See if we can have a serious thread...

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troll's picture
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B24's picture
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Fruitless waste of time.  No-load, DIY'ers have themselves convinced that they can do it better than anyone.  Truth is, you can build a great portfolio with Vanguard Funds, you just have to know WHICH funds to use, and HOW MUCH.  In addition, you need to know when to re-allocate, etc.
This is the big point that no-loaders miss.  It's not so much about the fund family, but about the combination of funds that you buy and when, and what is most appropriate for you.
 
My recommendation - don't try to argue with returns and comparisons and such.  Then you're just arguing one product versus the other.  You will lose (even if you are right you will lose the game).  Help him see clearly about asset allocation, risk levels, inevsting for income (if he needs income), etc.  You need him to see that he needs YOU, not American Funds, or Edward Jones, or Vanguard.

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You can run a Morningstar hypo through JonesLink. I believe you must run them seperately though and tell the client that the funds have different objectives, as you are not allowed to show people funds like that compared to each other as you are likely comparing apples to oranges.
 
In my limited experience those Vanguard funds are hard to beat because their expenses are low comparitively speaking, and the performance in many cases is comparable or better. The only way I have won any business from Vanguard evangelists is to talk about having you help manage the funds. If anyone has different ideas it will be good to hear about it.

SometimesNowhere's picture
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B24 wrote:Fruitless waste of time.  No-load, DIY'ers have themselves convinced that they can do it better than anyone.  Truth is, you can build a great portfolio with Vanguard Funds, you just have to know WHICH funds to use, and HOW MUCH.  In addition, you need to know when to re-allocate, etc.
This is the big point that no-loaders miss.  It's not so much about the fund family, but about the combination of funds that you buy and when, and what is most appropriate for you.
 
My recommendation - don't try to argue with returns and comparisons and such.  Then you're just arguing one product versus the other.  You will lose (even if you are right you will lose the game).  Help him see clearly about asset allocation, risk levels, inevsting for income (if he needs income), etc.  You need him to see that he needs YOU, not American Funds, or Edward Jones, or Vanguard.
 
Yeah, what he said...

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Truth Windy, If you are really doing 25k+ months... eff em'.  You dont need em, not worth your time, headaches, or posts.  I would be interested to here what dk techniques you find to be most affective though.  Who are we kidding, if your doing as well as you say you are with 0 assetts, I wanna hear whats working.
 
I apologize in advance for the firestorm that will come for asking Wind for his methods..... ok, maybe this is a terrible idea.  This thread could get out of hand quick.

troll's picture
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voltmoie's picture
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Only thing I've found that works with DIY'ers is advisory solutions.  I sell them on how its for our "sophisticated" clients.  I don't even go into the A shares with these guys because truth me told I'm sorta like that guy. Granted I've only done this three times but it worked 3 out of the 5 I've pitched.  Might be an angle he's not thought about.

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wind3574 wrote: Right now, B24 is right, He doesn't value my advice.
 
See the comments under "clients vs. customers" thread from a while back.  In my experience, the effort you'll expend on trying to impress your value upon the engineers, statisticians, Mensa members and VanTRoweFidelSchwabites would be much more effectively applied on coming up with your next good seminar idea, or even imagining what it would sound like if Barney Frank and Sylvester the Puddy Tat broke it down ol' skool on the rap stage. 

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I mostly agree with ice.  If  you're even going to have a chance with this guy you have to show him something that includes the company he's convinced himself is the best.  I'll bet that he's not rebalancing like he should, doesn't have a correct asset allocation, doesn't have a plan at all.  He probably just reads Money or watches CNBC and they've told him Vanguard rocks. 
 
Here's where I don't agree with ice.  It's relatively easy, using a hypo, to show him how any number of funds can beat whatever he's got.  There are only about 10 funds that I see most often.  Index, Primecap, Windsor, and some others off the top of my head.  You can show him those hypos if you want to play that game.   Like the others said, I wouldn't waste your time on A shares.  I would show him Advisory Solutions like the others said.
 
Just keep dripping on the guy.  Give him service like you would any other $400K account and you will most likely win the biz eventually. 

troll's picture
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Ron 14's picture
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Spaceman Spiff wrote:I mostly agree with ice.  If  you're even going to have a chance with this guy you have to show him something that includes the company he's convinced himself is the best.  I'll bet that he's not rebalancing like he should, doesn't have a correct asset allocation, doesn't have a plan at all.  He probably just reads Money or watches CNBC and they've told him Vanguard rocks.  It's relatively easy, using a hypo to show him how any number of funds can beat whatever he's got. 
 
