun 27, 2020 5:32 pm
Are there any Vanguard Target Retirement ETFs? I thought they were only available as mutual funds, though I could be wrong.

So, if there are not Vanguard Target Retirement ETFs available for PAS, they couldn't recommend them, as the PAS service uses ETFs.

OP, you have had a couple of years to familiarize yourself with investing. Take a deep breath and do some reading. You can do this. But you have to stop bouncing around and being overwhelmed.

You say you want to learn, so spend some time doing so.

Start by taking time to learn about Asset Allocation (AA). That information is necessary in setting up your portfolio properly. AA should be tailored to your (and your husband's) financial circumstances/retirement hopes/expectations.

When you think you have mastered the idea of AA, come back.

If you DON'T educate yourself, you are going to continue second-guessing any recommendation you receive and implement.

At this point, not educating yourself is just going to keep you on your current path.

KNOWLEDGE IS POWER!

Good luck!

Broken Man 1999
Is it possible to “ master “ the concept of AA? I am trying. I saw not long ago some posts about the subject with rather abstruse ( to me) mathematical formulas addressing the topic. And I think along the way someone quoted I think it was Jeremy Siegel something along the lines of the more complex the math the less u can trust the stuff posited to be helpful. I butchered the quote but that’s what I got from it.

I will keep trying and I am learning and I appreciate the chance to think aloud with people who know much more than me.

Thanks

Topic Author
nanameg
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Sat Jun 27, 2020 6:44 pm

nedsaid wrote:
Sat Jun 27, 2020 5:18 pm
nanameg wrote:
Sat Jun 27, 2020 3:27 pm
I may be a backseat driver. But this is my dilemma.

I got a PAS portfolio in 2015 and 2018 and just followed that rather than sign up for the service. I panicked. Why did I panic? Because I was following a FORMULA I didn’t understand.

I’m trying to UNDERSTAND and agree rather than have someone drive me.

And I’m forced to be a “ back seat driver” since PAS can’t legally advise me on a full 1/2 of our portfolio which is the active part...my husbands 401k that Vanguard is the custodian of.

I’ll be a lot less “ skittish “ if I understand and agree ..I’ve had this formula before and didn’t understand or really agree, I just went along. That didn’t work. I panicked because of it.

I never fully understood if international stocks were necessary and felt ambivalent because I had read bogle’s books and remembered him saying they weren’t necessary. They were the first fund I sold and the rest was history as the market kept plunging. I wanted a time out.

It was a costly mistake but I made it, I own it and I want to do better. I don’t think just handing the keys over to someone who can’t even manage 1/2 our assets is the foolproof answer.

And as I’ve said, I can barely get my husband to sit through a phone conversation with the advisor. I think I’m probably better off just going with a single fund of funds for the three accounts if I can make an informed decision about which one for our future and his if I’m out of the picture.
Part of what an advisor is supposed to do for you is to explain things. Another aspect of the advisor's role is to get to know you. There is a survey that is taken to determine your risk profile. The advisor asks you about your goals. You share your personal financial situation with the advisor. A plan is developed and investments are recommended based upon this process. Projections are made regarding the performance of the recommended investments and the range of potential outcomes.

There gets to be the moment of truth. Do you buy in to the plan the advisor presented to you or do you reject the advisors plan? I have often said that it is very important that you have a philosophical alignment with the advisor, doesn't mean you agree on everything but enough agreement that you can follow through with the plan.

I think a lot of the problem is that there is a lack of clarity as to what you really want. Do you want somebody to run the portfolio for you? Or do you just want somebody to bounce ideas off of? Or do you want something else?

Another part of the problem is that somehow you didn't understand why the advisor recommended certain things. It could be that the advisor didn't explain things very well. You also have the responsibility to ask questions and it doesn't hurt to do some meeting preparation to make best use of your time and the advisor's time.

So pretty much, if you aren't sure about what you really want, it is pretty hard for us to help you either. Perhaps you should write up an Investment Policy Statement. The Wiki has a good article and Morningstar has a really good worksheet. If you don't know where you are going, how will you know when you get there? I think you need to really think some things through and put some of that down on paper.
I don’t want to pay someone to set up something for me and pretend they’re doing something afterward when they’re really not. Rebalancing once a quarter? 3 k for that ? No. I’d rather pay much less for a fund of funds and get that.

As far as an IPS it’s something I can’t seem to do. It’s too complex and not practical and my mind doesn’t work that way. I don’t think an IPS is for everyone.

I do know what I want...I want a simple portfolio that I can forget about and that I’m not paying someone to manage. But I have to work to get to that place and thinking out loud here and getting feedback and reading is helping me. I’m sorry if I try some people’s patience.

Thank you.

L82GAME
Posts: 242
Joined: Sat Dec 07, 2019 9:29 am

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

Post by L82GAME » Sat Jun 27, 2020 6:50 pm

nanameg wrote:
Sat Jun 27, 2020 6:44 pm
nedsaid wrote:
Sat Jun 27, 2020 5:18 pm
nanameg wrote:
Sat Jun 27, 2020 3:27 pm
I may be a backseat driver. But this is my dilemma.

I got a PAS portfolio in 2015 and 2018 and just followed that rather than sign up for the service. I panicked. Why did I panic? Because I was following a FORMULA I didn’t understand.

I’m trying to UNDERSTAND and agree rather than have someone drive me.

And I’m forced to be a “ back seat driver” since PAS can’t legally advise me on a full 1/2 of our portfolio which is the active part...my husbands 401k that Vanguard is the custodian of.

I’ll be a lot less “ skittish “ if I understand and agree ..I’ve had this formula before and didn’t understand or really agree, I just went along. That didn’t work. I panicked because of it.

I never fully understood if international stocks were necessary and felt ambivalent because I had read bogle’s books and remembered him saying they weren’t necessary. They were the first fund I sold and the rest was history as the market kept plunging. I wanted a time out.

It was a costly mistake but I made it, I own it and I want to do better. I don’t think just handing the keys over to someone who can’t even manage 1/2 our assets is the foolproof answer.

And as I’ve said, I can barely get my husband to sit through a phone conversation with the advisor. I think I’m probably better off just going with a single fund of funds for the three accounts if I can make an informed decision about which one for our future and his if I’m out of the picture.
Part of what an advisor is supposed to do for you is to explain things. Another aspect of the advisor's role is to get to know you. There is a survey that is taken to determine your risk profile. The advisor asks you about your goals. You share your personal financial situation with the advisor. A plan is developed and investments are recommended based upon this process. Projections are made regarding the performance of the recommended investments and the range of potential outcomes.

