@shri haha yeah, I remember the "I-kill-you-later" accumulators. I definitely knew a few people who were enticed by the strike prices and seemingly in-the-moneyness of the terms. But when you broke it down to it's component options, you're really giving a ton of value to the bank.
I've been talking to some banks about the services and the ability to exclude certain products from the mandate. Specifically things like ELNs and Accumulators. While I understand the concern with giving the bank a mandate, I'm also concerned with an advisory account as this leaves my mother the main gatekeeper of entering products and she can potentially be blinded with jargon and cherry-picked data and performance.
@DellthinkHK Even at PB, if it was an advisory account, they could still recommend products that we could disagree over which is the conflict we're trying to avoid. Purchasing the products or not, we would be paying an all-in custody fee on AUM anyway.
The issue is if we allocated towards ETFs in the PB account, it feels silly to pay this AUM fee when it's such a vanilla product. If we go for more exotic alternatives, I think we're more out of our depth plus we'll be paying extra load to 3rd party funds.
@jdf21st Good point about the capitalization of brokerages. This probably should have been something more considered by me as my alternative to PB is just ETF basket held in some place like Interactive Brokers.
For now we're still talking to banks, but for me, as risky as this is, I'm leaning towards a discretionary mandate that is heavily restricted in terms of turnover and available products as opposed to advisory account. The problem with the advisory account is that my mother might be the main point of contact and it's been tiring to explain to her why certain products aren't desirable or misleading in their value. Case in point the ELNs and accumulators. This family debate of finances is something I'd like to avoid.
So for now, the value proposition of a clear mandate and discretionary account at PB over my default auto-rebalance ETF approach is:
1. Less family discussion about finances.
2. Access to alts, like private equity, distressed, etc (unconvinced of value)
3. Potential timing expertise of a market to rotate in and out of funds (again. unconvinced of value)
But yeah. We'll see how it goes. At this point I'm pretty eager to keep the peace and I'm getting more and more willing to sacrifice value and optimal finance management for that goal.