I hope you have been enjoying Spring and the slow warm up in temperatures.
Work has been busy, and I have spoken with many clients and potential clients. I have put together a list of some of the top questions I was asked over the last few months.
Are any of these questions similar to ones you have?
- Am I on track to be able to stop working when I want to?
- Are my investments aligned with my priorities?
- How can I simplify my savings and investment plans?
- How can I get on the same page with my spouse or partner about our goals and what we need to do to achieve them?
- How do I use the money I have inherited wisely, and respectfully?
PS: If any client would like a current copy of our ADV Form Part 2 please contact us at and put 'Form ADV' in the subject line.
Chris Long, CFP®
Long Financial Planning
Many brokers who work for the big banks, JPMorganChase, Goldman Sachs, Morgan Stanley, Wells Fargo, etc. push their company’s proprietary mutual funds. That’s no surprise, they work for the bank, and they owe a fiduciary duty to their employer, not to their clients.
According to a recent New York Times article, a majority of the proprietary mutual funds from major banks have underperformed their benchmark indices over a 10 year period
. This is even after accounting for funds that were closed or merged. If those had been included my guess is that the results would look even worse for the big bank mutual funds. One reason why the funds did so poorly could be the high fees, about 5 times higher than the fees from Vanguard. Not surprisingly the Vanguard funds outperformed the big bank funds over the 10 year period.
So the next time someone tries to push one of these funds on you, tell them “I’d rather not under-perform the market so I can pay your bank 5x more in fees than I need to.” If you see these high fee funds in your 401k plan, make sure to ask HR about it and lodge a complaint. Your employer is responsible monitoring fund fees as part of their management of the plan.
This is a sign that should be hanging from the doors on most hedge fund offices. The sketch guy
form the New York Times explains why people are willing to pay for complicated strategies that have had much worse outcomes than simple straightforward ones.
This plays into a misconception that we have when it comes to investing, that complexity and lots of activity is how your advisor or investment manager creates value. A high value investment strategy should be clear, simple, and low cost.
Removing complexity from investments allows the focus to be where it belongs, which is the complexity in our lives. We all face a number of complex and interconnected choices when it comes to our priorities, values, and money. Helping us untangle this complexity, understand tradeoffs, and letting us see possible outcomes based on our choices is where the real value of a financial advisor comes. In addition a good advisor can help us not make really poor investment and money decisions when our emotions kick in during a turbulent market.
I have recently worked with a number of clients who are the executors of an estate. This can be a complex and time consuming process. I recently stumbled across an online tool called Estate Exec https://www.estateexec.com/ .
The tool looks interesting, although I do not know much about it so I cannot endorse it. I am interested in hearing if anyone has used this tool or one like it to help them. I would see this tool as a supplement to an good estate planning attorney vs. a substitute for one.
| Long Financial Planning is a Fee-Only(TM) advisor for individuals and small company retirement plans.
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