How to break up with an advisor

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greenfire
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How to break up with an advisor

Post by greenfire »

I finally did it. I'm transferring a brokerage account with UBS to Vanguard. Here's the letter I sent:

Hello xxxx,

Hope you are well and that you had a good holiday. Thanks for the chocolates, we all enjoyed them.

I'm writing today with some news that I'm sure you won't be happy about..... I've just initiated the process to transfer my funds to a Vanguard account which I will manage.

I want to be clear that I do appreciate all the work that you have done on my behalf all these years.

Since I've had more time on my hands lately, I've had a chance to read a lot and learn a lot more about investing. And one thing that I've learned is that costs matter. This was brought home to me especially when I did a calculation with firecalc - http://www.firecalc.com

A 1% reduction fees gives me an 86% chance of having my portfolio last for 30 years vs. the 71% chance of it lasting with that 1% fee added in. Bottom line, it is arithmetic, not you, that is prompting this move - so please don't take it personally.

I will continue to work with you on my mom's account, and again, do appreciate all that you have done for us.

Be well,
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Toons
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Re: How to break up with an advisor

Post by Toons »

"Bottom line, it is arithmetic, not you, that is prompting this move - so please don't take it personally."

Well Said :thumbsup
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
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potatoman
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Re: How to break up with an advisor

Post by potatoman »

Seems polite and reasonable. :happy
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FelixTheCat
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Re: How to break up with an advisor

Post by FelixTheCat »

Fifty ways to leave your advisor


You just slip out the back, Jack
Make a new plan, Stan
You don't need to be Coy, Roy
Just get yourself free
Hop on the bus, Gus
You don't need to discuss much
Just drop off the key, Lee
And get yourself free
Felix is a wonderful, wonderful cat.
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dbCooperAir
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Re: How to break up with an advisor

Post by dbCooperAir »

greenfire wrote:Hope you are well and that you had a good holiday. Thanks for the chocolates, we all enjoyed them.
You could now send your old advisor a box of chocolates every year to let him/her know how much you still think of them with the cash you are saving every year :twisted:
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-
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dbCooperAir
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Re: How to break up with an advisor

Post by dbCooperAir »

"One Way Out" (Elmore James)

Lord you got me trapped woman, up on the second floor;
If I get by this time I won't be trapped no more.
So raise your window baby, and I can ease out soft and slow.
And lord, your neighbors, no they won't be
Talking that stuff that they don't know.
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-
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tetractys
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Re: How to break up with an advisor

Post by tetractys »

I would never bother with what I view as a pointless attempt at explanation, and especially to a party with the gall to send gifts I paid for. Simply remove the money, or have Vanguard do it. Do we explain whenever we use the bathroom? Perhaps at the most, if it's necessary, specify little or big business, but no more.-- Tet
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N1CKV
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Re: How to break up with an advisor

Post by N1CKV »

He's not your friend. You were paying him very well to be nice to you. It's a business relationship that has expired. You aren't hurting his feelings, just his pocketbook.
Coiled_Snake
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Re: How to break up with an advisor

Post by Coiled_Snake »

You seem like a very nice person.

That said, you used much more detail than I would have.

But you have nothing to be guilty about. Congrats on your freedom.

"Life is like a box of chocolates."
jbmitt
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Re: How to break up with an advisor

Post by jbmitt »

Please share his reponse. :sharebeer
J295
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Re: How to break up with an advisor

Post by J295 »

Good of you to reach out to your friend.
livesoft
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Re: How to break up with an advisor

Post by livesoft »

Poll and testimonial thread for these break-ups: http://www.bogleheads.org/forum/viewtop ... 1&t=144994
Wiki This signature message sponsored by sscritic: Learn to fish.
poker27
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Re: How to break up with an advisor

Post by poker27 »

Maybe we are both too nice? I can see it being a very tough conversation too. You can think of a lot of advisers as friends, and they may or may not think of you as a friend.

