"Didn't lose as much as the indices..."

[Navig8tor]

FUNNY,

My current fantasy TSP account return reminds me of a conversation I had a few years back with UBS, the "wealth management company" that drains me for management fees every year on their portion of my retirement assets. Meanwhile, my portfolio balance has seemingly been the same for the past 4-5 years.

In the game, I'm currently 7% AHEAD of the C-fund with a -5% yearly return UBS dude called me one year for my annual review and said, "Well, the good news is even though you lost money this year, we didn't do AS BAD as the main market indices." I seem to be headed that way again this year. That's what happens when you're up 6% in mid-January and get greedy. I suppose I could have jumped around and got back in it quicker but....I didn't. Such is life.

However, when I get the next phone call from UBS in January '23 to discuss how much THEY lost for me this year, I'm going to ask them, "How is it, ONCE AGAIN, that you LOST money on the year while I'm up 8% in my real TSP account?" (2.6% to go to reach 8% - one good 1% bounce and I think I can sit in the G-Fund the rest of the year and get close to 8%).

"Jeff," if you're reading this (and I know you lurk), you have 6 months to prepare for THAT conversation.

[Scarfinger]

It depends on what you are paying for and how much you are paying. If you are paying more than around 1.3 to 1.5% total on your portfolio management, you are probably losing a lot to fees.

What is you portfolio mix? 60/40? and then compared to an inexpensive ETF portfolio of the same balance?

If you are paying high fees for an actively managed portfolio then per morningstar.com and SPIVA Research:

In general, actively managed funds have failed to survive and beat their average passive peer, especially over longer time horizons. Only 26% of all active funds topped the average of their passive rivals over the 10-year period ended December 2021

Only 16% outperformed last hear. So you basically have closer to at least an 83% change that they will underperform a passive strategy all the time.

An inexpensive balanced portfolio around 0.08% to 0.25% in fees, buy and hold, according to academic research, from Investopedia:

The reality is buy-and-hold still works, even for those who held passive portfolios in the Great Recession. There is statistical proof that a buy-and-hold strategy is a good long-term bet, and the data for this hold up going back for at least as long as investors have had mutual funds.

Supported by smarter and richer people than me:
Warren Buffett, Jack Bogle, John Templeton, Peter Lynch, Larry Swedroe, and Buffett's mentor Benjamin Graham. Throw in Fama and French and at least one noble prize winner Harry Markowitz on "Modern portfolio theory".

So pay less, get mediocre consistent returns with a few above average returns, less losses when the market is down and you will do better than most active investors... according to the smart people, the academics.

Paul Merriman has lots of data on his website showing multiple buy and hold portfolios beating the S&P 500.

*Maybe you need to fire your Wealth Management company and find a Fee only Fiduciary company Like Vestory or IFA or any other legitimate fee only fiduciary. One that's not trying to sell you insurance products and discloses all their conflicts of interest.

Best of Luck!

[Scarfinger]

From brokercheck.finra and UBS Brochure...

(Retirement Plan Guided Solutions) RPGS Fee Schedule—The RPGS Fee applies to the RPA Program and RPM Program. RPGS Fees are negotiable and generally expressed as an annual rate. The maximum annual RPGS Fee is 2.00% based on the amount of eligible plan assets. There is no minimum annual RPGS Fee.

My guess is that this is a 2% fee + fund fees = 2+%? total. That would be on the high side from my limited knowledge of portfolio fees.

I am not sure if there is also a "Wealth Management" fee on top of that. It seems like UBS was or is a commission based firm. It looks like there have been a lot of litigations concerning this firm

There has been 467 regulatory events filed according to FINRA.

This guy says UBS is one of the firms to avoid:
https://www.marottaonmoney.com/avoid-ub ... l-advisor/

Ameriprise Financial Services Inc.
Morgan Stanley Wealth Management
LPL Financial
RBC Wealth Management US
Wells Fargo Advisors
Edward Jones
UBS Financial Services Inc.
AXA Advisors

So? If your balance hasn't changed in 5 years? Something is going on. I would look pretty hard into the fees they are charging you.

[Navig8tor]

The "standard" UBS management fee from Day#1 (14-years ago for me) has been 1% of the total portfolio balance, slightly reduced based on "family money." By "family money" I mean the combined portfolio balance of my parents, me and my sisters >>> all separate accounts but under a "family" umbrella. I think the overall fees, based on the four accounts was right at .9%.

UBS did very well for my dad throughout the 80's & 90's. He tried for years to talk me into opening an account before I finally did in March 2008 with $40K. You all know what happened after that...I promptly lost near 50% of that "new" investment (80/20).

I took that annual review phone call sometime in 2009. "Well, we took a pretty big hit like everyone else...I think we should sell out of those positions and start over." <<< That conversation WAS NOT well-received after losing half my investment, plus monthly contributions, in what amounted to less than 6-8 months. I was not pleasant with "my guy" on the phone. Minus the expletives, "Have you lost your mind, I'm not a MILLIONAIRE...I gave you $40K six months ago and I've lost HALF OF IT already...now you want to sell out and start over...just write off a $20,000 loss...I DON'T THINK SO, you hold what you have and wait for it to come back!!" He did, and the the market came back.

I get it, but I don't. We, in the TSP, are somewhat more maneuverable than they are. As such, I DESTROY them year in and year out with the TSP. I earn 10-15%; they earn 5%. I earn 8%; they earn 2%. I lose 1%; they lose 4% (but we did better than the major indices).

My dad has passed. My mother, after 30-some years, finally got tired of UBS and pulled out her money earlier this year. I don't think I'm far behind. I've nearly quadrupled my TSP balance over the same 14-years UBS has been fiddle-farting around with their 1/3 of my assets. I will say, I stopped contributions to them 5 years ago BECAUSE OF that. This is also the reason I think the balance has remained stagnant with minimal growth since I stopped contributing.

As my mother said, "They get theirs and you're left holding the poopy end of the stick every year...I'm OUT."

[Scarfinger]

As my mother said, "They get theirs and you're left holding the poopy end of the stick every year...I'm OUT."

Love that quote!

Not sure about UBS but some brokers get a commission to put you in higher cost funds vs ETF's.

Sounds like you have a handle on it but it wouldn't hurt to shop around if your not happy with them.

I mean, it sounds like you could be your own Portfolio manager? Cut out that 1% management fee and replicate the UBS funds with low cost Vanguard/Fidelity/Schwab ETF funds and pay something like .08 to .25% in fees. Whomever you choose, I would just try and make sure they are a true fiduciary.

Lower fees, more return

Take care Navig8tor.