5 Key Questions to Ask Your Investment Advisor

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In this video we'll look at a portfolio a viewer sent in to me. It's from their investment advisor, and we will be asking 5 key questions about the portfolio that I would ask if an advisor put me in the same portfolio.
1. What's the target asset allocation?
2. Have you made any changes to the target asset allocation?
3. How do you pick the funds to implement the plan?
4. Why isn't a simpler, less expensive portfolio a better choice?
5. How do you invest your own money?
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While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.
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Опубликовано:

22 янв 2024

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Комментарии : 123

@MattT157 4 месяца назад

If people understood what a 1% AUM fee costs, they would never agree to pay it.

@HamiltonRb 4 месяца назад

It comes down to are you investing for your retirement or his?

@wdeemarwdeemar8739 4 месяца назад

Well I am up 41 % in my Ira under management and up 11.63 in my 401 k on the investments I manage myself. I am happy to pay the fee. Even if it was a 1% fee which it is not I would pay 2%.

@TonyCox1351 4 месяца назад

@@wdeemarwdeemar8739Warren buffet and ray Dalio dont get consistent 41% returns. So either you’re full of doo doo or your manager is better than the best in the world

@MartinHopkinson 4 месяца назад

@@wdeemarwdeemar8739You should be worried. If things seem too good to be true it’s usually because they’re not true.

@rayzerot 4 месяца назад

@@wdeemarwdeemar8739That's a downright impressive spread. Why not let him/her manage your 401K too if they're that good?

@phd_angel4192 4 месяца назад

Investment advisors hate to answer questions. I was fired by one because I asked questions about how much I was paying in fees, and I also fired advisors because of their sloppy decisions. Now I run my own portfolio independently and am very happy with the results.

@carlbook2051 4 месяца назад

They really want wealthy naive clients. They start looking silly when they have to explain.

@circusfreakRob 4 месяца назад

This was pretty much my experience when I was with an advisor. I didn't have much confidence in what I knew at the time so I went with an advisor for a couple years. The portfolio they had me in was at least twice as many funds as this one has. I assumed a complex portfolio must mean they know what they are doing and it will outperform. Eventually, I learned more and used tools like this to plug in their portfolio to backtest against a simple Boglehead 3 fund. Well, it turns out, both portfolios had about identical returns, but all of their funds had larger ERs and also my 1% AUM fee. So, I was losing out significantly by using the "expert" portfolio. Now I self-manage a simple portfolio with basically no fees and I am much happier!

@Panelson74 4 месяца назад

Yes, this is what I have seen, I would have to think the ETF and mutual fund has some sort of kickback to the firms.

@nobuharu2336 4 месяца назад

Rob is trying to say "don't get ripped off" without saying it.

@bingoknows 4 месяца назад

"Do you eat your own cooking" well said Rob!

@hanwagu9967 4 месяца назад

but there are reasons which the exact same porfolio for your advisor and you are going to be different, aside from the AUM %. How your advisor earns extra commission and fees is important.

@jamesmarsh8707 4 месяца назад

Thanks Rob. You are changing peoples lives. Well done sir.

@davidboston9227 4 месяца назад

Great video. Really hits home with my wife and I because we have never used an advisor and have wondered if we should look in to working with one. Thank you for your expertise!!

@davidroberts7996 4 месяца назад

Great video This hits home Thank you for sharing

@marym5631 4 месяца назад

Thanks Rob! Always learn much!

@Yette 4 месяца назад

Question 1: Why are any of my investments outside index funds?

@ccrider8483 4 месяца назад

Second question I would ask myself would be; why am I paying someone for something I can do myself?

@2011hemiram 4 месяца назад

Why index funds? My ira is at 7.18% up and the s&p is 2.96% up year to date. If you do tour homework you can out perform the market.

@Yette 4 месяца назад

@@2011hemiramclearly you don't understand the fact based concepts discussed on this channel. You do you.

