Morningstar study says advisory clients are stuck on investment performance

“Behavioral coaching is the single biggest value that modern financial planning can bring, and advisers understand that, but they are also aware that clients don’t see the value,” said Ray Sin, behavioral scientist at Morningstar.

 

Dunno about you, but I’m just can’t believe this is an unbiased assessment, particularly from a guy named Sin

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A Typical Physician Investement Portfolio

Not my account but I was surprised by the transactions in this account and the obvious lack of index funds.  These management fees would not be so bad if you were posting a reasonable gain but the figures below this one show, the performance is mediocre at best.

 

custodial account

Performance was bad before fees, but after fees, it erases almost reverses gains after 3 years of investing.

gainloss

Here is a list of the unrealized securities (Distribution witheld in the name of social engineering prevention)

 

AES CORP
ALLETE INC
ALLIANT ENERGY CORP
AMERICAN WATER WORKS
AQUA AMERICA INC
BERKSHIRE HATHAWAY CLASS B
BRISTOL-MYERS SQUIBB
CELGENE CORP
CLOROX CO
COLGATE-PALMOLIVE CO
CONAGRA BRANDS INC
CONSOLIDATED EDISON
COTY INC CLASS A
DOMINION ENERGY INC
DUKE ENERGY CORP
FLUOR CORP
G E O GROUP INC NEW REIT
GENERAL ELECTRIC CO
GENERAL MILLS INC
HERSHEY CO
HOST HOTELS & RESORT
IRON MOUNTAIN US HOLDING REIT
KRAFT HEINZ CO
MOLSON COORS BREWING CLASS B
NEWELL BRANDS INC
OUTFRONT MEDIA INC
PARK HOTELS & RESORTS IN
PPL CORP
PUBLIC STORAGE REIT
THE COCA-COLA CO
TYSON FOODS INC CLASS A
VIACOM INC CLASS B

And here are the realized gain securities

Name Quantity Total Gain/Loss ($) Total Gain/Loss (%)
WHOLE FOODS MARKET 160 $2,169.00 46.02%
VIACOM INC CLASS B 26 $294.12 32.72%
VIACOM INC CLASS B 94 $1,030.10 31.70%
COCA-COLA EURO PTNRS F 51 $429.19 24.39%
COCA-COLA EURO PTNRS F 45 $378.33 24.37%
DIGITAL REALTY TRUST REIT 38 $769.20 21.90%
PERRIGO CO PLC F 22 $315.39 19.84%
ALPHABET INC. CLASS C 5 $812.24 19.81%
PERRIGO CO PLC F 36 $500.19 19.41%
PERRIGO CO PLC F 32 $442.68 19.32%
WHOLE FOODS MARKET 120 $637.29 17.81%
CONSOLIDATED EDISON 70 $876.53 17.34%
GOLDCORP INC F 260 $530.91 13.94%
COCA-COLA EURO PTNRS F 19 $97.37 13.50%
KANSAS CITY SOUTHERN 56 $564.00 11.78%
ERICSSON LM TEL-SP F SPONSORED ADR 1 ADR REPS 1 ORD SHS 261 $165.22 10.65%
ERICSSON LM TEL-SP F SPONSORED ADR 1 ADR REPS 1 ORD SHS 654 $410.29 10.55%
ALLIANT ENERGY CORP 196 $818.84 10.46%
CHURCH & DWIGHT CO 20 $89.51 9.88%
CHURCH & DWIGHT CO 150 $659.69 9.71%
ERICSSON LM TEL-SP F SPONSORED ADR 1 ADR REPS 1 ORD SHS 625 $335.22 9.02%
NIKE INC CLASS B 110 $523.54 9.00%
KANSAS CITY SOUTHERN 44 $303.44 7.81%
STERICYCLE INC 78 $420.44 7.04%
STERICYCLE INC 32 $165.19 6.74%
CREDIT SUISSE GRP AG F SPONSORED ADR 1 ADR REPS 1 ORD SHS 210 $196.13 6.21%
CREDIT SUISSE GRP AG F SPONSORED ADR 1 ADR REPS 1 ORD SHS 380 $349.48 6.18%
CONSOLIDATED EDISON 25 $105.70 5.83%
CONSOLIDATED EDISON 25 $103.77 5.73%
PROCTER & GAMBLE 70 $311.21 5.22%
PEPSICO INCORPORATED 19 $89.98 4.50%
PEPSICO INCORPORATED 71 $288.76 3.87%
ENTERGY CORP 58 $153.81 3.62%
GOLDCORP INC F 230 $118.97 3.53%
ENTERGY CORP 92 $168.55 2.48%
TARGET CORPORATION 118 $155.35 2.38%
ROGERS COMMUN INC F CLASS B 15 ($5.19) -0.81%
CAMPBELL SOUP CO 15 ($12.90) -1.43%
CAMPBELL SOUP CO 50 ($60.80) -2.02%
ROGERS COMMUN INC F CLASS B 85 ($77.44) -2.14%
A T & T INC 225 ($296.64) -3.51%
RANGE RESOURCES CORP 250 ($322.35) -5.57%
PUBLIC STORAGE 10 ($182.77) -8.42%
CREDIT SUISSE GRP AG F SPONSORED ADR 1 ADR REPS 1 ORD SHS 0.1 N/A N/A
$14,821.54 9.24%

