Why so many funds in one account

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FarmerJo
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Why so many funds in one account

Post by FarmerJo »

Hello -

I have a question that I'm simply curious about. I recently moved all my accounts away from my advisor and placed them in Fidelity (3 fund approach).
As I was selling out of the funds and moving them into Fidelity index funds I noticed a theme, each account (Roth, Rollover, general brokerage) all had 10-12 mutual funds or EFTs. I understand not everyone follows the 3 fund approach but why did my advisor have that many funds holding my money in a single account? And it wasn't like he used those same 10-12 funds in each account, I bet between all the accounts he used 20 different funds and all my accounts are earmarked for retirement. They were with various sources too (Pimco, Principle, Sierra, Cohen & Steers, Northern LTS).

Thanks
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cheese_breath
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Re: Why so many funds in one account

Post by cheese_breath »

He wants to impress you with how complex managing your finances is and how much he's doing for you. Plus it might benefit his income to have you in more funds, especially if some of them are load funds.
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UpperNwGuy
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Re: Why so many funds in one account

Post by UpperNwGuy »

Apparently advisors think that putting lots of funds into a client's account demonstrates that the advisor is adding value. My recently-deceased father had 25 funds in his taxable brokerage account.
Last edited by UpperNwGuy on Thu Jun 10, 2021 2:12 pm, edited 1 time in total.
hnd
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Re: Why so many funds in one account

Post by hnd »

20 probably isn't really all that nuts out in the "real" world IMO. to us its nuts obviously but I would guess most people aware of their accounts and most advisors wouldn't even sneeze at such dispersal. Many advisors will have their favorite funds that touch all the style boxes, sprinkle in some REITS, sprinkle in some fixed income, sprinkle in some balanced, sprinkle in some leverage, and boom. They may have a few funds they like for all of this and thus split some of these categories.

why thy don't do all of a few in 1 account and then all of a few in another accounts could be due to software limitations, could just be preference.

I've seen some doozies. sometimes complication makes you seem smarter than you are, or helps you create this feeling to your customer that there is no way they could possibly manage and maneuver something like this. sometimes I think people really think this is the way to go.
RetiredAL
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Re: Why so many funds in one account

Post by RetiredAL »

cheese_breath wrote: Thu Jun 10, 2021 2:10 pm He wants to impress you with how complex managing your finances is and how much he's doing for you. Plus it might benefit his income to have you in more funds, especially if some of them are load funds.
I'll be more harsh that cheese-breath - It's to scare you into believing investing is so complex you need to stay with this manager to be successful with your investments.
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Raymond
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Re: Why so many funds in one account

Post by Raymond »

As above:

- If he put you in fewer funds, you might, God forbid, decide that you could do it yourself.

- If the funds have sales loads or 12-b1 fees, he might get a cut of those.

- Or perhaps he was really doing his best, and those were his best picks.

If you wouldn't mind listing the names and tickers of the funds, they we could help tell you which of the above apply :happy
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vineviz
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Re: Why so many funds in one account

Post by vineviz »

FarmerJo wrote: Thu Jun 10, 2021 2:03 pm Hello -

I have a question that I'm simply curious about. I recently moved all my accounts away from my advisor and placed them in Fidelity (3 fund approach).
As I was selling out of the funds and moving them into Fidelity index funds I noticed a theme, each account (Roth, Rollover, general brokerage) all had 10-12 mutual funds or EFTs. I understand not everyone follows the 3 fund approach but why did my advisor have that many funds holding my money in a single account? And it wasn't like he used those same 10-12 funds in each account, I bet between all the accounts he used 20 different funds and all my accounts are earmarked for retirement. They were with various sources too (Pimco, Principle, Sierra, Cohen & Steers, Northern LTS).

Thanks

A couple things are likely responsible for the large number of funds, some relatively benign and others more nefarious.

On the benign side most brokers use model portfolios, and the funds contained in these models must work for a wide variety of clients. As a result, you might end up with small allocations to some funds that another client might have a big allocation to. And even better reason might be that the broker was doing some sort of tax loss harvesting, which can result in owning twice as many funds (or more) than you might think. This isn’t necessarily a problem as long as you retain the advisor, since it’s just as easy for them to manage a potty with 20 funds as it is to manage a portfolio of 3 funds. The complexity is possibly unnecessary but not actually deleterious.

