# What is the max %



## Plugging Along (Jan 3, 2011)

I know this board people are very against advisors and high MERS.

I have been managing some of my investments on my own, and the majority (my rrsp and resp) are with my advisor in MF. I won't get into that portion of it, as I have not made to move yet, for my own reason (people can look up my other money diary)

My questions is not whether I should ditch my advisor or not. he is moving to a different structure. What would you consider a 'reasonable' amount for fees? 1 to 1.25% for someone to give me advise and model my portfolio and all transaction cost?

My thoughts are if I do it on my own, I would start with tangerine, Where their MER are 1.07%. So it seems to have someone work with me, it's reasonable for the 1.25%. 

I do speak with my advisor fairly frequently, and he has helped on the past a fair bit.


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## scientist (Feb 14, 2015)

Plugging Along said:


> I know this board people are very against advisors and high MERS.
> 
> I have been managing some of my investments on my own, and the majority (my rrsp and resp) are with my advisor in MF. I won't get into that portion of it, as I have not made to move yet, for my own reason (people can look up my other money diary)
> 
> ...


If you want to go with the most hassle free MFs, just go with Tangerine. If you are in agreement with many on this forum that actively managed funds are not worth it, then anything with a higher MER than Tangerine is going to waste. 
As long as you balance things, TD e-Series is pretty much the same as Tangerine. The increase in MER from e-Series to Tangerine can be considered in your mind to be paying the guy who keeps things balanced in 1 MF portfolio so you don't have to, and can just worry about adding to and withdrawing from the MF investment.

Summary: If you believe actively managed funds aren't worth it, don't go for anything higher than what Tangerine's charging (1.07%)

Edit: One more point, in terms of getting advice from advisors, I feel like asking anyone on this forum is way more helpful than asking the advisors, who do offer helpful advice, but it is always in a context that will help the bank also. Here, you get the full picture: The good advice, and how it differs from what advisors tell you. That being said, I've talked to Tangerine's advisors before (on the phone) and they are great. They aren't linked to selling you MFs so that are just paid hourly and are more honest.


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## 1980z28 (Mar 4, 2010)

Plugging Along said:


> I know this board people are very against advisors and high MERS.
> 
> I have been managing some of my investments on my own, and the majority (my rrsp and resp) are with my advisor in MF. I won't get into that portion of it, as I have not made to move yet, for my own reason (people can look up my other money diary)
> 
> ...


That is ok,I personally have Edward Jones,all american stocks ,,it is not a large amount less than 200k,I have the same account from 199?,my large account is SD and registered,I think my fees are in the same ball park


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## Davis (Nov 11, 2014)

PA: it sounds like you would be paying the advisor 1.25% to manage mutual funds. Is that correct? I would think you would be paying the fund MERs on top if that - another 1-2% of assets. Make sure you understand the total costs when making your decision.


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## Synergy (Mar 18, 2013)

1-1.25% is in the ball park. It will however depend somewhat on the amount of money you have to invest and the reputation / quality of the advisor you select. A few of my family members use Edward Jones for a portion of their investments (100% stock / bond portfolio). They appear to be doing a pretty good job and have performed quite well over the last few year. But then again, who hasn't perform well over the last few years ;o)


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## Toronto.gal (Jan 8, 2010)

Plugging Along said:


> My thoughts are if I do it on my own, I would start with tangerine, Where their MER are 1.07%. *So it seems to have someone work with me, it's reasonable for the 1.25%.*


I think Davis is right, with an advisor your fees would likely be higher than the 1.25% by the time all was added, including trailing commissions, which is for the advice you get. 

The lower fee with Tangerine is because there are no advisors involved for the 4 funds they offer. I personally find even the 1.07% MER high for passive management [management + operating expenses, but no trailing commissions].
https://www.tangerine.ca/en/investing/investment-funds/index.html


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## Plugging Along (Jan 3, 2011)

Sorry everyone, I was not very clear. It would be about 1.25 % to help build me a stock/bond portfolio but not MF (though those could be part of it). It would most likely be stock portfolio. I would be getting rid of my MF, and building a portfolio of stocks and ETF (if I choose). Any commissions would be included in this fee. However, you are correct if I choose to pick MF in this mix, then the 1.25 would be on top. I was planning to get out of my mutual funds.


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## 1980z28 (Mar 4, 2010)

If your balance is high you can negotiate cost

Or

Get a fee based FA


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## slacker (Mar 8, 2010)

It comes back to why a lot of people on this forum dislike MER.

The notion that an advisor gets a percentage of your networth every year doesn't feel right. If they are offering a service, like portfolio allocation, then just pay them a fixed fee.

E.g.

If your networth is $100, then paying $1.25 for an advisor to spend an hour with you to create the portfolio is a great deal.

If your networth is $100,000 , then paying $1,250 for an advisor to spend an hour with you to create the portfolio is a terrible deal.



But to answer your question, I wouldn't pay a highly trained accredited professional with fiduciary and legal duties (think lawyers, accountants, doctors) more than $500-1000 an hour.

For a lowly trained advisor with no fiduciary and legal responsibilities, I wouldn't pay more than $100 an hour.

If you insist on a percentage, then my threshold advisor fee% = $100/(portfolio size).

For a $100,000 portfolio, my acceptable advisor fee is 0.1%


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## slacker (Mar 8, 2010)

Just to be clear.

In most retail environments, the advisor fee is about 1 to 1.5%.

The additional damage, is that they will advise you to buy mutual funds in the 1 to 1.5% as well, meaning total cost to you is about 2% to 3% in fees.

This is not always transparent.


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## Plugging Along (Jan 3, 2011)

scientist said:


> Edit: One more point, in terms of getting advice from advisors, I feel like asking anyone on this forum is way more helpful than asking the advisors, who do offer helpful advice, but it is always in a context that will help the bank also. Here, you get the full picture: The good advice, and how it differs from what advisors tell you. That being said, I've talked to Tangerine's advisors before (on the phone) and they are great. They aren't linked to selling you MFs so that are just paid hourly and are more honest.


It's actually the last point. Though I agree this is great for questions, it is not a substitute for my over all investment and estate planning. I am not willing to post all my detail with numbers here. I also find the tangerine advice alright. The advice I get from my advisor, I do appreciate. My question is more of what is a reasonable percent to pay for this service. 



1980z28 said:


> If your balance is high you can negotiate cost
> 
> Or
> 
> Get a fee based FA


This is the crux of my question. With a higher net worth, what would one consider a fair percentage. 


slacker said:


> Just to be clear.
> 
> In most retail environments, the advisor fee is about 1 to 1.5%.
> 
> ...


I understand. I am looking to build more or a stock and bond portfolio and moving right out of my mutual funds. 

Currently, my personal situation, I would rather keep an advisor. I have an advisor I like and trust. What is a fair percentage? It is inclusive of trading costs but not MERS for MF which I would be getting out of.


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## Woz (Sep 5, 2013)

1% not including trading costs is fairly common. The MER on any ETFs should come out of that 1%. Excessive trading costs would be a red flag.