 

 

Reminder from TD Ameritrade: We’re boneheads, in case you forgot

Maybe a holiday reminder?  It’s a busy time of year and people often forget stuff so TD Ameritrade thought they would send out a reminder to tell us how they FUBAR’d their ETF list and called it an “Enhancement”.

Thanks TD!

There is no such thing as forgiveness. People just have short memories.

Rustin Cohle (True Detective)

Capture

TD Ameritrade Commission Free ETF Shenanigans Continue

Nowadays, the saying “put his/her/their foot in their mouth” is more appropriate than ever.  If they put their hand in their mouth, then they couldn’t keep making things worse, because hopefully they could no longer type (barring a Daniel Day Lewis “My Left Foot” kind of phenomenon).

TD adds another steaming pile of excrement to their already formidable accumulation of ETF Egesta (yes, I looked that one up and am loving it).   I was going to use the word “Shisno” but that is even more fringe.  LINK : SHISNO Def: Shisno’s are considered almost universally repulsive, partly due to the fact that their excrement produces its own excrement following initial defecation. It is most commonly used as a racial slur for humans, demonstrating the animosity of the two species.


tdcraptdcrap2

So now you have even more ETF’s to mismanage.  Data has shown that the more choices an individual investor is offered, the less able they are to make appropriate decisions about how to invest.  It’s much like choosing mint chocolate chip ice cream. If there is only one choice, it is a binary decision.  Choose or walk away.

But lets say they have:

  • Mint White Chocolate Chip
  • Mint Conflict-free Chocolate Chip
  • Mint White Chocolate Chip
  • Mint Dark Chocolate Chip
  • Mint Swiss Chocolate Chip
  • Mint Belgian Chocolate Chip
  • Creme de Menthe Chocolate Chip

Now I’m stymied by the choices.  In reality, they probably all taste the same. I’ll walk away feeling satisfied after ingesting only half a pint.  You know this is fiction because…

NOBODY EATS HALF A PINT AND STOPS.


 

So the current timeline is: Take away good ETFs from commission free list, then extend the window to cash out, and now give even more crappy choices.  All cleverly disguised under the banner of enhancement.

I’ve clipped the best of the lot, the SPDR’s which STILL don’t include SPY. In fairness, it includes the less liquid SPY relatives.

tdcrap3

 

VA and HSA


VA Medical Benfits and HSA

Since leaving my last job and becoming a 1099 contractor, I have returned to the VA system as a veteran with a service connected disability rating.  The biggest bummer about not having to have insurance was the potential loss of an HSA contribution.

HSA contributions are the triple tax free gift from the government to anyone, but most potent for earners who are phased out of other plans.

