Anyone use a professional money/investment manager? What has been your experience?

I follow the lazy but steady path that Buffet always pushes.

Index funds.
Push it into the s&p500 and let it ride.
I have a Fidelity account for that, based on the recommendations of friends in the fiance world.

I let the investment brokers manage my 401k. Just told them a retirement date and so far I'm up 10% over the life.
Rolled an old 401k into mutual funds with principal financial. They've made me 12% over the last 15 years.

It's all dependant on what you want though. Gotta go talk to people and see what they're selling.

J. P. Morgan will do what you want. I have always appreciated their services even though my investment mix and strategy are really simple. They’re really useful for me when I want to create a scholarship fund or fund some other program that interests me.

It depends on what level of net worth that you have when it comes to service at brokerages and banks. The higher it is, the better the access you'll have to vehicles that the average investor could only dream of. $1M or less and you're just average guy that they will abuse for fees and commissions. Just my guess, but do you really want to trust your money to someone else?

I went to one cfp who wanted to manage our money and it just didn't seem right. Several years later, she skipped town (South Bend, IN) with millions of dollars in client money. FBI didn't do a thing to help. They all seem to give the same general advice with bromide formulas that you can find anywhere...........AG Edwards was one of several others we went to and they all play the same game. The fees really add up over time. In the end, I learned to invest on my own and not trust the market brokerage racket.

Today is a whole new game with the rapid trading platforms that the brokerages use....Average guy has a tough time trying to beat them. Shorts and hedging strategies are a bane for Joe 6 pack. Precious metals are a glaring example of this today. It's your money to invest in a market that has a very high p.e. level for many stocks.........especially the tech stocks. If it were my money, I'd wait for the crash that will be coming............Then look to commodities and select stocks with reasonable p.e's.

Bottom line, no one will manage your money better than you with the right education.

At a certain point it becomes onerous to manage it all by yourself.

I have interviewed many, but I chose to invest my money myself. It takes a lot of my time but I enjoy it.

Here are some things to consider

1. Your net worth (net investable assets) determines your access to advisors. They don't care about your house or possessions.
2. What kind of services do they offer? Oftentimes, they not only provide investment services, they provide insurance services, tax preparation, etc. They will try to get you to use all their services as it boosts their fee.
3. Are their investment instruments tied to a particular provider? Do they only use Fidelity, Schwab, etc? Some investment services are tied at the hip, which is not the best approach.
4. When they generate a plan for you, do you pay for it? If you do, you get to take their plan and walk away if you decide not to engage.
5. Is their investment philosophy aligned with yours? Does their investment philosophy match your risk aversion or tolerance?
6. What is their fee structure?

I found that it wasn't for me.

Is there a correction coming? There is always a correction coming. Trying to time it is a fool's folly. Corrections have always happened and have always reversed themselves. On a long-term basis, all of the indexes have appreciated over time. The issue is how long will it take. I don't know how old you are. Your age correlates or should correlate to the degree of risk you are willing to bear.

Investing in index funds is certainly one approach. There are many approaches. Fortunately, there is a ton of information out there so do your research and build a portfolio that makes sense based on your risk aversion and age.

An AUM fee of 1.45% is crazy. "We do better when you do better" just means they take more of the money you make!

Look for a fee-only advisor if you must. Pay them a one-time fee to come up with a financial plan. Then implement their plan. It's really not rocket science.

The fee for service or AUM advisors often put you into high cost mutual funds. Then a better fund comes around and they switch you to that. Getting a commission for each sale of course. Others will try to push various insurance products - Universal Life, Variable Universal Life, and many other names meant to obfuscate the fact that they are high cost products that combine expensive life insurance with mediocre investment options. Still others will push annuities that generate big commissions for the salesman. While there is a role for both the insurance and annuity products, very few people actually benefit. The people pushing those products are salesmen, not advisors.

Low (or no) cost mutual funds just work. Vanguard, Schwab, Fidelity, and likely others have many funds with very low expense ratios. Max out a Roth IRA. Do Roth conversions if they make sense for you. The Bogleheads forum is a great resource and has suggested portfolios you can adjust to your risk tolerance. Don't try to time the market.

Now, if you are a multi-millionaire with multiple properties, rentals with depreciation, foreign stocks, etc, then it might make sense to go with a high-fee advisor.

Based on my experience. Not meant to represent financial advise.

chevy_man said:

I follow the lazy but steady path that Buffet always pushes.

Index funds.
Push it into the s&p500 and let it ride.
I have a Fidelity account for that, based on the recommendations of friends in the fiance world.

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This is the way the problem is people wanna be all brilliant and pick high yields or special stocks or whatever. Just slow roll it.

I run it all through Fidelity. The 401k is managed by Fidelity by whatever fund they picked. My IRA is in a couple of funds, mostly in VGT. And my personal play money account, I manage myself and most of that money is in tech stocks. From what I have ever seen and heard, investment managers/stock brokers are only right about stuff half the time and that's a really good one. I invest in what sector I know well.

