Merrill, Morgan, Fidelity v Vanguard

[clarkster]

Hi Boglehead experts! My wife is being pitched personal advisor services through her company from Merrill, Morgan and Fidelity. I’ve met some of them and I tell them I’m a Boglehead and huge proponent of Vanguard. But, honestly I’m still very much in the learning stage of Vanguard and investing in general. Some advisors I’ve met with have said Vanguard will sell you funds and that’s about it and they can beat Vanguard’s returns. What can I say to that or counter with I’m such a newbie with all of this. I really could use y’all’s advice!

[nisiprius]

Hi Boglehead experts! My wife is being pitched personal advisor services through her company from Merrill, Morgan and Fidelity. I’ve met some of them and I tell them I’m a Boglehead and huge proponent of Vanguard. But, honestly I’m still very much in the learning stage of Vanguard and investing in general. Some advisors I’ve met with have said Vanguard will sell you funds and that’s about it and they can beat Vanguard’s returns. What can I say to that or counter with I’m such a newbie with all of this. I really could use y’all’s advice!

Of the three, I would prefer Fidelity. I once had an account there, and once consulted with a CFP in their retirement department, and felt that they were a fairly straight outfit... and Fidelity has a long history of having their own index funds, all good.

She should try not to engage with them. It's anyone's job to counter them. She should just say "no." If she lets them maneuver you into playing a game in which the implied rules are "if you can't convince me that Vanguard is better, you must invest with me," she will lose.

I suppose she can always try saying "If you say you can beat Vanguard's returns, I want you to put it in writing and sign it. 'I guarantee that the portfolio I design for you will beat the performance of the Vanguard S&P 500 index fund, or I will pay you the amount of the shortfall." Just to see how they will weasel out of it.

You may know the story of Warren Buffett's ten-year bet? He challenged the hedge fund industry to a ten year bet. He bet that they couldn't beat the performance of the Vanguard S&P 500 index fund. Ted Seides, of Protegé Partners, took him up on it. That firm specializes in assembling portfolios of hedge funds. Seides lost the bet. Of course.

[Stinky]

Hi Boglehead experts! My wife is being pitched personal advisor services through her company from Merrill, Morgan and Fidelity.

What would these “personal advisor” services cost her?

And even if there is no out of pocket cost to your wife, would she be imputed income that would increase her taxes?

Years ago, I was offered advisory services through my employer. I declined, because the taxes in the imputed income were higher than the value I would have received from them. (I estimated the real value of the services at zero).

[afan]

The best solution is option 4-DIY with no adviser pulling doen returns by charging fees.

2-4 index funds and be done with it.

[retired@50]

Hi Boglehead experts! My wife is being pitched personal advisor services through her company from Merrill, Morgan and Fidelity. I’ve met some of them and I tell them I’m a Boglehead and huge proponent of Vanguard. But, honestly I’m still very much in the learning stage of Vanguard and investing in general. Some advisors I’ve met with have said Vanguard will sell you funds and that’s about it and they can beat Vanguard’s returns. What can I say to that or counter with I’m such a newbie with all of this. I really could use y’all’s advice!

Say you're happy matching the S&P 500 or the total US stock market.

There's no need to swing for the fences. Just hold an index fund with a small (or zero) tracking error (like the ones Vanguard offers) and you'll get market matching returns, while the active managers are trying to beat the market, most of them fall behind the market. Ask if the adviser knows what SPIVA is?

https://www.spglobal.com/spdji/en/resea ... hts/spiva/

Regards,

[clarkster]

Hi Boglehead experts! My wife is being pitched personal advisor services through her company from Merrill, Morgan and Fidelity. I’ve met some of them and I tell them I’m a Boglehead and huge proponent of Vanguard. But, honestly I’m still very much in the learning stage of Vanguard and investing in general. Some advisors I’ve met with have said Vanguard will sell you funds and that’s about it and they can beat Vanguard’s returns. What can I say to that or counter with I’m such a newbie with all of this. I really could use y’all’s advice!