On the nefarious side the funds you mentioned all pay the brokers commissions, and those commissions get discounted the more money you have in a particular fund or fund company. It’s not uncommon for brokers to spread out the allocation across a wide variety of fund companies to prevent these discounts from kicking in.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
Topic Author
FarmerJo
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Re: Why so many funds in one account

Post by FarmerJo »

As I was trading out of those funds I was checking performance and ER, and WOW, 2.1 was the highest I've seen and he was taking another 1% for himself each year. Performance was average but after ER and his 1% it was below average. Needless to say even I'm pretty excited to have it all in one place and under my control. I've bought into the Boglehead philosophy and am ready to get on with it. I'd like to be frustrated with him but at the end of the day I was the one that allowed him to do it. :confused
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leeks
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Re: Why so many funds in one account

Post by leeks »

FarmerJo wrote: Thu Jun 10, 2021 2:23 pm As I was trading out of those funds I was checking performance and ER, and WOW, 2.1 was the highest I've seen and he was taking another 1% for himself each year. Performance was average but after ER and his 1% it was below average. Needless to say even I'm pretty excited to have it all in one place and under my control. I've bought into the Boglehead philosophy and am ready to get on with it. I'd like to be frustrated with him but at the end of the day I was the one that allowed him to do it. :confused
Makes sense to focus on the future and not worry too much about the past investments. At least you were saving money, that is the most important part! Now you have learned more and can invest in much better way. Progress!
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FarmerJo
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Re: Why so many funds in one account

Post by FarmerJo »

Raymond wrote: Thu Jun 10, 2021 2:18 pm As above:

- If he put you in fewer funds, you might, God forbid, decide that you could do it yourself.

- If the funds have sales loads or 12-b1 fees, he might get a cut of those.

- Or perhaps he was really doing his best, and those were his best picks.

If you wouldn't mind listing the names and tickers of the funds, they we could help tell you which of the above apply :happy
BUYWX
CPXIX
PFORX
PPSIX
SECT
SIRRX
SSIRX
STBJX
STMEX
TMAT
VWIAX
DEMSX
DFCEX
DFEVX
DFFVX
DFIEX
DFLVX
DFQTX
DFREX
DISVX
DFITX
DFIVX
DISVX
dbr
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Re: Why so many funds in one account

Post by dbr »

I'm not sure I am buying it that advisors are trying to make their clients think anything in particular about the funds.

I don't actually know, but I am imagining that this is more likely a result of using portfolio construction models, possibly mean variance optimization, on an inventory of funds. Such approaches will generally produce dribs and drabs of about everything available. I also imagine that advisor's using such approaches think doing this is one way they add value.

I do know salesmen can be cynical about what they are selling but I also just think most salesmen really believe people are benefited by buying what the salesman sells. If anyone is getting brainwashed it might be the salesman more than the client. I'm not sure what the supervisors of such advisors do if the advisor comes up with something simple.
sycamore
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Re: Why so many funds in one account

Post by sycamore »

vineviz wrote: Thu Jun 10, 2021 2:20 pm ...since it’s just as easy for them to manage a potty with 20 funds as it is to manage a portfolio of 3 funds. The complexity is possibly unnecessary but not actually deleterious.
Is that a technical term or a Freudian slip? :-)
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gwe67
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Re: Why so many funds in one account

Post by gwe67 »

Here is why:

If the advisor had put you in a single target date fund, then you would have questioned, "Why do I need to pay for this advice?"
VTI 48%, VXUS 12%, BND 40%
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Raymond
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Re: Why so many funds in one account

Post by Raymond »

FarmerJo wrote: Thu Jun 10, 2021 2:26 pm
Raymond wrote: Thu Jun 10, 2021 2:18 pm As above:

- If he put you in fewer funds, you might, God forbid, decide that you could do it yourself.

- If the funds have sales loads or 12-b1 fees, he might get a cut of those.

- Or perhaps he was really doing his best, and those were his best picks.

If you wouldn't mind listing the names and tickers of the funds, they we could help tell you which of the above apply :happy
BUYWX
CPXIX
...
Great Googly Moogly!

That's... a lot of funds.

When I return home to my desktop computer and keyboard, I'll take a crack at it :shock:
"Ritter, Tod und Teufel"
hnd
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Re: Why so many funds in one account

Post by hnd »

it can go the other way too. we had an advisor for 6ish years who put us in a single fund that was a fund of funds. the fund itself paid the 8 other funds it invested in's but then also paying another 1.10 ER on top of that. So now we were paying fund managers and the fund manager who used those funds AND the advisor. I knew we should of been earning more but i never really figured the backtest of just how much. I did years later and determines those 6 years we trailed a 80/20 VTI/VXUS portfolio just a bit over 3%. I had the same attitude, I allowed my ignorance to let this happen.

