 |
| Used with Permission |
Our advisor is a CPA who works for himself. He does financial advising through the brokerage firm of HD Vest. The advisor interfaces with clients, gathers information about them, helps them assess their risk tolerance and then passes the information on to HD Vest which uses it to determine the appropriate basket of mutual funds in which to invest the client's money. While they will honor requests for certain funds, or to increase or decrease the risk in a portfolio, HD Vest controls the investments in the account--they decide which funds to buy, and which to sell, and when to do so. The idea is that they have people who keep an eye on the industry, who know which funds do well, and which do not, and know when it is time to get out of a fund that has been doing well (say when the fund manager changes).
Transferring money from one manager to another takes time--several days. Unfortunately when we moved from our prior investments to HD Vest, the timing was such that we ended up with less money in HD Vest than we had with the old custodians--the movement of the market over a few days made a difference. That wasn't HD Vest's fault and I don't criticise them for that. However, during the time our money has been with them, all of our other investments have made money; the accounts with them are still worth less than what was deposited in them. A large part of the reason is the fee they assess (and which we agreed to pay) of slightly more than 1% of the account value. I sat down the other night and did the math--had we invested my husband's IRA in Vanguard's Target Date fund for his age group, his account would have $8000 more than it has now. HD Vest's fees on that account since we opened it have been about $4000. In other words, had they invested our money in Vanguard's Target Date fund, and still taken their $4,000, we would still be $4,000 better off than we have been with their chosen funds.
As I said above, I am not mad at the advisor; however, I am mad at HD Vest right now; not because they failed to equal my other investments (you win some, you lose some) but because they are charging us $95 each for three accounts to transfer the money out. I saw an article today that talked about how Vanguard with its low fees was hurting a lot of Wall Street firms; I guess this is how HD Vest gets back at people for choosing not to stay with them. Because of that fee, I'm putting their name in this article and I'm recommending staying far away from them. All total, in the year and a half we have had those accounts, we have paid fees of $6678.72, including that last $285.00 hit. Our account is worth $12,234.52 less than it was worth when we deposited the money in August, 2014. This has definitely been an expensive lesson.
We got a little financial advice and a couple of dinners out of our advisor during the time we used him. What I really wanted when we entered into this relationship was someone to look at our overall financial picture, especially the fact that we have a son who will likely need financial support his entire life (he's autistic), as well as our other goals and savings rates. I was hoping for a plan that said "save this much", put together this type of trust, and fund it this way. Instead, what I got was a mutual fund portfolio, quarterly meetings to explain that the market was down and that balanced portfolios were faring the worst, and a little generalized tax advice. Frankly I've learned more reading blogs, and I don't think his predictive model was any more accurate than any on any mutual fund family homepage.
Have you ever used a financial advisor? Were you happier than we are?
Have you ever used a financial advisor? Were you happier than we are?
0 Response to "We Fired the Investment Advisor"
Post a Comment