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## avrex (Nov 14, 2010)

@slacker has got it nailed!



slacker said:


> It comes back to why a lot of people on this forum dislike MER.
> 
> The notion that an advisor gets a percentage of your networth every year doesn't feel right. If they are offering a service, like portfolio allocation, then just pay them a fixed fee.
> 
> ...


For investors just starting out, I think something like Tangerine is fine.
However, once you start accumulating serious $$$, that 1.07% Tangerine MER is too high.

For someone like @Plugging Along, with a higher net-worth, either go:
a) fee-based. Pay for advice at an hourly rate.
b) DIY. Become a Do-It-Yourself investor and educate yourself. Look at models like the couch potato with passive low-fee ETFs.

For myself, when I include all trading costs, my annual *personal MER is 0.23%.*


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## uptoolate (Oct 9, 2011)

It may be that to some here, there is no fair percentage. As pointed out, I am good with paying fudiciaries a reasonable sum on a pay-per-use basis. I have an excellent tax accountant and a lawyer. I am a bit cynical when it comes to 'advisors', perhaps because my experience and the stories that I have been privy too have been uniformly negative. If you can find an good advisor that would sign a fudiciary agreement then perhaps. Most 'advisors' have very little in the way of real education in investing. Also, bear in mind that there are many, many high net worth individuals who hold a simple 3 fund or 4 fund ETF portfolio and have done very well and with much less drama. It might be presumptuous of me as it is OT but a great and easy read on the subject is Phil DeMuth's 'The Affluent Investor'.


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## Plugging Along (Jan 3, 2011)

As I said in my Original post, I am not looking at leaving my advisor yet, so it looks like 1-1.25 is what I will negotiate for now unless anyone has information related to what is a fair fee to negotiate with. NOT DIY or indexing, I am already do some of that for part of my portfolio.


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## Synergy (Mar 18, 2013)

I couldn't see paying someone 1% to "build a portfolio" but I could see paying 1% for someone to construct and actively manage a portfolio. An advisor from Edward Jones seems to do pretty good work for a few of my family members. Actively buy / sell stocks and bonds, provide monthly reviews / trading summaries, yearly comprehensive performance reviews, etc. Seems okay to me for individuals that want nothing to do with investing, managing their own finances, etc.

If you have a decent chunk of change I wouldn't pay more than 1%


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## GoldStone (Mar 6, 2011)

I use Mawer Balanced as a yardstick. It has a stellar reputation and a strong performance record. MER = 0.96%

If you pay more than that, what exactly do you get in return? Personalized financial planning? Tax advice? Estate planning?

If you get none of that, why pay more?


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## My Own Advisor (Sep 24, 2012)

I would get a fee-only advisor. Pay once, year #1, then again maybe in year #2 or #3 to help you stay the course, then done.

I also wouldn't pay much more than 1%.


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## Plugging Along (Jan 3, 2011)

Synergy said:


> I couldn't see paying someone 1% to "build a portfolio" but I could see paying 1% for someone to construct and actively manage a portfolio. An advisor from Edward Jones seems to do pretty good work for a few of my family members. Actively buy / sell stocks and bonds, provide monthly reviews / trading summaries, yearly comprehensive performance reviews, etc. Seems okay to me for individuals that want nothing to do with investing, managing their own finances, etc.
> 
> If you have a decent chunk of change I wouldn't pay more than 1%


Again, I wasn't clear. All of the things you stated plus a few things more. 



GoldStone said:


> I use Mawer Balanced as a yardstick. It has a stellar reputation and a strong performance record. MER = 0.96%
> 
> If you pay more than that, what exactly do you get in return? Personalized financial planning? Tax advice? Estate planning?
> 
> If you get none of that, why pay more?


. 

Sorry wasn't clear, it's to build, manage, monitor, report, rebalance, retirement, and estate planning. A little tax planning but I have an better accountant. 


This sort of helps me know what I reasonable. My plan is to go with the current advisor, reconstruct my main portfolio, pay the % which gets me all of the services, at the same time I still am managing my non registered accounts and TFSA on my own. My plan originally was to transfer all of my fund from my advisor to DIY, however, I have been doing it my self on my TFSA, and in the same time frame, I am so to say my advisor has well out performed me. It is for this reason, I am okay with him managing my main retirement amount. 

I understand why so many people recommend DIY because of the fees. However, in my particular case, I have proven I am better not to do that quite yet. I still need the advisor to keep me on track. So %1 is much less than the difference between how I have done myself vs my advisor over the same frame.


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## avrex (Nov 14, 2010)

This has been a confusing thread.

So, I would like to seek clarification on a few points, to make sure that I/we all understand.

*1. TFSA and non-registered account.*
@Plugging Along you mentioned that you managed these accounts yourself. That's great. 
I'm wondering if you have ever calculated (including trading fees) what your personal MER% is for a calendar year.
Sometimes, I find this interesting for comparison purposes against an advisor.

*2. RRSP*
This is your main/largest asset that you have for retirement. Because of this, you want this portion of your allocation to be your 'safe' retirement allocation. That's great. 
You are using a financial advisor to handle this. As you mentioned, you expect your financial advisor will build, manage, monitor, report, rebalance your RRSP. Plus you will want to discuss retirement and estate planning issues with him. 

*Here are my questions for you, @Plugging Along.*

*1. *If you know it, what is *your personal MER%* for the TFSA/non-registered accounts that you manage.
*2. *Your current advisor is managing your RRSP. *What percentage of your RRSP assets is he currently charging you?* (Make sure you include in this percentage both a) his fee, plus b) the weighted average MER fee of the mutual funds that he has you invested in.)
*3. * You want to *stay with your current advisor? * correct? (i.e. you are not looking to move to another advisor?)
*4. * It sounds like you started this thread because you want to negotiate a better deal (i.e. a lower percentage) with your current advisor. 
If so, then is this (see below) the ultimate question that you are trying to ask us here on this thread?.....

*What is a fair percentage (of my assets) that I should be paying my advisor for his services?* 
(i.e. build, manage, monitor, report, rebalance your RRSP, plus discussions on retirement and estate planning)​


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## Plugging Along (Jan 3, 2011)

avrex said:


> This has been a confusing thread.
> 
> So, I would like to seek clarification on a few points, to make sure that I/we all understand.
> 
> ...




1. It is irrelevant what my personal MER is. Yes I do know it, and it is low, but it doesn't matter. That is not what I am asking
2. It is irrelevant what he is currently charging, as he is looking to restructure fees. 
3. It should be irrelevant if I want to move advisors or not in terms of fees. But yes, I do want to stay with my advisor for now.
4. Yes, this is still the question, what is a fair percentage for an advisor that I like to manage my portfolio and provide invest advice and planning as previously mentioned. The reason is that he is changing his fee structure (doesn't matter from what) but we are looking at negotiating a fair price. I don't think $100 is right. So for those who would pay a fee, what is a fair fee in terms of percentage. I am not going fee based, so I am looking at percentages.

