Thanks Rob! So THOROUGH and easy to understand. I bet a lot of folks don't consider the fund fees and the loss of compounding on all fees, including the advisor's fee, they may only have heard that a 1% advisor's fee is high. That is why content like yours is so impactful to someone like me who is managing my own portfolio with very little experience and being very close to retirement. You must sleep well at night knowing how many folks you help everyday. Rock on! :)
Every time I see a portfolio like this I come away with the take away that the complexity isn’t a bug, it’s a feature. It’s a result of the advisor not wanting to be asked after telling the investor for a few years to buy the same ETFs a simple question. Why am I paying you $5000 to keep telling me to do the same thing? Complexity allows for a simulation of value.
I'm impressed that you refrained from using the word "kickback" the entire presentation. There's usually only one reason why non-fiduciary advisors put clients in high expense ratio funds.
Very important video! Kudos to you, Rob. Too many people are clueless & losing so much $$$$ to fees. It makes me sick. I try to tell others, but many people seem to want to remain clueless & get taken advantage of.
Thanks for sharing, Jack Bogle (vanguard founder) spent the majority of his career working and preaching low fees for the common man in the creation of the first index funds, he had a front seat view into the greedy personal finance industry
I had a wealthy client who paid Merrill Lynch advisor fees of 400k per year. These advisor fees aren't tax deductible, unlike expense ratios that directly reduce your investment/ asset value (so are tax deductible). The advisor bought various single stocks and mutual funds. On top of the 400k advisor fees were expense ratios and commissions for buying/selling stocks. Some years the advisor would sell 100s of stocks.
Very good information. Thanks Rob. I went to Personal Capital as you recommended and started to sign up, but then I could not get past the "free consultation" service ad from an investment advisor to go any further. They called and offered services for 0.79% of assists under advisement (which I said no to after just watching your RUclips). How Ironic.
Thanks for this! This video clearly illustrates the value of education, in this case, financial literacy. The more you know, the less likely others will take advantage of you. It enables you to pull back that curtain to reveal that "wizard" was just a guy banking on the fact that you don't know any better. As a widow, that is extremely important to me; no yellow brick roads for me. Instead, I take the time to learn all I can from different credible sources and compare strategies. Ultimately, I want to be in charge of my future, knowing exactly which path I'm on and making corrections as needed.
Thank you for making this video - it answered so many questions I had. Could you also make one for advisors on how they can structure their fees so they can help people pay less but also not go out of business themselves? I’ve worked for advisors in the past and they all said the same thing, 1% is the industry standard because when you add up all the time it takes to service 250-300 clients or more, payroll for staff, office expenses, brokerage firm fees taken out of the Advisory fee, the advisor wants to net somewhere around 1% because 1% gives you enough to live on.
I created a Personal Capital account a couple of months ago. I regret it. They require SMS based 2FA (which is a good thing) but it also means that they get your phone number. They will call you incessantly. I would heartily advise using a burner phone number where you can still retrieve SMS if you're going to sign up.
Nice video !!very engage from beginning to end . Nevertheless business and investment are the easiest way to make money irrespective of which party make it to the oval office.
@Rob Berger How do you square a Mutual Fund that averages higher than market returns (with a long track record), with say, a .50 expense ratio, vs an Index/ETF that averages 8% over the same time with a .05 expense? The 12%er crushes it, even in retirement. It hurts to "lose" more, but you're actually "earning" more.
Great question. There are very few funds, at least in the large U.S. cap sector, that beat the index over 10+ years. Then you have the question of trying to pick a fund that will outperform over your life time. And even if it does, which we can't know in advance, it will underperform at some time along the way. And that raises the question whether an investor will be able to stay in the fund, not knowing of course that it may outperform after 30 or 40 years.
Hey Rob. So when a return for a mutual fund is posted, that number is BEFORE the 12b fees are taken into account? What we really want to know is what is the net return- AFTER taking into account any fees- and then to be able to compare that return to other funds with either lower or higher fees. I always assume the return figure reported was AFTER the fees. If I'm looking for [let's just say] an 8% return and a fund shows a 8% return and a 1% 12b fee, then that fund is only returning 7%?? Can you clarify?
Let's say someone has a $600,000 portfolio with an investment advisor charging 1% per year. The investor contributes $6,000 annually to the portfolio. In actuality the investor is just covering the advisor fee and not really investing anything!
Hello Rob, my company switched to fidelity for the 401k. The only low expense index fund available to me is the sp 500 index fund. I decided to go 100% into that fund to not pay large fees. I figured I could just have my roth ira (also fidelity) heavily weight into a low cost extended market index fund. Is there any reason it would be bad to try to cover the entire market with two funds in different portfolios?
I had the same scenario! But then I discovered the option my 457b has to open a self directed brokerage through Schwab (with an added yearly admin fee of $50) I signed up. Overall, I'll save more if I want to invest in lower cost index funds when taking into account the expense ratio of the 457b options. If I didn't have that option I would have kept investing in the S&P fund
There should be regulations against this happening to the average in the dark investor. Sad that these advisors get away with it. Self educate yourself on financial literacy and there would be less of this happening. I would assume the reason for 4 seperate large cap funds is to help put the advisors own kids through college. LOL 😆
Thanks Rob! So THOROUGH and easy to understand. I bet a lot of folks don't consider the fund fees and the loss of compounding on all fees, including the advisor's fee, they may only have heard that a 1% advisor's fee is high. That is why content like yours is so impactful to someone like me who is managing my own portfolio with very little experience and being very close to retirement. You must sleep well at night knowing how many folks you help everyday. Rock on! :)
What is it they say, if you know enough to choose a good financial advisor, you know enough to not need one? Yes, I think that's it.