I know for that advisor, he was using models that he'd used through Oppenheimer for years. He wasn't in it to fleece me or had bad intentions, its just the modeling he had been taught. and felt like this new fund followed that model perfectly and was all that was needed.
atdharris
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Re: Why so many funds in one account

Post by atdharris »

Because otherwise, your advisor may think you'll figure out they are not needed. I once thought having tons of funds with different objectives would be worthwhile, but I learned that allocating 5% or less to a fund would be inconsequential in the long run. The same goes for holding both growth and value funds. Why not just hold the entire market and be done with it?
hnd
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Re: Why so many funds in one account

Post by hnd »

FarmerJo wrote: Thu Jun 10, 2021 2:26 pm
Raymond wrote: Thu Jun 10, 2021 2:18 pm As above:

- If he put you in fewer funds, you might, God forbid, decide that you could do it yourself.

- If the funds have sales loads or 12-b1 fees, he might get a cut of those.

- Or perhaps he was really doing his best, and those were his best picks.

If you wouldn't mind listing the names and tickers of the funds, they we could help tell you which of the above apply :happy
BUYWX
CPXIX
PFORX
PPSIX
SECT
SIRRX
SSIRX
STBJX
STMEX
TMAT
VWIAX
DEMSX
DFCEX
DFEVX
DFFVX
DFIEX
DFLVX
DFQTX
DFREX
DISVX
DFITX
DFIVX
DISVX
so a lot of bond derivative stuff and then perhaps the oddest allocation of DFA mutual funds I have EVER seen.
Dregob
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Re: Why so many funds in one account

Post by Dregob »

FarmerJo wrote: Thu Jun 10, 2021 2:03 pm Hello -

I have a question that I'm simply curious about. I recently moved all my accounts away from my advisor and placed them in Fidelity (3 fund approach).
As I was selling out of the funds and moving them into Fidelity index funds I noticed a theme, each account (Roth, Rollover, general brokerage) all had 10-12 mutual funds or EFTs. I understand not everyone follows the 3 fund approach but why did my advisor have that many funds holding my money in a single account? And it wasn't like he used those same 10-12 funds in each account, I bet between all the accounts he used 20 different funds and all my accounts are earmarked for retirement. They were with various sources too (Pimco, Principle, Sierra, Cohen & Steers, Northern LTS).

Thanks
I'd love to see a Venn diagram showing the overlap of the ~20 funds your "advisor" sold you.
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RickBoglehead
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Re: Why so many funds in one account

Post by RickBoglehead »

RetiredAL wrote: Thu Jun 10, 2021 2:17 pm
cheese_breath wrote: Thu Jun 10, 2021 2:10 pm He wants to impress you with how complex managing your finances is and how much he's doing for you. Plus it might benefit his income to have you in more funds, especially if some of them are load funds.
I'll be more harsh that cheese-breath - It's to scare you into believing investing is so complex you need to stay with this manager to be successful with your investments.
This^^^
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Dale_G
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Re: Why so many funds in one account

Post by Dale_G »

I favor the "It's too complex for you theory". But with a bunch of funds, after a bad year, the advisor can always say, "The market didn't do too good this year, but look at that "Topaz and Zirconium Mining ETF", it did really great."

I rescued my little sis from an advisor at Merrill Lynch 20 years ago. She definitely didn't need junk bonds in her taxable account, to say nothing of non-traded REITS and capital gains distributions in down markets
.
A three fund portfolio has worked out very well for her.

Dale
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dbr
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Re: Why so many funds in one account

Post by dbr »

I struggle with the idea that typical advisors, brokers, and generally financial services salesmen consciously operate to deceive their customers in order to take money out of people's pockets.

How many people here think that? I mean I don't know a lot of people in that business, but the one's I do know are without question stupid and brainwashed rather than nefarious. They are not stupid at selling, so maybe they are crazy like a fox with these portfolios. You can also read books written by people we mostly respect here and see some odd things. Financial Engines and other software can certainly generate odd things and I don't think the people who sell products like that are nefarious. Maybe they lack common sense.

A classmate of one of our kids had an offer at Ameriprise but I think he bailed early on having found out what the job really was. I do see people from different advisory houses at charity events and I really don't think they are cynically scheming to set people up to have their money stolen. The community I generally live in is just not like that, and these people are our neighbors if not any of them our friends, as it happens.
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Re: Why so many funds in one account

Post by Taylor Larimore »

FarmerJo wrote: Thu Jun 10, 2021 2:03 pm

I recently moved all my accounts away from my advisor and placed them in Fidelity (3 fund approach).
FarmerJo:

This is probably the best investment decision you will ever make!

Best wishes.
Taylor
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RickBoglehead
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Re: Why so many funds in one account

Post by RickBoglehead »

dbr wrote: Thu Jun 10, 2021 4:30 pm I struggle with the idea that typical advisors, brokers, and generally financial services salesmen consciously operate to deceive their customers in order to take money out of people's pockets.

