Hello, again, everyone. I did have that conversation with the Merrill Lynch guy. He was both charming and smart. The conversation was animated, we were connecting very well. And he did not try to sell me anything. It turns out that there is a way --- if I choose to do it --- whereby one of his underlings could handle my portfolio under his guidance. But the catch is that I would have to turn my stuff over to them rather completely. They would want to take the freedom and responsibility to choose the mutual funds in which to invest my money. (The standard minimum threshold is $250,000, but I'll never get there.)
He was wonderful, really. He listened, and he wanted to know about some basic stuff. Even though he's doing this at no charge for me--- because my friend is a client of his, and recommended him to me!
Before I said goodbye, I asked, and he told me a 6% return would be realistic. That seems weak, but at least--- I told myself--- he's being realistic.
He showed me a list of funds they typically use. I noticed a great many are run by insurance companies. I've been warned about that. I do know (just) enough to make sure I look for NO-LOAD funds.
I'm enjoying all the different items that get posted here in Mutual Fund Observer. So much to learn about!
Comments
You noted: "He showed me a list of funds they typically use. I noticed a great many are run by insurance companies. I've been warned about that."
This then means that you only saw a list of funds, but don't have the list of funds?
What indicated that many of the funds on the list were vendored by insurance companies?
Was he attempting to sell you some type of insurance product using mutual funds?
Back to work for me.
Regards,
Catch
Doing the math ... and, expected returns.
On a well diversified portfolio a six percent return going forward is indeed a posibility by my thinking. Taking my own allocation and applying it on a $100,000.00 hypothetical amount which would equal $20,000 in cash at a zero return and then $25,000 to income at a return of 4% would be $1,000 in gains and then putting the rest $55,000 in stocks with an anticipated return of 8% results in gains for stocks in the amount of $4,400.00. Add the gains and I get an expected return of $5,400.00 or 5.4%. With this, expectations going forward based upon current elevated market valuations puts anticipated return expectation somewhat on the limited side. I am thinking the easy money has already been made over the next couple of years. No doubt stocks have had a good run ... but, things just don't go upward forever.
I assure you Merrill Lynch will cost just as much to do business with them as some of the other major brokerage houses with neighborhood offices. And, Merrill Lynch is not without its problems either.
Since you have heard from Merrill Lynch why not hear form the "bad guys" Edward Jones, Scottrade and Raymond James. All these have neighborhood offices. Then you have four choices of brokers that you can get in front of and do business face-to-face with the one of your choosing. Then there are some of the online brokers that you might explore also. Their cost will most likely be less. Scottrade, I beleive, has a mutual fund NTF platform. I have provided a link. They perhaps can provide the best of both worlds, in office broker advise when needed; and, internet access to online investing. Hey, why not take the tour?
https://www.scottrade.com
I think Catch 22 was on to something ... you might have been told about an insurance product with a six percent "guranteed" investment return feature. If so, my thinking, is you'll pay for a rider to get that. Many insurance products use mutual funds as investment vehicles.
Knock on some doors, talk to some people ... and, then get back with us and let us know what you have discovered. Thus far you have told us little about your tolerance for risk, your goals, your capacity, time horozon, etc. All this should figure in. And, then you get to investment choices? You might look at David's list of Great Owl funds. They have been through some pretty close review by a former NASA engineer with a review process that I want go into. Thank you, Charles.
Hope this helps ...
Old_Skeet
Of course, there are many others. And it was just an initial meeting. What I intended to say above was that in round numbers, a diversified portfolio could expect to earn 6% going forward, according to this fellow. It had nothing to do at all with buying insurance. Our entire conversation was all about stock and bond funds. But as you know, many insurance companies operate mutual funds. I recognized BlackRock, Eaton Vance, Dreyfus. But there was also a John Hancock fund on the sample. And Prudential. Both insurance companies. I just happen to KNOW that.
We agreed that I actually do NOT want to abdicate from being able to choose the mutual funds where my money will go.
He was quite helpful, though. There was no hard-sell at all. At this point, the follow-up conversation he offered to have with me will be gratis. I am not, nor will become, a client. He's doing this as a favor for my long-time friend, who recommended me to this ML guy. First impressions are lasting. I was impressed.
One simple question. Would you marry someone after the first date? I hope your answer is "of course not!"
Many of these brokers have been to charm school.
Sounds to me like you got a "song and dance" ... and, now you are "head over heals."
Think on it ... Do yourself a favor ... And, Go Talk To Some Others. They want usually charge you either ... to talk ... unless they are a fee only based advisor and many of them don't charge until you become a client. You might seek one of them out so you have a compairson. We have one that visits the board from time-to-time and that is BobC. He has been very helpful to many. And, I don't think he mailed anyone an invoice until after taking them on as a client.