@kennycheng5455 4 месяца назад

excellent questions. thx for the candid video

@swright5690 4 месяца назад

This is a great discussion. My advisor charges .48 AUM and uses a mix of Vanguard ETFs (VOO, VUG, VTV, VO...) in an IRA and ROTH IRA. The ROTH is more growth focussed than the conventional and we are doing ROTH conversions up until 2025 when the TCJA ends. My logic is that they can create a better and more tax efficient plan for growth and distribution than I can by doing it on my own. If I make a small mistake, the impact could be bigger than the price I am paying for their services on a $1M portfolio.

@4tomop 4 месяца назад

Another good one Rob 👍

@lebowski5192 4 месяца назад

I'm currently preparing for a quarterly meeting with my advisor, and this excellent video is very timely! Fortunately, my advisor is very transparent on these topics, but it's good to let him know I'm watching!

@twilde3754 4 месяца назад

I've flagged this one Rob! Very helpful. Many thanks!

@rick_vv7754 4 месяца назад

With a 1% fee on AUM, your 4% safe withdrawal rate becomes a 3% safe withdrawal rate in retirement.

@rayzerot 4 месяца назад

Ding ding ding!

@testit1902 4 месяца назад

If the advisor is doing real work on withdrawal strategy and tax location and you are an early retiree with a large portfolio spread across taxable, tax deferred and tax free accounts they may save you well over their fee in taxes even if they get you identical performance. Just something to consider.

@berryconway4296 4 месяца назад

This was a great video, thanks.

@Rand-ob2fm 4 месяца назад

Love your channel and very relevant content Rob! After months of internal debate & procrastination, I finally tried the New Retirement planner tool. Disappointed to see it needs a lot of work...not intuitive (at least for non-Finance professionals), very buggy, with inconsistent behavior entering/modifying information. I'll stick with Excel.

@AdamGoodmanlv 3 месяца назад

As an advisor, I agree if a client is paying 1% (or anywhere near that) for investment management and are only getting a stock/bond portfolio (that they could do themselves), easy to make a case there isn't value there in excess of the cost (but does vary client to client). Where I see a good advisor add value far in excess of the fee/cost is using alternatives (things like structured notes, buffered investments and annuities) to stocks bonds that clients either can't access themselves and/or don't understand how they work, how to use them, if they are right for them, if so to what degree. Also if an advisor does tax planning that can easily add value far in excess of the fee/cost, as many do it yourselfers that I have met with are overlooking/missing annual opportunities. Some people also find value/comfort in having a 1 to 1 client/advisor relationship, someone that understands them, their goals, tolerances and resources and is available to answer questions, provide customized advice etc...

@MarionBlair 4 месяца назад

Good advice

@Eric-wc7lx 4 месяца назад

Excellent video! As everyone should know from your videos, portfolio returns are mainly driven by fees and asset allocation. International has been a drag for two decades now, even though all the experts recommended 20-30% allocations.

@user-hp9eg3gf6s 4 месяца назад

Some advisors can bring Value to help you with you whole economic situation like when to get insurance for what, when it is time to retire to enjoy life more, what are your options when it comes to withdrawal strategies, safeguard against selling in a crush AND Most importantly managing your money in your senile years where you might have cognitive issues. I am young now but when i am in retirement and start having cognitive issues i plan to get an advisor just for that.

@ghazikerkeni7031 4 месяца назад

Nice last question

@LJ-jq8og 4 месяца назад

Great video Sir 💪❤.

@mr.m8123 4 месяца назад

Thanks for the excellent work. I have been 'encouraged' on several occasions to consider 'robo-advising' for a very small fee. Personally I have a strong aversion to this mainly because I feel that so much advising is 'robotic' anyway. A lot of advisors utilize an algorithmic approach in their management and can actually demonstrate very little 'activity' in an actively managed portfolio. I manage our portfolio, keep it very simple, and have found that we, the average investors, can do a very effective job at providing for their financial security - IF we will take the time to educate ourselves about the basics, and, as you suggest, ask the right questions.

@Toomanydays 4 месяца назад

Why would you pay someone to pick funds for you? The funds already have a manager. You don’t need a advisor.