There gets to be the moment of truth. Do you buy in to the plan the advisor presented to you or do you reject the advisors plan? I have often said that it is very important that you have a philosophical alignment with the advisor, doesn't mean you agree on everything but enough agreement that you can follow through with the plan.

I think a lot of the problem is that there is a lack of clarity as to what you really want. Do you want somebody to run the portfolio for you? Or do you just want somebody to bounce ideas off of? Or do you want something else?

Another part of the problem is that somehow you didn't understand why the advisor recommended certain things. It could be that the advisor didn't explain things very well. You also have the responsibility to ask questions and it doesn't hurt to do some meeting preparation to make best use of your time and the advisor's time.

So pretty much, if you aren't sure about what you really want, it is pretty hard for us to help you either. Perhaps you should write up an Investment Policy Statement. The Wiki has a good article and Morningstar has a really good worksheet. If you don't know where you are going, how will you know when you get there? I think you need to really think some things through and put some of that down on paper.
I don’t want to pay someone to set up something for me and pretend they’re doing something afterward when they’re really not. Rebalancing once a quarter? 3 k for that ? No. I’d rather pay much less for a fund of funds and get that.

As far as an IPS it’s something I can’t seem to do. It’s too complex and not practical and my mind doesn’t work that way. I don’t think an IPS is for everyone.

I do know what I want...I want a simple portfolio that I can forget about and that I’m not paying someone to manage. But I have to work to get to that place and thinking out loud here and getting feedback and reading is helping me. I’m sorry if I try some people’s patience.

Thank you.
Please forgive me for potentially suggesting an idea that may very well have been suggested previously by others above:
  • If you, “...don’t want to pay someone to set up something for me and pretend they’re doing something afterward when they’re really not...;
  • Then why not enlist the help of a fee-only fiduciary to help you develop a plan that you can implement and maintain yourself?

User avatar
LadyGeek
Site Admin
Posts: 64050
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

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

Post by LadyGeek » Sat Jun 27, 2020 6:56 pm

^^^ A "fee-only" advisor is another good solution.

================
For a "fee-based" advisor (pay a percentage of your assets for as long as they are on contract) -

You may be missing the point that having an advisor is not a life-long commitment. All you need is for them to set things up. Give it a few months and then see how it goes. Once you're sure of everything, simply terminate the agreement.

Here's the Service Agreement for Vanguard Personal Advisor Services.
Termination

This is a continuous Agreement with no set expiration date. Either party can terminate this Agreement or the Service at any time upon prior notice....
While they're handling things, do everything you can to learn investing. Ask lots of questions - you're paying for the advice.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Topic Author
nanameg
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Sat Jun 27, 2020 7:00 pm

Thank you!

pkcrafter
Posts: 14109
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

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

Post by pkcrafter » Sat Jun 27, 2020 7:03 pm

nanameg wrote:
Sat Jun 27, 2020 6:22 pm
retiredjg wrote:
Sat Jun 27, 2020 4:43 pm
The things I learn here always amaze me. :happy
Ditto
nanameg, you seem very ungrounded and are having trouble making rather straight-forward decisions. To that I'll bring up 3 points.

1. The stock market is risky--always risky, which includes times when it's obvious and times when it appears that it can't lose. We've gone over your asset allocation and you appear to be risk-averse, which is not uncommon. Several of us have suggested and AA of 40/60, NOT 60/40 or even 50/50, but I don't think you've even settled on that.

2. There are no exactly-right answers, every decision involves some sort of compromise.

3. Judging from your posts, it appears your problem is behavioral and it has stopped you from making any decisions. To that I would suggest you read a couple of good behavioral books.

Behavior - bottom of this page--

Kahneman, Thaler, Zweig

https://www.bogleheads.org/wiki/Books:_ ... al_finance

Regarding Vanguard PAS, it is a structured approach and everyone gets the same funds. It's low cost so you don't get the fancy (costly) bells and whistles which make you feel more important. It's OK for some. If you really want a manager, then talk to Rick Ferri. The next choice is simply to use lifestrategy funds because they have fixed allocations, and that is exactly what you need. If you decide you want to self manage, that's fine too, but don't make it into something more difficult than it really is.

All accounts are part of one portfolio. I'd suggest 40/60, but since your withdrawal rate is less than 4% (?) you could go to 35%.
total stock market, total bond, total international optional (10%-30%), international bond (10% to 30%). Note: sometimes 10% will look the best; other times 30% may not seem like enough, but you don't change anything.

Too bad your husband doesn't show any interest in his own money, but I tend to believe it is an obligation. Being unaware can end up costing 10s of thousands over time.

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
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Sat Jun 27, 2020 7:09 pm

pkcrafter wrote:
Sat Jun 27, 2020 7:03 pm
nanameg wrote:
Sat Jun 27, 2020 6:22 pm
retiredjg wrote:
Sat Jun 27, 2020 4:43 pm
The things I learn here always amaze me. :happy
Ditto
nanameg, you seem very ungrounded and are having trouble making rather straight-forward decisions. To that I'll bring up 3 points.

1. The stock market is risky--always risky, which includes times when it's obvious and times when it appears that it can't lose. We've gone over your asset allocation and you appear to be risk-averse, which is not uncommon. Several of us have suggested and AA of 40/60, NOT 60/40 or even 50/50, but I don't think you've even settled on that.

2. There are no exactly-right answers, every decision involves some sort of compromise.

3. Judging from your posts, it appears your problem is behavioral and it has stopped you from making any decisions. To that I would suggest you read a couple of good behavioral books.

Behavior - bottom of this page--

Kahneman, Thaler, Zweig

https://www.bogleheads.org/wiki/Books:_ ... al_finance

Regarding Vanguard PAS, it is a structured approach and everyone gets the same funds. It's low cost so you don't get the fancy (costly) bells and whistles which make you feel more important. It's OK for some. If you really want a manager, then talk to Rick Ferri. The next choice is simply to use lifestrategy funds because they have fixed allocations, and that is exactly what you need. If you decide you want to self manage, that's fine too, but don't make it into something more difficult than it really is.

All accounts are part of one portfolio. I'd suggest 40/60, but since your withdrawal rate is less than 4% (?) you could go to 35%.
total stock market, total bond, total international optional (10%-30%), international bond (10% to 30%). Note: sometimes 10% will look the best; other times 30% may not seem like enough, but you don't change anything.

Too bad your husband doesn't show any interest in his own money, but I tend to believe it is an obligation. Being unaware can end up costing 10s of thousands over time.

Paul
Thank you. No exactly right answer is the thing that’s making me “ ungrounded”. I’ll get there. Thanks for your insights.

