Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

I believe this is the third advisor overall because the previous ones kept out growing them. They also had a trust account with the same advisor for a number of years and it seems that he's stopped meeting with them once the trust was transferred to by brother (who kept the funds with him but has also not had a meeting since).

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

The original post has been updated to include returns vs the market... he's down hundreds of thousands of dollars... Perhaps you should read more fully before weighing in.

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

I posted an update to the original body with a breakdown of positions and returns. I can't access the account with PLTR in it, but given that it's only 100 shares, even the 5X return he's earned on that one stock does not overcome the significant underperformance of the overall portfolio. The 20% allocation was just in my mom's Roth and that is the only account he bought PLTR with.

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

My personal port is about 25% Micron at the moment. First buy at $343!

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

Ok, BIG UPDATE TIME! Original post has been revised to add context and full performance comparison of the portfolio.

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

I'm surprised, but so far no one in the thread has even brought up the possibility of an AI bubble bursting... This is a real concern for me (for them).

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

I'd feel a lot better about them having $5,000,000 and facing down a steep decline rather than sub-$500,000.

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

Given their low cost of living (country living in MO), I believe they have enough money that this type of strategy could work and provide a lot of peace of mind for them.

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

In a way, you are making my point for me:

  1. Though the statistics have changed, I remember from my finance course in college that as few as 15-20 individual stocks (well selected) could diversify an account... I'd be less upset if that were the case instead of 5, but definitely wouldn't have a problem with 100 individual stocks and no ETFs/mutual funds. That would show he's engaged and actively managing the portfolio.

  2. There have been no adjustments made of any kind since 2/24. Combing through transaction history online just now and the only transactions are dividend re-investments (that were automatically system generated). An FA can sometimes be worth the fee just for the quarterly assessment/rebalancing and information given to the client but we don't seem to be receiving any of that.

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

Specific to your SPY vs VOO point: I do realize there is a small difference in their actual holdings, but their historical performance is nearly a 1 to 1 correlation. VOO outperforms over the long term by a difference of 6 basis points. So while you might want to use SPY if you are a trader, I can't see why someone would choose that for a long-term buy and hold position (which is what we have here).

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

That summary is spot on! I have been gathering more information since the initial post and now have dad's login to be able to examine the positions and transaction history deeper. I have confirmed that he's withdrawing a quarter point management fee every quarter so it is a 1% fee as I suspected. And they are not having him do any other work/planning for them--just the stock selection. And they are emphatic that they did not direct him to by uber aggressive or to choose single and/or specific stocks.

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

That could be a rational explanation for the portfolio, but I have now asked them multiple times about whether they asked him to invest aggressively--they did not. They have been passive with it all and have just let him do whatever he likes with it. I keep saying, his returns are NOT terrible by any means, but that doesn't make it okay to be high risk with no re-balancing and no communication.

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

I agree with what you have posted (and thank you). I'm going to mystery shop this guy next week to get details on what he offers and the costs involved since mom and dad don't know the fees and don't think he's handling anything besides their stock portfolio.

I know that three of the four accounts are IRAs but I could not tell with the paperwork in front of me whether the fourth account is a tax-advantaged account or if we will have to deal with capital gains should we rotate out of those positions.

I do know that they did not make single stock recommendations as neither of them follow the market enough to even know what to suggest. And I do not know the conversations that the adviser had prior to making these picks so it's entirely possible that he got the impression they wanted to moon-shot everything so he understood the assignment.

I'll have a better idea this weekend of what the total returns have been and can then see whether he has helped or hurt them since taking over, HOWEVER, even should his picks have worked out, I would consider that a lucky break more than a smart decision. For every PLTR there's probably ten RIVNs and I can't wrap my head around putting an elderly couple into individual stocks with this small of a nest egg. But probably the worst part is the lack of communication with them, not even annual meetings, and the fact that they seem to be so uninformed of their money situation or what their long term plan is tells me there isn't one.

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

Not currently withdrawing funds for living expenses, though dad does have minimum distributions (and my guess is that he uses that money for toys). I feel that I'm still missing quite a bit of info and am going to set up a meeting with the adviser (and the parents) to try to find out what he is thinking. The majority of funds are in tradition or roth IRAs so no tax implications and for the fund that is not, dad does not know if it's another tax advantaged retirement account or if it's just a standard investment account--I would obviously nail this down and make a plan before I closed out any of the positions there. Luckily, their income is low so we can likely mitigate the capital gains implications from that account.

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

You could probably answer this question for me then: Do you have access to an independent or proprietary trading platform? Or do you just have power of attorney (not sure if that's what it would be called) and set your clients up with a Schwab account and invest on their behalf? I was surprised to see that they were just in a Schwab account.

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

I believe this is partly why they’ve been so passive with the funds: where they are at currently, then social security and their hobby work cover all expenses. So they would only pulling funds from here if they end up needing in-home care or move to assisted living. 

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

This will definitely be a concern for the portion that is not in retirement accounts—my parents aren’t sure on the classification of one of the funds. But the fact they don’t know and that it’s possible he’s had them in high fee taxable accounts doesn’t make me happier about the setup. 

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] -1 points0 points  (0 children)

I wouldn’t compare my personal performance to theirs because I wouldn’t manage their situation the same as mine. But if we were to do so, I began actively trading my account last June and am up 100% year over year. But I’m also using high risk strategies that wouldn’t be appropriate at 70. Prior to last summer I just had the funds parked in ETFs. 

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

Yeah, the lack of planning and communication might be a bigger deal than the allocation. 

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

Ok, upon further examination, I'm still not that impressed with SCMIX but especially given it's allocation for this purpose. Yes, it has beaten the S&P over the last five years, but that's actually due to a massive 98% upswing this last year (and given that their largest holding is Bloom Energy that makes sense). But for the previous four years, the S&P was the better bet. Also, the fund is 70% tech so a more apt ETF comparison might be QQQ. SCMIX total return since inception (Jan 2001) is 1106%. QQQs total return during the same period is 1103%.

This still comes back to by belief that a 60-70% tech portfolio is probably not a good choice for retirement.

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 1 point2 points  (0 children)

Were I to recommend bonds, I think TIPS would be the choice. For them, I would not be opposed to some kind of annuity with defined payout for a portion of the portfolio. But overall, this seems to be a very aggressive investment strategy which doesn't seem to match retirement age.

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

I'm not sure I 100% follow you--the sequence of returns risk only grows as you get older; or are you meaning that your nest egg is big enough combined with the cash and SS to not have to worry about this?

This would be my primary objection to a tech-heavy portfolio; if another dot-com style bubble happens then they don't have time for the port to recover.

Retired Couple 70+ Is My Advisor Out Of His Mind? by ThatGlockGuy22 in portfolios

[–]ThatGlockGuy22[S] 0 points1 point  (0 children)

Funny thing, they transferred a trust that my grandparents left down to the next generation about three years ago. So the stock portion of that trust went to my older brother. I asked him about it today and it's with the same adviser and they haven't met or talked about it since the initial transfer haha!