If both of you are really friends, you must see each other occasionally, be invited to each others non work events and such. If not I dont think there is much of a friendship. By you saying you do not need his service anymore, is part of business.

Now if it is a good friend or family, a different type of discussion might be needed. My future brother in law is my insurance agent and it would be a little awkward to tell him we are pulling all of our policies elsewhere. I would tell him that as long as he would be somewhere close in price, we would stay, but this is x% higher.

I was shopping for motorcycle coverage 2ish years ago and he gave me a quote. I then went to progressive and it was almost $1k cheaper every year. When he asked I told him, and he said he would do the same thing. 'Good friends' should also understand.
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JupiterJones
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Re: How to break up with an advisor

Post by JupiterJones »

FelixTheCat wrote:Fifty ways to leave your advisor
The problem's all about your costs, she said to me.
The answer is easy if you go for lower fees.
I'd like to help you move your money to VG.
There must be 50 ways to leave your advisor.
50 ways to leave your advisor.

You just move all your bucks, Chuck.
Pick a new fund, son.
Stay on the course, Horace,
and listen to me.

Keep that ER low, bro.
Live under your means, Gene.
Then turn off the news, Bruce,
and set yourself free!
Stay on target...
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BL
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Re: How to break up with an advisor

Post by BL »

I think you wrote a nice letter and it was a good idea since you will be dealing with him with Mom's account. (Of course Mom's account might need to go also!)

I like the poem, JupiterJones.
Last edited by BL on Mon Jan 05, 2015 4:08 pm, edited 1 time in total.
user5027
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Re: How to break up with an advisor

Post by user5027 »

"It's not you, it's me. I have an aversion to high expenses." :happy
Topic Author
greenfire
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Re: How to break up with an advisor

Post by greenfire »

ha ha ha ha ha. thanks, all, you gave me a good chuckle. this isn't the first advisor I've broken up with - I count 4 others, and sometimes they did put up a fuss. This guy was cordial - here is his reply:

I understand your decision and certainly don't take anything personally
by it. Let me know if there is anything you need. I'll look forward to
continuing to work with you on your mom's account.

I would like to move Mom's account, but I don't have her power of attorney. She is 94, and not in the best of health. My story is a long saga. My dad passed away in 2007 and I was left to deal with his accounts. He had 67 different accounts. He didn't believe in having his egg in one basket. So he had 67 baskets. (Many were stocks with direct registration with the company, but also quite a few different brokerage accounts.) It truly was a nightmare getting things sorted out and consolidated. Mom is now down to this one advisor, and I'll probably hold on to him for her account because my mom doesn't want to have to stress or think about anything.
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Toons
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Re: How to break up with an advisor

Post by Toons »

greenfire wrote:ha ha ha ha ha. thanks, all, you gave me a good chuckle. this isn't the first advisor I've broken up with - I count 4 others, and sometimes they did put up a fuss. This guy was cordial - here is his reply:

I understand your decision and certainly don't take anything personally
by it. Let me know if there is anything you need. I'll look forward to
continuing to work with you on your mom's account.

I would like to move Mom's account, but I don't have her power of attorney. She is 94, and not in the best of health. My story is a long saga. My dad passed away in 2007 and I was left to deal with his accounts. He had 67 different accounts. He didn't believe in having his egg in one basket. So he had 67 baskets. (Many were stocks with direct registration with the company, but also quite a few different brokerage accounts.) It truly was a nightmare getting things sorted out and consolidated. Mom is now down to this one advisor, and I'll probably hold on to him for her account because my mom doesn't want to have to stress or think about anything.

67 Accounts??? Is that a typo.. :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
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Abe
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Re: How to break up with an advisor

Post by Abe »

My financial advisor broke up with me. I finally saw the light after 25 years. After that, every time he called advising me to buy this or sell that, I wouldn't do anything. One day I got this letter from him:

Dear Abe:
At "Screw The Client Advisors", we strive to provide all of our clients with exceptional service. Since our relationship began, my practice has grown and demands on my time have increased. It's become necessary to transition (like that word transition) some of my clients to other Financial Advisors with more capacity to serve their needs.