Just to be clear, Your last bold with my quote is always what I have been asking. I don't want advice on becoming a DIY, or indexer, (At least not in this thread) nor do I need to know the costs of MERS, I only want to know what is a good starting point in negotiation with my advisor a percentage. 

I appreciate that Mawer is 0.93, that is pretty close to what I was thinking, and that retail is about %1. That was the information I was looking for.


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## slacker (Mar 8, 2010)

Your question is wrong.

There is nothing fair about giving a percentage of your networth every year to an advisor.


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## KevinWaterloo (Mar 5, 2015)

slacker said:


> Your question is wrong.
> 
> There is nothing fair about giving a percentage of your networth every year to an advisor.


While I agree with that for an advisor that is simply recommending mutual funds (and ETFs) I don't think that is necessarily true for advisor that is investing 100% in stocks. At that point they are essentially acting similar to a mutual fund manager which requires substantially more work than simply the hour or two spent with the client. I would obviously prefer a mixed fee where a portion of the advisor's fee would come just out of the investment gains, but I have never seen that in practice.

Also *if[/ the advisor is able to match or beat the returns you could get yourself after fees, than it would still be a good deal. Clearly a large portion of financial advisors likely wouldn't be able to do this, but I still believe that some may exist. They might just be unicorns though....
I have used a financial advisor for more than 10 years for a portfolio that was almost 100% in stocks. Until the relatively recent availability of ETFs there weren't many other options especially if you didn't like mutual funds (and I didn't).

I have since moved 1/2 of my portfolio to a new financial advisor and I'm managing the other 1/2 myself. The advisor fee is 1.75% but it would be 1.25% if he was managing my full portfolio. After 2-3 years (or sooner) my plan is to consolidate my portfolio back to the winner  The advisor and I discussed my plan upfront and he is aware that I'm comparing his after-fee returns with my own. Part of the reason for this is just because the portfolio size is large enough that I'm a little nervous to do it myself and this gives me a simpler transition.*


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## GoldStone (Mar 6, 2011)

KevinWaterloo said:


> I have since moved 1/2 of my portfolio to a new financial advisor and I'm managing the other 1/2 myself. The advisor fee is 1.75% but it would be 1.25% if he was managing my full portfolio. After 2-3 years (or sooner) my plan is to consolidate my portfolio back to the winner


*1.* The outcome of your little competition is not statistically valid. 2-3 year performance is noise. The winner (loser) may win (lose) thanks to *one* random decision. Such as:

- one lucky/unlucky stock pick
- the split between large and small caps
- the split between Canada and US, plus the currency move
- allocation to a particular sector that suddenly gets hot
etc
etc
etc

To come to a statistically valid conclusion, you need a much longer track record. At the very least, it has to span a full business cycle from recession to boom to recession.


*2.* The proper comparison is not between you and your advisor. To justify his fee, the advisor has to beat a low-cost passive benchmark. If your advisor beats you, but both of you lose to a couch potato strategy, does it mean that 1.75% fee is somehow justified? Of course not.


*3.* We don't need to run any comparisons to say upfront that 1.75% fee is way too high. A portfolio that charges 1.75% fee has a slim chance of beating a low-cost passive strategy in the long run (20-30 years).


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## KevinWaterloo (Mar 5, 2015)

GoldStone said:


> *1.* The outcome of your little competition is not statistically valid. 2-3 year performance is noise. The winner (loser) may win (lose) thanks to *one* random decision. Such as:
> 
> - one lucky/unlucky stock pick
> - the split between large and small caps
> ...


I get your point. But I never stated that my conclusion would be statistically valid. You haven't given any data to prove that a full business cycle would be statistically valid either. Arguably it could take multiple business cycles really be statistically valid and I don't have 20 years to wait.

I am not talking about a portfolio of 5 stocks but rather one that has >40 stocks, several mutual funds and EFS etc. that is reasonably well diversified across countries, sectors, and companies. One stock, one sector etc. shouldn't have a huge impact, and even if it does that is usually pretty noticeable and can be considered in the comparison. I have been comparing the couch potato strategy against my portfolio managed by my previous advisor against the TSX closely for >10 years. It doesn't take that long to see why one is outperforming the other. 

But 2 years is better than nothing. 



GoldStone said:


> *2.* The proper comparison is not between you and your advisor. To justify his fee, the advisor has to beat a low-cost passive benchmark. If your advisor beats you, but both of you lose to a couch potato strategy, does it mean that 1.75% fee is somehow justified? Of course not.
> 
> *3.* We don't need to run any comparisons to say upfront that 1.75% fee is way too high. A portfolio that charges 1.75% fee has a slim chance of beating a low-cost passive strategy in the long run (20-30 years).


That is debatable. While there is data to show the returns from a low-cost passive strategy, there isn't a lot of public data from professionally managed portfolios over a long time span. Arguing the couch potato strategy is better than all other strategies over the long term is both naive and pretty pointless. The best arguments for the couch potato strategy are that it is reasonably good, reasonably low risk, and relatively easy to do.
For example Berkshire Hathaway doesn't follow the couch potato strategy.

I am using a couch potato strategy myself. If my advisor can beat it continuously after fees for a long period of time than yes the 1.75% fee would be justified. Not having a long period of time to make a valid comparison I think that a few years is better than nothing.


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## Plugging Along (Jan 3, 2011)

KevinWaterloo said:


> While I agree with that for an advisor that is simply recommending mutual funds (and ETFs) I don't think that is necessarily true for advisor that is investing 100% in stocks. At that point they are essentially acting similar to a mutual fund manager which requires substantially more work than simply the hour or two spent with the client. I would obviously prefer a mixed fee where a portion of the advisor's fee would come just out of the investment gains, but I have never seen that in practice.
> 
> Also *if[/ the advisor is able to match or beat the returns you could get yourself after fees, than it would still be a good deal. Clearly a large portion of financial advisors likely wouldn't be able to do this, but I still believe that some may exist. They might just be unicorns though....
> I have used a financial advisor for more than 10 years for a portfolio that was almost 100% in stocks. Until the relatively recent availability of ETFs there weren't many other options especially if you didn't like mutual funds (and I didn't).
> ...


*


Thank you. This is more what I looking for. I was considering following a similar strategy. I have been negotiating with my current advisor and we are looking at fees around 1.25ish. I am trying to get him down to 1%. 

I have been investing our TFSA, and non registered account myself. Sad to say my advisor has drastically out performed me, hence why I haved stayed with him.

He is changing his fee structure, so I thought it would be a good opportunity to test out some things. I would like him to build me a stock portfolio with the accounts he current has of ours. At the same time, I will be investing some other money in a coach potatoe. I will compare the returns over a couple of years and see where that leads me. Based on my personal past performance, I have concluded my own investing is not a good idea, but now with the coach potatoe and more knowledge hopefully I will change this. So far, my 2% has been worth it in MY situation.*


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## Plugging Along (Jan 3, 2011)

GoldStone said:


> *1.* The outcome of your little competition is not statistically valid. 2-3 year performance is noise. The winner (loser) may win (lose) thanks to *one* random decision. Such as:
> 
> - one lucky/unlucky stock pick
> - the split between large and small caps
> ...