@claudiap3742 4 месяца назад

Thank you Rob for this video! I'm looking to simplify our managed account. The fees are almost 1% & he has us in quite a few ETF's & Mutual funds. I'm going to do the analysis in Portfolio Visualizer & then speak to him. I'm leaning towards moving the account into a low cost brokerage house & manage it myself. Our retirement accounts are doing very well & we manage those ourselves. This was a very helpful video & gives me a good starting point for the analysis!

@jamesmarsh8707 4 месяца назад

That’s exactly what I just did. I couldn’t justify that AUM fee one day longer.

@PhilippeOrlando 3 месяца назад

Very useful, thanks. I will retire in the next 5 years, and all I need is a return of 3-4% on my investment. I'm noticing that CDs do offer 5% now, so I'd love it if you could actually have a video on how to use CDs to live off interest during retirement.

@TheKevinBostic 4 месяца назад

Hey Rob! Great video/content as usual! Where is best place to ask you *general* questions and/or requests for special topics for you to cover? My request is to discuss section 204 of the SECURE Act 2.0, related to annuities within an IRA/401k. I just listened to a podcast of "The Retirement and IRA Show", and was fascinated - this blew my mind and I immediately came home to throw together an Excel file trying to explain to myself the opportunity here. My wife is likely to live much longer than me, and I want to be sure she's set up - reducing RMDs, prepping for the "widow tax penalty" etc., and I think that annuitizing a portion of her 401k might be a good way to mitigate risks, manage RMDs, etc. What do you think? Can you cover this? I'm searching through your videos, but haven't yet found where you might already have covered this. TIA!

@dalenelson3707 4 месяца назад

My advisor charges 1.5% and a $1200 yearly fee 😫. Going out on my own very soon.

@cathyg1099 4 месяца назад

You can do it. I took control over my portfolio a couple of years ago. Wish I had done it sooner.

@MartinHopkinson 4 месяца назад

@@cathyg1099Same here. And Rob (and others like him) have made it so easy to do that.

@rayzerot 4 месяца назад

Rewatch the video and just switch to either the single fund method he mentions or the 3 fund method. Both are very manageable Edit: Remember that with a 1.5% AUM fee, the 4% safe withdrawal drops down to 2.5% safe withdrawal. That's taking over 25% of your retirement income. That's huge!!!

@derrickollinger3411 4 месяца назад

Hi Rob! I really appreciate your good work. I have a question about the Portfolio Visualizer asset allocation screen - the one that lists out the percentages of style categories. I've played around with that tool a bit and I've noticed that it's not a pure static snapshot of your portfolio's asset classes. It shifts with time. So, if you put in say, 50% VOO and 50% BND, and you are analyzing some stretch of time, the asset class percentages will actually shift (I guess based on return). I'm kind of confused by it. Do you know of a tool that cleanly analyzes your asset classes (with styles) based on a list of ticker symbols? Thank you!

@d.bishop1034 4 месяца назад

First, I would totally change the viewpoint and language used here. It should never be "What are you doing with my money?" It should be, "What are you recommending I do with my money?" I would never allow an advisor to move a penny without convincing me and getting my express permission. Second, I would never pay an AUM fee. Nobody has as much stake in my money as I do, so I educate myself and make my own decisions. It's not rocket science.

@VietnamSteve 4 месяца назад

Q6 during accumulation how do you intend to buy bonds to maintain allocation and offset the growth of stocks. Will I ever need to buy stocks again, ever, or is my life now either buying bonds from new contributions or selling stocks every period to buy bonds, all to maintain allocation.

@lustig6210 4 месяца назад

Does Empower allow for data upload by .csv or other spreadsheet file? Thx

@GM-yn9nc 4 месяца назад

YOU ARE A GENIUS!!! The simpler the better is my moto anyway and you just proved why again ♥

@SD-co9xe 4 месяца назад

I would be interested in seeing what funds and allocation various investment advisors choose based on age and situation. It would be great if you showed more examples on your channel. I self manage so I'm curious.

@Panelson74 4 месяца назад

Truist FA jumps around right now they are into DFA, but it is not them managing the stock with there hands, they use a third party.

