cougarguard.com — unofficial BYU Cougars / LDS sports, football, basketball forum and message board  

Go Back   cougarguard.com — unofficial BYU Cougars / LDS sports, football, basketball forum and message board > non-Sports > Finances

Reply
 
Thread Tools Display Modes
Old 07-31-2008, 02:46 PM   #1
MikeWaters
Demiurge
 
MikeWaters's Avatar
 
Join Date: Aug 2005
Posts: 36,363
MikeWaters is an unknown quantity at this point
Default How much is reasonable for a financial advisor?

I guy I have worked with on a number of things is probably going to take up my stock portfolio (i.e. retirement accounts).

I pretty much trust him. I knew his brother in med school. I've known him now for several years.

With my small retirement fund, he had recommended I mainly invest in index funds.

But now he says my little pot of money is large enough to manage.

He says that historically he beats the S&P 500 by 2-3%. He would charge 1% per year for him and his employees to manage my accounts.

Is 1% a reasonable charge for a relatively high-maintenance management?
MikeWaters is offline   Reply With Quote
Old 07-31-2008, 08:46 PM   #2
MikeWaters
Demiurge
 
MikeWaters's Avatar
 
Join Date: Aug 2005
Posts: 36,363
MikeWaters is an unknown quantity at this point
Default

anyone have an opinion on this?
MikeWaters is offline   Reply With Quote
Old 07-31-2008, 08:52 PM   #3
BYU71
Senior Member
 
BYU71's Avatar
 
Join Date: Jan 2006
Posts: 5,084
BYU71 is an unknown quantity at this point
Default

[QUOTE=MikeWaters;249147]I guy I have worked with on a number of things is probably going to take up my stock portfolio (i.e. retirement accounts).

I pretty much trust him. I knew his brother in med school. I've known him now for several years.

With my small retirement fund, he had recommended I mainly invest in index funds.

But now he says my little pot of money is large enough to manage.

He says that historically he beats the S&P 500 by 2-3%. He would charge 1% per year for him and his employees to manage my accounts.:



If he historically beats the S&P by 2-3%, I assume per year, and that is net of his 1% charge, you are getting a very good deal. You could find some who are even better than 2-3% net of fees, but they will charge more than 1%.

One of the money managers I use for my clients has beaten the S&P the last 5 years, through June 30th, by 2% a year and and over the last 10 years by 5% a year. That is net of a 1 1/2% management fee.
BYU71 is offline   Reply With Quote
Old 07-31-2008, 08:54 PM   #4
MikeWaters
Demiurge
 
MikeWaters's Avatar
 
Join Date: Aug 2005
Posts: 36,363
MikeWaters is an unknown quantity at this point
Default

of course he could have been lying about the 2-3%.
MikeWaters is offline   Reply With Quote
Old 07-31-2008, 09:00 PM   #5
BYU71
Senior Member
 
BYU71's Avatar
 
Join Date: Jan 2006
Posts: 5,084
BYU71 is an unknown quantity at this point
Default

Quote:
Originally Posted by MikeWaters View Post
of course he could have been lying about the 2-3%.
I thought you said you trusted him. He should be able to provide documents that verify his claim.

He should be able to tell you how much risk he is taking to get those returns Ask him for instance what his beta is.

For instance, Growth fund of America over the last 3 years has average 8%. That is 3.64% higher than the market. However, their beta is .94. They are beating the market that badly with 94% of market risk.
BYU71 is offline   Reply With Quote
Old 08-03-2008, 01:19 AM   #6
Jennerstein
Junior Member
 
Jennerstein's Avatar
 
Join Date: Jan 2006
Posts: 44
Jennerstein
Default

I guess there's a reason why Growth Fund of America is the biggest mutual fund in the nation, with almost 200B in assets under management. That's insane.

I actually work for CRMC's IT group as a business systems analyst, and the company seems to be doing things right. The fundamental philosophy is conservative long term investment results and we're always reminded to remember that it's shareholder's money we're managing. It's not as cheesy as remember this is Billy's college fund, or Dorothy's retirement money, but that's the culture I work in. Of course, there's no guarantee that mutual funds such as GFA or EUPAC will continue to do as well, especially with the size of the funds, but the company certainly has the right focus.

