When I was growing up, stocks weren’t a big topic of discussion in my family. And I wasn’t really an active investor for a long time. From around 2000 to 2007, my investing was mostly in my 401(k) plans, either at my employer or through a back-office services provider and employer of record for independent consultants I’ve used.
But in 2007, I moved from Washington, D.C., to Houston to be closer to my siblings. My employer at the time didn’t care where I lived. Then my sister introduced me to her CPA. She had gone through a divorce, and he’d really helped her. So, he started doing my taxes. He had recently become a financial advisor, going through a broker/dealer that was working with mom-and-pop CPAs, helping them provide that service offering to their clients. It sounded really good.
He helped me merge my 401(k)s. And we were going to do a 21-point inspection every year, looking at my investments, my taxes, everything. He did that for a couple of years. But then he stopped; and he wasn’t very proactive about asking me to come in or do anything over the phone.
Along the way, in 2009, I had some cash and he said, “Why don’t we get you into REITs, it would be a good way to diversify your portfolio?” He assured me they weren’t risky. I trusted him. He talked to me about it in the office, and he also invited me to one of those steak dinners, because he had a REIT person coming in to speak to us.
I remember I had to sign a suitability form to attest to the fact I had a certain level of income, and I did that every year. I didn’t know why at the time. Now I know the reason is, if the thing crashes, you can still survive.
There were two nontraded REITs. The first was in necessity retail. He told me that even if Starbucks goes out of business, they still have to pay the rent. And he told me they had a great payout. He also got me into another REIT that was in triple-A office space. When I looked at the brochure, I saw a lot of buildings in D.C. that I’d worked in and knew were very nice. In the end, the first one made money and the second lost money. So, they were a wash.
I didn’t pay much attention to them. I was busy working. A few years went by and there was a big scandal involving the office-space REIT. I was really shocked by all the shenanigans. Then in 2015, I started getting really nervous about retirement savings because I was turning 50. So, I looked more closely at my statements. He was taking 1.55%, and I realized I wasn’t getting anything for that 1.55%. My portfolio did well, but I didn’t need to pay 1.55% for a computer to manage my investments.
I started reading investing books and listening to podcasts. I realized I can do this myself. It’s not rocket science. So, in the fall, I moved my money over to Vanguard. I was shocked that I didn’t have to speak to my previous advisor; though, to be honest, I didn’t want to deal with him at that point. And he never called afterward to see if there was a problem.
Now I’m investing in ETFs, total market things, following the Paul Merriman buy-and-hold portfolio. I’m not trading a lot of stocks. My sister is urging me to go into Vanguard’s advisory program, which has a relatively low cost. I’m thinking about it.
There’s also one advisory firm I’m looking at. A lot of guys in the firm are prolific writers, and it’s all really good stuff. I like their philosophy and how they treat their clients. My only sticking point is they don’t have an office in Houston. And they’re expanding. I don’t know if, as they grow, they’ll turn into one of these big firms that doesn’t get great client service ratings.
