[manaboutown]

Thursday I had my first scheduled conversation with a potential FA to whom I had sent portfolio statements. Without getting my prior approval he informed me he had another FA on the call. Strike one!

Then he told me he was compensated based on AUM. When I mentioned that, for example, it literally takes no more time or effort to manage a $2(X)M portfolio than a $1(X)M portfolio ( just buy 200 shares of XYZ instead of 100) so why should he get twice as much? He had no good answer. I asked why he could not bill as lawyers do, by the hour. Silence. Strike two.

During the call the other FA three times chimed in I should expect a 5% return. I did not bother to ask if that is 5% before or after their fee. With T-bills returning 4+% (4.99% on the 20 year treasury) with no fee who needs a FA getting 5%? Many good companies and ETFs paying pretty good dividends are out there, too, and qualified dividends are taxed at a relatively low rate. I am not swinging for the seats out in left field, but I do expect to average 7-8% on a conservative portfolio over the next ten years, with both up and down years occurring during that period. Strike three. He is OUT!

This week I have a scheduled conference with another FA. Let's see what he says.