Last edited by Jennerstein; 08-03-2008 at 01:25 AM.
Jennerstein is offline   Reply With Quote
Old 08-04-2008, 04:40 PM   #7
jay santos
Senior Member
 
Join Date: Jan 2006
Posts: 6,177
jay santos is on a distinguished road
Default

Quote:
Originally Posted by MikeWaters View Post
I guy I have worked with on a number of things is probably going to take up my stock portfolio (i.e. retirement accounts).

I pretty much trust him. I knew his brother in med school. I've known him now for several years.

With my small retirement fund, he had recommended I mainly invest in index funds.

But now he says my little pot of money is large enough to manage.

He says that historically he beats the S&P 500 by 2-3%. He would charge 1% per year for him and his employees to manage my accounts.

Is 1% a reasonable charge for a relatively high-maintenance management?
Mike, here are my thoughts.

1. I don't think a financial advisor is EVER worth 1% of your return, unless you're into the $10M+ range of assets.
2. <$10M, don't even think about it--use Vanguard index funds and modern portfolio theory and balanced asset allocation. here are a couple places to learn. http://www.moneychimp.com/articles/risk/riskintro.htm
http://www.indexfundeducator.com/allocation.htm
3. >$10M you may think about additional diversification or the use of funds like Dimensional Fund Advisors. http://www.dfaus.com/
4. Any financial advisor who is telling you he beats S&P by 2-3% is probably dishonest or incompetent and I would run away as fast as you can.
jay santos is offline   Reply With Quote
Old 08-04-2008, 06:45 PM   #8
BYU71
Senior Member
 
BYU71's Avatar
 
Join Date: Jan 2006
Posts: 5,084
BYU71 is an unknown quantity at this point
Default

Quote:
Originally Posted by jay santos View Post
Mike, here are my thoughts.

1. I don't think a financial advisor is EVER worth 1% of your return, unless you're into the $10M+ range of assets.
2. <$10M, don't even think about it--use Vanguard index funds and modern portfolio theory and balanced asset allocation. here are a couple places to learn. http://www.moneychimp.com/articles/risk/riskintro.htm
http://www.indexfundeducator.com/allocation.htm
3. >$10M you may think about additional diversification or the use of funds like Dimensional Fund Advisors. http://www.dfaus.com/
4. Any financial advisor who is telling you he beats S&P by 2-3% is probably dishonest or incompetent and I would run away as fast as you can.
Any financial advisor who tells him that?? I think you meant to say, verify what you are told. To say any financial advisor telling you that is probably dishonest or incompetent is something an arrogant asshole or dipshit would say.
BYU71 is offline   Reply With Quote
Old 08-04-2008, 07:20 PM   #9
jay santos
Senior Member
 
Join Date: Jan 2006
Posts: 6,177
jay santos is on a distinguished road
Default

Quote:
Originally Posted by BYU71 View Post
Any financial advisor who tells him that?? I think you meant to say, verify what you are told. To say any financial advisor telling you that is probably dishonest or incompetent is something an arrogant asshole or dipshit would say.
Nah, I'd say someone in finance who actually would say that to a client is the true arrogant asshole and/or dipshit.
jay santos is offline   Reply With Quote
Old 08-04-2008, 07:49 PM   #10
BYU71
Senior Member
 
BYU71's Avatar
 
Join Date: Jan 2006
Posts: 5,084
BYU71 is an unknown quantity at this point
Default

Quote:
Originally Posted by jay santos View Post
Nah, I'd say someone in finance who actually would say that to a client is the true arrogant asshole and/or dipshit.
Perhaps you ought to stick to your area of expertise, which obviously isn't investment advising.

By the way, the dimension system you suggested. What is their 5 year track record on their core value equity fund.
BYU71 is offline   Reply With Quote
Reply

Bookmarks

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump


All times are GMT. The time now is 11:22 PM.


Powered by vBulletin® Version 3.8.2
Copyright ©2000 - 2024, Jelsoft Enterprises Ltd.