I would like to transition your relationship to Mr. X, another Financial Advisor at Screw The Client Advisors. And yada, yada, yada.

A lot of the holdings he advised me to sell had gone south. He just wanted to get rid of these losers to make my statement look better. Of course, he would make a commission when I sold and also when I bought another one of his good picks. The funny thing is I did sell most of them later at a profit. So much for his advise.
Slow and steady wins the race.
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nedsaid
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Re: How to break up with an advisor

Post by nedsaid »

Abe wrote:My financial advisor broke up with me. I finally saw the light after 25 years. After that, every time he called advising me to buy this or sell that, I wouldn't do anything. One day I got this letter from him:

Dear Abe:
At "Screw The Client Advisors", we strive to provide all of our clients with exceptional service. Since our relationship began, my practice has grown and demands on my time have increased. It's become necessary to transition (like that word transition) some of my clients to other Financial Advisors with more capacity to serve their needs.

I would like to transition your relationship to Mr. X, another Financial Advisor at Screw The Client Advisors. And yada, yada, yada.

A lot of the holdings he advised me to sell had gone south. He just wanted to get rid of these losers to make my statement look better. Of course, he would make a commission when I sold and also when I bought another one of his good picks. The funny thing is I did sell most of them later at a profit. So much for his advise.
If your portfolio doesn't have enough "action" for the advisor, you might get dumped as a client. A friend of mine went into the brokerage business and I took my IRA to his firm. The friend lasted about a year and then I went to broker #2 who was actually pretty good. Broker #2 later on became Office Manager and he dropped the smaller fish. Broker #3 wanted all my business and I didn't want to do that. He lost interest in me pretty quickly and I was history. I went on to Broker #4 who later left the firm and went independent at another firm. I took the account and went with him to the new firm. So you might say that I have been fired twice.
A fool and his money are good for business.
Impromptu
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Re: How to break up with an advisor

Post by Impromptu »

I left my advisor at the end of last year. The buzz word for financial advisors these days is value. Do they add any value to your financial life? If you don't want to think about your money and let someone else handle it, then they add value. If you spend a couple hours a week following your investments, understanding where all the fees are coming into play, what funds you are invested in, if you are meeting your target allocations, typing it all into an excel spreadsheet, then they likely aren't adding value. Over the last year I became the latter person.

When I first started with him he offered value. He found me the best deals on life insurance, disability insurance, and a home mortgage. He set up my IRA and roth IRA conversion. His company managed my 401(k), roth IRA, and other investments, and made sure that the asset allocations were hitting the target percentages across all my brokerage accounts. His company believed in low fee passively managed index or DFA funds. I would occasionally get a large envelope of documents with little sticky arrows for my wife or me to sign, and pre-stamped envelopes to mail them back in. It was easy. I can see the appeal.

But once I was set up, what more was he going to do? I had his target allocations for about 8 different levels of investing aggressiveness. I knew the funds he was already investing in (except no more DFA investments), so I could continue making those buys.

Eventually their lowest accounts under management fee of 0.75% for high investors would no longer be offering value for the fees I was paying. While I have a few decades to get there, it would have eventually been $30,000/year. I would hope I would get a box of chocolates for that.

I will miss the quick responses to questions. Sometimes within an hour of me sending an email. "I'm at a timeshare presentation in Branson. The salesman is very convincing. Should I do it?". "No, I went to that exact timeshare presentation. We have run the numbers previously and you have 90% likelihood of not coming out ahead." But I don't need to be spending $30,000/year for that kind of advice.