User avatar
nedsaid
Posts: 13474
Joined: Fri Nov 23, 2012 12:33 pm

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

Post by nedsaid » Sat Jun 27, 2020 7:30 pm

nanameg wrote:
Sat Jun 27, 2020 6:44 pm
nedsaid wrote:
Sat Jun 27, 2020 5:18 pm
nanameg wrote:
Sat Jun 27, 2020 3:27 pm
I may be a backseat driver. But this is my dilemma.

I got a PAS portfolio in 2015 and 2018 and just followed that rather than sign up for the service. I panicked. Why did I panic? Because I was following a FORMULA I didn’t understand.

I’m trying to UNDERSTAND and agree rather than have someone drive me.

And I’m forced to be a “ back seat driver” since PAS can’t legally advise me on a full 1/2 of our portfolio which is the active part...my husbands 401k that Vanguard is the custodian of.

I’ll be a lot less “ skittish “ if I understand and agree ..I’ve had this formula before and didn’t understand or really agree, I just went along. That didn’t work. I panicked because of it.

I never fully understood if international stocks were necessary and felt ambivalent because I had read bogle’s books and remembered him saying they weren’t necessary. They were the first fund I sold and the rest was history as the market kept plunging. I wanted a time out.

It was a costly mistake but I made it, I own it and I want to do better. I don’t think just handing the keys over to someone who can’t even manage 1/2 our assets is the foolproof answer.

And as I’ve said, I can barely get my husband to sit through a phone conversation with the advisor. I think I’m probably better off just going with a single fund of funds for the three accounts if I can make an informed decision about which one for our future and his if I’m out of the picture.
Part of what an advisor is supposed to do for you is to explain things. Another aspect of the advisor's role is to get to know you. There is a survey that is taken to determine your risk profile. The advisor asks you about your goals. You share your personal financial situation with the advisor. A plan is developed and investments are recommended based upon this process. Projections are made regarding the performance of the recommended investments and the range of potential outcomes.

There gets to be the moment of truth. Do you buy in to the plan the advisor presented to you or do you reject the advisors plan? I have often said that it is very important that you have a philosophical alignment with the advisor, doesn't mean you agree on everything but enough agreement that you can follow through with the plan.

I think a lot of the problem is that there is a lack of clarity as to what you really want. Do you want somebody to run the portfolio for you? Or do you just want somebody to bounce ideas off of? Or do you want something else?

Another part of the problem is that somehow you didn't understand why the advisor recommended certain things. It could be that the advisor didn't explain things very well. You also have the responsibility to ask questions and it doesn't hurt to do some meeting preparation to make best use of your time and the advisor's time.

So pretty much, if you aren't sure about what you really want, it is pretty hard for us to help you either. Perhaps you should write up an Investment Policy Statement. The Wiki has a good article and Morningstar has a really good worksheet. If you don't know where you are going, how will you know when you get there? I think you need to really think some things through and put some of that down on paper.
I don’t want to pay someone to set up something for me and pretend they’re doing something afterward when they’re really not. Rebalancing once a quarter? 3 k for that ? No. I’d rather pay much less for a fund of funds and get that.

As far as an IPS it’s something I can’t seem to do. It’s too complex and not practical and my mind doesn’t work that way. I don’t think an IPS is for everyone.

I do know what I want...I want a simple portfolio that I can forget about and that I’m not paying someone to manage. But I have to work to get to that place and thinking out loud here and getting feedback and reading is helping me. I’m sorry if I try some people’s patience.

Thank you.
This is YOUR money. If you want to understand investing and if you are wanting to understand a good investment plan, you are going to have to put some effort into it. If you don't like the plan your advisor prepared and you don't want to pay for another one then you will have to develop your own. If your mind doesn't work that way, well then, train your mind. I had to force my mind to do a lot of things it didn't want to do. Of course, there are things we are better at than others and we all look at things differently. There are things we like doing and things we don't like doing. An Investment Policy Statement is not a difficult thing, print out the worksheet and just start filling in the blank spaces. I learned this stuff over many years, I made the effort to learn because I realized that there was no pot of gold at the end of the rainbow and pretty much if a good retirement was to be, it was up to me. I made all kinds of mistakes along the way but that is how I learned. Pretty much, just get started and learn as you go, that is what most of us here did. I think your problem is that you are not interested in the subject. If you really aren't interested and don't want to make the effort, then there isn't much we can do to help. Probably the best thing to do is to put your retirement money into a Target Date Retirement fund and then forget about it.
A fool and his money are good for business.

User avatar
Rowan Oak
Posts: 594
Joined: Mon May 09, 2016 2:11 pm
Location: Yoknapatawpha

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

Post by Rowan Oak » Sat Jun 27, 2020 7:50 pm

retiredjg wrote:
Sat Jun 27, 2020 7:47 am
nanameg wrote:
Sat Jun 27, 2020 7:15 am
I don’t think I can panic twice.
Here is something to mull over while you wait.

It's not just about panicing so much that you sell in a down market. It is also about your ability to be comfortable and happy with what you choose when the bad times do come.

You should not want a portfolio that is stressful even if you can "gut it out" and stay the course. "Gutting it out" through a 1 hour procedure at the dentist is one thing. "Gutting it out" for a 12 to 24 months downturn is another thing. It takes a toll on your mind and your body. And your relationships. :(

Instead, you should want a portfolio that allows you to go on with other parts of your life without worry. You want to be able to sleep at night without worry. You want to spend more time thinking about your grandkid(s) than your portfolio. In fact, you should want a portfolio that you hardly think about at all.

I know you want 50/50 but a large motivation for that seems to be that the math is just easier. You can pretty much see things at a glance. I'd suggest that your temperament is more suited for moving the other direction. I think you'll be a lot happier with 40% stock (or even less) in the next downturn than 50%.

Your money should be a source of comfort in your life, not something that causes you stress.
Great post.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

Topic Author
nanameg
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Sat Jun 27, 2020 8:04 pm

nedsaid wrote:
Sat Jun 27, 2020 7:30 pm
nanameg wrote:
Sat Jun 27, 2020 6:44 pm
nedsaid wrote:
Sat Jun 27, 2020 5:18 pm
nanameg wrote:
Sat Jun 27, 2020 3:27 pm
I may be a backseat driver. But this is my dilemma.

I got a PAS portfolio in 2015 and 2018 and just followed that rather than sign up for the service. I panicked. Why did I panic? Because I was following a FORMULA I didn’t understand.

I’m trying to UNDERSTAND and agree rather than have someone drive me.

And I’m forced to be a “ back seat driver” since PAS can’t legally advise me on a full 1/2 of our portfolio which is the active part...my husbands 401k that Vanguard is the custodian of.

