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Jun 16, 2009 12:31 pm

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Jun 16, 2009 12:40 pm

Fruitless waste of time.  No-load, DIY'ers have themselves convinced that they can do it better than anyone.  Truth is, you can build a great portfolio with Vanguard Funds, you just have to know WHICH funds to use, and HOW MUCH.  In addition, you need to know when to re-allocate, etc.

This is the big point that no-loaders miss.  It's not so much about the fund family, but about the combination of funds that you buy and when, and what is most appropriate for you.
 
My recommendation - don't try to argue with returns and comparisons and such.  Then you're just arguing one product versus the other.  You will lose (even if you are right you will lose the game).  Help him see clearly about asset allocation, risk levels, inevsting for income (if he needs income), etc.  You need him to see that he needs YOU, not American Funds, or Edward Jones, or Vanguard.
Jun 16, 2009 12:40 pm

You can run a Morningstar hypo through JonesLink. I believe you must run them seperately though and tell the client that the funds have different objectives, as you are not allowed to show people funds like that compared to each other as you are likely comparing apples to oranges.

 
In my limited experience those Vanguard funds are hard to beat because their expenses are low comparitively speaking, and the performance in many cases is comparable or better. The only way I have won any business from Vanguard evangelists is to talk about having you help manage the funds. If anyone has different ideas it will be good to hear about it.
Jun 16, 2009 12:41 pm
B24:

Fruitless waste of time.  No-load, DIY'ers have themselves convinced that they can do it better than anyone.  Truth is, you can build a great portfolio with Vanguard Funds, you just have to know WHICH funds to use, and HOW MUCH.  In addition, you need to know when to re-allocate, etc.

This is the big point that no-loaders miss.  It's not so much about the fund family, but about the combination of funds that you buy and when, and what is most appropriate for you.
 
My recommendation - don't try to argue with returns and comparisons and such.  Then you're just arguing one product versus the other.  You will lose (even if you are right you will lose the game).  Help him see clearly about asset allocation, risk levels, inevsting for income (if he needs income), etc.  You need him to see that he needs YOU, not American Funds, or Edward Jones, or Vanguard.
 
Yeah, what he said...
Jun 16, 2009 1:29 pm

Truth Windy, If you are really doing 25k+ months... eff em'.  You dont need em, not worth your time, headaches, or posts.  I would be interested to here what dk techniques you find to be most affective though.  Who are we kidding, if your doing as well as you say you are with 0 assetts, I wanna hear whats working.

 
I apologize in advance for the firestorm that will come for asking Wind for his methods..... ok, maybe this is a terrible idea.  This thread could get out of hand quick.
Jun 16, 2009 1:36 pm

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Jun 16, 2009 1:54 pm

Only thing I've found that works with DIY'ers is advisory solutions.  I sell them on how its for our "sophisticated" clients.  I don't even go into the A shares with these guys because truth me told I'm sorta like that guy.

Granted I've only done this three times but it worked 3 out of the 5 I've pitched.  Might be an angle he's not thought about.

Jun 16, 2009 2:18 pm
wind3574:

Right now, B24 is right, He doesn't value my advice.

 
See the comments under "clients vs. customers" thread from a while back.  In my experience, the effort you'll expend on trying to impress your value upon the engineers, statisticians, Mensa members and VanTRoweFidelSchwabites would be much more effectively applied on coming up with your next good seminar idea, or even imagining what it would sound like if Barney Frank and Sylvester the Puddy Tat broke it down ol' skool on the rap stage. 
Jun 16, 2009 2:32 pm

I mostly agree with ice.  If  you're even going to have a chance with this guy you have to show him something that includes the company he's convinced himself is the best.  I'll bet that he's not rebalancing like he should, doesn't have a correct asset allocation, doesn't have a plan at all.  He probably just reads Money or watches CNBC and they've told him Vanguard rocks. 

 
Here's where I don't agree with ice.  It's relatively easy, using a hypo, to show him how any number of funds can beat whatever he's got.  There are only about 10 funds that I see most often.  Index, Primecap, Windsor, and some others off the top of my head.  You can show him those hypos if you want to play that game.   Like the others said, I wouldn't waste your time on A shares.  I would show him Advisory Solutions like the others said.
 
Just keep dripping on the guy.  Give him service like you would any other $400K account and you will most likely win the biz eventually. 
Jun 16, 2009 2:36 pm

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Jun 16, 2009 2:43 pm
Spaceman Spiff:

I mostly agree with ice.  If  you're even going to have a chance with this guy you have to show him something that includes the company he's convinced himself is the best.  I'll bet that he's not rebalancing like he should, doesn't have a correct asset allocation, doesn't have a plan at all.  He probably just reads Money or watches CNBC and they've told him Vanguard rocks.  It's relatively easy, using a hypo to show him how any number of funds can beat whatever he's got. 

