When I first met my wife, she was intimidated at the idea of questioning an investment advisor.
Most people feel the same way.
But she was invested in products that could have cost her tens of thousands of dollars over her investment lifetime. She was invested with a company called Raymond James where she was paying 1.75% of her account’s assets every year in what the industry calls a “wrap fee”; she was paying hidden mutual fund costs of a further 1.3% per year, and according to Yale University’s David Swensen, author of Unconventional Success, an account like hers (with actively managed mutual funds) would likely cost her close to a further 1% in annual tax fees, compared to the alternative. That’s a total of 4.05% in annual fees and taxes.
But what’s the alternative?
The alternative is a decision to go with a different set of financial products, other than actively managed mutual funds. I’ve gone to great lengths on this site (with my other postings) to show how every academic finance study relating to the after tax performance of actively managed mutual funds stands the highest statistical chance of falling far short of what a diversified portfolio of index funds would return.
Even if that previous paragraph sounded like Greek, please stay with me. There are places where true financial experts would put your money, and I’d like to show you where those places are.
There are two that I recommend for Americans: Assetbuilder and Vanguard. These companies can literally hold your hand and put you on the right track.
But first, a word for my fellow expatriate friends:
Recently, Vanguard has made it tough for American investors living overseas to open investment accounts with them. In the past, you needed a U.S. address, but if you lived overseas, you could still open an account, as long as you gave them a stateside address. But this no longer applies.
Assetbuilder, however, according to conversations I’ve had with them, will allow overseas based Americans to invest with them. They use the investing formula touted by the financial experts—the same one used by Vanguard, choosing low cost passive index funds over high cost actively managed mutual funds. Their fees are exceptionally low, and they offer full service advice.
Please check them out—Vanguard or Assetbuilder if you’re based in the U.S., or Assetbuilder if you’re an overseas American. Also, check out my post titled Investment Advisors Convince 95% of Americans to settle for less. I think you’ll find it eye-opening.