Good overview. Book: Jordan Belfort, the wolf of investing

My opinion, use a Fiduciary. They are required to act in your best interest and don’t sell products. I used a local advisor whose company was bought by Mercer. They advise you and you pick growth/risk level you want to take. I feel they tend to be more conservative than needed, and would adjust as I request. But I do remember 2008…they did help a lot when I retired, on taking advantage of some stock swaps. Had to do with taxes and I can’t even start to explain since I had no clue these rules even existed!

748rpilot said:

The AUM fee did seem high, I would have expected around 1% or less. I don't necessarily mind an AUM fee as it creates incentive on both sides, but that's a good size fee.

I've been talking to JP Morgan Private Client Banking, they build their own in-house investment portfolios and strategies, so it's not the same as an independent manager putting you into Vanguard/Principal/whatever mutual funds, so there's also no extra commissions.

I did like that the JPMPB banker sat down with me, went over all my financials and drew up both strategy and tactics for how to manage my assets. Even if I don't use them, it gave me helpful information.

I'm well past the income cutoff for a traditional IRA, but my employer recently got us a Mega Backdoor Roth IRA that allows us to contribute to a Roth IRA. This is in addition to our regular 401k. The Mega account allows an additional (post-tax) contribution of $34k/yr, which I'll be taking some advantage of.

Based on some of the feedback here I'm going to re-asses doing my own management after doing more personal research on investment strategies and management.

Appreciate all the feedback so far.

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If I were in your shoes I would max that Roth contribution.

I started out managing my accounts but quickly realized it is a full time job and having someone manage was less stressful and gave me access to investment vehicles that individuals don’t have.

I use one and he is a fiduciary as well. I ran my stuff on my own and had a trading account. Used the work 401k as well. At some point I rolled it into one big account. I'm retired and do not tap any of it just yet.

Having an account manager allows you to spend less time on financial issues. If there is something I want to buy or sell he is a phone call, text or email away.

As far as investment advice, he has picked two losers and 8 winners and made me money thus far. Over all I'm running 9% a year over the last decade. My savings account is paying .000005% a year.

I have two IRA's, One I've had for nine years that is set and forget. The other I started last spring that is guided. At the end of 24 I had a set down with my advisor. The set and forget account made 16% and the guided account made 20%. The last month I looked the advisory fee was $320 for one month. To me the fee is worth it.

Sp500/total market (vanguard vfiax/fidelity) and forget the money is there. It is that simple. The hard part is not to touch it/diverge from the strategy. Focus on making more and getting more happiness out of the money you do spend.

748rpilot said:

That's the same thing the investment manager said, max that out first even if it reduces what I contribute to my non-employer accounts.

I can set it up to finish maxing out when my yearly bonus pays in September, which leaves me extra flush for the last 4 months of the year. That's what I currently do with the 401k.

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If you’re getting any kind of employer matching, you’d be missing out on some of that by reaching the contribution limit in September.

You need to understand that if you go with the big boys, Fidelity, Schwab, Chase, etc you go into a pool investment plan. That means you go into Plan A, B C, D, E, etc. They may not describe it like that, but that's what it is.
Understand. the person you deal with when you open the account and get comfortable with will not be there in 6 months and you have to build another relationship for another 6 months. Rinse and repeat. I worked with a Fidelity Sr VP (not a paid investment account) for 6-8 months. Went in One day to talk over some tax question and the staff response was "who?" it had only been a couple of months since I had been there. But everyone at Fidelity, almost, is a Sr VP.
They will look at your age, investment time frame, income, and may talk about risk. Then they put you in Plan"X". They rebalance every 6 or 12 months. If the market goes up they look like a genius. If the market goes down, they tell you "you are in it for the long term, don't worry".
Most/many of the smaller (relative term) firms will not talk to you without $500K-$1M. They may build your investment portfolio "just for you", but all the other clients have the same investments.
Be very clear with a smaller firm that ANY investment they put you in is liquid, IE you can sell it any day you ask them to. I have been working for 2 years now to sell a REIT a firm put me in that can only be sold 3-4 times /year and only in certain allocations. Hopefully the last lot can be sold in 4 months. And I don't get to pick a price to sell, it is a pre announced specific day, so it is whatever market close is that day.
If you work with any firm, get everything in writing with a timeline for them to produce the documents, IE Investment Plan, Tax Plan, Income Plan, etc and how often they are updated and reviewed. Hold them to it and demand to know why they aren't making the date. Meet with them every quarter and review where you are for the first 2 years and ask hard questions if they aren't performing.
I got really tired of paying someone to lose my money.

Yes, had two, now down to one, but honestly do just as well with the self-managed index funds in my 401K.

A friend asked me this very question yesterday. This Morningstar article (actually a podcast transcipt) addresses this very question; I should say the article is skewed towards finding a fee only advisor more than a money manager.

I have an account that is professional managed and I have an account that I manage. Half of my gains in the professionally managed account have been swallowed by fees.

jhunter said:

I have an account that is professional managed and I have an account that I manage. Half of my gains in the professionally managed account have been swallowed by fees.

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That sounds like a lot.

My fee is under 1% with JP Morgan private bank. The fee is worth it for me to have all the services I want/need available at any time.