Anecdotally, I’ve heard this from several professional asset managers who mainly (99%) invest money for institutional investors but who offer private money management for “friends and family”: some prospective private clients would hear the professional’s advice on custom portfolio construction (typically a mix of low fee ETFs and/or mutual funds tailored to the client’s needs), but would then insist on adding this stock to the mix, and excluding that stock from the proposed ETF, and discussing (as a layperson really) the benefits of such a, shall we say, Frankenstein portfolio.
All of those professional money managers I have heard this from politely decline managing assets for such “active” private clients as it goes against their professional … pride?
A private banker though will happily accommodate any strategy the client prefers and will at best act as a rail guard for really stupid things the client might want to implement. The private banker isn’t a bad person, they are just accommodating what the client wants.
Anyhow, as @Cortana expressed so eloquently some people will do better this way (even with high fees) than managing the money entirely themselves and e.g. selling at the worst time when panic sinks in for them. The private banker will then at least tell the client that they should sit through this, and hopefully they’re successful. Maybe that alone is worth the high fee for someone who hasn’t got the financial background and the guts to navigate the markets.
No offense taken.
Comparing yearly returns would be adequate if all investments (and potential withdrawals) took place on January 1 (or thereabouts). The total return and the TWR for that year would then match mostly.*
If investments (or withdrawals) took place throughout the year, then you’d need to compare the aggregated total return and the aggregated TWR on a more granular basis. Most funds do this on a monthly basis, but you can go as granular as daily.
At the risk of boring you, comparing a portfolio tailored for high distributions to a total return index only partially makes sense given the way you describe the deceased’s desire for choosing stocks and an apparent preference of high steady and regular distributions (possibly with less volatiliy) over total return of an index.
* The different cash flows from an index fund and the relatively high distribution portfolio discussed here would still make some minor differences.
Hey, wow, what a coincidence, I happen to offer this for a very small fee …
Just kidding.
I would look for someone who does this on Honorarbasis.
The somewhat radical view by finpension claims that there is no independent financial advice (see their post here), but their alternative is that the investor educate themselves – which is not feasible for some people for whatever reason ever.
I hesitate to post the name of the Honorarberater that I used, not because I didn’t like them, but because I don’t want to endorse anyone with my name. If you insist, DM me and I’ll send you a name.
Be prepared to pay up – they are independent for a reason and do have to finance themselves without getting kickbacks from the funds/ETFs they recommend or the bank they will propose for accounts and custody of your assets.
).