My brief encounter with Fisher Investments

 It was a little over a year ago that I gave Fisher Investments a try.  It took less than an hour for me to figure out that it just wouldn't work for me.  I had already built a substantial portfolio, but my thought was that if they could help me improve my returns it would be so much the better.  Instead I found that what they were offering was in fact a time bomb, at least from my perspective.

 They seemed to have a one size fits all strategy, and I need to emphasize 'seemed' because I can only speak to what they wanted me to do with my portfolio.  It comes down to a significant difference in strategy.

 I started my Schwab account when I started my own business.  The account is a SEP (Simplified Employee Plan), a variety of IRA.  With a SEP IRA the employer can create an IRA for the employee and contribute tax deferred money to that IRA.  That contribution, as is salary, is a deductible expense to the business.

Over the years I invested the money in a combination of stocks, mutual funds, and exchange traded funds. Each of the investments either paid interest or paid dividends.  The dividends I set to automatically re-invest, so that all through the year, even though the business only added money once a year, the account would continue to grow.  The interest I just let collect, and when a big enough pile had accumulated either bought a CD or started a new stock position.

When I decided to give Fisher Investments a try, I was still working, but close to retirement. If I turned off automatic dividend re-investment, then between dividends and interest and what I would be getting from Social Security I would have a not lavish but comfortable income that would continue to pay me for the rest of my life.

So I was pretty satisfied with what I had done for myself, but I thought  I would give Fisher Investments a try to see if they could improve upon what I had done. After all, they do this for a living.

Now this was all happening over the phone.  I don't remember if I was sharing a screen with them.

First of all, they had no interest in what I had already done. They wanted me to sell everything and start over.  So they would give me a position they wanted me to buy, and I would sell enough of the portfolio to cover that buy.

I noticed that the none of the stocks that they were recommending I buy were dividend payers.  After making several trades I brought this up.  That's when they explained the strategy behind their plan.

Based upon my age they estimated that I would likely live about another 20 years.  So each year I would sell some of the positions, and that I would be just about out of money when I died or shortly thereafter.  Not much left to leave children and grandchildren.

My grandmother lived into her 90s.  I prefer not to gamble on being broke the last few years of my life,  I also don't consider having some money left over to pass down an unreasonable expectation.

So I told them that their plan just didn't work for me, and  they politely returned my money. I sold the stocks they had me buy, and bought back positions I had sold.  I have since opened a taxable Schwab account so that as I take my required minimum distributions I can simply move positions (instead of selling and moving cash) from the IRA into that account, not having to sell of the securities.  I had to pay tax on that required distribution but the positions will continue to grow and accumulate cash from paying dividends until I need the money. 

Each year I will repeat the pattern, moving positions with an equivalent value to the required minimum distribution into the taxable account, letting the income from them to supplement my social security as needed.