All great points. 
1. In my case, I don't need to be statistically valid. I just need the advisor to beat MY returns, which he has over the the last 10 years. But seriously over the last 5.

2. Just out of curiosity. I am planning to run three portfolios. One with my advisor, my self directed one, and will try a coach potatoe. They will have different amounts starting, but I think large enough (each a minor 6 figures). On the date I start I was going to track the opening value, and then track the percentage of change over the same time periods. Does this makes sense in terms of comparing apples to apples?


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## GoldStone (Mar 6, 2011)

KevinWaterloo said:


> You haven't given any data to prove that a full business cycle would be statistically valid either.


Where did I say that one business cycle would be statistically valid? I said: "At the very least, [the track record] has to span a full business cycle from recession to boom to recession."




KevinWaterloo said:


> Arguably it could take multiple business cycles really be statistically valid and I don't have 20 years to wait.


Oh, I agree. In fact, it may be impossible to reach a statistically valid conclusion about one person's alpha, even if you have a lifetime worth of data. The experiment is not repeatable.




KevinWaterloo said:


> But 2 years is better than nothing.


2 years can be worse than nothing. Anything can happen in the short run due to randomness. A bad investment process can result in a good outcome. A good process can lead to a bad outcome.




KevinWaterloo said:


> Arguing the couch potato strategy is better than all other strategies over the long term is both naive and pretty pointless.


Where did I say that? It seems to me that you are twisting my words. I said that you should benchmark your advisor against a low-fee passive strategy. My statement doesn't imply that a low-fee passive strategy is "better than all other strategies".




KevinWaterloo said:


> The best arguments for the couch potato strategy are that it is reasonably good, reasonably low risk, and relatively easy to do.


Bingo! That's precisely the reason why it makes for a good benchmark.


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## GoldStone (Mar 6, 2011)

Plugging Along said:


> 2. Just out of curiosity. I am planning to run three portfolios. One with my advisor, my self directed one, and will try a coach potatoe. They will have different amounts starting, but I think large enough (each a minor 6 figures). On the date I start I was going to track the opening value, and then track the percentage of change over the same time periods. Does this makes sense in terms of comparing apples to apples?


It's only apples to apples if three portfolios use the same asset allocation. 

If asset allocation is not the same, it's apples to oranges to bananas. Especially in the short run.


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## cainvest (May 1, 2013)

Plugging Along said:


> One with my advisor, my self directed one, and will try a coach potatoe.


Couldn't you just back test the couch potato indexes vs the other ones using the same asset allocations?


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## james4beach (Nov 15, 2012)

slacker said:


> Your question is wrong.
> 
> There is nothing fair about giving a percentage of your networth every year to an advisor.


slacker nails it again. The percentage model is a rip-off.

Do you realize how easy it is to become "financial advisors"? Some of the stupidest kids from my high school class became financial advisors. They'll put on a good show, but I assure you that most of them don't add any value.


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## Plugging Along (Jan 3, 2011)

i do realize paying an advisor is sacriligious here, but for me I stand by that it is the strategy that is current best for ME for now. I understand myself really well. For me having an advisor go an do the work for me,when I call and say I want to invest X amount, please research these things, and come back with a recommendation works well for me. I tend to get more done. 

When I invest my own my money, I tend to either over analyze to the point where I never get to the point I am comfortable investing my kids money. Hence, part of my kids money has been sitting in a high interest account for years now. Whereas, the money I gave to my advisor, has been invested and doing twice as well over the same time frame than the money I have done myself. Even when I decide on something it takes me forever to get to it. This is one example. 

My other extreme, is I decide I just have to do it, so then I make some high level decisions and jump all in. Some get lucky some don't. I have found that my advisor has given me advice in the past even on the accounts that were not with him, and I do think it motivated me to make some good adjustments. I do pay for this piece of mind. 

My point is, if I have happy, and to worked for me so far, then why change. I seemed to hit an okay net worth doing what I have been doing. Of course we all want to do better, but I am not currently ready to cut the ties with my advisor yet. However, with the size of my portfolio, I know I can do better on negotiating the fees, which is where I am at now.

My goal has always been to be DIY for most of my portfolio but I am not quite ready to go there yet.


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## none (Jan 15, 2013)

^ I can understand that. The biggest threat to investors is 1) themselves; 2) fees. If you are your own greatest threat against your financial success then I think you're being smart about it. Paying a 2% (or whatever) yearly tax is far better than paying 0.2 % and losing an additional who knows how much from either paralysis or bad decision making. 

I can totally related to that because although I do stats for a living I have a REALLY hard time believing in the independence of independent events. For example, if you flip a coin 9 times and get a heads those 9 times, I feel like the 10th SHOULD be tails even though it's an independent event. Anyway it's dumb and that's why I say my gut is an idiot.

For me accepting the efficient market hypothesis as a reasonable approximation of the stock market made a huge difference. Now when I buy ETFs I don't look at the price - it's priced exactly what it should be priced. If it was going to go lower in the summer it would cost less, if it was going to go up soon it would cost more so it just is what it is. No worries. Therefore all I can control is how much money i put into my investment portfolio (which is the BIGGEST things) and my asset allocation (as little as three funds). Everything else is just noise and I do my best to ignore it.

That's also why I advocate to NOT track your potato portfolio because the correct answer when someone asks you how your couch potato is doing is: "probably 2-3% better on average than professionally managed or marking timing portfolios out there". That's about it.


Honestly, I'll always be in debt to the couchpotato master: Dan Bortolotti.

Also, I'm starting to think Garth Turner is a bit of a douche.


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## humble_pie (Jun 7, 2009)

personally i think a cool zero-fee portfolio might look something like this:

- 40% doctrine (well-chosen, with dividends)
- 40% altaRed (well-chosen, heavy on fixed income)
- 15% cash/Pluto (market timing, cash holding, swing trading)
- 5% GOB (option strategies)

as of today i might allocate a portion of cash/Pluto to a euro security, i'd probably pick FEZ-with-otm-covered-call since it combines significant yield with liquid option markets.


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## Plugging Along (Jan 3, 2011)

none said:


> ^ I can understand that. The biggest threat to investors is 1) themselves; 2) fees. If you are your own greatest threat against your financial success then I think you're being smart about it. Paying a 2% (or whatever) yearly tax is far better than paying 0.2 % and losing an additional who knows how much from either paralysis or bad decision making.
> 
> I can totally related to that because although I do stats for a living I have a REALLY hard time believing in the independence of independent events. For example, if you flip a coin 9 times and get a heads those 9 times, I feel like the 10th SHOULD be tails even though it's an independent event. Anyway it's dumb and that's why I say my gut is an idiot.
> 
> ...


