Investments in a managed account?

[+ SundayZip]

Do others have some or all of their investments in a "managed account" (the money manager's compensation is a flat percentage of the managed account total as opposed to a commission on individual trades). Or, have you specifically decided to NOT have any investments in a managed account? Either way, what is your rationale for your decision?

 

Personally, I've stayed away from managed accounts because I'm not confident that, in the long term, the return on investment on a managed account, less the management fee, would be better than a portfolio made up a few, well known ETFs that have good diversification and reflect my investment goals (appropriate levels of risk and income). But I'm not a finance professional and worry that I'm not doing the right thing for myself.

[+ azdr0710]

yes, I have a managed account for most of my "cash" assets.....fee is 0.7%.....very happy with it.....a few friends do their own investments, but I very much trust this company and am glad to let the pros take care of it....

[Nebost]

I used a manage account for a couple of years. While the returns were very acceptable (even net of fees), they kept selling very small shares of the total portfolio...it was too much for me to follow, and I needed to get a better sense of how my money was being invested , and what direction was being taken. So I left them. But it was only because I like more control, not that they charged exhorbitant fees or didn't perform.

[Diverdan]

I have been very happy with a managed fund for years. Once a year the manager and I review my goals, look at market trends, etc., and then we may make some adjustments. He really only makes money when he does a good job of investing, and not by the trades that are done. So far, he has beat the market indices that are appropriate for my mix of stocks, bonds, international funds, etc. Until recently I was also responsible for a multi-million endowment fund, and we used a manager on the same basis. He has a low flat fee, but as the endowment grows, he earns more. Pick an investment manager wisely. I have always used someone that is part of a large firm. I never worry about the trades, as that is what he gets paid to do, but I do monitor the portfolios every month, and have a comprehensive review quarterly or semi-annually depending on what is happening in the markets.

[gallahadesquire]

Let me endorse the idea of having an investor account. Although my advisor is a fraternity brother, he knows his stuff and has a relatively unique view on the economy, which has yet to fail us. We missed the tech run up in 99 it is true; we also miss the type blow up in 2000.

 

I'm not the only one who thinks he is good. He recently left one major brokerage and went to another. He took 98% of his client tell with him. When I'm asked "do I like my financial advisor?" I say well I've been with him for 32 years.

 

I think the best reason to have a managed account is your retirement accounts. I had a total of seven different IRAs, 403(b)s, and the like. When it came to start taking withdrawals, I was hit with the state of panic, as I didn't know from which account I should be drawn first. He simply said just transferred to us and we'll take care of it.

 

Having himaround his made my financial life simpler and more secure. I think that I pay 0.8% fee which is more than worth it for services obtained.

 

One does need to go shopping for an appropriate advisor. I'm glad to endorse this fellow at any time, but I know there are equally good advisers out there. Anyone who seems to be stuck to the "company line" or restrict themselves to the company's products I would consider suspect.

 

As has been said many times, managed Mutual funds rarely outperform the market. I think for the best combination of diversity inappropriate investments, and appropriate financial advisor is the way to go.

[+ sam.fitzpatrick]

When I left my employer of 24 years a few years ago, I took my 401(k) rollover and split it into two separate IRAs with an investment advisor. One account is a managed account and it has performed well the last 5 five years. The other account I have managed with my advisor. The managed account has performed slightly better and it is more diversified than the account I manage.

 

The one thing I did with the managed account, it to make sure that the investments would not be invested in stocks from the industry where I continue to work. In the other account I have invested in my employer's stock, and I want to keep the portfolio divested.

[Irtwo]

Where you guys getting these fees of 0.7% and 0.8%? That sounds very cheap to me. Most charge 2% to 3%, at least at the big firms. You're talking about flat percentages, right?

[+ azdr0710]

Where you guys getting these fees of 0.7% and 0.8%? That sounds very cheap to me. Most charge 2% to 3%, at least at the big firms. You're talking about flat percentages, right?