I’ll be a lot less “ skittish “ if I understand and agree ..I’ve had this formula before and didn’t understand or really agree, I just went along. That didn’t work. I panicked because of it.

I never fully understood if international stocks were necessary and felt ambivalent because I had read bogle’s books and remembered him saying they weren’t necessary. They were the first fund I sold and the rest was history as the market kept plunging. I wanted a time out.

It was a costly mistake but I made it, I own it and I want to do better. I don’t think just handing the keys over to someone who can’t even manage 1/2 our assets is the foolproof answer.

And as I’ve said, I can barely get my husband to sit through a phone conversation with the advisor. I think I’m probably better off just going with a single fund of funds for the three accounts if I can make an informed decision about which one for our future and his if I’m out of the picture.
Part of what an advisor is supposed to do for you is to explain things. Another aspect of the advisor's role is to get to know you. There is a survey that is taken to determine your risk profile. The advisor asks you about your goals. You share your personal financial situation with the advisor. A plan is developed and investments are recommended based upon this process. Projections are made regarding the performance of the recommended investments and the range of potential outcomes.

There gets to be the moment of truth. Do you buy in to the plan the advisor presented to you or do you reject the advisors plan? I have often said that it is very important that you have a philosophical alignment with the advisor, doesn't mean you agree on everything but enough agreement that you can follow through with the plan.

I think a lot of the problem is that there is a lack of clarity as to what you really want. Do you want somebody to run the portfolio for you? Or do you just want somebody to bounce ideas off of? Or do you want something else?

Another part of the problem is that somehow you didn't understand why the advisor recommended certain things. It could be that the advisor didn't explain things very well. You also have the responsibility to ask questions and it doesn't hurt to do some meeting preparation to make best use of your time and the advisor's time.

So pretty much, if you aren't sure about what you really want, it is pretty hard for us to help you either. Perhaps you should write up an Investment Policy Statement. The Wiki has a good article and Morningstar has a really good worksheet. If you don't know where you are going, how will you know when you get there? I think you need to really think some things through and put some of that down on paper.
I don’t want to pay someone to set up something for me and pretend they’re doing something afterward when they’re really not. Rebalancing once a quarter? 3 k for that ? No. I’d rather pay much less for a fund of funds and get that.

As far as an IPS it’s something I can’t seem to do. It’s too complex and not practical and my mind doesn’t work that way. I don’t think an IPS is for everyone.

I do know what I want...I want a simple portfolio that I can forget about and that I’m not paying someone to manage. But I have to work to get to that place and thinking out loud here and getting feedback and reading is helping me. I’m sorry if I try some people’s patience.

Thank you.
This is YOUR money. If you want to understand investing and if you are wanting to understand a good investment plan, you are going to have to put some effort into it. If you don't like the plan your advisor prepared and you don't want to pay for another one then you will have to develop your own. If your mind doesn't work that way, well then, train your mind. I had to force my mind to do a lot of things it didn't want to do. Of course, there are things we are better at than others and we all look at things differently. There are things we like doing and things we don't like doing. An Investment Policy Statement is not a difficult thing, print out the worksheet and just start filling in the blank spaces. I learned this stuff over many years, I made the effort to learn because I realized that there was no pot of gold at the end of the rainbow and pretty much if a good retirement was to be, it was up to me. I made all kinds of mistakes along the way but that is how I learned. Pretty much, just get started and learn as you go, that is what most of us here did. I think your problem is that you are not interested in the subject. If you really aren't interested and don't want to make the effort, then there isn't much we can do to help. Probably the best thing to do is to put your retirement money into a Target Date Retirement fund and then forget about it.
I’m not sure why you think I’m not interested and don’t want to make the effort. I’ve been reading and posting and talking to PAS..I’m very much interested and I want to get it right as I can.

I’ll keep at it and in the meantime I’m in a decent portfolio with PAS until I feel more confident.

User avatar
Rowan Oak
Posts: 594
Joined: Mon May 09, 2016 2:11 pm
Location: Yoknapatawpha

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

Post by Rowan Oak » Sat Jun 27, 2020 8:07 pm

nanameg wrote:
Sat Jun 27, 2020 6:44 pm
I don’t want to pay someone to set up something for me and pretend they’re doing something afterward when they’re really not. Rebalancing once a quarter? 3 k for that ? No. I’d rather pay much less for a fund of funds and get that.

As far as an IPS it’s something I can’t seem to do. It’s too complex and not practical and my mind doesn’t work that way. I don’t think an IPS is for everyone.

I do know what I want...I want a simple portfolio that I can forget about and that I’m not paying someone to manage. But I have to work to get to that place and thinking out loud here and getting feedback and reading is helping me. I’m sorry if I try some people’s patience.
Have you considered hourly based investment advice?

Two of the best:

Allan S. Roth

https://daretobedull.com/overviewbio/

https://daretobedull.com/services/

Rick Ferri

http://rickferri.com/about-rick/

http://rickferri.com/investors/
Last edited by Rowan Oak on Sat Jun 27, 2020 8:10 pm, edited 2 times in total.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

User avatar
nedsaid
Posts: 13474
Joined: Fri Nov 23, 2012 12:33 pm

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

Post by nedsaid » Sat Jun 27, 2020 8:08 pm

The whole reason that I want people to go through the exercise of writing an Investment Policy Statement is that it forces you to think things through and that it organizes your thoughts. It is also a way of learning more about yourself. One takeaway that I take from this is that you are a fairly risk averse investor. The advisor realized that and wanted to put you into a more conservative 45% stock/55% bonds and cash portfolio. You wanted to go 50/50 instead of 45/55 and that is okay. What is your reasoning for being 50/50 instead of 45/55?

What I am trying to say is that you need to have a strong belief system and some strong core beliefs so that you can stick with your investment plan when things look tough. One way of doing that is learning a bit about market history, this gives you a sense of perspective. You come to realize that corrections and bear markets are actually pretty normal events. If you have a set of strong convictions, you will likely not bail out of stocks the next time a bear market hits.

Another issue here is that you don't yet know yourself very well as an investor. That is okay, I didn't either early on in my investing career. It took me some time to formulate my investment approach, you don't have to figure this out tonight. But you need to start thinking about these things, one reason I recommend filling out the Morningstar Investment Policy Statement worksheet. It won't be perfect and probably your first one won't be very good but it gets you started. The worksheet is two pages, it isn't writing War and Peace Volumes 1-10. At this point, even some scribbled notes in the blank spaces will get the old noggin' working. If it is to be, it is up to me.
A fool and his money are good for business.

