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Need advice helping parent move funds from Financial Advisor (American Funds)

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  • Avatar SteffanW 
    Participant
    Status: Advanced Practice Provider
    Posts: 88
    Joined: 01/24/2019
    it’s not quite that black and white

    Click to expand…

    I appreciate what you’re saying. And you’re right, I am biased as the one who will inherit. That said, I would give the same advice to just about anyone so my bias would seem only to affect how much I care, not how to invest. That $1MM in fees I mentioned above sure feels black and white. Either you pay it or you don’t. Being that there is no reasonable expectation a financial advisor will provide any stock/bond portfolio benefit beyond what can be expected in a broadly diversified passive index fund with low ER and the higher ERs my mother currently incurs is a predictor or poorer performance compared to lower ER Passive index funds, I fail to see that it “ain’t broke.” The studies are so clear on this. So why is this compared to religion? I always find it odd when people compare science to religion.

    #244986 Reply
    Liked by Yowza
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2806
    Joined: 01/03/2017

    The studies are so clear on this. So why is this compared to religion? I always find it odd when people compare science to religion.

    Click to expand…

    There is far more emotions in finance than you’re letting on or realize. Humans are emotional creatures so discounting or ignoring those emotions will prove detrimental.

    I know you stated before that they asked you for your advice, however, that does not mean they have to (or want to) follow it. It isn’t your money so I would still continue to tread carefully.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #244987 Reply
    Liked by SteffanW
    Avatar SteffanW 
    Participant
    Status: Advanced Practice Provider
    Posts: 88
    Joined: 01/24/2019

    OK, I understand what you are saying. It is rude for me to point out the time in this scenario did same way as it is rude to point out the science to someone who has extreme religious views. That is a hard pill to swallow when finances are involved, but I can relate to what you are saying.

    #244991 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3030
    Joined: 09/18/2018

    “The older generation is blind to the facts.”

    The facts are, your mother has chosen an FA that let’s her sleep at night.
    She is 75 with $4.5 mm with an AA that seems to not be a problem. ER’s at .73 and AUM at .5%. Please note, she probably understands the graphs with a nice explanation that she has made a good hunk of change so far this year. The only complaint is .73 ER is too high and the FA is charging her an AUM.

    What did she think about your presentation? It seems she is actually being treated extremely fairly. Do you have any problem with her AA or portfolio? (other than the total of 1.23% ) that gives her trusted advice and she can ask any question and get a gentle probing of her real motive and concern and most likely a sincere fiduciary answer?

    At 75, I hope you actually are proud of her standing up for herself. She can afford the relatively small fees unless you want her to start feeling stressed and nervous. Her choice of words, you are missing. It’s not that you aren’t a FA professional. She simply trusted the current situation and feels she wants to continue. A mother’s way of not hurting your feelings.
    Looks like she will be fine. The person that will end up with less will most likely be the beneficiary. No offense, it’s her choice. Feel free to have her discuss your suggested portfolio with the FA. Best of both worlds. Low ER’s and she might decide not to pay the AUM.
    Nothing wrong with helpful suggestions.

    #244996 Reply
    Liked by rdo

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