I was trying not to admit it, but you did hit it on the head, I can be my worst enemy when it comes to investing. Ironically, I have a business/finance background. I am great at giving the advice that you are supposed to follow, and have been thanked for it, but for some reason, I feel the rules don't apply to me. My por ome is that my gut is usually right with ther things I life, but not so sure with my investing yet. Hence, I do silly things, exactly as you mentioned when I start to think. Therefore I pay someone to keep me following the advice I don't want to follow. 

I have been reading he coach potatoe, for a few years now, but just haven't pulled the plug. At one point I was going to contact the firm directly and have them manage my portfolio. 

I don't read Garth much because I find, I start to read too much, and then don't make a decision, or say screw, and jump in. 



humble_pie said:


> personally i think a cool zero-fee portfolio might look something like this:
> 
> - 40% doctrine (well-chosen, with dividends)
> - 40% altaRed (well-chosen, heavy on fixed income)
> ...


LOL... See, I look at these poster, and yourself, and think wow what interesting and diverse strategies, then I want to start analyzing...... Then nothing...

Perhaps I would pay... Based on 1% of my portfolio


.3% to doctrine
.3% to altared
.05 to Pluto
0.05 to gibor
.3 to humble for overall coordination of strategy

That might be a good deal.


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## humble_pie (Jun 7, 2009)

i don't see having a proven advisor as any kind of sacrilege. Many investors benefit from such arrangements. 

plugging isn't this the same advisor you've been mentioning for years? the one who attends to other members of your extended family as well?

it's unlikely that this advisor is providing poor service. Plugging says his returns have traditionally outstripped her own. Another mark of quality is that plugging tells us he comments helpfully when asked about securities she holds in other accounts, accounts that he does not manage. Now that's class.

i think there is definitely a role for such quality advisors, for some clients. Part of their service consists of offering trustworthiness, stability, reliability, continuity, attentiveness to the different stages of a family's financial growth & development - all delivered with effective communication. The security & peace of mind that many clients gain from such a relationship are non-quantifiable.

a big problem is that there are few advisors who can wear these shoes. Finding one becomes a search for the proverbial needle in the haystack. Many advisors act only as salesmen, as james4 & so many in this forum have always pointed out.

avoiding the self-bettering salesmen is a job in itself. But here & there, some clients do get lucky. Plugging's good fortune may be the family connection (plugging if this is the case, it could also be the best avenue to lowering the fees to around 1%, imho.)

as long as we can see an advisor account thriving (check in this case), an advisor acting responsibly (check in this case), & a client benefiting from peace of mind (check in this case) then channelling the trustworthy advisor looks good to me.


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## Plugging Along (Jan 3, 2011)

First thanks to those that provided some good advise and considerations. I thought I would provide an update to close this out. We met the advisor and negotiated a rate of one percent. However, that was just on the overall portfolio amount. We asked what value were we going to get for that amount, and we had to push a little, but wasreasonably satisfied with the answer. Enough to keep him for another year under some additional conditions we asked for We then received the contract to sign, and there were additional fees, and it locks us in much more than I would like. Also, the additional conditions we made have not been honoured, though they were really minor.

So in short, I am meeting with TD Waterhouse, and may be moving everything into self directed very shortly. The reason we stayed with this firm so Lon was our advisor has been great in the years, however, he has been retiring, and nowhis partner was taking over. We wanted to give the partner a chance, but I am no longer satisfied. 

I have to admit, I am a little nervous moving everything over and doing it myself. I hate paper work, and a, quite lousy at it, and it just seems like a large amount to move at one time. Stay tuned, I will start a new new post on that.


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## james4beach (Nov 15, 2012)

Something that would be fun to do would be to walk in to meet with the advisor. Put up a chart showing your account versus the representative ETF portfolio (eg XIU, XBB, SPY). Point to your underperformance over the last 15 years and ask, "let's not worry about your fee yet... First question is why I shouldn't fire you?"

Then again, anyone who has that data probably fired the advisor long ago.


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## larry81 (Nov 22, 2010)

here is some guidelines:

1.00% for account less than 100k (think tangerine)
0.50% for 100k-500k (think td-eseries)
0.25% for 500k+ (think homebrew etf's portfolio)

My portfolio is at 0.14% and i can literally feel the essence of life being sucked from me every hour of the day.


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## james4beach (Nov 15, 2012)

I may have been a bit harsh there. If they provide good service, the performance is comparable to benchmarks, and aren't just salespeople then they might be worth it.

My family has not encountered such a unicorn. My parents are happy with their advisor, but the performance is awful compared to benchmarks.


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## larry81 (Nov 22, 2010)

Plugging Along said:


> I have to admit, I am a little nervous moving everything over and doing it myself. I hate paper work, and a, quite lousy at it, and it just seems like a large amount to move at one time. Stay tuned, I will start a new new post on that.


You could also explore the robot advisor's offerings in the canadian market:

http://nestwealth.com
https://www.wealthbar.com
https://www.wealthsimple.com


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## GoldStone (Mar 6, 2011)

larry81 said:


> My portfolio is at 0.14% and i can literally feel the essence of life being sucked from me every hour of the day.


Umm, I have no idea what this means. Can you explain?


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## larry81 (Nov 22, 2010)

GoldStone said:


> Umm, I have no idea what this means. Can you explain?


management fee's are always too high (for my taste)


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## KevinWaterloo (Mar 5, 2015)

james4beach said:


> I may have been a bit harsh there. If they provide good service, the performance is comparable to benchmarks, and aren't just salespeople then they might be worth it.
> 
> My family has not encountered such a unicorn. My parents are happy with their advisor, but the performance is awful compared to benchmarks.


On a related note, I would personally love to see a statistically valid survey of people's experience using financial advisors. 

It is highly likely that the experiences on this forum are not the average. Most people on this forum are likely more engaged in investing than the vast majority of the public. And it is also highly likely that people in this forum have dealt with lower-performing advisors than the average. People with extremely good financial advisors are probably less likely to consult this forum.

My guess is that the deviation (ie spread) of advisor's managed portfolios is extremely high. The majority of managed portfolios are likely similar or slightly worse than a couch-potato strategy (before fees) in the long term. I'm reasonably sure that there is a significant (ie > 20%) of managed portfolios that have much worse performance than a couch-potato strategy. But there is almost certainly a percentage of managed portfolios that have returns significantly higher than a couch-potato strategy in the long term even after fees. Is that percentage 0.1%, 1%, 10%, 20%? Are they unicorns or real? So far the only evidence I have seen is mostly anecdotal. I know I am slightly optimistic here but my WAG is ~10%. Which would mean that ~90% of people would be better off following a couch potato strategy if portfolio returns were the only consideration (which isn't the case). But I'd love to see an unbiased survey


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## OnlyMyOpinion (Sep 1, 2013)

Very good point. My WAG is that most Canadians who are not DIY are invested in mutual funds through the advise of their local bank rep, perhaps followed by IG? Then company-sponsored DC pensions would be the other large reservoir of individually invested MF's. 
So typical bank and large mutual fund performance might be a proxy for how they've done, but of course we don't know which of those funds their portfolio contains (1 balanced, a balanced plus sector funds? etc.).