How many people here think that? I mean I don't know a lot of people in that business, but the one's I do know are without question stupid and brainwashed rather than nefarious. They are not stupid at selling, so maybe they are crazy like a fox with these portfolios. You can also read books written by people we mostly respect here and see some odd things. Financial Engines and other software can certainly generate odd things and I don't think the people who sell products like that are nefarious. Maybe they lack common sense.

A classmate of one of our kids had an offer at Ameriprise but I think he bailed early on having found out what the job really was. I do see people from different advisory houses at charity events and I really don't think they are cynically scheming to set people up to have their money stolen. The community I generally live in is just not like that, and these people are our neighbors if not any of them our friends, as it happens.
So if Bob, your broker neighbor, could recommend a non-load fund vs a load fund where he gets his commission upfront, and annually, you believe he is going to recommend the non-load fund?

Do you also think a car salesman is going to offer you the highest possible discount?

Or the insurance salesperson is going to recommend term life instead of whole life?

If so, that is very naive.
Last edited by RickBoglehead on Thu Jun 10, 2021 5:44 pm, edited 1 time in total.
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RetiredAL
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Re: Why so many funds in one account

Post by RetiredAL »

RickBoglehead wrote: Thu Jun 10, 2021 4:56 pm
dbr wrote: Thu Jun 10, 2021 4:30 pm I struggle with the idea that typical advisors, brokers, and generally financial services salesmen consciously operate to deceive their customers in order to take money out of people's pockets.

How many people here think that? I mean I don't know a lot of people in that business, but the one's I do know are without question stupid and brainwashed rather than nefarious. They are not stupid at selling, so maybe they are crazy like a fox with these portfolios. You can also read books written by people we mostly respect here and see some odd things. Financial Engines and other software can certainly generate odd things and I don't think the people who sell products like that are nefarious. Maybe they lack common sense.

A classmate of one of our kids had an offer at Ameriprise but I think he bailed early on having found out what the job really was. I do see people from different advisory houses at charity events and I really don't think they are cynically scheming to set people up to have their money stolen. The community I generally live in is just not like that, and these people are our neighbors if not any of them our friends, as it happens.
So if Bob, your broker neighbor, could recommend a non-load fund vs a load fund where he gets his commission upfront, and annually, you believe he going to recommend the non-load fund?

Do you also think a car salesman is going to offer you the highest possible discount?

Or the insurance salesperson is going to recommend term life instead of whole life?

If so, that is very naive.
+1 to Rick.
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cheese_breath
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Re: Why so many funds in one account

Post by cheese_breath »

dbr wrote: Thu Jun 10, 2021 4:30 pm ...I struggle with the idea that typical advisors, brokers, and generally financial services salesmen consciously operate to deceive their customers in order to take money out of people's pockets...
Deceive may be a little strong. Put their interests above their client's interests may be more appropriate. Hence the need to look for a fiduciary if seeking an advisor.
The surest way to know the future is when it becomes the past.
LeslieSmiley
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Re: Why so many funds in one account

Post by LeslieSmiley »

Trailer fee
Front end load
Back end load
Commission

On each fund

Those are a few reasons why...
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Re: Why so many funds in one account

Post by LeslieSmiley »

dbr wrote: Thu Jun 10, 2021 4:30 pm I struggle with the idea that typical advisors, brokers, and generally financial services salesmen consciously operate to deceive their customers in order to take money out of people's pockets.

How many people here think that? I mean I don't know a lot of people in that business, but the one's I do know are without question stupid and brainwashed rather than nefarious. They are not stupid at selling, so maybe they are crazy like a fox with these portfolios. You can also read books written by people we mostly respect here and see some odd things. Financial Engines and other software can certainly generate odd things and I don't think the people who sell products like that are nefarious. Maybe they lack common sense.

A classmate of one of our kids had an offer at Ameriprise but I think he bailed early on having found out what the job really was. I do see people from different advisory houses at charity events and I really don't think they are cynically scheming to set people up to have their money stolen. The community I generally live in is just not like that, and these people are our neighbors if not any of them our friends, as it happens.
It’s not about deception. It’s about incentive. If one’s income/revenue is directly tied to commission/fee, then it’s completely understandable and expected that a product with higher commission/fee would be more likely to be recommended and sold to customers as long as such product is within the justifiable category that is considered to be suitable for the customer’s profile.
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oldcomputerguy
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Re: Why so many funds in one account

Post by oldcomputerguy »

Partial list showing why your "advisor" had you allocated this way:


BUYWX - Main BuyWrite Fund Class I Shares, a mix of about 13% non-US and 87% US large-cap equity, ER 1.35% - turnover 95% (each 100% of turnover adds another 1.0% to the total expense, so call it an effective 2.3% ER)

