Fishing for Feedback

I met with a Vice President of Fisher Investments, a very large and very well-advertised fee-only investment advisory firm, to see if they would be a good fit to manage my portfolio. It turns out they weren’t, and after they asked why, this was my reply:

Frank,

Thanks for taking the time to meet with me to explain how Fisher Investments works.

I respect you for asking for feedback. And since you asked:

1. I’m not a fan of the fee structure:

-Its size: Paying you $70,000 a year to manage my portfolio seems like an awful lot of money. I realize that it is based on incentivizing you to grow my portfolio. While I understand the idea that you will provide such superior returns as to make it appear insignificant, I still can’t wrap my mind around paying you more money than the average US worker is paid ($66,622). I don’t think of myself as a Communist, but there must be some upper bounds.

-Its calculation: The straight percentage of assets under management model seems arbitrary. When I use a CPA to file my taxes, he doesn’t base his fees on my wealth, and neither does my maid or my Realtor®. Well, maybe not the latter, but I’m not sure you want to be placed in the same category as my Realtor®.

I do understand the 1%+ fee is industry standard, though it reminds me of my Realtor®, as she gets paid a percentage that has somehow become the norm and gets paid it irrespective of performance.

2. I’d rather not own (more) individual stocks:

-The tax headache: You mentioned that you will invest my money in individual stocks. After almost 30 years of owning individual stocks, I don’t want more stocks, I want less. Transposing my 1099-B data into TurboTax is as complicated as it is insufferable. For example:

I have just finished filing my 2024 taxes, and they were greatly complicated by sales of a few shares of Solventum (SOLV), which was spun off from MMM on April 1, 2024. I purchased the shares of MMM so long ago that it occurred in another century, but Charles Schwab has classified part of the sale as Short Term (Box B) and part as Long Term (Box D). Why? I have no idea and don’t have the energy to fight it. It’s not the first time they screwed this up and they’re not the only one.

– In 2023, Charles Schwab purchased TD Ameritrade and decided to change my account over on October 1, 2023. I think they chose this date specifically so I would now have two 1099-DIV, INC, and Bs to file. They could have changed over on, say . . . Jan 01, 2024, but I have a feeling they didn’t because they cared more about their fiscal year issues than my carpal tunnel issues. Oh yeah, since I know you like to move your clients’ accounts over to Schwab, can you ask that they start estimating my “Est. Annual Income($)” accurately by including dividends from my mutual funds? I spent most of the first part of 2024 getting them to include income from my CDs (<1 year), CEFs, JWN, and MAR, but I guess they don’t want to make the estimate too accurate.

3. The resulting proxies: I know that I don’t need to vote each and every one received, but if I don’t, I feel like I’m letting someone down – I just can’t help myself.

4. The Performance: I read Ken Fisher’s column in Forbes for many years and know that he always measured himself vs. the MSCI World index. While through Dec 31, 2024, his 10-year return (10.9%) certainly beats the  MSCI World (9.9%), it pales in comparison to the S&P 500 (13.14%). Please don’t take it personally, as it’s an issue I faced, and after the chronic underperformance of my portfolio, I decided to measure it against the S&P 500 Value Index (7.4%).

Thanks again,

Mike