 
Just keep dripping on the guy.  Give him service like you would any other $400K account and you will most likely win the biz eventually. 
 
Use a hypo to show him how any number of funds can beat whatever he's got ? Actually that doesn't show anything besides what has happened in the past. Way to add value by doctoring a hypo to beat a portfolio after the fact.
Jun 16, 2009 3:03 pm

I would tell him he is not the type of client I am looking for. I wasted 4 yrs at Jones trying to convince people they need my help. When I left I finally figured out that it isn't worth the battle. Those you do convince will never be happy and will tell other people how unhappy they are, others who you never will convince will try to keep the conversation going over years..



Move on.. Tell him that you don't think he is the type of client you are looking for since he doesn't value your advice... The rest of these guys are right, don't doctor a morningstar hypo, in the end it never works out.. performance comes and goes.. ask Putnam

Jun 16, 2009 3:04 pm

Had a similar situation happen to me last month.  Prospect focused on cost, I focused on professional advice.  I asked him a simple question.  If I could show him how my advice would benefit him, would he do business with me now?  He said he doubted how I could, but yes, if I could show him my value he would bring sign the transfer on his $300m account (I wouldn't bother for $50m).  I did a fact finder, got him to agree that we were on the same page as to time frame, goals, and risk. 

 
Then I pulled out a hypo of my generic portfolio that fit his situation and asked him which no load funds and in what proportion he was considering.  Blank stare.  He hadn't had a chance to do that yet.  I said ok.  Please initial the first 5 pages of the hypo.  He did without looking at the hypo.  I said when you figure out your portfolio I will compare yours to mine and you can decide which is best.  He asked why I had him initial the hypo pages.  I explained that I wanted him to know that what I would have shown him before knowing what he picked is the same as after I find out which funds he choses.
 
Two days later he called me with a portfolio of no load funds.  I set an appointment for the next day.  He came in and I compared the two portfolios.  14 year hypo.  I had better returns in 12 of 14 years, 3 yr, 5 yr, 10 yr, since inception, lower beta, lower std dev, higher alpha.  I also explained to him that my numbers included about 50 bps in MF internal fees and my 150 bps, while his portfolio did not.  I asked him if now he could see the value that I provide my clients.  He signed the transfer.
 
I don't recommend this for most prospects.  Your value should be your service, not your performance.  But you have to pander to what the client views as most important.  I sold him on numbers, I will keep him on service.
Jun 16, 2009 3:06 pm

Unless your numbers decrease. then he won't care about service..

Jun 16, 2009 3:10 pm
Sam Houston:

Had a similar situation happen to me last month.  Prospect focused on cost, I focused on professional advice.  I asked him a simple question.  If I could show him how my advice would benefit him, would he do business with me now?  He said he doubted how I could, but yes, if I could show him my value he would bring sign the transfer on his $300m account (I wouldn't bother for $50m).  I did a fact finder, got him to agree that we were on the same page as to time frame, goals, and risk. 

 
Then I pulled out a hypo of my generic portfolio that fit his situation and asked him which no load funds and in what proportion he was considering.  Blank stare.  He hadn't had a chance to do that yet.  I said ok.  Please initial the first 5 pages of the hypo.  He did without looking at the hypo.  I said when you figure out your portfolio I will compare yours to mine and you can decide which is best.  He asked why I had him initial the hypo pages.  I explained that I wanted him to know that what I would have shown him before knowing what he picked is the same as after I find out which funds he choses.
 
Two days later he called me with a portfolio of no load funds.  I set an appointment for the next day.  He came in and I compared the two portfolios.  14 year hypo.  I had better returns in 12 of 14 years, 3 yr, 5 yr, 10 yr, since inception, lower beta, lower std dev, higher alpha.  I also explained to him that my numbers included about 50 bps in MF internal fees and my 150 bps, while his portfolio did not.  I asked him if now he could see the value that I provide my clients.  He signed the transfer.
 
I don't recommend this for most prospects.  Your value should be your service, not your performance.  But you have to pander to what the client views as most important.  I sold him on numbers, I will keep him on service.

That right there my friends is a professional financial advisor. Great stuff Sam.

