I am wondering something that I think alot of people are right now – with the average consumer’s 401k or IRA balance being down 30-50% in the last few months – Should people with professionally managed 401k or IRAs keep paying for “managed service” or just cancel it for now and leave the funds where they are? For instance I have Fidelity’s “portfolio advisory service” and they charge me a fee of about 1% a year, billed quarterly out of my account So in addition to these HUGE drops in market value (I have lost about $40,000 since July ’08), I am also getting hit for this 1% fee every 3 months out of my account too, compounding the losses. I don’t know what to do right now. I feel like my retirement account is draining down so fast that I will have nothing left soon. Naturally, when I speak to the PAS at Fidelity, they say that although they are not able to make me any profits right now, they claim they are still minimizing my losses. In other words, they claim they are helping me to “lose less” than the average investor has lost. The whole thing is just making me stressed out and sick to my stomach. Please, anyone with professionally managed retirement account experience – give me some advice on what to do in this type of economy and stock market. (IE – keeping the portfolio advisory service or not).
chances are good that your advisor is not worth his fees, in other words he is not beating an index fund over time. you will probably be ahead by learning all you can and cut out all the fees that you can. best would be to invest in index funds which should be no problem for an IRA but you may not be able to self direct your 401K.
most of the losses have probably already occurred so switching won’t likely gain you that much.