Of the three, I would prefer Fidelity. I once had an account there, and once consulted with a CFP in their retirement department, and felt that they were a fairly straight outfit... and Fidelity has a long history of having their own index funds, all good.

She should try not to engage with them. It's anyone's job to counter them. She should just say "no." If she lets them maneuver you into playing a game in which the implied rules are "if you can't convince me that Vanguard is better, you must invest with me," she will lose.

I suppose she can always try saying "If you say you can beat Vanguard's returns, I want you to put it in writing and sign it. 'I guarantee that the portfolio I design for you will beat the performance of the Vanguard S&P 500 index fund, or I will pay you the amount of the shortfall." Just to see how they will weasel out of it.

You may know the story of Warren Buffett's ten-year bet? He challenged the hedge fund industry to a ten year bet. He bet that they couldn't beat the performance of the Vanguard S&P 500 index fund. Ted Seides, of Protegé Partners, took him up on it. That firm specializes in assembling portfolios of hedge funds. Seides lost the bet. Of course.

Great advice all around! I appreciate it. I would love to ask for it in writing, lol. You’re absolutely right, a simple no should work!

[clarkster]

Hi Boglehead experts! My wife is being pitched personal advisor services through her company from Merrill, Morgan and Fidelity.

What would these “personal advisor” services cost her?

And even if there is no out of pocket cost to your wife, would she be imputed income that would increase her taxes?

Years ago, I was offered advisory services through my employer. I declined, because the taxes in the imputed income were higher than the value I would have received from them. (I estimated the real value of the services at zero).

It’s anywhere from 1-1.25%! I’m not sure about the taxes but your example of the estimated real value of services is an eye opener!

[clarkster]

The best solution is option 4-DIY with no adviser pulling doen returns by charging fees.

2-4 index funds and be done with it.

Could you please give me an example of 2,3,4 fund portfolio? Like I said, I’m still learning and have some ideas, but I want to make sure I’m on the right track.

[retiringwhen]

Hi Boglehead experts! My wife is being pitched personal advisor services through her company from Merrill, Morgan and Fidelity.

What would these “personal advisor” services cost her?

And even if there is no out of pocket cost to your wife, would she be imputed income that would increase her taxes?

Years ago, I was offered advisory services through my employer. I declined, because the taxes in the imputed income were higher than the value I would have received from them. (I estimated the real value of the services at zero).

It’s anywhere from 1-1.25%! I’m not sure about the taxes but your example of the estimated real value of services is an eye opener!

Buy the 401K's target date fund and make your life simple and move on. Tell them you don't need advise, you bought a fund that doens't require sophisticated advice SErioulsy, just buy the the lowest Cost Target Date fund that is close to you expected retirement. Spend a few years learning about investing and just sit there. you'll never regret that decision.

[clarkster]

Hi Boglehead experts! My wife is being pitched personal advisor services through her company from Merrill, Morgan and Fidelity. I’ve met some of them and I tell them I’m a Boglehead and huge proponent of Vanguard. But, honestly I’m still very much in the learning stage of Vanguard and investing in general. Some advisors I’ve met with have said Vanguard will sell you funds and that’s about it and they can beat Vanguard’s returns. What can I say to that or counter with I’m such a newbie with all of this. I really could use y’all’s advice!

Say you're happy matching the S&P 500 or the total US stock market.

There's no need to swing for the fences. Just hold an index fund with a small (or zero) tracking error (like the ones Vanguard offers) and you'll get market matching returns, while the active managers are trying to beat the market, most of them fall behind the market. Ask if the adviser knows what SPIVA is?

https://www.spglobal.com/spdji/en/resea ... hts/spiva/

Regards,

Great answer! Just tell them I’m happy matching the Market! Simple and effective! I better look what SPIVA is!

[clarkster]

Hi Boglehead experts! My wife is being pitched personal advisor services through her company from Merrill, Morgan and Fidelity.

What would these “personal advisor” services cost her?

And even if there is no out of pocket cost to your wife, would she be imputed income that would increase her taxes?

Years ago, I was offered advisory services through my employer. I declined, because the taxes in the imputed income were higher than the value I would have received from them. (I estimated the real value of the services at zero).

