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  • ?s about parents advisor

    I could use some advice. I have been a WCI disciple for a little over a year and it has been profoundly helpful for our personal financial picture. My 77 yo mother asked me to take a look at her portfolio. My father- her husband- passed away last summer. I am by no means a financial expert but from what I have learned thru the WCI I feel more educated. It appears her portfolio has a fair amount of loaded mutual funds with moderate to high expense ratios and a variable annuity and medallion annuity. I want to give my mom good advice but I get the feeling she could be getting "hosed" (to steal a Jim Dahle podcast word). I don't feel I have the skill or insight (yet) to help guide her. Any thoughts or advice would be appreciated.

  • #2
    Sorry to hear about your loss.  I'd say look to some of the fee only advisors that WCI has recommended on his site.  Probably no sense in wrestling around with the current FA to get into lower cost funds and have them still manage things.  If you're not comfortable managing things I'd get her a more reasonable FA soon.

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    • #3
      Same happened to my parents, albeit they are in their 60s. They had some investments, basically annuities with the guaranteed no loss but capped at like 4-5% returns.

      I understood these were terrible investments, but got them a fee by advisor, went to the meetings with them and slowly we have been pulling money out of the annuities into Vanguard. It's frustrating when the market is getting 20% returns, while your annuity is sitting at 4%.

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      • #4
        Sorry, post got cut off. Anyways, I agree with the above. Get your mom a fee only advisor for $1-2k checkup and if you can do all their recommendations yourself, if not, transfer to Vanguard for their 0.35% fee instead.

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        • #5
          You're already ahead of the game with your mother. The part where she wants your opinion and is open to changing things is critical. I thought I had my parents ready to dump Edward Jones a couple years ago. Mom was ready but my dad doesn't like change. They are still there and I can't do anything about it.

          I second the Vanguard option. Just keep it really simple and have someone help you through what to do with the annuities.

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          • #6
            This situation can be a real tragedy.  Someone that I know inherited a sum in the millions around 30 years ago.  It was held in trust at a bank.  The mergers and consolidation of so many banks occurred over the years and the money ended up being managed by the trust department at a large, well known national bank with a CEO who makes 30 million a year.  There were fund fees, management fees, trust fees, and more fees. Overall it was perhaps more than 200 basis points of annual fees. But the fees are hidden and complex and hard to sort out and I don’t really know the total amount.

            Over the years, the bank made out quite nicely, probably taking from the inheritance something more than half the money. The heir got part of the other half.  Despite the heir taking out a very low percentage from the principal over the years, the funds have slowly been depleted by the fees and by inflation.  Had the funds been invested in a vanguard three fund portfolio there would be a substantial multimillion dollar nest egg still sitting there despite the funds that were withdrawn.

            I had tried to intervene, to explain all of this to the beneficiary years ago, but they were afraid to make a change. The trust department would wine and dine the beneficiary in their private trust department dining room, and act all smart and official, providing economic reports and presenting their investment strategies in fancy binders printed on expensive paper.

            This has been very painful to watch over the years. Again, I attempted to give advice but did not get very far.  I am one of many in a larger group of secondary beneficiaries that might have benefitted had the money not been “stolen” by the bank trust department over the years.  The primary beneficiary is over 80 years old and it is almost as if the bank has a strategic plan to fully deplete the inheritance with fees over the next decade.  This situation won’t make any difference to me or my nuclear family, but I feel sad when I think about others in the group of secondary beneficiaries who could have benefited but will not.

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            • #7
              I see this happening with a friend also.


              It was held in trust at a bank
              Click to expand...


              Fiduciary?  People seem to trust bankers.  Beware of wining and dining and a nice office.

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              • #8




                I see this happening with a friend also.


                It was held in trust at a bank 
                Click to expand…


                Fiduciary?  People seem to trust bankers.  Beware of wining and dining and a nice office.
                Click to expand...


                Perception is everything. The banks and big box brokerages figured that out a long time ago.
                Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

                Comment


                • #9




                  This situation can be a real tragedy.  Someone that I know inherited a sum in the millions around 30 years ago.  It was held in trust at a bank.  The mergers and consolidation of so many banks occurred over the years and the money ended up being managed by the trust department at a large, well known national bank with a CEO who makes 30 million a year.  There were fund fees, management fees, trust fees, and more fees. Overall it was perhaps more than 200 basis points of annual fees. But the fees are hidden and complex and hard to sort out and I don’t really know the total amount.

                  Over the years, the bank made out quite nicely, probably taking from the inheritance something more than half the money. The heir got part of the other half.  Despite the heir taking out a very low percentage from the principal over the years, the funds have slowly been depleted by the fees and by inflation.  Had the funds been invested in a vanguard three fund portfolio there would be a substantial multimillion dollar nest egg still sitting there despite the funds that were withdrawn.