User avatar
nedsaid
Posts: 13474
Joined: Fri Nov 23, 2012 12:33 pm

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

Post by nedsaid » Sat Jun 27, 2020 8:15 pm

nanameg wrote:
Sat Jun 27, 2020 8:04 pm

I’m not sure why you think I’m not interested and don’t want to make the effort. I’ve been reading and posting and talking to PAS..I’m very much interested and I want to get it right as I can.

I’ll keep at it and in the meantime I’m in a decent portfolio with PAS until I feel more confident.
Just going to the Advisory service was a good start. They probably have something like an Investment Policy Statement already written, you can just read that. If something is there you disagree with, cross it out and write in something you like. You have a good opportunity to learn from the Advisor and at any point you can drop the service if you like. One way of learning is to ask Vanguard why they are doing what they are doing. Take this opportunity to learn.

The thing is, you are miles ahead of many people. There are folks that think that if they pick every fund offered by the 401(k), that will make them diversified. At least you sought help and that speaks well of you. At some point, if you would like, you can take up the reigns and run this yourself. If you follow the standard 3 fund advice given here, running your portfolio should be relatively simple. You are also far ahead most people in that you are at the forum. You don't have to learn it all today, just get the ball rolling. The more you learn, the easier it gets to learn even more.
A fool and his money are good for business.

Topic Author
nanameg
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Sat Jun 27, 2020 8:55 pm

Rowan Oak wrote:
Sat Jun 27, 2020 8:07 pm
nanameg wrote:
Sat Jun 27, 2020 6:44 pm
I don’t want to pay someone to set up something for me and pretend they’re doing something afterward when they’re really not. Rebalancing once a quarter? 3 k for that ? No. I’d rather pay much less for a fund of funds and get that.

As far as an IPS it’s something I can’t seem to do. It’s too complex and not practical and my mind doesn’t work that way. I don’t think an IPS is for everyone.

I do know what I want...I want a simple portfolio that I can forget about and that I’m not paying someone to manage. But I have to work to get to that place and thinking out loud here and getting feedback and reading is helping me. I’m sorry if I try some people’s patience.
Have you considered hourly based investment advice?

Two of the best:

Allan S. Roth

https://daretobedull.com/overviewbio/

https://daretobedull.com/services/

Rick Ferri

http://rickferri.com/about-rick/

http://rickferri.com/investors/
Thanks for links.

Topic Author
nanameg
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Sat Jun 27, 2020 8:56 pm

nedsaid wrote:
Sat Jun 27, 2020 8:15 pm
nanameg wrote:
Sat Jun 27, 2020 8:04 pm

I’m not sure why you think I’m not interested and don’t want to make the effort. I’ve been reading and posting and talking to PAS..I’m very much interested and I want to get it right as I can.

I’ll keep at it and in the meantime I’m in a decent portfolio with PAS until I feel more confident.
Just going to the Advisory service was a good start. They probably have something like an Investment Policy Statement already written, you can just read that. If something is there you disagree with, cross it out and write in something you like. You have a good opportunity to learn from the Advisor and at any point you can drop the service if you like. One way of learning is to ask Vanguard why they are doing what they are doing. Take this opportunity to learn.

The thing is, you are miles ahead of many people. There are folks that think that if they pick every fund offered by the 401(k), that will make them diversified. At least you sought help and that speaks well of you. At some point, if you would like, you can take up the reigns and run this yourself. If you follow the standard 3 fund advice given here, running your portfolio should be relatively simple. You are also far ahead most people in that you are at the forum. You don't have to learn it all today, just get the ball rolling. The more you learn, the easier it gets to learn even more.
Yes I feel I’m making some progress. Thanks for the encouragement...I know I’m going in circles but I’ll get there. Thanks.

Topic Author
nanameg
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Sat Jun 27, 2020 8:59 pm

nanameg wrote:
Sat Jun 27, 2020 7:09 pm
pkcrafter wrote:
Sat Jun 27, 2020 7:03 pm
nanameg wrote:
Sat Jun 27, 2020 6:22 pm
retiredjg wrote:
Sat Jun 27, 2020 4:43 pm
The things I learn here always amaze me. :happy
Ditto
nanameg, you seem very ungrounded and are having trouble making rather straight-forward decisions. To that I'll bring up 3 points.

1. The stock market is risky--always risky, which includes times when it's obvious and times when it appears that it can't lose. We've gone over your asset allocation and you appear to be risk-averse, which is not uncommon. Several of us have suggested and AA of 40/60, NOT 60/40 or even 50/50, but I don't think you've even settled on that.

2. There are no exactly-right answers, every decision involves some sort of compromise.

3. Judging from your posts, it appears your problem is behavioral and it has stopped you from making any decisions. To that I would suggest you read a couple of good behavioral books.

Behavior - bottom of this page--

Kahneman, Thaler, Zweig

https://www.bogleheads.org/wiki/Books:_ ... al_finance

Regarding Vanguard PAS, it is a structured approach and everyone gets the same funds. It's low cost so you don't get the fancy (costly) bells and whistles which make you feel more important. It's OK for some. If you really want a manager, then talk to Rick Ferri. The next choice is simply to use lifestrategy funds because they have fixed allocations, and that is exactly what you need. If you decide you want to self manage, that's fine too, but don't make it into something more difficult than it really is.

All accounts are part of one portfolio. I'd suggest 40/60, but since your withdrawal rate is less than 4% (?) you could go to 35%.
total stock market, total bond, total international optional (10%-30%), international bond (10% to 30%). Note: sometimes 10% will look the best; other times 30% may not seem like enough, but you don't change anything.

Too bad your husband doesn't show any interest in his own money, but I tend to believe it is an obligation. Being unaware can end up costing 10s of thousands over time.

Paul
Thank you. No exactly right answer is the thing that’s making me “ ungrounded”. I’ll get there. Thanks for your insights.
Do you have any data about whether it’s best to stay in one AA as the life strategy fund do or to be in a fund that has a glide path to FI like the TDF?

Topic Author
nanameg
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Sat Jun 27, 2020 9:05 pm

L82GAME wrote:
Sat Jun 27, 2020 6:50 pm
nanameg wrote:
Sat Jun 27, 2020 6:44 pm
nedsaid wrote:
Sat Jun 27, 2020 5:18 pm
nanameg wrote:
Sat Jun 27, 2020 3:27 pm
I may be a backseat driver. But this is my dilemma.

I got a PAS portfolio in 2015 and 2018 and just followed that rather than sign up for the service. I panicked. Why did I panic? Because I was following a FORMULA I didn’t understand.

I’m trying to UNDERSTAND and agree rather than have someone drive me.