It’s anywhere from 1-1.25%! I’m not sure about the taxes but your example of the estimated real value of services is an eye opener!

Buy the 401K's target date fund and make your life simple and move on. Tell them you don't need advise, you bought a fund that doens't require sophisticated advice SErioulsy, just buy the the lowest Cost Target Date fund that is close to you expected retirement. Spend a few years learning about investing and just sit there. you'll never regret that decision.

Thank you! I’ll look the Target Date Funds!

[Stinky]

Hi Boglehead experts! My wife is being pitched personal advisor services through her company from Merrill, Morgan and Fidelity.

What would these “personal advisor” services cost her?

And even if there is no out of pocket cost to your wife, would she be imputed income that would increase her taxes?

Years ago, I was offered advisory services through my employer. I declined, because the taxes in the imputed income were higher than the value I would have received from them. (I estimated the real value of the services at zero).

It’s anywhere from 1-1.25%! I’m not sure about the taxes but your example of the estimated real value of services is an eye opener!

FWIW - An advisory fee of 1.00-1.25% virtually guaranteed that the “advised” portfolio will underperform a simple Vanguard (or other low cost provider’s) portfolio over the long term.

You’re way, way better off doing it yourself.

[RetirementClass2021]

The best solution is option 4-DIY with no adviser pulling doen returns by charging fees.

2-4 index funds and be done with it.

Could you please give me an example of 2,3,4 fund portfolio? Like I said, I’m still learning and have some ideas, but I want to make sure I’m on the right track.

Diversified low-cost portfolio consisting of passive (Non-actively managed) index mutual funds or ETF funds:

2 Fund
Total Stock Market Fund - Includes U.S. and Non-U.S. investments
Total Bond Market Fund - Includes U.S. and Non-U.S. investments

3 Fund
Total U.S. Market Fund
Total Intl Market Fund
Total U.S. Bond Fund

4 Fund
Total U.S. Market Fund
Total Intl Market Fund
Total U.S. Bond Fund
Total Intl Bond Fund

Fidelity, Vanguard and Schwab have these funds for your choosing.

[Dead Man Walking]

JP Morgan offers portfolios that are tailored to your risk level and are rebalanced for you. The advisor selects funds that match your chosen asset allocation. If you read the fine print, you are warned that they may chose JP Morgan funds and not the best funds for your asset allocation. They warn you that they are not fiduciary advisors. The advisor to whom I spoke was surprised that I had read the fine print. Of course, I declined an advisory account.
I have a self-directed account at JP Morgan because I bank at Chase and transferring funds between bank accounts and a brokerage account is seamless. Furthermore, when I’ve called them for customer service, the representatives have been very knowledgeable and helpful. I’ve never had to wait to speak to them. Their secure message system also works. Since I buy ETFs and Vanguard funds on line for no commission, the account works for me. The website isn’t glitzy, but it is functional for trading and transfers.

DMW

[mkc]

Hi Boglehead experts! My wife is being pitched personal advisor services through her company from Merrill, Morgan and Fidelity. I’ve met some of them and I tell them I’m a Boglehead and huge proponent of Vanguard. But, honestly I’m still very much in the learning stage of Vanguard and investing in general. Some advisors I’ve met with have said Vanguard will sell you funds and that’s about it and they can beat Vanguard’s returns.

Personal experience with family members' use of Merrill WM and Morgan Stanley, and I know a MS VP personally. No way I would ever use either. Merrill WM created a completely inappropriate portfolio/asset allocation for the person's age and had complete disregard for tax efficiency, resulting in significant IRMAA surcharges for several years. Plus AUM fees of 1.4%. MS used a cookie-cutter approach with frequent trades that resulted in 40 page 1099-B each year, poor performance, and AUM fees of 1.5%. MS VP doesn't have a clue - he simply trades based on the communications from corporate (with lots of "we like XYZ now", fast talk, and conflicting phrases).

No experience with Fidelity advisor services.

[clarkster]

Hi Boglehead experts! My wife is being pitched personal advisor services through her company from Merrill, Morgan and Fidelity.

