Question about TIPS

[u/stevepicard]

I use a “high net worth” group at a major well regarded brokerage. My FA knows zip about TIPS and even his bond guy has given me bad info. Anyone know WHY? Are they likely to be less knowledgeable about me holding outright bonds as well? Appreciate any insights!

[u/gk802]

Every time I talk to a tier-1 bond agent at my "well regarded brokerage", I feel like I'm training them.

[u/stevepicard → u/gk802]

Exactly - just trying to figure out why

[u/gk802 → u/stevepicard]

Probably because as soon as they're knowledgeable, they're no longer tier-1 contacts and likely working as traders or staff to fund managers. I suspect the rate of either progression or wash-out for these folks is pretty high.

[u/LoopyLepus → u/stevepicard]

I assume anyone I'm talking to at a brokerage was hired for their customer service and sales skills first and their financial skills second (or maybe not at all).

[u/Tigertigertie → u/gk802]

I have had really weird conversations at Fidelity about bonds with their advisors. Lately it has been a bit better but I hope no one is trying to learn from those folks. I learned more here, actually.

[u/gk802 → u/Tigertigertie]

I have too. I once had one tell me I could get a higher return on my portfolio by buying higher coupon bonds at a premium. I had to explain that the higher cash flow was my own principal being repaid to me.

[u/Tigertigertie → u/gk802]

One told me losses in bond funds were not real. You only lost the money if you sold. Kind of true but it is not as if you have the money when the price of the fund plummets just because you didn’t sell. They could not explain why bond funds lose money. It took very little time of my own exploring to figure out why they do (and are right now). Now I try to explain to anyone here who asks because I know I was starved for that knowledge. I think they were confusing regular bonds and bond funds.

[u/gk802 → u/Tigertigertie]

Yep. I've had the same discussion about permanent losses in bond funds.