Just keep dripping on the guy.  Give him service like you would any other $400K account and you will most likely win the biz eventually. 
 
Use a hypo to show him how any number of funds can beat whatever he's got ? Actually that doesn't show anything besides what has happened in the past. Way to add value by doctoring a hypo to beat a portfolio after the fact.

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I would tell him he is not the type of client I am looking for. I wasted 4 yrs at Jones trying to convince people they need my help. When I left I finally figured out that it isn't worth the battle. Those you do convince will never be happy and will tell other people how unhappy they are, others who you never will convince will try to keep the conversation going over years..

Move on.. Tell him that you don't think he is the type of client you are looking for since he doesn't value your advice... The rest of these guys are right, don't doctor a morningstar hypo, in the end it never works out.. performance comes and goes.. ask Putnam

Sam Houston's picture
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Had a similar situation happen to me last month.  Prospect focused on cost, I focused on professional advice.  I asked him a simple question.  If I could show him how my advice would benefit him, would he do business with me now?  He said he doubted how I could, but yes, if I could show him my value he would bring sign the transfer on his $300m account (I wouldn't bother for $50m).  I did a fact finder, got him to agree that we were on the same page as to time frame, goals, and risk. 
 
Then I pulled out a hypo of my generic portfolio that fit his situation and asked him which no load funds and in what proportion he was considering.  Blank stare.  He hadn't had a chance to do that yet.  I said ok.  Please initial the first 5 pages of the hypo.  He did without looking at the hypo.  I said when you figure out your portfolio I will compare yours to mine and you can decide which is best.  He asked why I had him initial the hypo pages.  I explained that I wanted him to know that what I would have shown him before knowing what he picked is the same as after I find out which funds he choses.
 
Two days later he called me with a portfolio of no load funds.  I set an appointment for the next day.  He came in and I compared the two portfolios.  14 year hypo.  I had better returns in 12 of 14 years, 3 yr, 5 yr, 10 yr, since inception, lower beta, lower std dev, higher alpha.  I also explained to him that my numbers included about 50 bps in MF internal fees and my 150 bps, while his portfolio did not.  I asked him if now he could see the value that I provide my clients.  He signed the transfer.
 
I don't recommend this for most prospects.  Your value should be your service, not your performance.  But you have to pander to what the client views as most important.  I sold him on numbers, I will keep him on service.

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Unless your numbers decrease. then he won't care about service..

Ron 14's picture
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Sam Houston wrote:Had a similar situation happen to me last month.  Prospect focused on cost, I focused on professional advice.  I asked him a simple question.  If I could show him how my advice would benefit him, would he do business with me now?  He said he doubted how I could, but yes, if I could show him my value he would bring sign the transfer on his $300m account (I wouldn't bother for $50m).  I did a fact finder, got him to agree that we were on the same page as to time frame, goals, and risk. 
 
Then I pulled out a hypo of my generic portfolio that fit his situation and asked him which no load funds and in what proportion he was considering.  Blank stare.  He hadn't had a chance to do that yet.  I said ok.  Please initial the first 5 pages of the hypo.  He did without looking at the hypo.  I said when you figure out your portfolio I will compare yours to mine and you can decide which is best.  He asked why I had him initial the hypo pages.  I explained that I wanted him to know that what I would have shown him before knowing what he picked is the same as after I find out which funds he choses.
 
Two days later he called me with a portfolio of no load funds.  I set an appointment for the next day.  He came in and I compared the two portfolios.  14 year hypo.  I had better returns in 12 of 14 years, 3 yr, 5 yr, 10 yr, since inception, lower beta, lower std dev, higher alpha.  I also explained to him that my numbers included about 50 bps in MF internal fees and my 150 bps, while his portfolio did not.  I asked him if now he could see the value that I provide my clients.  He signed the transfer.
 
I don't recommend this for most prospects.  Your value should be your service, not your performance.  But you have to pander to what the client views as most important.  I sold him on numbers, I will keep him on service.

That right there my friends is a professional financial advisor. Great stuff Sam.