 

 

I'm getting 0.7% at USAA, but I'm grandfathered in and I think their fees have gone up.....yes, flat percentage

[Frequentflier]

I've had managed accounts at both Merrill Lynch and UBS. Both charged 1%. I now have accounts at Vanguard and Fidelity. Both assign a manager with no fee. These two accounts have performed better over the past 10 years than what I experienced with UBS and Merrill. One thing that was annoying (and at least for UBS is still the case) is that many funds are not available for purchase. As an example, if there is a great Vanguard or Fidelity fund you and your advisor would like to buy for your UBS account, you can't. So, whenever asked, I point people to Schwab, Vanguard and Fidelity for no cost and as specific as you want advice. Most investment advisors and fund managers cannot beat the market. There are plenty of low cost investments and fee free accounts even rich people take advantage of.

[+ Topseed]

Read John Bogle. You can start and stop with him.

[+ SundayZip]

When I left my employer of 24 years a few years ago, I took my 401(k) rollover and split it into two separate IRAs with an investment advisor. One account is a managed account and it has performed well the last 5 five years. The other account I have managed with my advisor. The managed account has performed slightly better and it is more diversified than the account I manage.

 

The one thing I did with the managed account, it to make sure that the investments would not be invested in stocks from the industry where I continue to work. In the other account I have invested in my employer's stock, and I want to keep the portfolio divested.

 

Thanks SamF, Do you think that the managed account out performed the non managed account by more than the management fee? If so, do you think it was due to the skill of the account manager? Even as I ask the question, I recognize that it may be tough to know -- especially if the two accounts have a very different mix of assets.

[+ SundayZip]

Read John Bogle. You can start and stop with him.

 

Hey Topseed, I haven't read any of John Bogle's books, but it looks like his last one is available for download from Amazon. I'll take a look.

[robberbaron4u]

Following the deaths of my partners, I "retired" from active business pursuits and placed some but not all of my potable assets, perhaps 25% of my net worth, with a "money manager" working out of London with whom I had a long acquaintance on a percentage basis and I have been pleased with that particular arrangement. I have chosen not to "play the market" any more, but, I do hold my former company's Indochinese bank stocks and a portfolio of public utility stocks which are paying 5% +/- in separate accounts; being that these stocks do not constitute a speculative venture, they "tend" themselves.

[down_to_business]

The management fees you pay can also be related to the size of the assets under management. I liked Fidelity, but predominately did it self-directed there. I had mixed experiences with TD Ameritrade.

 

In general, a good place to check out is the couch potato investing portfolio, simple to follow, very low fees and effective. http://www.dallasnews.com/business/columnists/scott-burns/20150214-couch-potato-investing-trumps-expert-investing-once-more.ece

[Kenny]

The flat fee percentage should decrease as the asset value grows. Say, 1% for the first $X, .5% for the next $x.

[Diverdan]

Kenny is right... the fee percentage should decrease as the asset value grows. My current fee is as noted in an earlier post... 0.7% I also benefit with a year end discount for having been with this group for a very long time.

[+ Topseed]

SundayZip: Thanks for your interest in John Bogle. He founded Vanguard, and so of course he preaches no-load funds. I think he makes a great deal of sense; his characterization of the investment industry as an "extractive" business (in terms of fees charged to customers irrespective of performance) is spot-on in my thinking and should be heeded by any individual investor.

 

In short, I always counsel individual investors first to answer this question: "How do you imagine your life in 3 to 5 years?" Once an investor fully grasps his VALUES, then it's time to talk numbers. And not the other way around. An investment program should be aligned and MIRROR the investor's values; any investment professional who does otherwise is doing his clients a disservice.

[+ sam.fitzpatrick]

Thanks SamF, Do you think that the managed account out performed the non managed account by more than the management fee? If so, do you think it was due to the skill of the account manager? Even as I ask the question, I recognize that it may be tough to know -- especially if the two accounts have a very different mix of assets.

 

My performance comparison was net of fees in both accounts. The managed account is being handled by a committee of five brokers rather than an individual manager. I'm sure the collective thoughts of the individuals help improve the performance.

[+ SundayZip]

Read John Bogle. You can start and stop with him.

 

Finished his last book this morning and it's certainly answered my question about moving assets to a managed account. Thanks for the recommendation! I can already see some adjustments that I'll make right away and some that I'll run past my financial adviser.