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I am new to Motley Fool and discussion board. I am 55 years old and want to real serious about investment strategy for retirement. I have been ivesting through an agent of Fidelty Investments for past few years. Limited success rate. My broker has left to go to Smith Barney.
According to broker, he will pay my transfer fees from Fidelty to Smith Barney and if he is not sucessful in growing my accounts the first year he will pay transfer fees to another brokerage house.

Or should an inexperienced investor like me consider online broker?

I would appreciate feedback on my situation.
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What are Smith Barney's fees in comparison to Fidelity. I moved my account from a full-service brokerage (Morgan Stanley) to Fidelity and have been most pleased.

Donna
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I am new to Motley Fool and discussion board. I am 55 years old and want to real serious about investment strategy for retirement. I have been ivesting through an agent of Fidelty Investments for past few years. Limited success rate. My broker has left to go to Smith Barney.
According to broker, he will pay my transfer fees from Fidelty to Smith Barney and if he is not sucessful in growing my accounts the first year he will pay transfer fees to another brokerage house.

Or should an inexperienced investor like me consider online broker?

I would appreciate feedback on my situation.

Start here:

http://www.fool.com/mutualfunds/mutualfunds.htm?source=LN

Read as much as you can. Take control of your own inveastments. That's the Foolish thing to do. Don't let the Wise broker take your money at all. Fidelity has some good funds. I prefer Vanguard, but I have some Fidelity in my 401K.

Until you know more, stick with mutuals. (I am so ignorant a have nothing but mutuals.) There are some good funds out there, but there are some high-priced losers, so don't go whoring after this broker.

JMO. Cliff
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me(I am so ignorant a have nothing but mutuals.)

OCD: I have nothing but mutuals.

cliff
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Cliff is right on the money, but let me add my 0.02 worth.

I use Fidelity Brokerage services and moved my IRA there from Solomon Smith Barney a few years ago. SSB rates are negotiable but nothing like the commissions paid at Fidlity. The end came when I had a $50K preferred stock trade in mind. SSB wanted $2K in commissions each way. I about died. Fidelity charges $8 per trade. A large transaction can sometimes result in several trades if they cannot scare up all the shares on the same day. But even $100 is high for such a transaction.

So to me, you would consider going with SSB only if your broker is doing an excellent job for you. As Cliff points out, mutual funds are an excellent place to begin while you learn to do it yourself. Especially index funds.

And by the way, Fidelity offers free research reports like S&P reports on stocks. I would rate what they offer as excellent. As you learn, they can help. And I am sure you will find management services available from Fidelity too, if that is what you want.
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So to me, you would consider going with SSB only if your broker is doing an excellent job for you.

Brokers are basically salesmen. Most of them know little or nothing about actual investing. They read the scrips that are sent out by the home office each day, which tell them what to do and how to do it. In the final analysis, brokerage houses are out to make money, and they do it by taking your money.
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No. of Recommendations: 3
Limited success rate. My broker has left to go to Smith Barney.

Since he has had limited success for you, let him go. Give him a pat on the fanny, a candy bar, and say "good bye & good luck to you".

According to broker, he will pay my transfer fees from Fidelty to Smith Barney and if he is not sucessful in growing my accounts the first year he will pay transfer fees to another brokerage house.

Let me translate this: "He will churn your account to increase his commissions to cover any expenses for the transfer. He will hold onto your money with a death grip until he has bled it out of your account." Unless he puts his promise in writing it is worth nothing, and he isn't going to do that. Even if he does put it in writing, he has demonstrated that he hasn't made money for you.

I tell you what--ask him if he will put in writing that your account will grow by 10% or more during the first year (after fees & commissions of course) or he will refund all fees and commissions to you for the entire year.

Or should an inexperienced investor like me consider online broker?

You have lots of experience. Your broker has been unsuccessful. Learn from the experience and start doing it yourself. Open an account at on online brokerage and put your money in some nice, index funds while you learn. You have the great advantage that you do not have the inherent conflict of interest any broker has. You want your account to grow -- the broker wants to get the most commissions he can possibly bleed out of you.