SometimesNowhere's picture
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Sam Houston wrote:Had a similar situation happen to me last month.  Prospect focused on cost, I focused on professional advice.  I asked him a simple question.  If I could show him how my advice would benefit him, would he do business with me now?  He said he doubted how I could, but yes, if I could show him my value he would bring sign the transfer on his $300m account (I wouldn't bother for $50m).  I did a fact finder, got him to agree that we were on the same page as to time frame, goals, and risk. 
 
Then I pulled out a hypo of my generic portfolio that fit his situation and asked him which no load funds and in what proportion he was considering.  Blank stare.  He hadn't had a chance to do that yet.  I said ok.  Please initial the first 5 pages of the hypo.  He did without looking at the hypo.  I said when you figure out your portfolio I will compare yours to mine and you can decide which is best.  He asked why I had him initial the hypo pages.  I explained that I wanted him to know that what I would have shown him before knowing what he picked is the same as after I find out which funds he choses.
 
Two days later he called me with a portfolio of no load funds.  I set an appointment for the next day.  He came in and I compared the two portfolios.  14 year hypo.  I had better returns in 12 of 14 years, 3 yr, 5 yr, 10 yr, since inception, lower beta, lower std dev, higher alpha.  I also explained to him that my numbers included about 50 bps in MF internal fees and my 150 bps, while his portfolio did not.  I asked him if now he could see the value that I provide my clients.  He signed the transfer.
 
I don't recommend this for most prospects.  Your value should be your service, not your performance.  But you have to pander to what the client views as most important.  I sold him on numbers, I will keep him on service.Just a question...How do you walk around with basketballs for nads?That's is bad@$$....

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SometimesNowhere wrote: Sam Houston wrote:Had a similar situation happen to me last month.  Prospect focused on cost, I focused on professional advice.  I asked him a simple question.  If I could show him how my advice would benefit him, would he do business with me now?  He said he doubted how I could, but yes, if I could show him my value he would bring sign the transfer on his $300m account (I wouldn't bother for $50m).  I did a fact finder, got him to agree that we were on the same page as to time frame, goals, and risk. 
 
Then I pulled out a hypo of my generic portfolio that fit his situation and asked him which no load funds and in what proportion he was considering.  Blank stare.  He hadn't had a chance to do that yet.  I said ok.  Please initial the first 5 pages of the hypo.  He did without looking at the hypo.  I said when you figure out your portfolio I will compare yours to mine and you can decide which is best.  He asked why I had him initial the hypo pages.  I explained that I wanted him to know that what I would have shown him before knowing what he picked is the same as after I find out which funds he choses.
 
Two days later he called me with a portfolio of no load funds.  I set an appointment for the next day.  He came in and I compared the two portfolios.  14 year hypo.  I had better returns in 12 of 14 years, 3 yr, 5 yr, 10 yr, since inception, lower beta, lower std dev, higher alpha.  I also explained to him that my numbers included about 50 bps in MF internal fees and my 150 bps, while his portfolio did not.  I asked him if now he could see the value that I provide my clients.  He signed the transfer.
 
I don't recommend this for most prospects.  Your value should be your service, not your performance.  But you have to pander to what the client views as most important.  I sold him on numbers, I will keep him on service.Just a question...How do you walk around with basketballs for nads?That's is bad@$$....
 
What is the worst that could happen, he could tell me no?  He challenged me, I just asked him to prove it and I was prepared.  Not my first rodeo.

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Ron 14 wrote:Spaceman Spiff wrote:I mostly agree with ice.  If  you're even going to have a chance with this guy you have to show him something that includes the company he's convinced himself is the best.  I'll bet that he's not rebalancing like he should, doesn't have a correct asset allocation, doesn't have a plan at all.  He probably just reads Money or watches CNBC and they've told him Vanguard rocks.  It's relatively easy, using a hypo to show him how any number of funds can beat whatever he's got. 
 
Just keep dripping on the guy.  Give him service like you would any other $400K account and you will most likely win the biz eventually. 
 
Use a hypo to show him how any number of funds can beat whatever he's got ? Actually that doesn't show anything besides what has happened in the past. Way to add value by doctoring a hypo to beat a portfolio after the fact.
 
So, Sam is a financial professional because he used a hypo to sell, buy my comment on using a hypo to sell makes me something less than a professional?  The difference is...?
 