What would these “personal advisor” services cost her?

And even if there is no out of pocket cost to your wife, would she be imputed income that would increase her taxes?

Years ago, I was offered advisory services through my employer. I declined, because the taxes in the imputed income were higher than the value I would have received from them. (I estimated the real value of the services at zero).

It’s anywhere from 1-1.25%! I’m not sure about the taxes but your example of the estimated real value of services is an eye opener!

FWIW - An advisory fee of 1.00-1.25% virtually guaranteed that the “advised” portfolio will underperform a simple Vanguard (or other low cost provider’s) portfolio over the long term.

You’re way, way better off doing it yourself.

Thanks Stinky! I think you are right on the money!

[clarkster]

The best solution is option 4-DIY with no adviser pulling doen returns by charging fees.

2-4 index funds and be done with it.

Could you please give me an example of 2,3,4 fund portfolio? Like I said, I’m still learning and have some ideas, but I want to make sure I’m on the right track.

Diversified low-cost portfolio consisting of passive (Non-actively managed) index mutual funds or ETF funds:

2 Fund
Total Stock Market Fund - Includes U.S. and Non-U.S. investments
Total Bond Market Fund - Includes U.S. and Non-U.S. investments

3 Fund
Total U.S. Market Fund
Total Intl Market Fund
Total U.S. Bond Fund

4 Fund
Total U.S. Market Fund
Total Intl Market Fund
Total U.S. Bond Fund
Total Intl Bond Fund

Fidelity, Vanguard and Schwab have these funds for your choosing.

Thank you for providing examples. I think I’m starting to understand this!

[clarkster]

JP Morgan offers portfolios that are tailored to your risk level and are rebalanced for you. The advisor selects funds that match your chosen asset allocation. If you read the fine print, you are warned that they may chose JP Morgan funds and not the best funds for your asset allocation. They warn you that they are not fiduciary advisors. The advisor to whom I spoke was surprised that I had read the fine print. Of course, I declined an advisory account.
I have a self-directed account at JP Morgan because I bank at Chase and transferring funds between bank accounts and a brokerage account is seamless. Furthermore, when I’ve called them for customer service, the representatives have been very knowledgeable and helpful. I’ve never had to wait to speak to them. Their secure message system also works. Since I buy ETFs and Vanguard funds on line for no commission, the account works for me. The website isn’t glitzy, but it is functional for trading and transfers.

DMW

Thank you for reading the fine print! I bank at Chase as well, thank you for your input and personal experience with them. I think I will decline their advisory services as well!

[ruralavalon]

Hi Boglehead experts! My wife is being pitched personal advisor services through her company from Merrill, Morgan and Fidelity. I’ve met some of them and I tell them I’m a Boglehead and huge proponent of Vanguard. But, honestly I’m still very much in the learning stage of Vanguard and investing in general. Some advisors I’ve met with have said Vanguard will sell you funds and that’s about it and they can beat Vanguard’s returns. What can I say to that or counter with I’m such a newbie with all of this. I really could use y’all’s advice!

I suggest using a low cost fund firm like Vanguard, Fidelity or Schwab. All three offer low cost advisory services if you and she don't want to do-it-yourself.

VANGUARD PERSONAL ADVISOR SERVICES®.

Don't try to argue with them. Just say no thank you.

[clarkster]

Hi Boglehead experts! My wife is being pitched personal advisor services through her company from Merrill, Morgan and Fidelity. I’ve met some of them and I tell them I’m a Boglehead and huge proponent of Vanguard. But, honestly I’m still very much in the learning stage of Vanguard and investing in general. Some advisors I’ve met with have said Vanguard will sell you funds and that’s about it and they can beat Vanguard’s returns. What can I say to that or counter with I’m such a newbie with all of this. I really could use y’all’s advice!

I suggest using a low cost fund firm like Vanguard, Fidelity or Schwab. All three offer low cost advisory services if you and she don't want to do-it-yourself.

Don't try to argue with them. Just say no thank you.

I appreciate your advice with this. I think I’m all in on Vanguard. Like you said, I’ll just say, “No thank you.”

