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He told me what her allocation is (it wasn't my suggestion for his allocation, I didn't make a suggestion). You say 6 - 7% is too aggressive or risky a rate of return to try to reach? Why? It's half of what others have reported they've made last year. I made 11.2% return without taking too much risk, why is aiming for 6% - 7% not a good goal for my mother?
What violations is this advisor potentially making?
I've already suggested a few times this visit that my mother switch to Vanguard and go into index funds. I gave her a list of the funds I'm in. I offered to show her how easy it is. I offered to do it for her.
He told me what her allocation is (it wasn't my suggestion for his allocation, I didn't make a suggestion). You say 6 - 7% is too aggressive or risky a rate of return to try to reach? Why? It's half of what others have reported they've made last year. I made 11.2% return without taking too much risk, why is aiming for 6% - 7% not a good goal for my mother?
What violations is this advisor potentially making?
I've already suggested a few times this visit that my mother switch to Vanguard and go into index funds. I gave her a list of the funds I'm in. I offered to show her how easy it is. I offered to do it for her.
You're speaking like a young son...without true empathy for her specific situation.
Rate of return is not necessarily a good indicator of risk. You need to get more specific about the allocations you are thinking of and use actual risk indicators. How much does she have? How much does she need every year beyond SS to meet costs? Is that likely to change? Will she need to plan on living to 95 or only 85?
You have a lot more to figure out than a shot in the dark about what kind of returns you'd like to see. What level of returns does she NEED to suit her specific purpose and is that realistic? I'd say you do need a real planner - just not one charging 1% - fee for service instead.
Just off the collar of what I am reading here- I see a lot of issue's not only with your point of view but the advisor's potential violations if I am seeing all the facts.
There's not one bit of evidence of any violations on the advisor's part. It's just your common distaste that you're seeing
You're speaking like a young son...without true empathy for her specific situation.
Well that's quite a feat since I'm a middle-age woman getting close(r) to retirement myself.
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Rate of return is not necessarily a good indicator of risk. You need to get more specific about the allocations you are thinking of and use actual risk indicators.
Never said it was, but obviously if someone thinks they're going to be able to consistently get 10% - 20% return they're going to be taking bigger risks to consistently get those returns. Do you agree? I'm not thinking about her allocation because the investment advisor is the one who is being paid to think about it. I talked to him for the *first* time in 2.5 years. As I posted above, I had (note: past tense) been hands-off, not watching my mom's investments so I wouldn't get obsessed and start meddling.
My mother is turning 89 this year (not 70 as some have posted). Her expenses are well-calculated and holding steady. *IF* or *WHEN* she eventually needs nursing care or an aide she'll get it. She doesn't need it now, she is fully mobile, able to care for herself, and has her sister nearby.
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You have a lot more to figure out than a shot in the dark about what kind of returns you'd like to see. What level of returns does she NEED to suit her specific purpose and is that realistic? I'd say you do need a real planner - just not one charging 1% - fee for service instead.
You are making a ton of assumptions without knowing anything about the situation. My estimate of returns needed are not a shot in the dark.
I know how you feel lotta. You want to do right by your parents. My dad (91) and family were sitting around about 16 months ago and he was complaining that CD's he had that used to get 5% were now getting 1.125. I just casually mentioned I could do better in dividend stocks.
A couple months later he called and said 'I have $20,000. Let's do it'. So feels good to gave turned it to $24,600 so far and that he has faith in me.
I know how you feel lotta. You want to do right by your parents. My dad (91) and family were sitting around about 16 months ago and he was complaining that CD's he had that used to get 5% were now getting 1.125. I just casually mentioned I could do better in dividend stocks.
A couple months later he called and said 'I have $20,000. Let's do it'. So feels good to gave turned it to $24,600 so far and that he has faith in me.
Without regards to actual risk involved. The two investments are not even remotely similar and suggesting you could do better is actually pretty poor example of prudent advice. With ire toward the OP mother's advisor this is a much more glaring issue
He told me what her allocation is (it wasn't my suggestion for his allocation, I didn't make a suggestion). You say 6 - 7% is too aggressive or risky a rate of return to try to reach? Why? It's half of what others have reported they've made last year. I made 11.2% return without taking too much risk, why is aiming for 6% - 7% not a good goal for my mother?
What violations is this advisor potentially making?
I've already suggested a few times this visit that my mother switch to Vanguard and go into index funds. I gave her a list of the funds I'm in. I offered to show her how easy it is. I offered to do it for her.
I gave you an example of a realistic low-risk low-return portfolio that will give her 4%/year.
You made 11% last year therefore she should make at least 6-7% is not a good example. Aiming for high return is not a good goal because it almost always comes with higher risk (at your or your adviser's level of skill, no offense.) The converse is not true, you can definitely aim for low returns and high risks - e.g. junk bonds, presently.
Index funds are not magic. If they are stock index funds, they will drop like a rock just like a bunch of individual stocks. (Buying 30 or more random individual stocks and buying an index fund both have similar risk profiles.) Especially as indexing is now so popular that people are trading them instead of stocks. They are not the staid buy-and-hold DCA instruments they used to be.
Anyway, she is your mother, not mine. If you can convince her to aim high, mazel tov.
I didn't say my mother is *getting* 6% on average, I said that's what I'd like to see her get. That's just my wish for her. I am *not* directing her investments. Let me say that again for the hard of hearing & hard of reading: I am *not* directing her investments.
BTW, every retirement article I've read over the past few days all mention 6% as being a "conservative" return. It's a standard used in many retirement calculators to represent a conservative multiplier. So you can take your argument up with AARP, Kiplinger, Social Security, and a few others. Does that mean every year will earn a return of 6%? Of course not and I know that. There might be years where she gets 3% or 4% or has a good year and gets 8%, or the market goes south and she gets 0%.
There's no "undue risk" coming from me. Again if you had read my previous posts you would have seen I haven't spoken to the investment advisor in 2.5 years. I'm not pushing anyone to do anything. I haven't suggested any particular allocation. I am in fact-gathering mode.
I'm visiting my elderly mother and took a look at her investment statement up through 12/31/2016. In 3 years she only made 1.47% net growth on her investments. The investment fee is 1% (or maybe slightly more).
I'm upset because she's throwing money away.
She wants me to make a list of questions for her investment guy (who I know and have spoken to when she was first meeting with him). The thing is, I don't have questions as much as I think he/his firm should be fired ASAP. That amount of growth is unacceptable, IMO. For goodness sakes, a 3 to 5 year CD would have earned more for her over the same period of time.
Mom is convinced she must have an investment person and she doesn't trust me (even though my own portfolio of index and mutual funds has grown over 10% in that same period of time).
<deep breaths>
so if you could manage her money, what would you put it in?
why doesnt your mother trust you? do you want to take control of her investing?
Location: Was Midvalley Oregon; Now Eastside Seattle area
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Bogle thinks that 4% gains over core inflation is the new norm (2015-2016) in a balance portfolio
We did 20% in our trading accts 2016 and holding average of 60% cash.
Your mother risk tolerance may be low and she may need the Money later. Mom's broker/FA is bound by fiduciary/good practice to keep her conservative if that is her desire. Age alone would proactive being conservative We need more info about her financial situation.
FYI, 66/69 yo. Trading acct s are play funds. Currently holding 60% cash. We are about even for 2017. I expect to see a fairly large correction in 2017, and I am buy a bunch of equity when the Markets correct. We own home. Have a rental, Annuities, besides the trading accounts. LTD insurance. Only the trading accounts are directly connected to the Markets.
So what does your Mom have? What's her risk tolerance?
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