CPXIX - Cohen & Steers Preferred Securities and Income Fund, Inc. Class I, fixed-income fund, mostly BB-rated corporate bonds, duration 4.5 years, ER 0.85%

PFORX - PIMCO International Bond (USD-Hdg) Institutional class, world bonds, some leverage, duration 7.73 years, ER 0.5%

PPSIX - Principal Spectrum Pref&Cptl Scs IncInst, BB-rated corporate bonds, duration 4.27 years, ER 0.81%

SECT - Main Sector Rotation ETF, ER 0.80%, US large/mega-cap blend equity

SIRRX - Sierra Tactical All Asset Instl, ER 2.14% (!!), mix of equity, fixed-income, and cash

SSIRX - Sierra Tactical Core Income Instl, ER 1.6%, listed as a "non-traditional bond fund"

STBJX - Sierra Tactical Bond Instl, ER 1.76%, another "non-traditional bond fund", B-grade, duration 3.2 years

STMEX - Sierra Tactical Municipal Institutional, high-yield municipal bonds, ER 1.63%, BB-grade, duration 8.5 years

TMAT - Main Thematic Innovation ETF, ER 1.65%, mixed US/international mid/large-cap equity


This is such a mish-mash of high-fee overlapping funds (who in the world needs this many junk bond funds??) that I'm going with "advisor making it look complicated". And your "advisor" was charging you 1% on top of all this?!?

Moving away from this mess to a simple low-cost three-fund portfolio was a very smart move.
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Re: Why so many funds in one account

Post by bertilak »

dbr wrote: Thu Jun 10, 2021 2:29 pm I'm not sure I am buying it that advisors are trying to make their clients think anything in particular about the funds.

I don't actually know, but I am imagining that this is more likely a result of using portfolio construction models, possibly mean variance optimization, on an inventory of funds. Such approaches will generally produce dribs and drabs of about everything available. I also imagine that advisor's using such approaches think doing this is one way they add value.

I do know salesmen can be cynical about what they are selling but I also just think most salesmen really believe people are benefited by buying what the salesman sells. If anyone is getting brainwashed it might be the salesman more than the client. I'm not sure what the supervisors of such advisors do if the advisor comes up with something simple.
When an investment firm hires a new advisor I bet that advisor goes through an extensive education. He is probably trained to use the tools provided by the company and those tools probably create big, complex, portfolios that the advisor truly believes (because of his company-supplied education) are excellent. Blame it on the company! They are the ones that believe complication is good -- good for the company for the reasons given in previous posts. The advisor is probably being duped as much as the customer.
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backpacker61
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Re: Why so many funds in one account

Post by backpacker61 »

dbr wrote: Thu Jun 10, 2021 4:30 pm I struggle with the idea that typical advisors, brokers, and generally financial services salesmen consciously operate to deceive their customers in order to take money out of people's pockets.

How many people here think that? I mean I don't know a lot of people in that business, but the one's I do know are without question stupid and brainwashed rather than nefarious. They are not stupid at selling, so maybe they are crazy like a fox with these portfolios.
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Re: Why so many funds in one account

Post by bloom2708 »

Moar funds = moar fees.

Each fund family has incentives and kickbacks.

Moar! 🤭
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Raymond
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Re: Why so many funds in one account

Post by Raymond »

Ticker, fund name, category, adjusted expense ratio, loads/fees (if any) - information from Morningstar.com

BUYWX / Main BuyWrite I / Derivative Income / 1.350%
CPXIX / Cohen & Steers Preferred Sec & Inc I / Preferred Stock / 0.850%
PFORX / PIMCO International Bond (USD-Hdg) Instl / World Bond-USD Hedged / 0.500%
PPSIX / Principal Spectrum Pref&Cptl Scs IncInst / Preferred Stock / 0.810%
SECT / Main Sector Rotation ETF / US Fund Large Blend / 0.800%
SIRRX / Sierra Tactical All Asset Instl / Multisector Bond / 2.140%
SSIRX / Sierra Tactical Core Income Instl / Nontraditional Bond / 1.600%
STBJX / Sierra Tactical Bond Instl / Nontraditional Bond / 1.760%
STMEX / Sierra Tactical Municipal Institutional / High Yield Muni / 1.630%
TMAT / Main Thematic Innovation ETF / US Fund World Large-Stock Growth / 1.650%
VWIAX / Vanguard Wellesley® Income Admiral™ / Allocation--30% to 50% Equity / 0.160%
DEMSX / DFA Emerging Markets Small Cap I / Diversified Emerging Mkts / 0.600%
DFCEX / DFA Emerging Markets Core Equity I / Diversified Emerging Mkts / 0.390%
DFEVX / DFA Emerging Markets Value I / Diversified Emerging Mkts / 0.460%
DFFVX / DFA US Targeted Value I / Small Value / 0.330%
DFIEX / DFA International Core Equity I / Foreign Large Blend / 0.250%
DFLVX / DFA US Large Cap Value I / Large Value / 0.220%
DFQTX / DFA US Core Equity 2 I / Large Blend / 0.190%
DFREX / DFA Real Estate Securities I / Real Estate / 0.180%
DISVX / DFA International Small Cap Value I / Foreign Small/Mid Value / 0.490%
DFITX / DFA International Real Estate Sec I / Global Real Estate / 0.270%
DFIVX / DFA International Value I / Foreign Large Value / 0.340%

