Well, just to update ... my sister fired Fisher and turned it back over to Schwab in mid-Oct, paying the "insult to injury" $1,000 FI set-up fee penalty. By the time it was reinvested, her original January '08 portfolio of $696,000 netted $430,000, about a 40% loss in 10 months. That is money, most of which, she will never recapture, since she is back into a 30% equities/70% fixed allocation. Now, she is scared to death of stocks and wants to be out of them completely, but prudent investing says you need an inflation guard so she's reluctantly agreed to stay in at 30%, but is nervous every single day.

Regarding a class action suit, I don't know much about them. I do have serious concerns about FI marketing. In hindsight, no one could have expected to do well this year, though Fisher seems to have performed much more poorly than many of the rest of us. But the issue is not the portfolio performance per se. It's their failure to disclose the inherent risks. They do not seem to fully explain the risk and volatility built into their portfolio strategy (a corollary issue is having clients truly understand the MSCI World Index, vs the S & P, how aggressive it is, and the effect of a strong/weak dollar on those investments). If, for instance, they had explained to my sister, a retiree, that they could achieve for her much better than average returns, but to get there, she might have to endure some extremely wide swings in performance, I can tell you she wouldn't have gone down that road. She would NOT have invested with them. Knowing this, Fisher downplays that risk, by promising pro-active protective strategies (at every sales meeting it seems). And of course, we all know that they did not do this.

I think the design and organization of the company promotes"The HYPE". Do sales people have ANY direct investment experience, or investment people they confer with in selling their product ... if they don't, do sales people and "advisors" even understand the true volatility of their product? Do they explain it adequately? ... My experience at Schwab is conversations always are about tolerance-for-risk first. I imagine the sales turnover at FI would be quite high now.

I invested over $600,000 earlier this year. with Fisher. I am looking at a nearly 50% loss. They promise to manage your portfolio for you, but what you really have is the equivalent of a large inflexible mutual fund. Its run almost like an index fund since everybody appears to have about the same portfolio with little turnover. Your "finacial adviser" can't do much of anything since he's not a broker. All of the finacial decisions are apparently made by a small group of 3.
I asked more than once why defensive strategies were not being taken. What they kept telling us month after month was that they were predicting an up year for the stock market, until of course the emperor was found to have no clothes. In this market, I don't expect miracles and could understand a 25-30% drop. Somebody help me get off the Titanic! I don't want to bail out of all the stocks, since many are now attractively priced. I'm passed retirement age so I will need to continue working.
Would transfering the assets to a brokerage like schwab make sense?

I have been a Fisher client for over 7 years, I have far less today then when I started. My personal adviser only calls when the market is up, we have ridden out every single market up and down. I started with them right after 911, handed over my $500,000 and within a very short time found myself in the mid to low $300 range for quite a long time. After many years my portfolio value topped out at 780,000 and now it is back in the $300 range. My reason for choosing fisher was there reassurance of being able to time the market. They marketed themselves as being able to get you out of a market going down and preserve your capital. I should have bought an index fund, the fee's would have been lower and the results would have been the same or better. Fisher investments appears to spend all there time and energy on marketing to so called high net individuals and I bent over for them and they stuck it in.

Unfortunately, like Jake said, your sister's experience is not unique. And sad to tell you that I am one of the unfortunate. I let Fisher managed my money because they claimed to know how to weather a bear market (using short, puts, etc). They did none of that and lost 20% of my money.

The major problem is they chose to go with a high risk and super aggressive portfolio. They said they follow the Morgan Stanley World Index, which is far more aggressive then S&P 500. Not just that, they went even more aggressive in energy sector. When oil price dropped, they lost tons of their clients' money.

I have since fired Fisher. One big reason was I went to one of their investor seminars for their existing clients. I was told most of clients have the same portfolio. But I saw their clients base are mostly senior in their 50s, 60s, 70s. That tells me these guys are scamming the seniors. Seniors in retirement should never be investing in such aggressive investment. They can't afford to lose 20% of their investment but unfortunately many did. After what I witnessed, I lost trust in Fisher Investments that this company lack integrity.

