How did my advisor do?

[ItalianFX]

A little background on me: I turned 24 in June. I am a part-time Police Officer. I am graduating from college in December with a BA in Economics. I am very disciplined with saving money. I used to trade/invest in individual stocks, but I did terrible. I also used to trade Foreign Exchange. I never really got much other of either because I basically made every mistake in the book.

Anyways,

I recently got a new financial advisor, and it's free to talk to her because it is through my bank that I am a member of.

About a year ago, I opened an account with American Funds with another advisor - a guy I met in the police academy. He hooked me up with:

EuroPacific Growth Fund 33%
The Growth Fund of America 33%
New World Fund 33%

Those 3 have done very well for me in a 1 year period.

I also had opened a Roth IRA with Fidelity back in 2004 and that has done very well for me over the past 3 years. I held two ETFs that did well, obviously through the great run of the stock market.

Now, I talk to this advisor and she suggests I liquidate my Roth IRA and transfer all of the funds to a Roth IRA with American Funds. She also wanted me to add more money to my mutual fund account.

Now, in my mutual fund account I have:

American Balanced Fund 25%
American High-Income Trust 25%
Capital World Growth and Income Fund 25%
Europacific Growth Fund 10%
The Growth Fund of America 10%
New World Fund 10%
(Those are just rough estimates) The 10% is from what I had before, and the 25% is what I added.

As soon as my Fidelity IRA is liquidated, I will have a Roth IRA that consists of:

Capital World Growth and Income Fund
The Growth Fund of America
The Investment Company of America
New World Fund

I'm assuming there will be 25% in each.

[gull]

It's great you're saving and investing.

I'm a little confused by your funds though. They have high expense ratios and seem to be tilted toward growth. Your asset allocation doesn't seem very balanced to me.

And why would you leave Fidelity, which has some great spartan index funds?

[TheMetetron]

You are being screwed. Read more here. Go with no-load index funds. Don't sell them again for the rest of your life until you need to and profit hugely.

[wdcbooks]

I am a passive investor as is clear from my relatively few posts here. Even so I think that among loaded funds there are far worse choices than American Funds. Your asset allocation doesn't look bad at a glance.

Please understand that your advisor is a salesperson who gives advice as an auxiliary part of their business. They want you to move your money from Fidelity simply because they don't get paid if you don't bring the money over. It rarely has anything to do with your best interests. Given your past experiences and what sounds like a tendency towards market timing and pooer experiences with self-directed investment I think this relationship may be costly, but you can also succeed using American funds over a sufficiently long time period.

[ItalianFX]

Basically, the reason why she wanted me to get away from the ETFs was because they track an index. She wanted me to get away from that and get into mutual funds that are managed by people. She showed me the histories of the funds and they outperformed the majority of the time.

Also, she wanted me to go with the front load because the expenses would actually be less over the long run. If I remember right, she said something about how they take the expense out once and then I don't have to pay it ever again? I can't remember.

I'm not so sure how much of a "salesperson" she is trying to be because my mom works at the bank also. Whether that means anything, I don't know.

My original advisor from the police academy said he loved the American Funds and dealt primarily with him. He said they have done well for him for the years that he has been using them.

[mtgordon]

The deal with funds is that there are a lot that have done well in the past 3-5 or even 10 years. However that doesn't mean that they're going to continue to do so. There reason that people on here don't like funds very much is since they are actively managed you are paying someone (one way or another) to handle your money. Even if they only take out 0.5% per year they have to then beat the market but more than that to show a profit for you.

[jaydub]

[ QUOTE ]
She wanted me to get away from that and get into mutual funds that result in the people who pay her getting paid. She showed me some pretty charts and waved her hands a lot, I think I may have even caught a glimpse of a nipple


[/ QUOTE ]

I'd go back in and mace her.

J

[ItalianFX]

[ QUOTE ]
[ QUOTE ]
She wanted me to get away from that and get into mutual funds that result in the people who pay her getting paid. She showed me some pretty charts and waved her hands a lot, I think I may have even caught a glimpse of a nipple


[/ QUOTE ]

I'd go back in and mace her.

J

[/ QUOTE ]

She is definitely not someone I'd be checking out.

In any case, what would you guys have suggested as the best course?

[pig4bill]

[ QUOTE ]
You are being screwed. Read more here. Go with no-load index funds. Don't sell them again for the rest of your life until you need to and profit hugely.

[/ QUOTE ]

He's being screwed? He should read more here from poker players that bought an issue of Money at Safeway last week and now think they know more than certified financial advisors?

He should dump the good performance those advisors have given him so far in favor of the mediocre performance turned in by index funds?

OP, it sounds like your financial professionals have done well by you.

[lastsamurai]

well...IBD saids dont over diversify..make a few wise investments and watch them like a hawk. cut your losses quick..ride your winners...blah blah blah

I would get a copy of morningstar and see each mutual funds ranking then question her.