See if we can have a serious thread
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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.Sam. I may just copy your procedure with this feller. Thats brillaint.
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 :)
[quote=Takingnames]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 :) [/quote] 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.
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.[/quote] 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.[quote=wind3574]Sam. I may just copy your procedure with this feller. Thats brillaint.
[quote=Ron 14]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. [/quote]
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.[quote=Ron 14]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. [/quote]
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. [/quote][quote=BerkshireBull] [quote=Ron 14]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. [/quote]
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.
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...
[quote=BerkshireBull]
Ron 14: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. [/quote][quote=BerkshireBull] [quote=Ron 14]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. [/quote]
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.
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...
[/quote]
Cases of PBR, shoved the deposits into G-strings at the local "dancing" establishment. Memories will carry me through retirement.
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. [/quote] 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.[quote=BerkshireBull] [quote=Ron 14]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. [/quote]
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.
[quote=3rdyrp2]
[quote=Sam Houston][quote=3rdyrp2][quote=wind3574]Sam. I may just copy your procedure with this feller. Thats brillaint.[/quote] 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.[/quote] 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.[/quote] 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. [/quote] 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.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.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?
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.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.
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?
[quote=BondGuy]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?[/quote]
Another brilliant post I intend to plagiarize. Thanks BondGuy!
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.