Opinions on Fee Based Investment Advisor at TDW

[Jets99]

I do have some comments. You seem to understand that switching from bonds to blue-chip dividend payers means taking on more risk and you have a plan B in working longer.

However, I find it hard to square your desire to assemble a "blue-chip high dividend stocks" with names like Suncor, Goldcorp and AAPL thrown in the mix. If you are going to assemble a portfolio that looks like the index, why bother when you can simply buy an index fund and be done with it?

Good point. Why doesn't everyone simply buy an index fund? Not sarcasm, you are making me think here. Part of my answer would be that when I look at index funds, I don't like all of the holdings I see. I like the ability to pick stocks I like. Not saying I can do better than an index fund but I can live with any failings here. I like control and I want to take more active control of my portfolio and I think if I buy mostly funds, I'll likely tend to let it sit.

Having said this, I will likely buy some index funds too. Any you would recommend?

[CanadianCapitalist]

Why doesn't everyone simply buy an index fund? Not sarcasm, you are making me think here.

Mind you, I wasn't trying to be sarcastic. A strategy of buying blue-chip dividend payers sounds reasonable to me as far as portfolio construction is concerned since you are retiring fairly soon and likely would like to spend income from your portfolio. I was simply pointing out that your plan is very different from your implementation.

I agree with MoneyGal. Your needs are quite different from someone who is simply building a portfolio. You either have to DIY (MoneyGal's Pensionize Your Nest Egg is a good starting point) or hire someone with expertise in retirement planning. It looks like you may also want to get help with building and managing a portfolio (and yes, I fully realize that "help" will cost money). Buying products or stocks to implement your plan is the last step in the process.

[Sampson]

I would ask you what you are hoping to get out of the adviser?

If it is a 'plan' then this is not the way to go. I know people who have used these types of advisers and while they certainly are not your average MF salesman, they often don't add a whole lot of value - e.g. they advise you to buy portfolio matching your 'risk tolerance', then usually select the most widely held investments (SU, for example), mix in with some different asset class holdings (bond funds or something), and check in on you, or buy what you ask them to, and offer recommendations a few times of the year.

To me, if you are inclined, you might as well either learn on your own, or follow CC's advice of passive indexing.

That said, I do see value in some types of advisers - ones that help you pick micro-cap companies, ones that are good at timing, and ones that help you find and develop a plan. These types are rarer, and certainly not ones you would find at TDW.

[Four Pillars]

Lots of good comments so far.

You might also consider doing both passive investing and some stock picking. If you want non-North America international exposure then buying ETFs is the easiest way to get it. You can still pick some Cdn & US stocks.

[Jets99]

Whether I go DIY or not, I'm going to get the book today. Thanks for the tip.

I'm not sure I understand your comment that "your plan is very different from your implementation". Suncor, Goldcorp and more AAPL are only a few I am considering but is it that they don't meet your criteria for blue-chip dividend payers ? I know AAPL doesn't but I'll bend the dividend rule for this one.

I also own Telus, GWO, COS, MFC, GE, RY, MSFT, AT&T, AAPL.

[Jets99]

I would ask you what you are hoping to get out of the adviser?

If it is a 'plan' then this is not the way to go. I know people who have used these types of advisers and while they certainly are not your average MF salesman, they often don't add a whole lot of value - e.g. they advise you to buy portfolio matching your 'risk tolerance', then usually select the most widely held investments (SU, for example), mix in with some different asset class holdings (bond funds or something), and check in on you, or buy what you ask them to, and offer recommendations a few times of the year.

To me, if you are inclined, you might as well either learn on your own, or follow CC's advice of passive indexing.

That said, I do see value in some types of advisers - ones that help you pick micro-cap companies, ones that are good at timing, and ones that help you find and develop a plan. These types are rarer, and certainly not ones you would find at TDW.

Good post. This sounds alot like the guy I have now at NesBurns except for the "check in on you" part

And I agree if I could find a guy who was good at picking micro-cap companies and good at timing and who would keep a close eye on my portfoilo I think he'd be worth paying for. But how do you know unless you actually take the plunge and go with him.

[kcowan]

Jets
You don't seem to understand your need for a plan. It has nothing to do with building a portfolio. You will not get this from any of the guys you are dealing with. Without a plan, how will you know when you get there?

[Charlie]

I'll concur with MG that 1.25% is a good price for a managed portfolio. Especially at $300K. This is a DIY board, so many of us question the value -- but that's about as good as you'll get for someone else to manage your stuff. As to the service -- it really depends on the adviser, and on you.

For someone with few trades (which should be most long term investors) I can't help but think you should be able to hire an adviser who charges hourly to review your stuff and your plan every 2 to 3 yrs at much less than the $12K in fees you'd pay at 1.25% on $300K over 3 yrs. But that's because I'm a DIYer and like this stuff. Maybe it's a penny wise and pound foolish thing? And sometimes the full service advisers have access to certain bond or pref share issues that the retail investor doesn't.

But to your original question -- 1.25% is a good price.

[Jets99]

Jets
You don't seem to understand your need for a plan. It has nothing to do with building a portfolio. You will not get this from any of the guys you are dealing with. Without a plan, how will you know when you get there?

Maybe you're right but I actually think I have a very detailed plan on how I will get to my retirement goal. Too much detail to share and probably not of interest to anyone but me (even my wife is tired of hearing about it ).

In a nutshell I know what my goal numbers look like that will allow me to retire and I also know what funds I need to come up with and allocate to various investment vehicles annually to reach my goal but one of the biggest factors impacting my plan is expected rate of return on my investments. Hence my decision on DIY vs Advisor. Another advantage of the Advisor would be to validate my plan and apply his retirement planning tools.

But is it worth paying for? I still need to work that out. All of the opinions offered here have been excellent and I think my main question has been answered by MoneyGal and Charlie and others. So the 1.25% is not expensive and my original opinion on that was wrong. But sheesh I'm still having trouble coming to grips giving someone $3,750 a year to manage my money. Question is, would pinching pennies here come back to haunt me...

[MoneyGal]

In a nutshell I know what my goal numbers look like that will allow me to retire and I also know what funds I need to come up with and allocate to various investment vehicles annually to reach my goal but one of the biggest factors impacting my plan is expected rate of return on my investments. Hence my decision on DIY vs Advisor. Another advantage of the Advisor would be to validate my plan and apply his retirement planning tools.

At the risk of beating a dead horse, you are not going to get what you are looking for from the advisor you are proposing to use. First, there is no guarantee that using an advisor will give you higher rates of return and in fact, you could argue the opposite - the fees you'd be paying impose an additional hurdle the advisor has to overcome to give you the required rate, compared to implementing the same plan on your own.

Also: he isn't going to have any but the most basic, generic retirement planning tools - at least at the price you are paying. He won't be validating your plan. He won't even really be interested in your plan beyond what it takes to get the Know Your Client form completed.

But is it worth paying for? I still need to work that out. All of the opinions offered here have been excellent and I think my main question has been answered by MoneyGal and Charlie and others. So the 1.25% is not expensive and my original opinion on that was wrong. But sheesh I'm still having trouble coming to grips giving someone $3,750 a year to manage my money. Question is, would pinching pennies here come back to haunt me...

This is the wrong question. If "pinching pennies" means you go it alone in order to save on the "expensive fees," it does not hold true the other way that paying the pennies (instead of pinching them) provides a better outcome.