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ONLINE INVESTMENT advisor Personal Capital offered me a $25 Amazon gift card to open an account and then link it to one of my existing financial accounts worth more than $1,000. As a bonus, it also offered a complimentary financial checkup.
I duly signed up and linked one financial account. I then dodged the complimentary checkup and subsequently used my newfound wealth to purchase a portion of a good-enough HP computer.
I thought I was home free until I inadvertently answered a phone call from a member of my “Personal Capital team,” who again offered me the complimentary financial checkup. I couldn’t bring myself to hang up, so we made pecuniary small talk until I’d made an appointment.
As soon as I hung up, I realized that I had just chatted with staff. Apparently, “Mr. Big,” the actual financial advisor, was too important a fisherman to cast his own lines.
Mr. Big called a few days later and asked a few perfunctory questions. He then assured me that Personal Capital would use “sector and style weighting, risk minimization, and tax optimization [to] build a personalized portfolio based on your unique situation and goals” that would return more than the S&P 500 and with less risk.
I agreed to update my financial dashboard at Personal Capital with all my financial accounts, and we agreed to meet again in a couple of weeks to discuss great things.
Mr. Big, or Blake to use his given name, called me at the duly appointed time and introduced his colleague, who was either included to provide specific analysis of my unique financial needs or help sink the hook into this medium-sized fish. For the next hour, we spoke freely about a variety of investment topics, highlighted as follows:
They did provide a detailed analysis of my portfolio. I needed more international stocks, more U.S. bonds, more international bonds, more alternatives and a skosh less cash. I also needed to start thinking about the net unrealized appreciation ramifications of the company stock in my 401(k) and maybe a consultation with a CPA was in order regarding my tax strategy going forward.
I wasn’t a fan of the “smart weighting” special sauce. To me, it seemed like they had data-mined back to 1990 to find a specific portfolio that outperformed the S&P 500.
The quarterly investment committee conference calls also had no allure. I used to find all that stuff fascinating but—now that I’m retired—I just can’t be bothered. Also, the “buy now, while supplies last” had a QVC vibe and was “not cool,” and I specifically told Blake so.
We agreed that “marketing was sometimes not that helpful.” He tried to set up a followup appointment, but I wriggled off the hook.
It wasn’t a complete waste of time, though. A benefit of these calls is that it forces you to compile all your assets, review your financial plan, make the necessary updates—and hopefully provides the inspiration to act.
Agree on the AUM feed structure. Makes no sense (unless one is a FA). Carryover from the days when they were primarily investment advisors. All of our other professionals are hired by the hour/task (lawyers, CPAs, etc.). Arguably the work of a CPA is as difficult or more so than a FA (the qualifications to practice are higher), and they are legally responsible (as a signature to your tax return) vs. a FA who may only be a fiduciary. But we pay them less!
AnthonyClan, you make a very valid point. Imagine hiring a CPA to file your taxes: In order to get an estimate of how much it will cost, you start to explain your specific tax situation, then the CPA cuts you off and says “no need to, I just charge a percentage of your assets.”
So far, I have avoided the calls to chat and I give them credit for not being intrusive. I use the PC to marvel at how much money I am not throwing away by paying an AUM advisor. PC is a fantastic tool to aggregate your expenses effortlessly. I might take their counsel to see what they offer, but refuse to support any and all AUM fee structure which in my mind is anti fiduciary practice. Thanks for the article.