From IRS:

A-5.  An otherwise eligible individual who is eligible to receive VA medical benefits, but who has not actually received such benefits during the preceding three months, is an eligible individual under section 223(c)(1). An individual is not eligible to make HSA contributions for any month, however, if the individual has received medical benefits from the VA at any time during the previous three months.

So, as long as you have not received care in the previous 3 months, you can make a full annual contribution to your HSA without penalty.  This is great for healthy people.

The other option under consideration was going with the cheapest HDHP to enable the HSA, however the cost of HDHP would likely overcome any potential savings of the HSA.

TD Ameritrade backpedals on their “enhanced ETF list”…kinda

The original post is here.

tda-e1509538856675

Harry Sit’s commentary is here.  

I pulled my entire Roth.  I encourage others to do the same. The best way to vote in a financial market is with your feet or dollars.

Although TD’s boneheaded move instigated it, I’ve been wanting to consolidate my accounts for a while but since there wasn’t really anything wrong with their platform, I didn’t bother.

Now their platform has something wrong with it.  I have to keep my other account with them which is invested in Vanguard funds.  I weighed exchanging their crappy new lineup for my low cost VG ETFs but decided against it.  I’d rather just pay the commission to liquidate if I have to keep my funds there.  There is no cost unless liquidating at this point.

It is true that it would be cleaner to exchange VG funds for their new lineup, in terms of future assets.  Using their new funds with VG funds doubles the holdings, but hey, I’m not planning on doing anything with my triple tax free account for a long time.  I’ll eat the commission when it comes due.

God only knows what new boneheaded plan they’ll have in place when I need to liquidate my HSA holdings.

Dear Valued Client,
Last week, you received an email about the upcoming launch of our new commission-free ETF Market Center. Since then, we’ve learned investors could use more time to evaluate the new fund line-up. So we’re extending the effective date to January 19, 2018, giving you 90 days to review the funds and make any changes.
The restructured commission-free platform triples the number of ETF choices to 296 – the most in the industry – including many that are among the lowest-cost core ETFs available in the market today. We’ve also increased exposure to 77 Morningstar categories, including such strategies as smart beta, actively managed, market sectors and commodities providing more options for you to tailor your portfolio. We appreciate that this is a big change and we want to make sure you have the time and information you need.
Key takeaways
  • We have extended the commission-free transition period for legacy ETFs until January 19, 2018.
  • All new funds are available to trade commission-free today.
  • After January 19, 2018, the 84 legacy funds will still be available at TD Ameritrade at the standard online commission rate. The remaining 16 funds will continue to be a part of the enhanced ETF Market Center.
  • All other previously communicated changes remain in place. Enrollment and short-term redemption fees will be eliminated effective November 20, 2017. Selling legacy ETFs prior to November 20,2017 may incur a short-term redemption fee.

TD Ameritrade’s Boneheaded “Enhancement”

TD Ameritrade sent a very blandly worded email claiming an “enhancement” to their ETF lineup.  This removes all Vanguard ETFs from their commission free list.  Of course, only someone with no cognitive ability would see this as an enhancement.  I initiated my account transfer today.

 

Here are some screenshots to demonstrate why:

In the above table, you can see that AUM is 1/20th of two other two big boys in the market (not exhaustive, only representative).  A clever move would have been to include the original SPY Spider but of course they didn’t.  You have a palette of relatively less liquid specialized ETF’s that would be very difficult to figure out your asset allocation accurately.

The spread of their “enhanced” fund is the largest of the three, which is not surprising given the it’s the smallest of them.

Roughly similar performance.  I’m not really sure why the AVG market cap is equal in this table because their AUM is different on every other listing.  Either I don’t understand what market cap refers to in an ETF or it is reported incorrectly.

Anyway,  if you needed an excuse to move to a better commission free platform, both Schwab and Fidelity are better platforms IMO.  And of course, the mother of them all Vanguard is a possibility, but  I don’t have familiarity with their platform.