And I’m forced to be a “ back seat driver” since PAS can’t legally advise me on a full 1/2 of our portfolio which is the active part...my husbands 401k that Vanguard is the custodian of.

I’ll be a lot less “ skittish “ if I understand and agree ..I’ve had this formula before and didn’t understand or really agree, I just went along. That didn’t work. I panicked because of it.

I never fully understood if international stocks were necessary and felt ambivalent because I had read bogle’s books and remembered him saying they weren’t necessary. They were the first fund I sold and the rest was history as the market kept plunging. I wanted a time out.

It was a costly mistake but I made it, I own it and I want to do better. I don’t think just handing the keys over to someone who can’t even manage 1/2 our assets is the foolproof answer.

And as I’ve said, I can barely get my husband to sit through a phone conversation with the advisor. I think I’m probably better off just going with a single fund of funds for the three accounts if I can make an informed decision about which one for our future and his if I’m out of the picture.
Part of what an advisor is supposed to do for you is to explain things. Another aspect of the advisor's role is to get to know you. There is a survey that is taken to determine your risk profile. The advisor asks you about your goals. You share your personal financial situation with the advisor. A plan is developed and investments are recommended based upon this process. Projections are made regarding the performance of the recommended investments and the range of potential outcomes.

There gets to be the moment of truth. Do you buy in to the plan the advisor presented to you or do you reject the advisors plan? I have often said that it is very important that you have a philosophical alignment with the advisor, doesn't mean you agree on everything but enough agreement that you can follow through with the plan.

I think a lot of the problem is that there is a lack of clarity as to what you really want. Do you want somebody to run the portfolio for you? Or do you just want somebody to bounce ideas off of? Or do you want something else?

Another part of the problem is that somehow you didn't understand why the advisor recommended certain things. It could be that the advisor didn't explain things very well. You also have the responsibility to ask questions and it doesn't hurt to do some meeting preparation to make best use of your time and the advisor's time.

So pretty much, if you aren't sure about what you really want, it is pretty hard for us to help you either. Perhaps you should write up an Investment Policy Statement. The Wiki has a good article and Morningstar has a really good worksheet. If you don't know where you are going, how will you know when you get there? I think you need to really think some things through and put some of that down on paper.
I don’t want to pay someone to set up something for me and pretend they’re doing something afterward when they’re really not. Rebalancing once a quarter? 3 k for that ? No. I’d rather pay much less for a fund of funds and get that.

As far as an IPS it’s something I can’t seem to do. It’s too complex and not practical and my mind doesn’t work that way. I don’t think an IPS is for everyone.

I do know what I want...I want a simple portfolio that I can forget about and that I’m not paying someone to manage. But I have to work to get to that place and thinking out loud here and getting feedback and reading is helping me. I’m sorry if I try some people’s patience.

Thank you.
Please forgive me for potentially suggesting an idea that may very well have been suggested previously by others above:
  • If you, “...don’t want to pay someone to set up something for me and pretend they’re doing something afterward when they’re really not...;
  • Then why not enlist the help of a fee-only fiduciary to help you develop a plan that you can implement and maintain yourself?
Just because I’ve made some calls to fee only planners and the ones I’ve tried (2) seem a little more complex than I was hoping for. PAS seemed simplest at the time when I was just trying to get back into the market quickly with some help.

I’ve also read here that by the time you’ve done enough reading to choose a good advisor you can probably do it yourself... which sounds right. I’ll see how PAS works for a while longer and if I can get my questions answered and enough confidence to go on my own.

Topic Author
nanameg
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Sat Jun 27, 2020 9:24 pm

pennywise wrote:
Sat Jun 27, 2020 4:19 pm
nanameg wrote:
Sat Jun 27, 2020 3:27 pm
I may be a backseat driver. But this is my dilemma.

I got a PAS portfolio in 2015 and 2018 and just followed that rather than sign up for the service. I panicked. Why did I panic? Because I was following a FORMULA I didn’t understand.

I’m trying to UNDERSTAND and agree rather than have someone drive me.

And I’m forced to be a “ back seat driver” since PAS can’t legally advise me on a full 1/2 of our portfolio which is the active part...my husbands 401k that Vanguard is the custodian of.

I’ll be a lot less “ skittish “ if I understand and agree ..I’ve had this formula before and didn’t understand or really agree, I just went along. That didn’t work. I panicked because of it.
Very frankly after your many, many, MANY posts and explanations your logic is difficult to decipher.

If you don't want to use an advisor, don't use one. But according to this latest information your hesitation is because you implemented a set of investment recommendations you didn't understand but then never followed up to actually use the service/advisor which would have allowed you to discuss the recommendations till you did understand, then came to grief by bailing out of the investments you didn't understand partly because you didn't use the advisor you never hired to counsel you against a foolish decision.

I don't think anyone here can help you with that.

During this discussion you have shared you don't trust PAS, you don't think they are motivated by trying to help you, you are suspicious they do not have your best interests as a priority and you don't see yourself using them for any length of time. So don't use the advisory service. Advise yourself. Live long and prosper :D

You may feel better if you quit tormenting yourself by trying to understand the perspective of the folks on the forum who have used the advisory service to, as has been said, make our lives easier and our money management less stressful. It seems clear that at this time you do not share that perspective, and that's ok.

[OT comment removed by admin LadyGeek]
I think you nailed it there. I didn’t hire the advisor and I didn’t understand the formula he set up.

I’m determined to understand this time. I’m not investing in something I don’t understand again...because when the pressure builds you can’t hold on if you don’t believe in it. That’s the reason for my many, many MANY posts. I’m trying to understand.

I’ve got to get the AA right first. Not there yet.

Then, international or not? There are many many MANY posts about that topic here and none are definitive although one by dbr makes the most sense to me so far. Basically that it’s not earth shattering either way. At least that’s what I got from what he said.

Once that decision is made I can decide on TDF, or a three fund portfolio, or life strategy fund.

Then I have to see what a Roth is all about.

I know what I have to learn, it’s just learning it and making a choice that’s not perfect but good enough to not lose sleep over again. In the meantime I’m in the market with PAS for help.

Thanks for your response. I hope to live long and prosper and wish you the same! :happy

Silence Dogood
Posts: 1413
Joined: Tue Feb 01, 2011 9:22 pm

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

Post by Silence Dogood » Sat Jun 27, 2020 10:03 pm

nanameg wrote:
Sat Jun 27, 2020 7:15 am
I don’t think I can panic twice. It cost too much. And I understand more now.
Keep in mind this recent post by nisiprius:

(emphasis added)
nisiprius wrote:...one of the big takeaways from behavioral economics is that people cannot avoid behavioral errors simply by willing themselves not to make them. There have been experiments on this: explaining "anchoring," for example, and urging them not to make it, does not stop them anchoring.