Jun 16, 2009 3:32 pm
Sam Houston:

Had a similar situation happen to me last month.  Prospect focused on cost, I focused on professional advice.  I asked him a simple question.  If I could show him how my advice would benefit him, would he do business with me now?  He said he doubted how I could, but yes, if I could show him my value he would bring sign the transfer on his $300m account (I wouldn't bother for $50m).  I did a fact finder, got him to agree that we were on the same page as to time frame, goals, and risk. 

 
Then I pulled out a hypo of my generic portfolio that fit his situation and asked him which no load funds and in what proportion he was considering.  Blank stare.  He hadn't had a chance to do that yet.  I said ok.  Please initial the first 5 pages of the hypo.  He did without looking at the hypo.  I said when you figure out your portfolio I will compare yours to mine and you can decide which is best.  He asked why I had him initial the hypo pages.  I explained that I wanted him to know that what I would have shown him before knowing what he picked is the same as after I find out which funds he choses.
 
Two days later he called me with a portfolio of no load funds.  I set an appointment for the next day.  He came in and I compared the two portfolios.  14 year hypo.  I had better returns in 12 of 14 years, 3 yr, 5 yr, 10 yr, since inception, lower beta, lower std dev, higher alpha.  I also explained to him that my numbers included about 50 bps in MF internal fees and my 150 bps, while his portfolio did not.  I asked him if now he could see the value that I provide my clients.  He signed the transfer.
 
I don't recommend this for most prospects.  Your value should be your service, not your performance.  But you have to pander to what the client views as most important.  I sold him on numbers, I will keep him on service.



Just a question...

How do you walk around with basketballs for nads?

That's is bad@$$....

Jun 16, 2009 3:41 pm
SometimesNowhere:
Sam Houston:

Had a similar situation happen to me last month.  Prospect focused on cost, I focused on professional advice.  I asked him a simple question.  If I could show him how my advice would benefit him, would he do business with me now?  He said he doubted how I could, but yes, if I could show him my value he would bring sign the transfer on his $300m account (I wouldn't bother for $50m).  I did a fact finder, got him to agree that we were on the same page as to time frame, goals, and risk. 

 
Then I pulled out a hypo of my generic portfolio that fit his situation and asked him which no load funds and in what proportion he was considering.  Blank stare.  He hadn't had a chance to do that yet.  I said ok.  Please initial the first 5 pages of the hypo.  He did without looking at the hypo.  I said when you figure out your portfolio I will compare yours to mine and you can decide which is best.  He asked why I had him initial the hypo pages.  I explained that I wanted him to know that what I would have shown him before knowing what he picked is the same as after I find out which funds he choses.
 
Two days later he called me with a portfolio of no load funds.  I set an appointment for the next day.  He came in and I compared the two portfolios.  14 year hypo.  I had better returns in 12 of 14 years, 3 yr, 5 yr, 10 yr, since inception, lower beta, lower std dev, higher alpha.  I also explained to him that my numbers included about 50 bps in MF internal fees and my 150 bps, while his portfolio did not.  I asked him if now he could see the value that I provide my clients.  He signed the transfer.
 
I don't recommend this for most prospects.  Your value should be your service, not your performance.  But you have to pander to what the client views as most important.  I sold him on numbers, I will keep him on service.



Just a question...

How do you walk around with basketballs for nads?

That's is bad@$$....

 
What is the worst that could happen, he could tell me no?  He challenged me, I just asked him to prove it and I was prepared.  Not my first rodeo.
Jun 16, 2009 4:00 pm

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Jun 16, 2009 4:06 pm
Ron 14:
Spaceman Spiff:

I mostly agree with ice.  If  you're even going to have a chance with this guy you have to show him something that includes the company he's convinced himself is the best.  I'll bet that he's not rebalancing like he should, doesn't have a correct asset allocation, doesn't have a plan at all.  He probably just reads Money or watches CNBC and they've told him Vanguard rocks.  It's relatively easy, using a hypo to show him how any number of funds can beat whatever he's got. 

 
Just keep dripping on the guy.  Give him service like you would any other $400K account and you will most likely win the biz eventually. 
 
Use a hypo to show him how any number of funds can beat whatever he's got ? Actually that doesn't show anything besides what has happened in the past. Way to add value by doctoring a hypo to beat a portfolio after the fact.
 
So, Sam is a financial professional because he used a hypo to sell, buy my comment on using a hypo to sell makes me something less than a professional?  The difference is...?
 
BTW, Sam's approach is great.  I didn't want to make it sound like I was discounting his procedure.    
Jun 16, 2009 4:48 pm

The fact that you don't get the difference proves the point. You are showing the hypo after knowing the clients fund choices, Sam has the portfolio picked out already.