Have a good evening.
Old_Skeet
I just now stopped by, again. I'm paying attention, for sure. And as I said above, though I'm impressed with him--- the ML guy--- I will NOT become a client. I don't meet their asset threshold, and further, I would not want to give up the chance to choose funds on my own. That special arrangement, in which his intern would handle everything, is fine for folks who are not interested in doing their homework and WANT to "abdicate" from making financial decisions--- leaving it in the hands of their financial adviser. But I personally need to have more control. I can't just turn all my stuff over to someone else and leave it at that.
If you think you need an advisor, look for a fee-only person. I think the big-box advisors first priority is often picking funds where they get the best kick-back. Funds from insurance companies are often on these lists. This website will give you fee only advisors in your are. NAPFA is a very reputable organization.
http://www.napfa.org/
This link explains the differences in advisor fees
http://moneyover55.about.com/od/findingqualifiedadvisors/g/Feeonlyadvisor.htm
All advisors, fee only or fee based, are in the business to make money. That is understandable and not a bad thing. But if the advisor is pigeon holed into only specific fund choices, that's not the greatest situation for you. Many of the funds you read about on this board will not be available at the big-box store. A fund often talked about here on MFO for example, RPHYX, would never be available to you with Merrill Lynch.
He completely ignored my plans, and sailed off into a well-rehearsed sales pitch for an annuity. At first I was taking notes, but then, when I realized what he was doing, I stopped. When he finished I thanked him and got out of there with the straightest face I could manage.
Be careful out there, and good luck -
Archaic
http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/
I am 30 years old, and I have all my savings in the stock market, but my whole 401k is in VTSMX, with a 0.17% expense ratio.
Don't forget the sales person makes money when you pay him.
This is what Buffet has to say: http://finance.fortune.cnn.com/2013/01/24/buffett-hedge-fund-bet/
Thanks for providing the link for clarifying the difference between fee based and fee only. This year I switched over to ML from Fido, and although very pleased with how portfolio is now positioned, there are some Vanguard funds they cannot buy, as well as others. I was able to hold some I already had, but could not add to them such as VDIGX and VPCCX. I had to sell my MAPOX when I transferred, since they could not hold it, but bought FPACX in its place. When I chose two stocks to purchase this week with proceeds of my sale of GLD, the advisor was not able to comment on one of them, since it is not one they cover. This can be somewhat limiting, but she did not try and talk me out of it. just could not provide an opinion. However, if there is a fund I want to buy and they don't sell it, I don't mind reopening Fido or TD Ameritrade to do what I want. I do value the information provided and she has stopped me a few times from selling a stock which I thought would go down further (she also advised me to sell GLD almost a year ago, but kept it and sold at 20% loss). I feel the .65% annual fee is fair, and it does give me access to many funds with reduced ER since they can buy Institutional shares, but I also do much of the fund and stock picking with her input. I have gone against her opinion a time or two and have stood my ground where I felt I was right. I do thank her for introducing me to PKW and funds I could not have bought (including some closed funds) if I were still at Fido, but I am quite pleased with this advisor, it just has some limitations.
"Vanguard is owned by the funds themselves and, as a result, is owned by the investors in the funds."
Hello there again,
Welcome to world of investing ... Sometimes, things are not meant to be understood or easily understood?
I feel if you stay with it ... and, hang in with us on the board for a while ... in time ... the answers you seek will become common knowledge for you. There will be many that will step forward and try to help you through this journey.
I updated one of my above post with a link to Scottrade. You might wish to check it out as it might be your answer to get some face-to-face help form time-to-time with things that you don't understand while at the same time providing access to the lower cost usually associated with the use of their online investment services. Although, I am not currently a Scottrade customer ... I just might be in the near future as I plan to split my assets up among a few brokerage houses in the near future. They will all tell you they can do a better job if they have it all. Don't believe it as they will most likely have different views, investment ideas and perspectives on the markets.
I sincerely wish you the very best with your investing endeavors.
Have a good weekend ... and, most of all know that those of us that made comments did so in the spirit of helping someone else. I am sorry if I came across in a most direct manner. That's not your problem. It's mine. And, again, I apologize for being so direct with you but not for the message that I delivered.
Old Skeet
While I have no qualms about you getting all the advice you can from people trying to sell you something, there is little reason to think they have anything you need to buy.
While several posters question the concept, Mr. Bogle recommends viewing Social Security as a bond equivalent, allowing you to keep more money in stocks later in your life.