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## Plugging Along (Jan 3, 2011)

I thought I would resurrect this thread, as I have been going through some reviews with my (newish) advisor as their were offering a more managed approach. So lets start with what has occurred since I started this thread.

I move from the advisor in the original thread. After researching through TD Waterhouse, and a few other options. I went with an advisor based on a close family recommendation. I am fortunate that based on my family history and their connections, generally they have a pretty strong trusted network. So the advisor agreed to take me on, as he is not taking on many new clients (he is older and a family friend).

So we moved over the RRSP, RIF, RESP, and business account. I kept the in trust accounts, TFSA, and non registered. The intent always this would be my last advisor, before I move to DIY eventually, he knows that too. 

After 6 years, here's what I have so far learned:
1. I am still my worst enemy. Overall, the accounts I manage myself, have negative gains. I the ones that I did get a little advice from the advisor or here AND FOLLOWED (my kids in trust account), they are gaining a bit. So this tells me I am still not disciplined enough to completely. My costs in terms of my fees were about .25% a year. However, my gains, were almost loses. I won't even post, as it's barely above a HISA rate. 
2. My accounts through my advisor, he recommends a combination of stocks and MF. The amount I have paid is about 0.08% plus MERs of .26% on my over all portfolio, so I pay about .36% for my advisor/firm. My gains have averaged about 9.5% each year. 

I know I am pretty fortunate because he reduces my fees to the min he can. When they sent me the statements, I think he was really surprised how little I pay, and hope that doesn't change. Though, I may have opened myself up as I know I am one of the smaller accounts he deals with. Hopefully, likes me enough to keep us on.

I think in my case, I have proven that I have cannot do better in terms of fees or gains at this time. My goal is to still be able to take everything on when he retires.


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## Thal81 (Sep 5, 2017)

That's interesting and surely a valid justification for hiring a financial advisor. If you don't mind, could you elaborate on why you did poorly on the DIY portion? Choosing bad stocks, timing the market, etc? Just curious...


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## Plugging Along (Jan 3, 2011)

Thal81 said:


> That's interesting and surely a valid justification for hiring a financial advisor. If you don't mind, could you elaborate on why you did poorly on the DIY portion? Choosing bad stocks, timing the market, etc? Just curious...


Many reasons... which already knew about myself

poor pickings (I should know better than to randomly follow tips (but I still do)
Following my gut, similar to above, I normally great at following my gut in life, but investing, I don't do the research I always should, hence poor picks, even though know better.
When I do research and have a good rational, I am slow at it because I am so busy (hence why I should have an advisor) and by the time I do act, sometimes the rational for my buy is no longer valide
Worst timing in the history of ever. I put a very large amount just before everything crashed several times
Not a very well thought out plan. The areas where I am doing well in the DIY, I ran the plan through with my advisor (he is pretty open), and then know what my strategies are. The other picks were not very well thought out - so poor strategy.

My challenge is I understand enough that when my advisor who does all the research and then makes a recommendation for me, I know what I want and what decisions I want him to follow. This does not translate in making my own recommendation which requires time. Though, I understand this stuff, I honestly don't enough of an interest to do my own research, because there is just too much for me to want to analyse. Whereas, my advisor has already filtered out all the bad ideas.

That's why I decided to post a follow up, that sometimes having a great advisor that you trust is worth the fees. In my particular case, even if I had to pay 3% fees, it still would have been worth it over all.


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## Money172375 (Jun 29, 2018)

scientist said:


> If you want to go with the most hassle free MFs, just go with Tangerine. If you are in agreement with many on this forum that actively managed funds are not worth it, then anything with a higher MER than Tangerine is going to waste.
> As long as you balance things, TD e-Series is pretty much the same as Tangerine. The increase in MER from e-Series to Tangerine can be considered in your mind to be paying the guy who keeps things balanced in 1 MF portfolio so you don't have to, and can just worry about adding to and withdrawing from the MF investment.
> 
> Summary: If you believe actively managed funds aren't worth it, don't go for anything higher than what Tangerine's charging (1.07%)
> ...


I’d be surprised if they dont have sales goals and aren’t incentivized to sell MF. Bank branch staff are also on salary but have bonuses tied to volume growth and higher-profit products.


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## OptsyEagle (Nov 29, 2009)

Plugging Along said:


> Many reasons... which already knew about myself
> 
> poor pickings (I should know better than to randomly follow tips (but I still do)
> Following my gut, similar to above, I normally great at following my gut in life, but investing, I don't do the research I always should, hence poor picks, even though know better.
> ...


I have reminded people many times that a financial advisor's job is not to outperform the market. They have no better ability to do that then any 1/2 of the participants that try and fail every year. No, an advisors job is simply to outperform you.


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## Plugging Along (Jan 3, 2011)

OptsyEagle said:


> I have reminded people many times that a financial advisor's job is not to outperform the market. They have no better ability to do that then any 1/2 of the participants that try and fail every year. No, an advisors job is simply to outperform you.


This is very insightful. my advisor is doing his job, plus I am quite surprised at the low fees they are getting paid from my account. Doing a couch potatoe would be about the same for fees, and slightly lower return, assuming I don’t go off track. So n my case, well worth it.


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## Fain (Oct 11, 2009)

Don't go to any bank branch advisors

Usually high quality Advisors who outperform consistently, have alot higher minimum account sizes like 100k or 250k.


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## dubmac (Jan 9, 2011)

My experience with a broker was that they billed 1.5% on a pf of about 400K. (She had a deal with a mutual fund company whereby she would get a commission or trailing fee of around 0.5% on any MF's that were included in the pf)
She made money, but we didn't see much by the time she took her fee
We had no idea how the % return was calculated. Taxes were a nightmare.

In my second experience with an advisor, the advisor had my 91-year-old mum's portfolio almost 100% in equities (split-shares, preferreds, and common shares). The pf was worth around 1 mill. His fee was 1%. When my mum's cognitive skills declined - we took over the management of her affairs. I complained about the excessive yield on the LBS split shares, and some other stupid purchases (IPL) - he did nothing. He was lazy. I asked Globe and Mail (Dianne Malley's) Financial Facelift to undertake an assessment of the pf - they found out that he had been fined by the courts in the past. They also provided some exceptional analysis. We fired the broker.

The financial advising industry is a win-lose proposition. Advisors take your money whether they make money for their client and when they do not make money. Advisors/Brokers always win. I will never use one again. There are many options out there.

I've been happy with MAWER. Their fee structures are reasonable - MER's around 0.9 to 1%. When you compare MAW104 to VBAL or XBAL or even HBAL - the returns are very similar.


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## MrMatt (Dec 21, 2011)

Fain said:


> Don't go to any bank branch advisors
> 
> Usually high quality Advisors who outperform consistently, have alot higher minimum account sizes like 100k or 250k.


I'm not aware of any Advisors who consistently outperform net of fees.
The point of an advisor isn't to "outperform", it's to have a portfolio that fits your needs.


