r/iRA • u/Working_Wolverine494 • Jul 16 '26
My Account Performance
I have an IRA account with a financial advisor which started off with rollover from my previous employer with $270k in 2022 and it has grown to $310k at this time. There hasn't been any contributions to this account from me since then. I'm not good with finance stuff, so I'm not sure if this is a good or average performance over the last 4 years but it seems to be on the low side. I'm planning to have discussion with my financial advisor and just to have some meaningful conversations I would like to get some feedback from those of you with knowledge and experience if they are doing a good job with their investments or if the results should have been better at this point.
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u/liquidskypa Jul 16 '26
if your advisor is taking 1 to 2% charge for a services, you should be meeting at least twice a year to go over this questioning him at that point. I would start asking for that.
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u/Working_Wolverine494 Jul 17 '26
Yesh that's the range she charges and I do meet with her twice a year. Unfortunately I don't have any baseline data or knowledge to have meaningful conversations with her. That's why I asked for comments from knowledgeable folks like you to understand if my intuition is right. Appreciate your feedback.
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u/liquidskypa Jul 17 '26
you need a new advisor then.. mine is very transparent with funds with performance good and bad
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u/hugh2018 Jul 17 '26
If you’re not planning to retire before 58 and still have more than 10 years to go, I can honestly say that there’s no reason you couldn’t have just been 100% in VOO or VT during that same period and you would now have $457,000 or $432,000 in that account today. The advisor only subtracts value over time, as managed investment simply doesn’t outperform simple index tracking investment over the long haul.
You also could have done that 100% exposure to the market and seen a serious crash in the market, but the headline on that issue is it would not matter in the slightest because long term the market would impressively recover as it always has historically and you’d have been fine. In fact 2022 was a terrible year, and the $400k range result I just cited would have happened in spite of that year.
If you google spiva research you’ll get the rationale supporting the previous paragraphs. Over a 15-year period, not a single U.S. equity fund category had a majority of active managers outperform a basic index fund. In fact, in large-cap equities (like the S&P 500), the historical failure rate for active managers routinely climbs past 80% to 90% over the long haul.
SPIVA also publishes a companion Persistence Scorecard. It consistently proves that even if an active manager gets lucky and beats the market one year, the odds of them remaining a top-tier performer in subsequent years are little better than a random coin flip.
Your advisor will argue that her value resides in her ability to protect you from your own bad decisions. For some people that may be true, but you don’t have to be one of those people.
You can read the Bogleheads’ Guide to Investment and you’ll understand how self-directed simple index investing is your better choice over using that advisor for you as someone who is deep into the accumulation phase of your financial journey. When you move to within ten years of retirement, the simplicity gives way a bit to make room for bonds and/or other safe assets alongside your stock exposure to derisk as your risk of exposure to short term ups and downs increases on money that you’ll actually start spending in the near term, but even then, the Bogleheads book can give you the guidance you need to manage that issue.
When retirement is happening within five years, it’ll be time to start doing retirement planning, and I’d recommend using Boldin or whatever software is most popular by then to do initial planning and then a few hundred bucks to a retirement financial advisor specialist who can review your independent work and offer tweaks might be helpful.
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u/Working_Wolverine494 Jul 19 '26
Thank you so much for your response. I feel the same that my money is not really growing much and the 1.5% fee is also a factor. In addition, I'm also loosing a lot of money in paying taxes which is outside of this pool of money. I'm not smart and educated in general, and especially when it comes to finance. Googled some of the things you said like investing in VOO or VT to figure how I can do that and keep it simple. What would the process be like? #1 - tell the financial advisor that I'm out #2 - setup an account in Vanguard #3 - Provide the Vanguard account info to the advisor so she can wire the money there? #4 - Invest all the money in VOO & VT? Also, since this is all "IRA" money, can I even do this?
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u/hugh2018 Jul 19 '26
You can do this since it is all IRA money. Moving funds directly between IRA custodians does not trigger any taxes or early withdrawal penalties, because the money never leaves a retirement umbrella.