BTW, Sam's approach is great.  I didn't want to make it sound like I was discounting his procedure.    

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The fact that you don't get the difference proves the point. You are showing the hypo after knowing the clients fund choices, Sam has the portfolio picked out already.

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wind3574 wrote:Sam. I may just copy your procedure with this feller. Thats brillaint.
 
You need to look up what Alpha and Beta and Standard deviation mean before diving into those shark infested waters.  It could get dangerous in there.

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Wait, wait, wait, wait wait.....
Why would YOU want to spend YOUR time proving to HIM that it's better. Turn the table. Ask HIM to prove to YOU how it's better. Tell him to show you. It will free up YOUR time to go find another client :)
 

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Takingnames wrote:Wait, wait, wait, wait wait.....
Why would YOU want to spend YOUR time proving to HIM that it's better. Turn the table. Ask HIM to prove to YOU how it's better. Tell him to show you. It will free up YOUR time to go find another client :)
 
 
Huh?  Don't we spend our time acquiring clients by showing them we are better than the alternative?  Or should I be calling with "Hi this is Sam, you need to prove to me that what you have is  better than what I can do and if it isn't you can pay me"?  Tell me I read that wrong.

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3rdyrp2 wrote:wind3574 wrote:Sam. I may just copy your procedure with this feller. Thats brillaint.
 
You need to look up what Alpha and Beta and Standard deviation mean before diving into those shark infested waters.  It could get dangerous in there.
 
FYI, all the MPT stats are for my own financial geekdom.  My pitch to the prospect was much simpler.  I was not surprised my portfolio was better, just at the magnitude.

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Sam Houston wrote:3rdyrp2 wrote:wind3574 wrote:Sam. I may just copy your procedure with this feller. Thats brillaint.
 
You need to look up what Alpha and Beta and Standard deviation mean before diving into those shark infested waters.  It could get dangerous in there.
 
FYI, all the MPT stats are for my own financial geekdom.  My pitch to the prospect was much simpler.  I was not surprised my portfolio was better, just at the magnitude.
 
I'm sure its more than you'd want to post on here, but I'm curious how you would convince a client by using a Morningstar report that your portfolio is better than the one he already has without using the numerical data on there.  Or what he would be looking at on there to get that "Ahhhhh, you are right Sam, mine does appear to be out of whack" moment.  I'll guess yours was in the top left quadrant and his was in the bottom right, that seems the most obvious route to take.

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Ron 14 wrote:The fact that you don't get the difference proves the point. You are showing the hypo after knowing the clients fund choices, Sam has the portfolio picked out already. It wouldn't be hard to build a portfolio of funds that would beat most anything someone could put together over the last 14 years.I like the sales strategy in the above story, but if you're using highly ranked funds / ETFs you should be able to beat a Vanguard Portfolio someone whose a mechanical engineer by day would choose.

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BerkshireBull wrote: Ron 14 wrote:The fact that you don't get the difference proves the point. You are showing the hypo after knowing the clients fund choices, Sam has the portfolio picked out already. It wouldn't be hard to build a portfolio of funds that would beat most anything someone could put together over the last 14 years.I like the sales strategy in the above story, but if you're using highly ranked funds / ETFs you should be able to beat a Vanguard Portfolio someone whose a mechanical engineer by day would choose.
 
Exactly, but you aren't adding any value to the relationship because you can't prove your choices will again beat that Vanguard Portfolio moving forward.

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Ron 14 wrote:BerkshireBull wrote: Ron 14 wrote:The fact that you don't get the difference proves the point. You are showing the hypo after knowing the clients fund choices, Sam has the portfolio picked out already. It wouldn't be hard to build a portfolio of funds that would beat most anything someone could put together over the last 14 years.I like the sales strategy in the above story, but if you're using highly ranked funds / ETFs you should be able to beat a Vanguard Portfolio someone whose a mechanical engineer by day would choose.
 
Exactly, but you aren't adding any value to the relationship because you can't prove your choices will again beat that Vanguard Portfolio moving forward. Yup.  Props on your new signature, BTW, I chuckled.Now if someone came on here and posted a portfolio they IMPLEMENTED 10+yrs ago that blew the doors off I'd be impressed.  Of course then it would spark a massive debate over  whether they were telling the truth.  As it is...