What a dog's breakfast...
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gwe67
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Re: Why so many funds in one account

Post by gwe67 »

oldcomputerguy wrote: Thu Jun 10, 2021 5:30 pm Partial list showing why your "advisor" had you allocated this way:


BUYWX - Main BuyWrite Fund Class I Shares, a mix of about 13% non-US and 87% US large-cap equity, ER 1.35% - turnover 95% (each 100% of turnover adds another 1.0% to the total expense, so call it an effective 2.3% ER)

CPXIX - Cohen & Steers Preferred Securities and Income Fund, Inc. Class I, fixed-income fund, mostly BB-rated corporate bonds, duration 4.5 years, ER 0.85%

PFORX - PIMCO International Bond (USD-Hdg) Institutional class, world bonds, some leverage, duration 7.73 years, ER 0.5%

PPSIX - Principal Spectrum Pref&Cptl Scs IncInst, BB-rated corporate bonds, duration 4.27 years, ER 0.81%

SECT - Main Sector Rotation ETF, ER 0.80%, US large/mega-cap blend equity

SIRRX - Sierra Tactical All Asset Instl, ER 2.14% (!!), mix of equity, fixed-income, and cash

SSIRX - Sierra Tactical Core Income Instl, ER 1.6%, listed as a "non-traditional bond fund"

STBJX - Sierra Tactical Bond Instl, ER 1.76%, another "non-traditional bond fund", B-grade, duration 3.2 years

STMEX - Sierra Tactical Municipal Institutional, high-yield municipal bonds, ER 1.63%, BB-grade, duration 8.5 years

TMAT - Main Thematic Innovation ETF, ER 1.65%, mixed US/international mid/large-cap equity


This is such a mish-mash of high-fee overlapping funds (who in the world needs this many junk bond funds??) that I'm going with "advisor making it look complicated". And your "advisor" was charging you 1% on top of all this?!?

Moving away from this mess to a simple low-cost three-fund portfolio was a very smart move.
I call this a "white-collar crime".
VTI 48%, VXUS 12%, BND 40%
blueberrypi
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Re: Why so many funds in one account

Post by blueberrypi »

If only there were a way to build a diversified portfolio with a few simple funds... and a few minutes a year was all you needed to monitor and rebalance. Maybe someday! :)
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cheese_breath
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Re: Why so many funds in one account

Post by cheese_breath »

blueberrypi wrote: Thu Jun 10, 2021 6:10 pm If only there were a way to build a diversified portfolio with a few simple funds... and a few minutes a year was all you needed to monitor and rebalance. Maybe someday! :)
Remember this one?

https://dilbert.com/search_results?terms=Index+Funds
The surest way to know the future is when it becomes the past.
backpacker61
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Re: Why so many funds in one account

Post by backpacker61 »

Raymond wrote: Thu Jun 10, 2021 6:00 pm Ticker, fund name, category, adjusted expense ratio, loads/fees (if any) - information from Morningstar.com

BUYWX / Main BuyWrite I / Derivative Income / 1.350%
CPXIX / Cohen & Steers Preferred Sec & Inc I / Preferred Stock / 0.850%
PFORX / PIMCO International Bond (USD-Hdg) Instl / World Bond-USD Hedged / 0.500%
PPSIX / Principal Spectrum Pref&Cptl Scs IncInst / Preferred Stock / 0.810%
SECT / Main Sector Rotation ETF / US Fund Large Blend / 0.800%
SIRRX / Sierra Tactical All Asset Instl / Multisector Bond / 2.140%
SSIRX / Sierra Tactical Core Income Instl / Nontraditional Bond / 1.600%
STBJX / Sierra Tactical Bond Instl / Nontraditional Bond / 1.760%
STMEX / Sierra Tactical Municipal Institutional / High Yield Muni / 1.630%
TMAT / Main Thematic Innovation ETF / US Fund World Large-Stock Growth / 1.650%
VWIAX / Vanguard Wellesley® Income Admiral™ / Allocation--30% to 50% Equity / 0.160%
DEMSX / DFA Emerging Markets Small Cap I / Diversified Emerging Mkts / 0.600%
DFCEX / DFA Emerging Markets Core Equity I / Diversified Emerging Mkts / 0.390%
DFEVX / DFA Emerging Markets Value I / Diversified Emerging Mkts / 0.460%
DFFVX / DFA US Targeted Value I / Small Value / 0.330%
DFIEX / DFA International Core Equity I / Foreign Large Blend / 0.250%
DFLVX / DFA US Large Cap Value I / Large Value / 0.220%
DFQTX / DFA US Core Equity 2 I / Large Blend / 0.190%
DFREX / DFA Real Estate Securities I / Real Estate / 0.180%
DISVX / DFA International Small Cap Value I / Foreign Small/Mid Value / 0.490%
DFITX / DFA International Real Estate Sec I / Global Real Estate / 0.270%
DFIVX / DFA International Value I / Foreign Large Value / 0.340%