The money I have in mutual funds is divided about equally between SPY, MDY, and QQQQ. Others will have their own favorite funds, but in any case you really need to study enough about investing to make you own decisions.
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It seems that everyone here is in favor of not using a broker...no surprise, I am too. And I agree with what has been said. However I'd like to add one point...

Unless you agree to learn all you can, by reading books, posts, newsletters, magazines, etc., plug all of your money into an index fund or two. Even then, I would still recommend learning all you can. Th'aint no such thing as a free lunch, is true.

I would recommend that after you have read somewhat, and are becoming familiar with the terminology (and forgive me if I'm assuming too much - that you have no experience), then I would recommend determining the appropriate asset allocation for you. Stocks & Bonds, Domestic & International, Total Stock Market vs. S&P 500, Large & Small cap and Growth & Value (if so desired), specialty areas - Health Care, Energy, Precious Metals, etc (not recommending this necessarily, just pointing them out). And then, how much for each category?

Again, I'm not suggesting using a broker. To the contrary, I'm completely against it. However, I strongly recommend learning a bit about where you are putting your money. It's your money afterall, not mine, and not your brokers. We here are all faceless, and can only give our opinions.

Good luck - and I hope you have a good time doing this,
Ryan
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I would mostly just mimic what the OldOne said.

>>>>Limited success rate.
Plenty of experience!


And add maybe a tidbit.

If you have some investments with Fidelity, I beleive you can go to their website and use their planning tools to determine your risk tolerance, leading to the asset allocation some one in your shoes,
(risk, value, age, dreams) should have, especially at 55.

Then, when your broker gets to SB, you may say "interested in switching over, if I did, what would you put me in" and if his reply has nothing to do with your situation, for instance if he just says well, we have much better research here and I could get a couple of good stocks!!!!! RUN!

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Donna,

What were the Morgan Stanley full service brokerage fees? What are the Fidelty brokerage fees?

At this point I don't know the Smith Barney fees.

What is your recommendation of assest allocation?


Watertree
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I believe Fidelity has areas on their web site that you can learn about various financial vehicles in which you can invest.

If you live near one of their Investor Centers I would urge you to take advantage of their live classes offered free at these centers. If after learning more from the the Fidelity web site or their Investor Center you still feel your current broker could do a better job you could move your money at that time.

I, myself, am a professional skeptic and would be concerned about a brokers offer to pay transfer fees to his new employer, afterall you don't get something for nothing. My concern here would be that the trading fees are higher than at Fidelity and perhaps could more frequent costing you more in the long run.

I also prefer Vanguard over Fidelity, but each of these large financial companies have areas within their organizations in which you can learn more about your assets and ask informed questions instead of possibly being dictated to by a financial professional. Just remember that even though a broker may offer you financial advice you do not have to take their advice as the final decision is yours how you want your assets to be invested.

My mother was concerned about her limited retirement assets. I convinced her to take a more active role in deciding what was best for her financial future. Upon reading more about her options we were able to discuss her options as informed consumers amongst ourselves and with the Fidelity advisor when it was time to come up with her current asset allocation. She felt more comfortable because she understood what the advisor was taking about when he started talking about: allocations, risk, harvest rates etc. He was pleased beacuse he knew here was a woman and her son who had done some homework, had questions and sought advice. While we didn't do each and everything he suggested he understood our reasons for our objections. After our first visit my mother was surprised at how young this specific investment adviser was. He spoke directly to her since it was her money we were there to discuss even though I defintely have more financial knoweldge.

DMyers8985
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Hi Watertree !

You wrote:

"I am 55 years old and want to real serious about investment strategy for retirement. I have been ivesting through an agent of Fidelty Investments for past few years. Limited success rate. My broker has left to go to Smith Barney.
According to broker, he will pay my transfer fees from Fidelty to Smith Barney and if he is not sucessful in growing my accounts the first year he will pay transfer fees to another brokerage house."