Every time I see a portfolio like this I come away with the take away that the complexity isn’t a bug, it’s a feature. It’s a result of the advisor not wanting to be asked after telling the investor for a few years to buy the same ETFs a simple question. Why am I paying you $5000 to keep telling me to do the same thing? Complexity allows for a simulation of value.
100% agree.
I'm impressed that you refrained from using the word "kickback" the entire presentation. There's usually only one reason why non-fiduciary advisors put clients in high expense ratio funds.
Very important video! Kudos to you, Rob. Too many people are clueless & losing so much $$$$ to fees. It makes me sick. I try to tell others, but many people seem to want to remain clueless & get taken advantage of.
I've noticed that as well. I can tell right away if someone is receptive. If they aren't, I find another subject, say the weather.
Thanks for sharing,
Jack Bogle (vanguard founder) spent the majority of his career working and preaching low fees for the common man in the creation of the first index funds, he had a front seat view into the greedy personal finance industry
I had a wealthy client who paid Merrill Lynch advisor fees of 400k per year. These advisor fees aren't tax deductible, unlike expense ratios that directly reduce your investment/ asset value (so are tax deductible). The advisor bought various single stocks and mutual funds. On top of the 400k advisor fees were expense ratios and commissions for buying/selling stocks. Some years the advisor would sell 100s of stocks.
Very good information. Thanks Rob. I went to Personal Capital as you recommended and started to sign up, but then I could not get past the "free consultation" service ad from an investment advisor to go any further. They called and offered services for 0.79% of assists under advisement (which I said no to after just watching your RUclips). How Ironic.
Love the detail here, and the resources. I’m going to look into the costs for signing up for personal capital and morning star.
Thanks for this! This video clearly illustrates the value of education, in this case, financial literacy. The more you know, the less likely others will take advantage of you. It enables you to pull back that curtain to reveal that "wizard" was just a guy banking on the fact that you don't know any better. As a widow, that is extremely important to me; no yellow brick roads for me. Instead, I take the time to learn all I can from different credible sources and compare strategies. Ultimately, I want to be in charge of my future, knowing exactly which path I'm on and making corrections as needed.
If it's simple, people understand it and do it themselves also advisers can't charge those high fees!
Thank you for making this video - it answered so many questions I had. Could you also make one for advisors on how they can structure their fees so they can help people pay less but also not go out of business themselves? I’ve worked for advisors in the past and they all said the same thing, 1% is the industry standard because when you add up all the time it takes to service 250-300 clients or more, payroll for staff, office expenses, brokerage firm fees taken out of the Advisory fee, the advisor wants to net somewhere around 1% because 1% gives you enough to live on.
I created a Personal Capital account a couple of months ago. I regret it. They require SMS based 2FA (which is a good thing) but it also means that they get your phone number. They will call you incessantly. I would heartily advise using a burner phone number where you can still retrieve SMS if you're going to sign up.
They called one time. I told them no thanks and they haven't called back
What a great tool! Thanks for sharing!
LOL. That thumbnail though.
The Professor strikes again.
Rob thank you for sharing.
Nice video !!very engage from beginning to end . Nevertheless business and investment are the easiest way to make money irrespective of which party make it to the oval office.
Great video!
@Rob Berger How do you square a Mutual Fund that averages higher than market returns (with a long track record), with say, a .50 expense ratio, vs an Index/ETF that averages 8% over the same time with a .05 expense? The 12%er crushes it, even in retirement. It hurts to "lose" more, but you're actually "earning" more.
Great question. There are very few funds, at least in the large U.S. cap sector, that beat the index over 10+ years. Then you have the question of trying to pick a fund that will outperform over your life time. And even if it does, which we can't know in advance, it will underperform at some time along the way. And that raises the question whether an investor will be able to stay in the fund, not knowing of course that it may outperform after 30 or 40 years.
Hey Rob. So when a return for a mutual fund is posted, that number is BEFORE the 12b fees are taken into account? What we really want to know is what is the net return- AFTER taking into account any fees- and then to be able to compare that return to other funds with either lower or higher fees. I always assume the return figure reported was AFTER the fees. If I'm looking for [let's just say] an 8% return and a fund shows a 8% return and a 1% 12b fee, then that fund is only returning 7%?? Can you clarify?
Let's say someone has a $600,000 portfolio with an investment advisor charging 1% per year. The investor contributes $6,000 annually to the portfolio. In actuality the investor is just covering the advisor fee and not really investing anything!
Does the portfolio visualized results factor in the gross expense ratios on the funds?
Yes.
Hey Rob, you have an imposter replying to all the comments. Just want everyone to know, so they don’t get fooled!
Hello Rob, my company switched to fidelity for the 401k. The only low expense index fund available to me is the sp 500 index fund. I decided to go 100% into that fund to not pay large fees. I figured I could just have my roth ira (also fidelity) heavily weight into a low cost extended market index fund. Is there any reason it would be bad to try to cover the entire market with two funds in different portfolios?
I don't think so. Sometimes we have to do that given what's available in our 401k.
I had the same scenario! But then I discovered the option my 457b has to open a self directed brokerage through Schwab (with an added yearly admin fee of $50) I signed up. Overall, I'll save more if I want to invest in lower cost index funds when taking into account the expense ratio of the 457b options. If I didn't have that option I would have kept investing in the S&P fund
💪❤
There should be regulations against this happening to the average in the dark investor. Sad that these advisors get away with it. Self educate yourself on financial literacy and there would be less of this happening. I would assume the reason for 4 seperate large cap funds is to help put the advisors own kids through college. LOL 😆