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BerkshireBull wrote:
Ron 14 wrote:BerkshireBull wrote: Ron 14 wrote:The fact that you don't get the difference proves the point. You are showing the hypo after knowing the clients fund choices, Sam has the portfolio picked out already. It wouldn't be hard to build a portfolio of funds that would beat most anything someone could put together over the last 14 years.I like the sales strategy in the above story, but if you're using highly ranked funds / ETFs you should be able to beat a Vanguard Portfolio someone whose a mechanical engineer by day would choose.
 
Exactly, but you aren't adding any value to the relationship because you can't prove your choices will again beat that Vanguard Portfolio moving forward. Yup.  Props on your new signature, BTW, I chuckled.Now if someone came on here and posted a portfolio they IMPLEMENTED 10+yrs ago that blew the doors off I'd be impressed.  Of course then it would spark a massive debate over  whether they were telling the truth.  As it is...Cases of PBR, shoved the deposits into G-strings at the local "dancing" establishment. Memories will carry me through retirement.

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Ron 14 wrote:BerkshireBull wrote: Ron 14 wrote:The fact that you don't get the difference proves the point. You are showing the hypo after knowing the clients fund choices, Sam has the portfolio picked out already. It wouldn't be hard to build a portfolio of funds that would beat most anything someone could put together over the last 14 years.I like the sales strategy in the above story, but if you're using highly ranked funds / ETFs you should be able to beat a Vanguard Portfolio someone whose a mechanical engineer by day would choose.
 
Exactly, but you aren't adding any value to the relationship because you can't prove your choices will again beat that Vanguard Portfolio moving forward.
 
It absolutely astounds me that most people (ice excluded) on this board do not view themselves as a FINANCIAL professional.  He said he could get the same quality portfolio with a no load without my fee and therefore do better.  I pulled my portfolio and said lets compare.  While I have not been using this portfolio for 14 yrs (longest common history), I have been using it long enough to have an impressive track record.
 
What I am sure about is that this layperson will choose funds the same way in the future and as a financial professional I will be able to achieve better results with less risk over time AFTER my fee.

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3rdyrp2 wrote:
Sam Houston wrote:3rdyrp2 wrote:wind3574 wrote:Sam. I may just copy your procedure with this feller. Thats brillaint.
 
You need to look up what Alpha and Beta and Standard deviation mean before diving into those shark infested waters.  It could get dangerous in there.
 
FYI, all the MPT stats are for my own financial geekdom.  My pitch to the prospect was much simpler.  I was not surprised my portfolio was better, just at the magnitude.
 
I'm sure its more than you'd want to post on here, but I'm curious how you would convince a client by using a Morningstar report that your portfolio is better than the one he already has without using the numerical data on there.  Or what he would be looking at on there to get that "Ahhhhh, you are right Sam, mine does appear to be out of whack" moment.  I'll guess yours was in the top left quadrant and his was in the bottom right, that seems the most obvious route to take.
 
I asked the client when he came in for the comparison what would determine the winning portfolio.  He said returns.  He looked at the hypo for all of 30 seconds.  I explained that my portfolio beat his despite the higher costs for the same reason that having a professional mechanic (his profession) fix my engine would lead to a better result than me fixing it myself.   The MPT statistics are for my benefit to make sure I am doing my job well, not for the client.  I don't need to know how my engine works, just that it works, he didn't need to know how the portfolio works.....   BTW, I stopped even looking at what a prospect currently holds at the start of a meeting a long time ago.  I show him what I can do for him.  Only after that do we compare.  I tell the prospect that anyone can come up with something better after knowing what they are up against, it just takes time.  Really grabs their attention.

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Sam .. with the benefit of "hindsight" you can put together a hypo every month that will beat anything out there, without even seeing what the client has. Just pick the best funds over the last 14 years that fit into your mix.  I'm sure the client does not know this but what's the difference? How do they know you've been using it for more than a month?

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voltmoie wrote:Sam .. with the benefit of "hindsight" you can put together a hypo every month that will beat anything out there, without even seeing what the client has. Just pick the best funds over the last 14 years that fit into your mix.  I'm sure the client does not know this but what's the difference? How do they know you've been using it for more than a month?
 
Wow that's brilliant.  You should try that.  What I do is a bit more complicated than experimenting with hypos to get the best possible result as that would guarantee failure in the future.  But for your little scheme, start with LETRX.  Great 3,5,10yr returns.
 