If you want to get real serious about investment strategy for retirement, then you need to take the bull by the horns and start learning. No one will care as much about your money as you will. Your broker will pay the transfer fees because s/he knows they will more than make the money back.

Consider this:

$10,000 invested for 40 years with a 8% return yields $217,245.21

$10,000 invested for 40 years with a 8% return and 1% going to a financial advisor yields 149,744.58

Big difference on a small chunk of change. Consider learning about asset allocation and low cost mutual funds. You could do it quite easily with Vanguard Total Stock Market Index Fund, Total Bond Market Index Fund and Total Internation Index Fund. I am quite sure that you will be further ahead with that as opposed to going with a "Financial Manager" which is nothing more than a salesperson.

Here is another good site for you to read and post:

http://socialize.morningstar.com/NewSocialize/asp/AllConv.asp?forumId=F100000015

We work so long and hard for our money, but we often fail to understand how to invest it. Read books by John Boogle, Andrew Tobias and William Berstein. Knowledge gives confidence. I would not want to go into retirement depending upon someone elses judgement for my financial security, I would not be able to sleep at night.

Best of luck !

-helen



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I tell you what--ask him if he will put in writing that your account will grow by 10% or more during the first year (after fees & commissions of course) or he will refund all fees and commissions to you for the entire year.

I don't even agree with this strategy. Suppose there is a good bull market across most sectors during that year, something equivalent to calendar years 2003 and 2004? IIRC, most folks I know on these boards experienced a return of greater than 10% for both of those calendar years. (Even my 401k's high-cost S&P500 index fund returned 27.8% in 2003 and 10.15% in 2004.) In that type of market environment you can grow an account by 10% after fees without blinking an eye. IOW, this would not be a good benchmark.

You have lots of experience. Your broker has been unsuccessful. Learn from the experience and start doing it yourself. Open an account at on online brokerage and put your money in some nice, index funds while you learn.

Or maybe just open an account with Vanguard, diversify across their index funds, and just keep the money there, which does away with having to manage brokerage trades/costs at all.

2old


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Please don't go with Smith Barney. We were with them for way
to long and they nickeled and dimed us at every turn. You won't
believe the ways SB finds to charge fees - there are fees on top
of fees. DON'T DO IT! Remember, their brokers are just salesmen!

If you feel you need an advisor, find a fee only advidsor - not
a broker. You will be way ahead. I chringe every time I think of
all the fees we paid - but at least we know better now and we're
at Vanguard.

Good Luck!

MKT
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It is not unusual for brokers to change employers. When they do, they try to take their clients with them. Much easier than having to start from scratch doing cold calls. He'd be willing to cut slack in commissions for awhile to be able to keep your business. You can bargain for reduced commissions, no annual account fee, that sort of thing. He will probably keep his word. Holding onto an old customer is a lot more pleasant than the time on the phone it takes to recruit new ones.
There is no rule that says you can only have one brokerage account.
Smith Barney will offer some types of investments not stressed at Fidelity: individual bonds, GNMAs, FNMAs, CMOs. If it turns you on to have a part of your investments in that type of investment, it is perfectly possible to open an account with him, and fund the account with just a part of your money. If you make that type of investment, it absolutely is buy and hold.
In general, you do not want to buy stocks from the full service broker. Commissions eat you alive, as already pointed out. Fidelity and Vanguard are both best at mutual funds. Fidelity has primarily actively managed funds, although in recent years they have been indexing also. Vanguard is the king of low cost and indexing. It is possible to trade individual stocks with either firm.
Now, what is NOT fair would be to spend half an hour on the phone with your old broker, get some stock suggestions and then buy them at Fidelity or Vanguard or e-trade where the commissions are lower. If you decide to take his stock tip, he should get the business. Do your own research and you are free to buy the stock as cheaply as possible, and it isn't at a full-service firm.
Best wishes, Chris
Who has bonds and GNMAs at Merrill, stocks at Brown, and mutual funds with Fidelity, Vanguard and T Rowe Price. And likes it that way.
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