@anzatzi 4 месяца назад

Note: managed funds may incur significant capital gains taxes as it 'rebalances'. So your !% management fee may be much higher

@pauld9653 4 месяца назад

Question number 6= How tax efficient is this portfolio.. ? How does it relate to my non IRA assets.. stocks in non ira (cap gains rates) and bonds in IRA ..(deferring normal rates)

@sleepyhead7391 4 месяца назад

Hi Rob, would you be able to do a video on the proposal by Alicia Munnell and Andrew Biggs to remove 401k tax advantages to fund social security?

@Peterl4290 3 месяца назад

I think investors should always put their cash to work, especially In 2024, we'll start to see more market diversification. I'm hoping to invest about $350k of my savings in stocks this year. Hope to make millions in 2024.

@xaxb4178 4 дня назад

Do they also do taxes too? I am as much into the exit strategy as I am in playing the game.

@tboughnou 4 месяца назад

Does the portfolio visualizer require a subscription?

@circusfreakRob 4 месяца назад

they have subscriptions for additional features, but everything he does here I believe is available just using the free version.

@Jennypearls88 4 месяца назад

Do you take on customers?

@GoKU-xx2vg 3 месяца назад

He charges 1% AUM 😅

@jmnthe3rd 4 месяца назад

"Can I see everything you own?" is an interesting question. If you're paying AUM, technically they own what you own. In theory, that is the advantage of AUM; they make more money when you make more money. You're trying to put them in a position where it is always advantageous for them to optimize you returns and your risk. Otherwise, why not just pay them by the hour like any other professional?"

@rayzerot 4 месяца назад

That's the issue though. You making the most money isn't the same as them making the most money. They only make money if you stay their client They're incentived to sacrifice your profits for portfolio complexity. The average person is more likely to stay with a manager who makes the portfolio look technical and complex then a manger who just uses 3 index funds. The more complicated the portfolio, the more the average person will think that the portfolio is likely to out perform the market and the more knowledgeable they will think the advisor is Will this method work on people who consume financial media content like us? Not likely. But we're not their target customer

@derekmarlowe522 4 месяца назад

1% on top of the fund fee is no way to treat ones money. Much like dragging an anchor behind a boat.

@dseagull3567 4 месяца назад

Preach it brother. But next time say the quiet part out loud.

@rayzerot 4 месяца назад

I was thinking that too

@70qq 4 месяца назад

🤘

@jmc8076 4 месяца назад

Good reminder. As all things with money educate yourself (from diff reliable trusted sources) as best you can given your situation. Always do what feels best and right for you/ spouse/family. No one rule for all.

@jmc8076 4 месяца назад

PS Watch financial interviews on network media. Change in air?

@Paul-mr8no 4 месяца назад

What is the name of the software that you use to compare your portfolios?

@swright5690 4 месяца назад

Portfolio Visualizer. Great free tool. Google is your friend.

@nikkig1146 4 месяца назад

Portfolio visualizer!

@TWILLIE639 2 месяца назад

What if you are paying a Vanguard Personal Advisor for your 3 fund portfolio and they still don’t do what you’ve asked? My Personal experience he was controlling!

@Crijoe 4 месяца назад

1) If I do what you're suggesting, how do you get paid? 2) How are you unique?

@leesmith9299 4 месяца назад

the words them / they might make the wording less cumbersome when referring to a hypothetical person.

@ljrockstar69 4 месяца назад

As a warning, if you leave your financial advisor, they might take it personally and go out on a tantrum and try to persuade and scare you to stay with them. So, please be careful of narcissist financial advisors! Also, this financial advisor threatened to take part of my capital gains if I left.

@gfxpimp 4 месяца назад

Rob is a nice guy. But I'd pay money to just see a channel that does this kind of analysis over and over again with people's portfolios and trashes their financial advisors. Even without the trash talk it would be good :)

@TonyCox1351 4 месяца назад

I would 100% watch that channel

@LJ-jq8og 4 месяца назад

The 1% fees to me are a rip-off !

@Stashmo 4 месяца назад

The harsh reality is that only a tiny minority of investment advisors are worth the AUM fee they charge. And you’re highly unlikely to be able to identify that rare advisor in advance. Over 20 years, a 1% annual AUM fee eats up 25+% of your investment. Frankly, how can an advisor that claims to be a fiduciary (that is, puts your interests above his/hers) charge a fee based on AUM?? The fiduciary claim is almost meaningless. Better to pay by the hour for the specific expertise that you need, when you actually need it.