                  I had tried to intervene, to explain all of this to the beneficiary years ago, but they were afraid to make a change. The trust department would wine and dine the beneficiary in their private trust department dining room, and act all smart and official, providing economic reports and presenting their investment strategies in fancy binders printed on expensive paper.

                  This has been very painful to watch over the years. Again, I attempted to give advice but did not get very far.  I am one of many in a larger group of secondary beneficiaries that might have benefitted had the money not been “stolen” by the bank trust department over the years.  The primary beneficiary is over 80 years old and it is almost as if the bank has a strategic plan to fully deplete the inheritance with fees over the next decade.  This situation won’t make any difference to me or my nuclear family, but I feel sad when I think about others in the group of secondary beneficiaries who could have benefited but will not.
                  Click to expand...


                  The bank did not wine and dine them, they wined/dined themselves, ask them who do you think is paying for all this fancy stuff? They are. I know its tough, I think my friend still runs an American Funds plan for his practice even after I went over it for him, spreadsheets the whole nine, what can you do.

                  Comment


                  • #10
                    I have a “complicated” relationship with my 78 year old mother, and last year, my sister and I visited her, in part to assess her financial condition. I knew that she had been using the “wealth management” division of a large, national bank, and often referred to the “girls at the bank” as her friends. She meets them for lunch at Morton’s and Capital Grill a few times per year, etc. You know the drill.

                    So we set up a meeting. As I suspected, my mother was paying a hefty AUM (0.8%), and she owned a chaotic basket of stocks and bonds, as well as some mutual funds. They had recently purchased a variable annuity, too. You might wonder why I did not fire the team on the spot.

                    However, the primary objective was to assess whether my mother had enough resources to last to the end of her days and to assess whether her team was managing her money competently. I reviewed several years of annual statements and the transactions that were made. A secondary objective was to let the team know that someone would be looking over their shoulder, from time to time, to make sure that things were legit.

                    I asked questions that demonstrated that I knew what I was knowledgeable in this area and even offered that I was not agreeable to additional variable annuities and other such complicated instruments in my mother’s portfolio. It was a little bit tense.

                    In the end, my mother continues to use these advisors. She most likely has enough to last the end of her days, and the “complicated” nature of our relationship makes it difficult for me to get involved with out paying an emotional price. Perhaps this will reduce or eliminate any inheritance to me, but some things are just not worth any amount of money.

                    Comment


                    • #11




                      I have a “complicated” relationship with my then 77 year old mother, and last year, my sister and I visited her, in part to assess her financial condition. I knew that she had been using the “wealth management” division of a large, national bank, and often referred to the “girls at the bank” as her friends. She meets them for lunch at Morton’s and Capital Grill a few times per year, etc. You know the drill.

                      So we set up a meeting. As I suspected, my mother was paying a hefty AUM (0.8%), and owned a basket of stocks and bonds, as well as some mutual funds. They had recently purchased a variable annuity, too. You might wonder why I did not fire the team on the spot.

                      However, the primary objective was to assess whether my mother had enough resources to last to the end of her days and to assess whether her team was managing her money competently. I reviewed several years of annual statements and the transactions that were made. A secondary objective was to let the team know that someone would be looking over their shoulder, from time to time, to make sure that things were legit.

                      I asked questions that demonstrated that I knew what I was knowledgeable in this area and even offered that I was not agreeable to additional variable annuities and other such complicated instruments in my mother’s portfolio. It was a little bit tense.

                      In the end, my mother continues to use these advisors. She most likely has enough to last the end of her days, and the “complicated” nature of our relationship makes it difficult for me to get involved with out paying an emotional price. Perhaps this will reduce or eliminate any inheritance to me, but some things are just not worth any amount of money.
                      Click to expand...


                      This reminds me of a conversation about my grandmothers financial guy, shes 93, that was somehow (through charm and data overload offensive im sure) able to convince her, my dad and aunt that it was a good idea to allow him to use some portion of her account for "tactical asset allocation", etc...I let them know in no uncertain terms how this was exceedingly a bad idea. Just to allow somebody to feed their timing desires with someone elses money. Extremely inappropriate. Now Im upset all over again. Hopefully the quick education I gave my dad over the xmas break and letting him know how wrong I felt it was has put him in a more skeptical mindset going forward.

                      Comment


                      • #12




                        Same happened to my parents, albeit they are in their 60s. They had some investments, basically annuities with the guaranteed no loss but capped at like 4-5% returns.

                        I understood these were terrible investments, but got them a fee by advisor, went to the meetings with them and slowly we have been pulling money out of the annuities into Vanguard. It’s frustrating when the market is getting 20% returns, while your annuity is sitting at 4%.
                        Click to expand...


                        4%? My Mothers advisor has her 100% in annuities with a 3% cap. Moved out of stocks in March of 2009 (sound familiar?) using fear of further market losses.

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