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JMacDonald

Unhappy Ing Client At M*

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Guest Joel Lee Frank

<!--QuoteBegin--ira+Jul 7 2005, 11:55 PM-->

QUOTE (ira @ Jul 7 2005, 11:55 PM)
<!--QuoteEBegin--> James,

 

Like Steve and you, I also made some major investing mistakes. I didn't know that no load funds existed in th los angeles schools where I worked , and was sold a fund that was misrepresented to me by the agent. After a while, I switched to a low cost, no load mutual fund company.

.

Now that I know how these sharks work, and am successfully investing, I wish to share this information with others so they can avoid shark attacks.

 

Welcome to the site. Good luck in retirement.

 

Ira <!--QuoteEnd-->

<!--QuoteEEnd-->

I just had a conversation with a couple that have about 6 college degrees between the two of them. They have been investing in mutual funds for a dozen years and their accounts are worth about $1,000,000. They never heard of the term "no-load". Go figure!

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Guest TR1982

JP IN NJ

 

I am sorry but I have no sympathy for your bellyaching. I have had many clients over the last 15 years who played this game with me. They love making money but hate losing it. They will look for any scapegoat they can to blame for the ups and downs of the market. It's a little hard to take that the higher costs in your VA are the reasons for its poor performance. In fact, it's baloney. You may have paid a higher price (1%) but that doesn't explain why the S&P 500 is down -2.59% on a 5 yr annualized basis at this time. The simple truth is this: most of these VA's (including yours) have excellent money managers in them (many of them are frequently spoken of here including Vanguard). The problem is not the VA or the money manager or advisor. The problem is the client who is motivated by greed and won't follow the advice the advisor is giving. I had so many clients over the last half of the 90s who insisted they should be in tech funds it makes me sick. I told them not to do it and many did anyway. They got destroyed. Now they want to come here and proclaim that their "high priced VA" was the cause of there underperformance. Right. Try the next excuse, please.

 

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I just had a conversation with a couple that have about 6 college degrees between the two of them. They have been investing in mutual funds for a dozen years and their accounts are worth about $1,000,000. They never heard of the term "no-load". Go figure!

 

Joel, you're not suggesting that investment success is possible WITHOUT no-load funds, are you?

 

I'm marking this day on my calendar.

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TR1982 -

 

Your points are well taken and thanks for your response. In 15 years, though, I don't remember ever once rejecting the advice of the Valic advisors overlooking the account. I would ask a few questions, and then just go ahead and follow their suggestions, and sign on the .

 

To Steve and Ira: Thanks also for your responses.

 

I am seeing once again that as we seek to make ourselves financially self-educated, obtaining second opinions is always a good thing to do. All of you are providing a great service to those glancing in to read through this website and see the discussions taking place in threads like this one.

 

James P.

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Guest Sierra
I just had a conversation with a couple that have about 6 college degrees between the two of them.  They have been investing in mutual funds for a dozen years and their accounts are worth about  $1,000,000.  They never heard of the term "no-load".  Go figure!

 

Joel, you're not suggesting that investment success is possible WITHOUT no-load funds, are you?

 

I'm marking this day on my calendar.

You could put that calendar aside! Please don't be fooled by the current account value. They have been quite unsuccessful! They are in the process of transferring all of their loaded mutual funds to a no-load firm. They are embarrassed to learn that they paid $100,000 in fees to the brokerages over the past dozen years.

 

Why is it that a purchaser of a no-load fund knows of the availability of loaded funds but the loaded fund purchaser may very well NOT know of the availability to buy no-load.

 

Do you feel that a commissioned salesperson should be required to tell the prospect that the same type of investment may be acquired without paying a sales commission? Or is it pure caveat emptor?

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Guest Sierra

PRINCIPLE: Those who invest in the no-load variety will never invest in the loaded variety.

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Hi,

TR: you like to bring up the Index 500 as an example of poor performance. I have owned the Index 500 for some time. I have it in a taxable account. It has done well for me.

 

However, there have been some funds that have done well over the past five years: Mid-Cap Index-- +9.02%; Small-Cap Value Index-- +14.29%; and the REIT Index-- +19.62%. I have these funds in my tax-deferred accounts. Maybe James' agent didn't have him in a diversified portfolio.