[miket29]

Some advisors I’ve met with have said Vanguard will sell you funds and that’s about it and they can beat Vanguard’s returns. What can I say to that or counter with I’m such a newbie with all of this.

Don't waste time discussing things with anyone telling you that. They're salespeople and nobody has ever convinced a salesperson their product isn't right for them. Just walk away.

[clarkster]

Some advisors I’ve met with have said Vanguard will sell you funds and that’s about it and they can beat Vanguard’s returns. What can I say to that or counter with I’m such a newbie with all of this.

Don't waste time discussing things with anyone telling you that. They're salespeople and nobody has ever convinced a salesperson their product isn't right for them. Just walk away.

Well said!

[the_wiki]

Some advisors I’ve met with have said Vanguard will sell you funds and that’s about it and they can beat Vanguard’s returns.

Tell them you will sign up if they can put that promise of outperforming Vanguard in writing and sign it. I bet they walk that claim back.

[clarkster]

Some advisors I’ve met with have said Vanguard will sell you funds and that’s about it and they can beat Vanguard’s returns.

Tell them you will sign up if they can put that promise of outperforming Vanguard in writing and sign it. I bet they walk that claim back.

I know, right! I'll have to use that.

[K72]

DW has had her IRA with Fidelity in index funds for years and pays zero advisor fees. Same for me with Vanguard. The others you mentioned will likely have 1% fees on top of expense ratios in the funds they choose. If I were to make a choice today, it would be Fidelity.

[GaryA505]

Hi Boglehead experts! My wife is being pitched personal advisor services through her company from Merrill, Morgan and Fidelity.

What would these “personal advisor” services cost her?

And even if there is no out of pocket cost to your wife, would she be imputed income that would increase her taxes?

Years ago, I was offered advisory services through my employer. I declined, because the taxes in the imputed income were higher than the value I would have received from them. (I estimated the real value of the services at zero).

It’s anywhere from 1-1.25%! I’m not sure about the taxes but your example of the estimated real value of services is an eye opener!

FWIW - An advisory fee of 1.00-1.25% virtually guaranteed that the “advised” portfolio will underperform a simple Vanguard (or other low cost provider’s) portfolio over the long term.

You’re way, way better off doing it yourself.

The value I see in an advisor fee is not that they will beat the market, but that they will keep someone from making a mistake that will cost them way more than the advisor fee.

That said, I don't plan to use an advisor myself. Instead, I plan to set things up so that it is simple for me to manage when I get older and when/if the wife has to do it herself.

[bdwb]

Last year I moved half of my money to Merrill. Totally regret it, their advisors are sales people. Will get out as soon as I can, and continue doing it myself. Fidelity may be a ok option if you really want the help. Or there are some fee based boggle oriented adroit there. Best of luck

[egri]

Hi Boglehead experts! My wife is being pitched personal advisor services through her company from Merrill, Morgan and Fidelity.

What would these “personal advisor” services cost her?

And even if there is no out of pocket cost to your wife, would she be imputed income that would increase her taxes?

Years ago, I was offered advisory services through my employer. I declined, because the taxes in the imputed income were higher than the value I would have received from them. (I estimated the real value of the services at zero).

It’s anywhere from 1-1.25%! I’m not sure about the taxes but your example of the estimated real value of services is an eye opener!

FWIW - An advisory fee of 1.00-1.25% virtually guaranteed that the “advised” portfolio will underperform a simple Vanguard (or other low cost provider’s) portfolio over the long term.

You’re way, way better off doing it yourself.

Clarkster, to drive the bolded part home, I used the compounded return calculator at investor.gov and did a test run of an investment that grows at a certain rate, and that rate minus 1% (representing the manager's fee). To keep it simple, I used a $10,000 starting sum that grew at either 6 or 7% annually for 50 years; you can change the numbers to fit your situation. At 7%, the end result was $294,000; at 6%, only $184,000. That's almost 40% of your returns; if their sales pitch instead was, "You put up 100% of the money, take 100% of the risk, and I'll take 40% of the returns", you'd probably run the other way.