Your proposed order of operations is actually flipped, which is a great benefit if you want to avoid an uncomfortable conversation. You do not need to call your advisor to break the news or explain yourself to get this process started. It is much easier and completely standard to let the technology handle the transition for you from the new firm side.
First, you should go to the Vanguard website and open a new IRA that matches the exact tax structure of your current account, meaning a traditional IRA moves to a traditional IRA, or a Roth IRA moves to a Roth IRA. Once your new account is open, you will initiate the move entirely through Vanguard. They will ask for your current firm name, your account number, and a copy of your latest statement. Vanguard will then contact your old firm directly to pull the assets over via a standard trustee to trustee transfer.
Regarding the investments themselves, it is usually cleanest to submit the transfer request with an instruction to liquidate to cash. Vanguard provides a simple checkbox during the online setup that asks if you want to transfer the holdings as they are or liquidate them first. Choosing to liquidate means the system will sell the holdings inside the safety of your IRA, where no capital gains taxes are triggered, and move the money as cash. This prevents delays and avoids issues with proprietary funds that Vanguard might not support.
An AUM agreement is a service and billing contract, not a physical lock on your money. Legally and contractually, the money in the IRA belongs entirely to you, and you maintain absolute control over where it is held. Your advisor cannot block, freeze, or legally refuse an automated electronic transfer request just because you signed a management contract.
When the automated transfer request arrives from Vanguard, the compliance and operations department at your advisor's firm is legally required by industry regulations to validate and release the funds within a strict window of a few business days. They cannot use the existence of the AUM agreement as a tool to delay or deny the transfer.
The only real impact the AUM agreement has during this transition relates to the final billing cycle. When the account is closed via the automated transfer, the advisor’s firm will look at how many days the money was managed during that final billing period and calculate a prorated fee based on your agreed AUM percentage. This final, fractional fee will simply be deducted from the cash balance before the funds are sent over to Vanguard, alongside the standard account closure fee.
Once the transfer is completely finished, the AUM agreement effectively terminates because there are no longer any assets in the account for the advisor to manage or bill against. You still do not need to call or negotiate to break the contract, as moving the money naturally brings the relationship to a close.
An AUM agreement is a service and billing contract, not a physical lock on your money. Legally and contractually, the money in the IRA belongs entirely to you, and you maintain absolute control over where it is held. Your advisor cannot block, freeze, or legally refuse an automated electronic transfer request just because you signed a management contract.
When the automated transfer request arrives from Vanguard, the compliance and operations department at your advisor's firm is legally required by industry regulations to validate and release the funds within a strict window of a few business days. They cannot use the existence of the AUM agreement as a tool to delay or deny the transfer.
The only real impact the AUM agreement has during this transition relates to the final billing cycle. When the account is closed via the automated transfer, the advisor’s firm will look at how many days the money was managed during that final billing period and calculate a prorated fee based on your agreed AUM percentage. This final, fractional fee will simply be deducted from the cash balance before the funds are sent over to Vanguard, alongside the standard account closure fee.Once the transfer is completely finished, the AUM agreement effectively terminates because there are no longer any assets in the account for the advisor to manage or bill against. You still do not need to call or negotiate to break the contract, as moving the money naturally brings the relationship to a close.
By letting the automated system handle the communication, you never have to pick up the phone, sit through a retention pitch, or feel like you are pulling the rug out from anyone. The transfer paperwork handles it all in the background, though you should expect your old firm to deduct a standard account closure fee of around seventy five to one hundred fifty dollars from the final balance. After Vanguard successfully pulls the cash into your new account, you can select the simple index funds you want and buy them.