 

Also I would say that my portfolio would have suffered from those high fees that go with VAs. I feel fortunate that I learned to do it myself and didn't have to suffer the advice of an agent. Best Wishes.

 

Joe

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Guest TR1982

Joe,

If the agent didn't have in a diversified portfolio then the complaint should be against the agents advice. I have no problem with that. What I disagree with is blaming the poor performance on the fee structure in the VA. If he had invested his money in Vanguard Windsor II in that contract, subtracting out 1% for the additional cost would not have made the investment an "underperformer". That's the kind of logic that's spouted around here with no one contesting it.

 

Regards,

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You could put that calendar aside! Please don't be fooled by the current account value. They have been quite unsuccessful! They are in the process of transferring all of their loaded mutual funds to a no-load firm. They are embarrassed to learn that they paid $100,000 in fees to the brokerages over the past dozen years.

 

I hope I'm unsuccessful enough to pay $100k in fees and retire with more than a million dollars. I could really wallow in that sort of dismal failure.

 

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To follow up: the fact that they paid $100k in fees is meaningless without further context, of course. Tell me they started with $900k, they now have $1 million and they paid $100k in fees, and I'll agree that they were unsuccessful, regardless of time frame. Tell me they contributed $150k over 25 years, paid $100k in fees and are retiring with $1 million, and I'll think differently.

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However, there have been some funds that have done well over the past five years: Mid-Cap Index-- +9.02%; Small-Cap Value Index-- +14.29%; and the REIT Index-- +19.62%. I have these funds in my tax-deferred accounts. Maybe James' agent didn't have him in a diversified portfolio.

 

Also I would say that my portfolio would have suffered from those high fees that go with VAs. I feel fortunate that I learned to do it myself and didn't have to suffer the advice of an agent. Best Wishes.

 

 

 

Joe, how would you feel if it had been an agent that led you to the funds you listed here? In a market which has drifted downward over five years, would you not think the agent had done his/her job successfully if (s)he had shown you funds that returned 8.02%, 13.29% and 18.62% to you, after a 1% fee that (s)he had earned?

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Hi,

FT: My point is that I did it myself and have saved myself thousands of dollars in fees. This stuff is not that difficult. It does require a person to do some homework. If you don't want to do the homework, then you are at the mercy of the agent. As we have seen around here at this website, many people are unhappy with their agents. Apparently too many people are not being well served by their agents. Best Wishes.

 

Joe

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Guest TR1982

Joe,

It may not be that hard, but you are hardly "at the mercy of the agent". I guess you could operate or diagnose yourself if you are sick, instead of putting yourself "at the mercy" of your doctor. Why don't you do that as well?

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Joe, I'm not sure if it's so much that they're unhappy, as it is that they're oblivious. Then when they DO start doing a little homework, they find out they've been paying a lot, and at that point start to analyze what they've gotten in return and/or hold the agent accountable.

 

Either way, it really leaves me scratching my head: unless you are in a single-provider district, why on earth would anyone simply accept substandard service/advice? There's no reason anyone should be at anyone's mercy; if anything, the agents should be at OUR mercy, since we have options if they fail us.

 

Well, at least for now we have options...we'll see what happens when the IRS is done rewriting the code.

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Hi,

If you don't know something about a subject, you are at the mercy of "experts." If it is something medical, people often get second opinions. People need to question things.

 

Last year, the dealer I take my truck to recommended an engine oil flush. This service cost $120. I asked him why as my truck was new with only 12,000 miles on it. He didn't give a satisfactory answer. He stated that my engine could be damaged without doing it. That got my attention. I checked around with mechanics and the auto club. Nobody and I mean nobody thought that an engine oil flush was necessary. I wrote to GM about the dealer. The customer rep just listened but offered no answer to my questions. I next wrote to the CEO of GM. I talked to his office. The answer was that they trust their dealers. Well, I don't trust their dealers and told them so. Now, I don't go to that dealer anymore to have my truck serviced, and I won't buy another GM vehicle. If I didn't know something about cars, I probably would have paid the $120 for the unnecessary service.

 

It is caveat emptor for trucks and 403bs.

 

Joe

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