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Just asking bro, I'd have this concern if I was a client. Lose the chip on your shoulder.  This is the internet... and since we're acting like assholes now.  How about sharing how your "complicated portfolio" did over the last 5/10 years.

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voltmoie wrote: Just asking bro, I'd have this concern if I was a client. Lose the chip on your shoulder.  This is the internet... and since we're acting like assholes now.  How about sharing how your "complicated portfolio" did over the last 5/10 years.
 
Advisors don't have performance numbers, client do.  Clients have different needs so performance varies.  I can tell you I get a good chuckle everytime I see "down 40%" in reference to a client.

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The posts about fund selection have it exactly right.  Allocation determines performance, not individual investment selection. For example; in an up equity market even the poorest performing equity funds will outperform non equity funds. To benefit one must be invested in equity funds.
 
Points I make when up against Vanguard/no load:
 
1. Investment allocation determines performance. Vanguard has over 100 funds covering the investment allocation universe. Mr. Prospect, out of those 100 funds, do you know which ones to choose?
 
2. All companies have a choice. They can be the quality provider or the low cost provider. Vanguard has chosen to be the low cost provider.
 
3. To be the low price provider Vanguard has to control its costs. One of their biggest costs is people. Specifically managers to run their funds. Did you know that roughly ten years ago almost 1/3 of their managers quit when Vanguard refused to up their pay? How important are mangers? They are the ones who make all the investment decisions. Without them there are no funds.
 
4. And on that count let's talk about managers. How does one become a manager? These are people who go to college, then to business school and then take  jobs as a junior analyst with  major financial firms. That's a fancy title for gopher. But they get a chance to prove themselves and move into the big money positions as senior analyst, co- managers and then fund manager. When these people graduate they have a choice to make. The best and the brightest from the best schools can choose between the firms that pay the most money and have the best career path. The rest? well they go to low paying Vanguard. Mr. Prospect, do you want your money manged by the best and brightest or the people who couldn't get a job anywhere else on Wall Street??
 
5. Do you know who John Bogle is? John Bogle is the founder of Vanguard. He is a brilliant businessman who became rich by convincing folks like you that you can do it yourself. He did this by reducing investing to one question- how much does it cost? John Bogle would like everyone to think he's a frugal guy. About ten-fifteen years ago John Bogle needed a heart transplant. Let me ask you this Mr. prospect: As Mr. Bogle went through that process do you think he asked about cost? Do you think he took the lowest priced surgeon? And if not why not? Of course he didn't shop price. He wanted the best and the brightest. The point is you get what you pay for. The best and brightest are good enough for him, but not for you.
6. On that point let's say doing it yourself you could out perform the best minds on Wall Street. Guys like Bogle make it sound easy. But i assure you easy it's not. You could get lucky for a year or two but consistantly beating the street at what they are educated to do and do on a full time basis, that would be difficult. But let's say you can do it. The question is: How many hours a day, a week, per year would you have to devote  to beat the best at what they do full time? And would it be worth it? Most people do the math and say no it's not worth the time. It's better to spend that time doing what you do best and paying us to do what we do best. You use your time to make the money and we use ours to manage it. What do you think?

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BondGuy wrote:The posts about fund selection have it exactly right.  Allocation determines performance, not individual investment selection. For example; in an up equity market even the poorest performing equity funds will outperform non equity funds. To benefit one must be invested in equity funds.
 
Points I make when up against Vanguard/no load:
 
1. Investment allocation determines performance. Vanguard has over 100 funds covering the investment allocation universe. Mr. Prospect, out of those 100 funds, do you know which ones to choose?
 
2. All companies have a choice. They can be the quality provider or the low cost provider. Vanguard has chosen to be the low cost provider.
 
3. To be the low price provider Vanguard has to control its costs. One of their biggest costs is people. Specifically managers to run their funds. Did you know that roughly ten years ago almost 1/3 of their managers quit when Vanguard refused to up their pay? How important are mangers? They are the ones who make all the investment decisions. Without them there are no funds.
 
4. And on that count let's talk about managers. How does one become a manager? These are people who go to college, then to business school and then take  jobs as a junior analyst with  major financial firms. That's a fancy title for gopher. But they get a chance to prove themselves and move into the big money positions as senior analyst, co- managers and then fund manager. When these people graduate they have a choice to make. The best and the brightest from the best schools can choose between the firms that pay the most money and have the best career path. The rest? well they go to low paying Vanguard. Mr. Prospect, do you want your money manged by the best and brightest or the people who couldn't get a job anywhere else on Wall Street??
 
