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I think I know the answer to this but thought I would throw the question out here to see if there were different opinions.
A friend has a sizable 401k account from a previous job. It is invested in stock-heavy mutual funds that are not charging them any fees. A college friend is a successful money manager with a major investment firm and has offered to manage this money. They would charge an annual fee of 4 percent. My friend is 7 to 10 years from retirement and is a bit concerned about a stock market correction. Does it make sense for them to transfer this to a money manager? The manager sent a lot of information on what they do but nothing that shows that they do anything that justifies their fee or shows that their investment strategy would recoup the 4 percent fee. Thoughts? Suggestions? Jay
they are worth it if you can't keep your hands off your investments because you time things or lack pucker factor . they can help with complex tax issues .
4% is VERY VERY UNREASONABLE.
If you do not know what you are doing or do not want to pay attention the right advisor can be a very good idea. I would expect to pay under 1%.
The mutual funds have fees. How do you think the manager gets paid, office rent gets paid etc. etc.
I'm in agreement. I called my investment guy and he said he's under 1%. A few weeks ago when I was doing my taxes. No wonder the guy is a successful money manager. He's got a bunch I'd suckers for customers.
The only reason I trust my investment guy is because I've been with him forever. And even then sinetimes I question his methods and tell him no to some things.
4% is insane imo. I would never agree to that. But then again I don't have a property manager because I think their fees are insane too
Thanks. I thought that fee was insanely high. There is nothing in the information given about a gaurentteed return. There wasn't even a history of their performance showing that they beat the market average. Not sure how anyone would just sign over control of a seven figure account without some good return history. I will definite let my friend know this.
Do you think they should leave their money in the stock funds they have. There are no fees being charged and the returns have been very good to date. Not sure if they should be moving money into more stable funds or not. Jay
I agree with previous postrs. I am in a similar retirement range - hoping to retire in about 8 years. I have worked with a financial advisor for about 5 years and pay 1%.
I have found it worthwhile. I did not have the time to manage my own portfoilio properly, and he has given me several pieces of advice through the years that have paid for his services by themselves, with everything else being gravy.
IMO, there is no way for anyone to advise whether your friend should keep his funds where they are. one of the key principles is to be diversified, so he should have some in mid cap, some in large cap, some in international. etc. Simply knowign they are "stock heavy" isn't helpful. I would think with a 7-10 year horizon the portfolio should be stock heavy, but it should be balanced. Yes, there may be a correction. My portfolio has been through that. That is one of the reasons why being stock heavy at that horizon is OK - you have time to ride it out.
Last edited by CrowGirl; 03-18-2017 at 08:10 PM..
Reason: fix typo
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