What a dog's breakfast...
I wouldn't call that "bad" at all, but unnecessarily complicated.

Many good, relatively low cost DFA funds. VWIAX is not bad at all, though not exactly the "Boglehead way".

The data do show that the average investor with an advisory relationship actually does better than the average investors doing it "on their own", but that's primarily because the unadvised investor often buys and sells at the wrong times, and is undisciplined during market crashes.
“Now shall I walk or shall I ride? | 'Ride,' Pleasure said; | 'Walk,' Joy replied.” | | ― W.H. Davies
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David Jay
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Re: Why so many funds in one account

Post by David Jay »

vineviz wrote: Thu Jun 10, 2021 2:20 pmThis isn’t necessarily a problem as long as you retain the advisor, since it’s just as easy for them to manage a potty with 20 funds as it is to manage a portfolio of 3 funds.
Given the choice, I would really rather manage a portfolio with 3 funds than a potty with 20 :D

(Don’t you just love autocorrect?)
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
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David Jay
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Re: Why so many funds in one account

Post by David Jay »

oldcomputerguy wrote: Thu Jun 10, 2021 5:30 pmSIRRX - Sierra Tactical All Asset Instl, ER 2.14% (!!), mix of equity, fixed-income, and cash
This one is a real beauty. This is a bond fund-of-funds. That’s right, it just holds other funds. And then layers on a 1.25% Management fee plus fund expenses. So you pay all of the underlying fund expenses and then layer on an additional 2%+. That doesn’t leave much for the client in a bond fund.

This is going to surprise you, but M* says it underperforms the average of it’s category and it’s index.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
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1789
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Re: Why so many funds in one account

Post by 1789 »

FarmerJo wrote: Thu Jun 10, 2021 2:26 pm
Raymond wrote: Thu Jun 10, 2021 2:18 pm As above:

- If he put you in fewer funds, you might, God forbid, decide that you could do it yourself.

- If the funds have sales loads or 12-b1 fees, he might get a cut of those.

- Or perhaps he was really doing his best, and those were his best picks.

If you wouldn't mind listing the names and tickers of the funds, they we could help tell you which of the above apply :happy
BUYWX
CPXIX
PFORX
PPSIX
SECT
SIRRX
SSIRX
STBJX
STMEX
TMAT
VWIAX
DEMSX
DFCEX
DFEVX
DFFVX
DFIEX
DFLVX
DFQTX
DFREX
DISVX
DFITX
DFIVX
DISVX
Interesting. All i can say is it is close to certain that a single fund like FXAIX (SP500 index fund) would outperform this portfolio over the next 30 years.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)
Tdubs
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Re: Why so many funds in one account

Post by Tdubs »

RetiredAL wrote: Thu Jun 10, 2021 2:17 pm
cheese_breath wrote: Thu Jun 10, 2021 2:10 pm He wants to impress you with how complex managing your finances is and how much he's doing for you. Plus it might benefit his income to have you in more funds, especially if some of them are load funds.
I'll be more harsh that cheese-breath - It's to scare you into believing investing is so complex you need to stay with this manager to be successful with your investments.
Exactly. 10-12 is the magic number. Enough to confuse you and keep you dependent on an FA.
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Nate79
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Re: Why so many funds in one account

Post by Nate79 »

They were your advisor, there to advise you. Didn't you ever talk to them about why they had you buying these funds, what was the strategy, etc? Or did you do no diligence with your money?
Silverado
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Re: Why so many funds in one account

Post by Silverado »

Nate79 wrote: Thu Jun 10, 2021 8:23 pm They were your advisor, there to advise you. Didn't you ever talk to them about why they had you buying these funds, what was the strategy, etc? Or did you do no diligence with your money?
Hey, come on, be nice. It is well known that asking is a losing battle for most people. The OP is now here, great step.
sohcahtoa
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Re: Why so many funds in one account

Post by sohcahtoa »

David Jay wrote: Thu Jun 10, 2021 6:50 pm
oldcomputerguy wrote: Thu Jun 10, 2021 5:30 pmSIRRX - Sierra Tactical All Asset Instl, ER 2.14% (!!), mix of equity, fixed-income, and cash
This one is a real beauty. This is a bond fund-of-funds. That’s right, it just holds other funds. And then layers on a 1.25% Management fee plus fund expenses. So you pay all of the underlying fund expenses and then layer on an additional 2%+. That doesn’t leave much for the client in a bond fund.