5. Do you know who John Bogle is? John Bogle is the founder of Vanguard. He is a brilliant businessman who became rich by convincing folks like you that you can do it yourself. He did this by reducing investing to one question- how much does it cost? John Bogle would like everyone to think he's a frugal guy. About ten-fifteen years ago John Bogle needed a heart transplant. Let me ask you this Mr. prospect: As Mr. Bogle went through that process do you think he asked about cost? Do you think he took the lowest priced surgeon? And if not why not? Of course he didn't shop price. He wanted the best and the brightest. The point is you get what you pay for. The best and brightest are good enough for him, but not for you.
6. On that point let's say doing it yourself you could out perform the best minds on Wall Street. Guys like Bogle make it sound easy. But i assure you easy it's not. You could get lucky for a year or two but consistantly beating the street at what they are educated to do and do on a full time basis, that would be difficult. But let's say you can do it. The question is: How many hours a day, a week, per year would you have to devote  to beat the best at what they do full time? And would it be worth it? Most people do the math and say no it's not worth the time. It's better to spend that time doing what you do best and paying us to do what we do best. You use your time to make the money and we use ours to manage it. What do you think?Another brilliant post I intend to plagiarize. Thanks BondGuy!

chief123's picture
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Yeah that is great.. I have used points 1,2 and 6 but I have never used 5.. plan to do so in the future.

troll's picture
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Hey Kool-Aid's picture
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wind3574 wrote:Yes thanks BondGuy. The problem though, is that he argued with me that Vanguard is all managed funds. When I mentioned that the expense is cut by riding of the money managers, he told me I was wrong and i needed to get my facts straight lol. According to him, all Vanguard funds are managed just as well as any other firm.
 
Simple answer then....bye...next prospect!
 
btw...great post bondguy!

Ron 14's picture
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Thank you Bondguy.

Cowboy93's picture
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Another point to consider:  Vanguard has ETFs...if he is sold on the brand, you could use them in a commission based account and just explain that the expense rations are nil (9 bps on VTI for example) and the commission is how you get paid for allocation work, etc.

troll's picture
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jkl1v1n6's picture
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Why fight him on it.  Just put him in a fee based account and let him have his Vanguard funds. 

deekay's picture
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wind3574 wrote:Hey Kool-Aid wrote: 
Simple answer then....bye...next prospect!
 
 
He is a client, not a prospect.
 
Wrong.  He's a customer.  One doesn't fight with clients.

troll's picture
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troll's picture
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wind3574 wrote:I have a client who is absolutely un-ruly. Likes to argue about anything. Today, he was arguing with me that Vanguard was the best thing since sliced bread. I however wasn't saying anything back, so it was almost like he was arguing to himself. Anyway, does anyone know of a website or somewhere that I can get literature showing Vanguard funds vs. Traditionally managed funds like American Funds, Lord Abbett or whatever. I don't care what fund, I just want some sort of literature to compare the performance.Show him how index annuities have no expenses and would have outperformed his stupid mutual funds over the last decade. If he says no, fire him. Then, fire yourself for arguing with an idiot.

jkl1v1n6's picture
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Wind,
 
I know you don't have fee based at Eddy J.  I was just inappropriately playing with the Ed J model.  One small advantage of being outside of Jones is that you can have access to Vanguard in a fee based account.
 
In my experience you will never win over this client in the short term.  See if he'll let you prove it to him.  Ask him if he'll put some money into what you are recommending and then over the next 5 years you can review performance and YOUR value.  If you do your job he MIGHT eventually see the light.
 
Good Luck with this one, these are some of the most frustrating clients to deal with. 

troll's picture
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wind3574 wrote:I don't fight with anyone. He was trying to start a fight over a comment i made. Thats all. We can't put him in a fee based account at EDJ, except for advisory solutions, but the problem is getting him to see the value in an actual advisor. If he wasn't already a client, i'd quit awhile back.There is no value in an advisor. You failed to figure out what he wants to buy and then sell it to him. He doesn't want to pay you for advice and he doesn't like to pay fees. A good index annuity would be an easy sale.

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