To further prove my point, when I started asking question, my friendly investment counselor became friendly no more. He wouldn't call me any more but instead send me nicely, legally typed up letters (to protect themselves in case I sue them, I guess). When I finally fired them, they quickly deduct adviser fees PLUS termination fees within a few hours. Again, that clearly showed what they are after, the fees.

My suggestion is to fire them. You might want to fire them now (and pay the termination fee) or wait until after 1 year and fire them. Remember you don't need to sell your stocks after you fire them. Slowly sell shares (hopefully the market will recover also) and move your money to safer place. Don't know how old your sister is but she probably shouldn't be investing aggressively anyway. Good luck!

I don't understand this website.

[Please tell us specifically what you don't understand and we will attempt to answer your question.]

Yes, I was surprised by their picks ... One-third of her cash went for large cap well known US stocks, some of which she had already owned (but mostly did not own when Fisher took over). I thought a couple were particularly untimely. Our legacy stocks (when we inherited in 2004) and those she or I had purchased since, included positions in over half of their US stock purchases. So I was really surprised in the sense of "nothing new here!" I was also surprised by the purchase of MSCI Ishares, by far the largest positions.

Your analysis of retention rates is interesting. You could certainly work the numbers to your favor. There just doesn't seem to be any value-added here ... but the biggest mistake was getting caught up in their enthusiasm for what they do, and not recognizing the inherent risk in turning her moderate conservative portfolio allocation into an aggressive, one. When you need income to live on, how can you survive the volatility? It just won't last. I think Fisher needs to be more responsible by taking a broader look at individual situations instead of selling an inappropriate product.

Thanks Jake for your reply. I was familiar with your experience, having read your original blog, and since it coincided so perfectly with my sister's timing re Fisher, I was curious as to how you so quickly determined they were not for you. Since the market was tanking generally in January, was it the particular stock picks that got you? Had my sister kept her original portfolio and done nothing, she would be at least 3% ahead of Fisher, with no capital gains to pay and income to live on accumulating. Of course, her former portfolio was protected by a partial fixed income allocation. The mistake was letting them convince her that stocks were safe because they knew something others didn't and would implement protective strategies. As a reminder, they had no qualms about advising her to fork over the entire $1,000,000. And I might add, I was the one who advised her to wait until 2008 to give them the money because I figured using TurboTax that the savings in capital gains would be at least $5,000, due to other capital gains she had incurred already in 2007. The difference was primarily tax from AMT. That never entered the discussion with Fisher and I was a little miffed that they didn't probe a bit. But I assumed they were looking out for her ... they are quite adept at selling. What I don't understand is why their retention rate seems to be so high. I imagine my sister will wait until she is past the $1,000 penalty period, and hope that by year end their predictions are true. Then I think she should go very very conservative on stocks, and give them to Vanguard or such to manage.
Thank you so much for sharing. There is no teacher like experience. Support is what we need! Vicki

Your sister's Fisher Investments experience does not appear to be unique. I was also sold by FI's claim that they would protect me from bear markets and invested with them in December of 2007. I quickly realized that this was a promise that they were unlikely to be able to keep and fired them soon thereafter.

My simplistic strategy after firing Fisher Investments has been to sell over time positions in that portfolio that have appreciated. So far, I have been able to get out of roughly 1/3 of their positions (mostly during the suckers rally in March) and as of this writing this strategy has resulted in an approximately 4% performance improvement over keeping their original positions in tact.

If the capital gains from the sale of appreciated securities you described were all taken in 2007 tax year, that damage has already been done and, as far as I know, there is nothing she can do about it retroactively. On the other hand, any 2008 capital gains, your sister could offset by selling some of her loosing FI positions. (She should consult her accountant for advice on these tax matters.)

Nobody can tell you with certainty what is the best course of action for your sister to take from here. (I am not a financial adviser and even the best financial advisers are wrong some of the time.) Certainly, stocks can retreat further from current levels. It is also possible, for example, that irrational euphoria takes over markets as Obama wins his race for the White House and stocks recover.

If your sister does not feel comfortable making her own money management decisions and she is not willing or able to find an alternative to FI, it may be best for her to just stick with FI and do absolutely nothing.