This is going to surprise you, but M* says it underperforms the average of it’s category and it’s index.
Absolutely heinous. I suppose it's called a Tactical All Asset fund because it tactically transfers all your assets to various fund managers. :twisted:

Long live the 3 fund portfolio.
mikejuss
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Re: Why so many funds in one account

Post by mikejuss »

David Jay wrote: Thu Jun 10, 2021 6:50 pm
oldcomputerguy wrote: Thu Jun 10, 2021 5:30 pmSIRRX - Sierra Tactical All Asset Instl, ER 2.14% (!!), mix of equity, fixed-income, and cash
This one is a real beauty. This is a bond fund-of-funds. That’s right, it just holds other funds. And then layers on a 1.25% Management fee plus fund expenses. So you pay all of the underlying fund expenses and then layer on an additional 2%+. That doesn’t leave much for the client in a bond fund.

This is going to surprise you, but M* says it underperforms the average of it’s category and it’s index.
I've never seen an ER this high. :oops:
helloeveryone
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Re: Why so many funds in one account

Post by helloeveryone »

gwe67 wrote: Thu Jun 10, 2021 2:34 pm Here is why:

If the advisor had put you in a single target date fund, then you would have questioned, "Why do I need to pay for this advice?"
yeah, imagine 1% AUM fee and they pick a target date fund….even the least knowledgeable investors will be like “wait……I saw this target date fund at vanguard, or fidelity, or schwab. maybe I can give it a shot….next thing they know they’re not paying $10,000 on a million dollar portfolio
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cheese_breath
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Re: Why so many funds in one account

Post by cheese_breath »

Nate79 wrote: Thu Jun 10, 2021 8:23 pm They were your advisor, there to advise you. Didn't you ever talk to them about why they had you buying these funds, what was the strategy, etc? Or did you do no diligence with your money?
Think maybe their advice is may be as complicated as the portfolio, and you come out of the meeting with your head spinning?
The surest way to know the future is when it becomes the past.
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FarmerJo
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Re: Why so many funds in one account

Post by FarmerJo »

Nate79 wrote: Thu Jun 10, 2021 8:23 pm They were your advisor, there to advise you. Didn't you ever talk to them about why they had you buying these funds, what was the strategy, etc? Or did you do no diligence with your money?
I inquired with him two different times about why I was in the fund I was in and that I was concerned with the ERs. Both times he jabbered about diversification and long-term management strategies. It was after the second time I asked, and when he literally gave me the same speech I knew he had no clue what he was doing. At that point is when I rolled it all over to Fidelity. Not all his fault because I should have inquired earlier.
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FarmerJo
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Re: Why so many funds in one account

Post by FarmerJo »

cheese_breath wrote: Thu Jun 10, 2021 5:18 pm
dbr wrote: Thu Jun 10, 2021 4:30 pm ...I struggle with the idea that typical advisors, brokers, and generally financial services salesmen consciously operate to deceive their customers in order to take money out of people's pockets...
Deceive may be a little strong. Put their interests above their client's interests may be more appropriate. Hence the need to look for a fiduciary if seeking an advisor.
He was a fiduciary advisor. :shock:
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grogu
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Re: Why so many funds in one account

Post by grogu »

I’m not going to try to defend the funds your former advisor chose, and many of those ER are egregious.

However, I have close to 10 funds in some of my accounts. The overwhelming percentages are in total stock and total international funds. However, I want more emerging markets, and more small-cap, so I have separate funds for each of them. I want to diversity what little bond funds I have so there is high-yield, inflation-protected, corporate/government, international, etc., not all of which is in, or in the percentages I desire, for total bond. So I supplement there too. In one account I don’t have total market available, so I have to do SP500 + extended market. And I have small holdings in precious metals and a trust that can’t be mentioned. Many people also hold REITs.

You can say that these small “supplemental” holdings aren’t worth the “complexity” and don’t move the needle enough to make a difference. But since the allocations of 3 funds don’t meet my desired allocation, I have to get additional funds. Almost all of them have very low ER, and I’m willing to pay a premium on the higher ones.

My point (again, without commenting on the OP’s specific list of funds) is just to say that having more than 3 funds doesn’t necessarily mean you’re throwing your money away.
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