@Panelson74 4 месяца назад

Yeah I think I heard a little giggle, when mine said it. Then I asked if that 1% was all that I pay and he said kind of. No truth came out of his mouth in 1.5 years, except for his maybe you need a robo advisor statement.

@shvideo1 4 месяца назад

A great video by the way. But if a person is asking these great pointed questions, then why do they have an advisor? Money is quite important in our lives, we should know enough to have all these answers. Pleading ignorance is not an option in our educated society.

@todd2456 4 месяца назад

My first question was: "Why would I pay you when I can do the exact same thing without paying you?"

@kevinbarrett3706 4 месяца назад

Cash is King !

@southernc4919 4 месяца назад

If you have a Financial Advisor, you’re getting screwed whether you know it or not. Invest in index funds and stay away from the sharks.

@swright5690 4 месяца назад

What is the advisor has the client's money in a mix of ETFs?

@lonestrtgr55 4 месяца назад

The reason the advisor portfolio is holding 1% in cash is to pay his fees.

@Panelson74 4 месяца назад

This and it could be that they FA has an agreement to keep 100K in cash at all times.

@paulclement4961 4 месяца назад

I cannot wrap my head around paying a financial advisor ANYTHING, let alone 1% of my total assets each year! For what?? You could spend an afternoon doing research and then manage your own portfolio. Unless you have a very large portfolio ($25,000,000 or more), or are involved in complex tax and debt strategies, it makes absolutely no sense to have someone else manage your money.

@veritas3179 4 месяца назад

MISS. 😂

@bridgecross 4 месяца назад

If the advisor can't answer that first question (asset allocation) precisely, then they're probably investing on instinct. Which is terrible.

@folks37 4 месяца назад

Rob - you’ve talked about the 1% AUM fee and how that fee could hurt this potential couple which leads people to believe they could do better on their own with a 3 fund or 1 fund approach. I think this is very deceiving for viewers considering that the advisor could very well be providing a list of services, time spent on cash flow/income planning, protection areas, reading their wills to understand their estate plan, connecting them with other contacts in their circle so they can surround themselves with the best possible advisory team from all areas, yet you talk about this topic in a microscopic lense without consideration for so many other factors

@hanwagu9967 4 месяца назад

NOT.

@Panelson74 4 месяца назад

Fair enough, mine did none of that though. "providing a list of services, time spent on cash flow/income planning, protection areas, reading their wills to understand their estate plan"

@zumapuma38 4 месяца назад

My experience with advisors has been they talk about providing extra services and then never do.

@samagbasi 4 месяца назад

80/20 stocks to bonds? And they’re nearing retirement? Yikes..

@d.bishop1034 4 месяца назад

Maybe they have good pensions and aren't dependent on withdrawals. I'm retired and 100% stocks. Everyone's situation is different.

@brianglas7768 4 месяца назад

At least bond yields have risen in the last two years. 2 years ago I refused to give the US government a loan when they were only paying 1.5% interest.

@mere_cat 4 месяца назад

I wonder what kind of commission this “advisor” received for directing their client to these funds… 🤔

@Panelson74 4 месяца назад

THIS IS WHAT I THINK IT IS ALL ABOUT.

@Panelson74 4 месяца назад

It might not be the advisor per say, but some sort of kickback to the firm. Discounts on purchases, ie.

@User12345fan 2 месяца назад

1 question to ask yourself, You can do a better job than an advisor ever will if you learn a few rules of investing. Never use an advisor.

@edisonalmario6304 4 месяца назад

FA won.. Haha.. You ste giving money to him for buying mutal funds.. Just buy it your own.. Im a fan of VGT..

@buyerclub2 4 месяца назад

think about how much this so called advisor is costing these people per year. so expensive for so little

@sixstringsdaddy2477 4 месяца назад

You're being too nice. What's a perfectly good explanation for this choice of funds? If your viewer is asking, it means it's likely their advisor can make up any globbledigook of an explanation and make it sound reasonable.