Managed accounts—where’s the success

[1insider]

Here's a 70/30 portfolio of total stock market and total bond market VTI/BND from 2009 to now. Your manager is lagging a simple do-it-yourself lazy portfolio by a huge margin. Something ain't right.

[oneasterisk]

Originally Posted by luv4horses

So I have a professionally managed account at a big brokerage. 70/30 split stocks vs bonds. I don’t look from day to day even year to year since I don’t want to get psyched out. But today I was trying to calculate getting a mortgage vs paying more cash and needed some real numbers. Imagine my surprise when I saw that other than dividends I have almost earned nothing maybe 1 or 2% over the last 10 years! Total. What is going on?

Happened to my coworker's IRA but his was only 5 years. I told him he should just fold that money into our retirement account and setup into the same allocation. Within a year he had made more money than in his managed account.

Lesson learned, you should be paying attention to your money. No one should care more about your money than you do. If someone cares more about your money than you do, they're probably trying to do some wealth transfer that benefits them more than you.

[semispherical]

Originally Posted by oneasterisk

Happened to my coworker's IRA but his was only 5 years. I told him he should just fold that money into our retirement account and setup into the same allocation. Within a year he had made more money than in his managed account.

Lesson learned, you should be paying attention to your money. No one should care more about your money than you do. If someone cares more about your money than you do, they're probably trying to do some wealth transfer that benefits them more than you.

Bingo.

Take a look at your statements, OP. Is your "manager" churning the account (many trades over short time periods, most sold at a loss)? Unscrupulous brokers will load the client accounts with money-losing positions the firm took a gamble on & now regrets. Plus, the "manager" collects a commission each time he/she trades in your account, regardless of whether the trade is beneficial to you.

Also, buried deep in the last page or two of your annual statement, in very small print, will be the yearly management fee the brokerage is charging you. This can easily eat up a sizeable portion of your gain.

Managing your own investments and achieving a greater return than the brokerage gets you is simple and not time-consuming. Invest in no-load index funds or ETFs. If you are even more risk averse you can use one of the targeted funds. If you don't trust yourself to take even these steps, sit down with a fee-only certified financial planner (not associated with a broker) and take his/her advice.

[BigCityDreamer]

Originally Posted by luv4horses

So I have a professionally managed account at a big brokerage. 70/30 split stocks vs bonds. I don’t look from day to day even year to year since I don’t want to get psyched out. But today I was trying to calculate getting a mortgage vs paying more cash and needed some real numbers. Imagine my surprise when I saw that other than dividends I have almost earned nothing maybe 1 or 2% over the last 10 years! Total. What is going on?

U.S. stocks have enjoyed a strong bull market during the last 10 years. A monkey could have made a killing in the stock market.

So, something is definitely wrong if your returns have been small.