Cass Sunstein was the co-author of a book on behavioral economics, and he personally panic-sold during 2011, despite talking to his co-author, Richard Thaler, who told him not to! Worse is, in my opinion, the lesson he took from it was not "my stock allocation was too high for my risk tolerance," it was basically "I made a behavioral error, let's all resolve to say 'no' the next time we realize we are about to make one." (See his own story in his own words).

Risk tolerance matters. Behavioral errors happen. A rational investor will take their own irrationality into account.

Topic Author
nanameg
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Sat Jun 27, 2020 10:09 pm

Yes, I saw that too.

Better to be safe than sorry again you’re suggesting..lower the stock allocation.

It strikes me though that the advisor suggested 45/55 and I don’t think that’s significantly different from 50/50.

khart23
Posts: 18
Joined: Thu Jun 18, 2020 7:21 am

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

Post by khart23 » Sat Jun 27, 2020 11:37 pm

1: Did any part of your planning cover taxes? A 7-figure portfolio in all tax-deferred money is going to have major hurdles from the sun-setting of the trump tax-cuts in 2026 as well as from the new provisions of the SECURE Act for your estate. The SECURE Act alone would cause a non-exempt beneficiary who is single and makes $130k/yr another $27k in taxes per year for 10 years on a $1M inheritance (assuming zero growth and $100k/yr taken to achieve the ten-year requirement for distribution). That alone is $270k in today's (not the future rates post 2026) income tax and NIIT tax rates that they would be moved into as a result. You also want to think about what you'll pay in your lifetime as well for taxes.

2: Although I do believe an advisor can help keep you 'grounded' when emotions can arise (statistically that can be shown as well) I also am curious to know if there was anything discussed between 'do it yourself' and having the account managed? It sounds like a bucket strategy would be ideal for you from what's outlined here. It would give you the liquidity via the 2-4 years of cash on hand and allow you to simply align and view the intermediate & long-term account buckets. Its also hard to understand how outside solutions weren't discussed if there was in fact fiduciary advice being provided..?

Advice is only as good as the planning/depth of relationship between investor/advisor. I can only manage or plan to what I know and understand about someone's goals, aspirations, fears etc.

The most important thing is to understand YOU, taking the time to understand your personal values, experiences and goals. This helps you not only set the financial goals you have but also 'rank' the importance as needs, wants & wishes. A great example is this: Most people will agree that Essential expenses (Mortgage, food, utilities etc) and Healthcare are minimal retirement planning "needs" so they would be a 10 out of 10 in importance. Some of those same people would put their annual vacation budget as a 'want' meaning that its still of high importance but does not make or break the plan while others will verbatim state that vacations are what they worked so hard for and if they can't travel as planned they would rather work longer (meaning that this is a need to them). All of these are very personal to each person or couple but shouldn't be assumed.

When that time is taken, its my job to provide a clear link between those values and the advice that is being given. e.g. It might be a connection such as "Because of your primary goal to fund your essential expenses, healthcare and travel every year (if not every other) this allocation provides enough market exposure to cover such expenses. It also addresses your recent discomfort with volatility because of xyz"

In today's world it is the service & expertise such as some the tax/estate considerations mentioned above that have far more value than investment selection. You can keep things very diversified and simple as you've previously mentioned with a few indexes, set a regiment to re-balance etc. and not even pay a trading cost for the funds these days. But, if you get a holistic set of guidance and someone who helps you not make knee-jerk reactions (no matter if they or you are managing the portfolio) than you start to see some considerable value between the two that justifies what you pay.

Best of luck with everything!

It doesn't need to be super-complex stuff but it does need to make complete sense to you and your spouse's personal values and goals.

Topic Author
nanameg
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Sun Jun 28, 2020 4:22 am

khart23 wrote:
Sat Jun 27, 2020 11:37 pm
1: Did any part of your planning cover taxes? A 7-figure portfolio in all tax-deferred money is going to have major hurdles from the sun-setting of the trump tax-cuts in 2026 as well as from the new provisions of the SECURE Act for your estate. The SECURE Act alone would cause a non-exempt beneficiary who is single and makes $130k/yr another $27k in taxes per year for 10 years on a $1M inheritance (assuming zero growth and $100k/yr taken to achieve the ten-year requirement for distribution). That alone is $270k in today's (not the future rates post 2026) income tax and NIIT tax rates that they would be moved into as a result. You also want to think about what you'll pay in your lifetime as well for taxes.

2: Although I do believe an advisor can help keep you 'grounded' when emotions can arise (statistically that can be shown as well) I also am curious to know if there was anything discussed between 'do it yourself' and having the account managed? It sounds like a bucket strategy would be ideal for you from what's outlined here. It would give you the liquidity via the 2-4 years of cash on hand and allow you to simply align and view the intermediate & long-term account buckets. Its also hard to understand how outside solutions weren't discussed if there was in fact fiduciary advice being provided..?

Advice is only as good as the planning/depth of relationship between investor/advisor. I can only manage or plan to what I know and understand about someone's goals, aspirations, fears etc.

The most important thing is to understand YOU, taking the time to understand your personal values, experiences and goals. This helps you not only set the financial goals you have but also 'rank' the importance as needs, wants & wishes. A great example is this: Most people will agree that Essential expenses (Mortgage, food, utilities etc) and Healthcare are minimal retirement planning "needs" so they would be a 10 out of 10 in importance. Some of those same people would put their annual vacation budget as a 'want' meaning that its still of high importance but does not make or break the plan while others will verbatim state that vacations are what they worked so hard for and if they can't travel as planned they would rather work longer (meaning that this is a need to them). All of these are very personal to each person or couple but shouldn't be assumed.

When that time is taken, its my job to provide a clear link between those values and the advice that is being given. e.g. It might be a connection such as "Because of your primary goal to fund your essential expenses, healthcare and travel every year (if not every other) this allocation provides enough market exposure to cover such expenses. It also addresses your recent discomfort with volatility because of xyz"

In today's world it is the service & expertise such as some the tax/estate considerations mentioned above that have far more value than investment selection. You can keep things very diversified and simple as you've previously mentioned with a few indexes, set a regiment to re-balance etc. and not even pay a trading cost for the funds these days. But, if you get a holistic set of guidance and someone who helps you not make knee-jerk reactions (no matter if they or you are managing the portfolio) than you start to see some considerable value between the two that justifies what you pay.

Best of luck with everything!