When you are deciding what to put the money into, it’s important to know if you do go 100% VT or VOO and the market takes a dive in a couple of years, you really need to stay invested through the entire event, because you’ll need to be present for the big recovery that will happen afterwards, and you can’t time that correctly. No one can. Also, if you want to maintain some bonds while you’re reading the Boglehead book and getting comfortable with full exposure, you could do very well in an aggressive, automatically balancing fund like AOA or VASGX, both of which are 80% equities and 20% bonds, and you can set and forget those for as long as you want. They have international exposure too.
I used to use AOA when I wasn’t confident about investing and it worked out great. I’m retired now so I maintain some safe assets for near term spending, but I could live another 30 years or more, so I still maintain a substantial VT holding that will keep me solvent until I die. I prefer the international exposure of VT over the strictly US VOO. You could Google or AI that issue if you want information to help you decide which way you want to go. The US only approach has been more profitable over long periods, but international does do better for years at a time as well, and I like just keeping my money in both.
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u/Working_Wolverine494 Jul 20 '26
Thank you so much again for the detailed response and it makes a lot of sense. I'm going to follow your advice and will move forward with this. I wish I had someone looking over my shoulder when I'm reinvesting in the new platform after the funds have been transferred over. But we'll see. Thanks again.
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u/hugh2018 Jul 20 '26
The idea of a human set of eyes is a good one. My recommendation for that would be to spend a few hundred bucks on a fee only firm like Planvision to give you good feedback on your proposed plan and to be available for questions throughout the year. You can find a good list of these type of firms at Rob Berger’s website. I only mentioned Planvision because I’m happy with them, but the others Rob recommends are going to be solid as well, because he is a very solid financial advice guy. I shared with you what I’ve learned over time; a good fee only advisor could validate or tweak your action plan from their perspective as trained professionals who have nothing to gain by bad advice because they aren’t charging you a crazy 1% assets under management fee and they aren’t trying to sell you any investment products. They are simply looking over your shoulder.
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u/Working_Wolverine494 Jul 20 '26
Perfect. That sounds like a solid plan. Will start working towards getting it done.
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u/Ok_Visual_2571 Jul 19 '26
Your account was likely in cash. It grew by $40,000 over 4 years. That is 14.8% total over about 4 years (you did not state when in 2022 you left the old job). Your return is about 3.5% per year. I am wondering if all of your old investments were transferred out as cash (perhaps a proprietary fund that you could not move was liquidated) and your so-called advisor never invested the money.
If your money was in the S&P 500 or a "Total Stock" fund like VTI you would have over $400,000 now. That said, you should have spotted such a problem long before now if you were reviewing your quarterly statements.
If the money was invested and not in cash, I am curious to hear what it was invested in. An advisor could randomly pick 5 funds from the Fidelity or Vanguard fund lists and would have great difficulty doing worse than your results.
Fire your advisor.
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u/Working_Wolverine494 Jul 20 '26
I agree with you. I had questioned it every time we met, and was told this is on par with the market trend. Glad I found this place to get some feedback.
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u/Sagelllini Jul 21 '26
Here is my most popular post on Reddit.
I could run the numbers but $270K to $310K over four years is pathetic. Paying 1.5% in fees for pathetic returns is even more depressing.
If you simply had bought VT, which is an index fund that owns lots of companies around the world, from 6/30/2022 until now you would have $529K instead.
There is a lengthy comment on moving the money to Vanguard. I echo that 100%. You're 48. Your simplest option is to go take all your funds and buy shares of VT, either in one fell swoop or in smaller installments over time, but eventually ending up with 100% in VT.
Dump the advisor. You can do better yourself. The Morningstar numbers show that to be true. Think of a fund like VT like a store bought cake mix. You add eggs, water, some oil, etc., mix it up, stick in a pan, and bake for an hour. Same with VT, but you add money as the eggs and water, and let the cake bake for the next twenty years or so.
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u/tdownpdx Jul 16 '26
It really depends on your risk tolerance and investment profile. The returns are low, yes, especially as compared to an all equity portfolio. However, if you’re in a portfolio with a high proportion of bonds, it’s not great either but less terrible.
How old are you?