[Jodi]

The financial advisor has recommended taking 40% of his 401K and putting it into Barclays Trail Blazer Sectors 5 Index Fund.

They said we will never lose any money past the initial investment.

Does this make sense?

Moving 40% scares me.

[Chris]

This just goes to show that a financial advisor is not necessarily paid based on what they know, but all too often are paid based on what they convince people that they know.

[Sean]

Regarding the principle guarantee, it would be interesting to review the prospectus with the professional. Tough to judge the recommendation without full knowledge of your situation, goals and risk tolerance.

However, as I recall, Morningstar has some research indicating the value of a 60/40 allocation.

[Megan]

Run from him AND the company he’s associated with. Find a fiduciary because this “advisor” is trying to get a big commission check at your expense.

[Frank]

No, that does not makes sense for your husband. Probably makes a lot of sense for the advisor who gets paid one way or another for selling such things.

What would make sense is for you and your husband to find an honest advisor who will work in your best interests.

[Elizabeth]

“Will never lose any money past the initial investment” can be interpreted to mean, you CAN lose your entire investment but not MORE than you invest. So, if you invest $100k, the most you can lose is $100k. It isn’t leveraged.

Otherwise, I don’t see how the statement make any sense since this fund was down in 2008, 2015, 2018, and 2022 just like most of the stock market, so obviously it is possible to lose money over the short term.

https://indices.cib.barclays/IM/33/en/indices/details.app;ticker=BXIITBZ5

[Paul]

A financial advisor will never say that you “will never lose any money.”

Get yourself into a low fee target date fund like those at Vanguard.

OR get yourself a good fiduciary RIA (Registered Investment Advisor) if you don’t feel comfortable setting yourself up with target date funds.

Trailblazer Fund total cost is currently 0.85% + 5.34% + 0.26% = 6.45%

For comparison, cost of Vanguard target date fund is about 0.11%.

So the Trailblazer fund is ~60 times more expensive. Makes no sense .. advisor is probably pushing it because they get a commission on it.

[Marty]

Anytime someone in the investing world uses never or always I run the other direction.

[Mark]

Whenever someone In the finance world says NEVER and ALWAYS, do not take their advice.

[Author]

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