It doesn't need to be super-complex stuff but it does need to make complete sense to you and your spouse's personal values and goals.
Thank you. I’ll consider all you say.

pkcrafter
Posts: 14109
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

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

Post by pkcrafter » Mon Jun 29, 2020 12:01 am

nanameg, if I had to guess your problem, I would say it's a behavioral problem called regret. Daniel Kahneman has written about behavioral problems in his book "Thinking, Fast and Slow." In this article regret is touched on just enough to give you an idea of what it's about.

https://www.fool.com/investing/general/ ... egret.aspx


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
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Mon Jun 29, 2020 6:34 am

pkcrafter wrote:
Mon Jun 29, 2020 12:01 am
nanameg, if I had to guess your problem, I would say it's a behavioral problem called regret. Daniel Kahneman has written about behavioral problems in his book "Thinking, Fast and Slow." In this article regret is touched on just enough to give you an idea of what it's about.

https://www.fool.com/investing/general/ ... egret.aspx


Paul
Paul, before I even read the article I’d say yes, yes, yes.
I’m spinning and twisting because of pulling out and locking in 200k in losses :shock: I think I’m suffering from investment PTSD. Plus I really really REALLY hate making mistakes and have trouble forgiving myself. I just keep blaming myself and can’t move on.

Time heals all wounds however.



Also I reread something here recently to another puller outer that was interesting to the effect that if the market had continued down lower and stayed there ( which was and is still possible of course) would they still have regret?

I have to keep thinking about that too. What is the number we can really afford to lose and lose for 10+ years...or something like that. I still don’t have that totally clear in my mind. I think it’s half our portfolio and that’s why I think I can live with 50/50.

I like to think I’m a tough guy not a wimp. But maybe all that just has to be out of the equation..minimal emotion. It’ll never be down to no emotion, I’m not built like that and I don’t think many are.

There was a post here recently about risk tolerance that was all mathematical and I couldnt understand any of it. I’m rereading Bernstein’s “ Asset Allocation” right now.

Thanks for the article! I’ll check it out.

Topic Author
nanameg
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Mon Jun 29, 2020 11:37 am

pkcrafter wrote:
Mon Jun 29, 2020 12:01 am
nanameg, if I had to guess your problem, I would say it's a behavioral problem called regret. Daniel Kahneman has written about behavioral problems in his book "Thinking, Fast and Slow." In this article regret is touched on just enough to give you an idea of what it's about.

https://www.fool.com/investing/general/ ... egret.aspx


Paul
I watched this and I think I panicked more than suffered regret in March. The panic was due to total lack of knowledge I think.

No knowledge of the history of markets, no knowledge of the risk of stocks, no knowledge of how much money we really would be spending in retirement and how much we needed for that...and then fear. Fear that our present employment income was going to be shut off suddenly ( it was) and permanently ( it wasn’t).

I have more knowledge now. I think that will help with the fear.

I still want to understand much more however. I want to see how badly our portfolio can go down ..I saw that other people had run things like that and felt ok when it was actually happening..maybe not good but not panicked.

I keep referring to the model the advisor ran on our portfolio and I still don’t quite understand what that is and I need to.

Topic Author
nanameg
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Mon Jun 29, 2020 11:42 am

As I’ve said I was following a target fund without knowing what that really meant. I mean i had never thought thru the formula...I just followed it and couldn’t hold on when pressure came because I didn’t understand it.

I couldn’t “ stay the course” because it’s wasn’t mine. I was following a recipe blindly and just assumed it was ok because it was a professional portfolio. I didn’t know how to react because I did have enough knowledge all the way around about our personal situation and just about the market in general.

Topic Author
nanameg
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Mon Jun 29, 2020 11:45 am

DIDNT have enough knowledge. Just picked a retirement fund to follow based on our retirement timeline and a portfolio review from vanguard. I didn’t really understand any of it and the risk it entailed.

Outer Marker
Posts: 637
Joined: Sun Mar 08, 2009 8:01 am

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

Post by Outer Marker » Mon Jun 29, 2020 12:12 pm

OP, you sound like a nice person, but you are way over-thinking this and suffering "paralysis by analysis." It honestly is not that difficult. There is no such thing as a perfect portfolio. The Vanguard advisor has laid out a perfectly good course for you. Stick with it for at least a year until you develop some confidence and self-discipline. Your statements about recognizing the lack of discipline and yet seeing no need for an IPS are completely inconsistent. You need and advisor for hand holding. This is certainly not the last major market decline we are going to see. In fact, stocks are currently trading at levels far in excess of what is supported by actual earnings. We may yet see the March lows repeated this year. You panicked and sold a few months ago. Those loses are locked in. Absolutely nothing you can do to erase that mistake; consider it an educational expense. You have many years to recoup it.

In the long run, after you have weathered a few bear markets and tested your mettle, you might consider a 50/50 (couch potato) portfolio. 50% S&P 500 and 50% total bond. Many use Total Stock market instead of the S&P, but in your case, your risk aversion tends to lend itself to larger stocks. Since many of the S&P do major business abroad, this also compensates for your desire not to have direct international exposure.

Topic Author
nanameg
Posts: 392
Joined: Fri Mar 20, 2020 10:57 am

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

Post by nanameg » Mon Jun 29, 2020 6:51 pm

Outer Marker wrote:
Mon Jun 29, 2020 12:12 pm
OP, you sound like a nice person, but you are way over-thinking this and suffering "paralysis by analysis." It honestly is not that difficult. There is no such thing as a perfect portfolio. The Vanguard advisor has laid out a perfectly good course for you. Stick with it for at least a year until you develop some confidence and self-discipline. Your statements about recognizing the lack of discipline and yet seeing no need for an IPS are completely inconsistent. You need and advisor for hand holding. This is certainly not the last major market decline we are going to see. In fact, stocks are currently trading at levels far in excess of what is supported by actual earnings. We may yet see the March lows repeated this year. You panicked and sold a few months ago. Those loses are locked in. Absolutely nothing you can do to erase that mistake; consider it an educational expense. You have many years to recoup it.

In the long run, after you have weathered a few bear markets and tested your mettle, you might consider a 50/50 (couch potato) portfolio. 50% S&P 500 and 50% total bond. Many use Total Stock market instead of the S&P, but in your case, your risk aversion tends to lend itself to larger stocks. Since many of the S&P do major business abroad, this also compensates for your desire not to have direct international exposure.
Thank you. Sounds like sage advice.

GmanJeff
Posts: 612
Joined: Sun Jun 11, 2017 7:12 am

Re: PAS advisor portfolio

Post by GmanJeff » Wed Jul 01, 2020 2:13 pm

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 “.
This may be relevant to your question, although focused on the rationale for int'l equities, rather than bonds:

https://investornews.vanguard/internati ... portfolio/

Post Reply