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## Fain (Oct 11, 2009)

MrMatt said:


> I'm not aware of any Advisors who consistently outperform net of fees.
> The point of an advisor isn't to "outperform", it's to have a portfolio that fits your needs.


"I'm not aware" seems to be the common reply you post in each thread. . . I'm not talking a bank advisor who buys mutual funds for their client. 

There is alot of money managers/advisors who outperform the market. . . Those who want to match the market can just buy SPY. couch potato portfolios arent hard.


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## MrMatt (Dec 21, 2011)

Fain said:


> "I'm not aware" seems to be the common reply you post in each thread. . . I'm not talking a bank advisor who buys mutual funds for their client.
> 
> There is alot of money managers/advisors who outperform the market. . . Those who want to match the market can just buy SPY. couch potato portfolios arent hard.


Yes, when I say "I'm not aware" it means that I have not seen evidence to back up your claim. It is my polite way to say that I think you are making a statement that is not true, or likely not true, or at least doesn't have robust data behind it.
You could always support it with evidence. How about I'll support my claim with data.

I actually believe the *VAST* majority underperform the market. More than 86% of funds underperform the index. For subsectors some fair better and some much worse. 









Most investment pros can't beat the stock market, so why do everyday investors think they can win?


Over a 15-year period, nearly 90% of actively managed investment funds failed to beat the market. Passive investing is a better option for most of us.




www.businessinsider.com




.

Look at the graphs here.




__





SPIVA: 2021 Year-End Active vs. Passive Scorecard


The latest research from SPIVA in S&P's long-running study takes a fresh look at how active managers stack up against their respective benchmarks.




www.ifa.com





No advisor is likely to outperform the market. Even though some do, you probably didn't pick them.

That being said, an advisor can help tune the portfolio to your specific needs, which I actually think IS a value add, and may be worth the fees and lower return.


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## Fain (Oct 11, 2009)

dubmac said:


> My experience with a broker was that they billed 1.5% on a pf of about 400K. (She had a deal with a mutual fund company whereby she would get a commission or trailing fee of around 0.5% on any MF's that were included in the pf)
> She made money, but we didn't see much by the time she took her fee
> We had no idea how the % return was calculated. Taxes were a nightmare.
> 
> ...


What were the returns vs benchmark? how did you find these advisors? What do you ask before you hire them? 

Also, advisors who can outperform the market are handicapped by their clients as well due to suitability rules. Returns they would make for myself at 32 years old are different than a 90 year old pensioner or someone that can't take any risk in the life due to limited funds. 

Most Money Managers I've seen outperform their client portfolios in their own self-directed portfolios. One money manager I've selected has a TFSA account over 1M and RRSP account over 20M in their personal name. Their fund doesn't do as good but still beats the market.


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## MrMatt (Dec 21, 2011)

Fain said:


> What were the returns vs benchmark? how did you find these advisors? What do you ask before you hire them?
> 
> Also, advisors who can outperform the market are handicapped by their clients as well due to suitability rules. Returns they would make for myself at 32 years old are different than a 90 year old pensioner or someone that can't take any risk in the life due to limited funds.
> 
> Most Money Managers I've seen outperform their client portfolios in their own self-directed portfolios. One money manager I've selected has a TFSA account over 1M and RRSP account over 20M in their personal name. Their fund doesn't do as good but still beats the market.


Your observations don't match the reported reality. I think there is likely sample bias in your observation.

It's easy to find people with 1M TFSAs, they brag about it. The people that went to zero are a bit less talkative about it.
Some people get lucky, and >10x returns for a full portfolio in a decade is luck


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## Fain (Oct 11, 2009)

MrMatt said:


> Yes, when I say "I'm not aware" it means that I have not seen evidence to back up your claim. It is my polite way to say that I think you are making a statement that is not true, or likely not true, or at least doesn't have robust data behind it.
> You could always support it with evidence. How about I'll support my claim with data.
> 
> I actually believe the *VAST* majority underperform the market. More than 86% of funds underperform the index. For subsectors some fair better and some much worse.
> ...





MrMatt said:


> Your observations don't match the reported reality. I think there is likely sample bias in your observation.
> 
> It's easy to find people with 1M TFSAs, they brag about it. The people that went to zero are a bit less talkative about it.
> Some people get lucky, and >10x returns for a full portfolio in a decade is luck


honestly your a broken record dude. . . Give it a rest.

Alot of managers have their portfolio returns public for the funds.

If you take the average success rate of Athletes that make it. Most don't but a lot of them consistently do year after year. 

There's a ton of them out there, Donville Kent, MMfund, Polar Asset management, Mawer Global Small Cap Fund and there's dozens of individuals who I won't name but outperform significantly. You can either look around or just do a couch potato strategy and buy SPY Nothing wrong with that. 

You pointing out Mutual Fund advisors selling 1-2% MER mutual funds, and managing funds for pensioners then yeah sure they won't outperform and don't expect them too.


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## MrMatt (Dec 21, 2011)

Fain said:


> You pointing out Mutual Fund advisors selling 1-2% MER mutual funds, and managing funds for pensioners then yeah sure they won't outperform and don't expect them too.


Ahh yes, the common refrain, assign a position I don't hold to "discredit me".

Mawer is a great example, I think they're an excellent money manager, and only about half their funds that exist and are open today beat their respective index. Definitely excellent performance, but they're the exception, and even then, only half the time.

There's a fun game you can play, pick a fund or set of funds, and watch to see if it will beat the index. Odds are you'll guess wrong.


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## Money172375 (Jun 29, 2018)

An advisor’s most important role is stopping a client from redeeming when markets tank. Unfortunately, most clients take this advice as meaning the advisor is in it for themselves.
The advisor is there to promote: early investing, regular contributions, broad diversification and non-emotional decision guidance.


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## Fain (Oct 11, 2009)

MrMatt said:


> Ahh yes, the common refrain, assign a position I don't hold to "discredit me".
> 
> Mawer is a great example, I think they're an excellent money manager, and only about half their funds that exist and are open today beat their respective index. Definitely excellent performance, but they're the exception, and even then, only half the time.
> 
> There's a fun game you can play, pick a fund or set of funds, and watch to see if it will beat the index. Odds are you'll guess wrong.


I'm not talking about an entire asset management company. I'm talking about the fund individually. Your lumping in unrelated money managers to somehow take away from the fact that the fund has consistently outperformed. You realize they have different Money managers for different funds do you? 

If you're taking about 1 Spartan Fund that beats the market, why would you include other fund managers when your talking about an Individuals performance.


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## james4beach (Nov 15, 2012)

Money172375 said:


> An advisor’s most important role is stopping a client from redeeming when markets tank. Unfortunately, most clients take this advice as meaning the advisor is in it for themselves.
> The advisor is there to promote: early investing, regular contributions, broad diversification and non-emotional decision guidance.


This is only true if you have a good advisor. But many advisors have very different motives.

I originally had some investments at Investors Group quite a while ago. After I learned about discount brokerages, I wanted to get my money out. I knew that the advisor would (justifiably) try to prevent me from withdrawing during a depressed market.

So I waited for the market to get near all time highs. Then I told them I'm taking all my money out; this way I know they can not justify "protecting me from myself".

Investors Group still, initially, refused to give me my money and the advisor pushed back pretty hard. Clearly, it wasn't to protect me from selling low. It was to keep their grubby fingers on my assets and charge me high fees.


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## londoncalling (Sep 17, 2011)

Money172375 said:


> An advisor’s most important role is stopping a client from redeeming when markets tank. Unfortunately, most clients take this advice as meaning the advisor is in it for themselves.
> The advisor is there to promote: early investing, regular contributions, broad diversification and non-emotional decision guidance.


Not selling when markets tank is an important function and likely the biggest mistake investors make. I have never sold in a panic but what I have experienced is holding a losing position with the hope it will return for way too long. Perhaps I was conditioned to do so based on the churn and burn experience I had with financial advisors that wanted to cut losing positions so they would not show on my statement. Too bad they couldn't hide the longer term performance numbers. Unfortunately, I needed the longer term return numbers to realize I could achieve market returns on my own at a lower cost. 

There are great advisors out there, but my understanding is that the bulk of them are fee based as opposed to money managers. Not too many want to pay a few thousand to meet with these individuals, but are more than happy to pay a couple percent of total portfolio (which is usually more than the fee based cost) for years of subpar returns based on self serving advice.

I do see an advisor at my financial institution twice a year at no additional charge. She does not push products on me and focuses more on planning goals then product placement. Our first couple visits that was not the case but I was clear very early on that I wasn't interested in their products. She quickly learned if they wanted to keep my business they would need to stop. My visits now focus on monitoring progress on our financial plan (short, medium and long term goals). Sadly, that advisor moved on about 6 months ago and her replacement will need a little fine tuning. If it doesn't work out, I will seek out another location for my business as I did a decade ago. If not I am pretty sure I can figure it out on my own until I am about 5 years from retirement. 

The reason I believe this to be true is not out of arrogance but because each meeting with the advisor we have been ahead of targets for the past number of years. The bulk of this outperformance is due to having a plan that emphasizes increasing earning potential and maximizing savings beyond the target rates. I am more likely to control these factors than I am the market. For the first time since I started DIY, I lagged the benchmark (no shopify, gamehost, etc.) this year. I am ok with that because I don't need to shoot out the lights. I just need to follow my IPS and achieve the short, medium and long term goals.


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## dubmac (Jan 9, 2011)

well written London. I work with an advisor at MD Management who does not charge a fee, & does not push their products, (...But they do make money on some of the products that I choose to purchase). The relationship is similar to a coaching relationship - he provides suggestions and analysis on economic conditions, what assets will likely do well, and not do well, etc. He helps us by emphasizing the investment plan, and provides encouragement, suggestions and ideas on how to get good, sustainable results - not to "shoot the lights out" as you put it.


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## Plugging Along (Jan 3, 2011)

Out of the three advisors I had, 2 were excellent, and the middle was mediocre (but I didn't pick him, he took over from my first guy). Fortunately, I think I am better at picking advisors and people than I am investments. 

I am pretty lucky, my current advisor could have retired a while ago, and just likes doing this. He generally manages portfolios much larger than mine. I am one of his smallest portfolios (it's still 7 figures), and he always gives me the lowest fees he can, and I know the recommendations he makes are in my best interests. Could be that he is a long time friend of the family. He is just a pretty stand up guy. 

As others have said, I am not expecting him to beat the market, I just want him to beat what I would do on my own, and so far he has been doing it. Plus, my spouse has no interest in this, so our advisor is also there to help him manage decisions too.


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## MyCatMittens (Oct 20, 2015)

Money172375 said:


> The advisor is there to promote: early investing, regular contributions, broad diversification and non-emotional decision guidance.


My personal experience was somewhat similar to J4B where I had investments with a IG competitor. The advisor that I had was very easy to work with, and it forced me to make regular contributions and pay more attention to my money ("I have a good career, make decent money, where the heck did it go?"). Thankfully (mostly in part to the wonderful contributors to this site) I continued to learn, and only stayed with the advisor for a few years. While obviously the advisor, rightfully so, was charging fees, it was really the catalyst for me to start. I have no regrets.


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## kcowan (Jul 1, 2010)

I have an advisor for a small portion of our portfolio and I justify the fee because he will take over for spouse when I am gone. I like him and spouse really likes him. Plus he has started to believe that our 85/15 mix makes sense because most of it is play money now. We are playing for heirs and charities now.

But I agree with using advisors as sounding boards. They have access to a lot of expertise in their firms.

I am perfectly OK with seeing the success of cyber currencies and speculative holdings. Not my game.


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## james4beach (Nov 15, 2012)

dubmac said:


> The relationship is similar to a coaching relationship - he provides suggestions and analysis on economic conditions, what assets will likely do well, and not do well, etc.


Just beware, some of that is theatrical BS. Trying to read economic conditions is futile, and nobody can really say which assets will do well in the future. Same story with those investment newsletters that all the mutual fund companies send out.

This kind of thing is meant to create the perception that these people are experts who "know what they are talking about". They are attempting to show you that they are a sharp bunch of people at a sharp firm. But make no mistake, this isn't anything like medicine, or any other science. *None* of these people can predict the future, and telling you which assets are appropriate for the coming economic conditions is completely useless.

Things like this newsletter (take a look to see what I mean), which your advisor will do as well, have completely bogus predictions and forecasts with very poor accuracy. For example, pages 7-9. It's _complete_ BS, and your own guess is probably just as good as their guess.

Other aspects of coaching are fine though, and helping maintain discipline and focus on a plan is great.


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## prisoner24601 (May 27, 2018)

For me, the % portfolio structure is a rip-off. When I started to do retirement income planning it was a simple decision to part ways with the advisor. Say I have a $1M portfolio and will draw 4% based on assumptions of market returns for my asset mix. But wait, my advisor takes 1% of that every year. That's 25% of my draw! 10K for him, 30K for me with no risk to the advisor if he fails to perform. Hey and if I need to reduce my draw in a tough year using VPW or the like guess what I still have to pay the advisor the full rate. No thanks - a fixed fee, that is published and competitive is the only way I would engage an advisor.


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## latebuyer (Nov 15, 2015)

Some of the best advice i read is from Carl aRichards who says what is important is that you reach your financial goals, not the mer of your funds. The other good advice i read is from someone on the financial wisdom forum who says you should do what helps you sleep well at night. Theres no doubt that a lot of people with financial advisors are rich. Does that necessarily mean they should throw it away on fees? I would say its their choice. I would also say many can reach their financial goals and maybe sleep well at night with their advisor even though they do charge too much.

Oops I believe the poster may have said said sleep better at night, i can’t be sure.

One benefit i haven’t seen mentioned is if you’re a busy person maybe you want an advisor to handle your affairs so you don’t have to think about it.. Plugging along gives a lot of good reasons. Note i don’t have an advisor as i’m single with an average income and need to eke out every penny with low cost etfs.


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