Thank them for the work they have done thus far. Use the buzzword value in your Dear John. And don't burn any bridges. Things may come up where you will want his services again.
I'll gladly pay you Tuesday for a hamburger today.
Topic Author
greenfire
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Re: How to break up with an advisor

Post by greenfire »

67 accounts wasn't a typo. My dad had a long investing career - like 50 years - and I guess he just kept adding things.
fposte
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Re: How to break up with an advisor

Post by fposte »

The young guy handling my account called me when they got the request from Vanguard to move my funds. He asked if there was anything I was unhappy with; I truthfully and cheerfully said that I was very appreciative of all they'd done and thanked him. I don't think that was the answer he was prepared for, but this wasn't a very salesy firm and they had bigger clients, so I don't think there was likely to be much pushback no matter what I'd said.
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BolderBoy
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Re: How to break up with an advisor

Post by BolderBoy »

Toons wrote:"Bottom line, it is arithmetic, not you, that is prompting this move - so please don't take it personally."

Well Said :thumbsup
+1 Very excellently said!
abyan
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Re: How to break up with an advisor

Post by abyan »

"It's not you , it's fee!"
RVD
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Re: How to break up with an advisor

Post by RVD »

lol, great letter.

i broke up with my advisor last year. i didn't write him an email like that but i did slowly move some accounts out from him to etrade saying that i was going to manage things.

i did it slowly though...

1) closed an account and took all the money when i bought a new house. he did get the money after i sold my previous house though.

2) a few months later, moved my retirement money out into etrade.

as i moved one account out after another, he didn't say anything but before he knew it, they were all out...

lol.

like most financial advisors, he was a nice guy and he did help me out early when i needed the help (and didn't have bogleheads to read). too bad he had my wife and i in 3 different VUL policies, etc.

RVD.
hiddensee
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Re: How to break up with an advisor

Post by hiddensee »

I find this all a little odd; just send a concise, matter-of-fact letter instructing him to perform whatever action you want and that he is contractually obliged to perform.

Do you think some ball bearing factory sends grovelling letters to steel suppliers or whatever when it finds a better deal?

Is your relationship fundamentally different? If not, isn't the sense you have that it is just a marker that you have been exploited?
Johno
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Re: How to break up with an advisor

Post by Johno »

greenfire wrote: My dad passed away in 2007 and I was left to deal with his accounts. He had 67 different accounts. He didn't believe in having his egg in one basket. So he had 67 baskets. (Many were stocks with direct registration with the company, but also quite a few different brokerage accounts.) It truly was a nightmare getting things sorted out and consolidated.
Wow! I thought it was a nightmare to sort out my dad's stuff when he died. He also had lots of stock directly with different companies. That was kind of a proto-Boglehead investing method at one time, since it did avoid brokerage commissions, direct purchase and automatic reinvestment directly with the company with no fees. But for reasonable diversification it had to be a number of them, hence big potential problem for those in cognitive decline or just not inclined to begin with to organize stuff and write it down in one place! Likewise he had various brokerage accounts. It didn't total that many items though, maybe around half that many, I didn't count. But it took a long time and a few small things slipped through the cracks: we didn't realize their existence till after my mom had also died, they were all willed to her, and it was too much paperwork hassle by then relative to the amounts to transfer them directly to our (the children's) names.

On the main topic, I know my dad's (and later mom's) relationship with one main broker was such that a personal letter or even perhaps a phone call would have been appropriate if they ended the relationship. They'd stayed with him when he changed firms, relationship was with him. Like the direct dividend reinvestment thing, it's partly a blast from the past, generational thing. Of course that guy was well paid for what he did, but there's still a such thing as personal relationships in business. It doesn't mean dealing with a 'full service' broker makes any sense now if someone has the rudiments to construct and follow a DIY index fund strategy, don't get me wrong.
Topic Author
greenfire
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Re: How to break up with an advisor

Post by greenfire »

Re; the comment that I was being exploited. Well, I chose to put my funds with this advisor, and, through my father's death there was a lot of activity, including dealing with his trust and separating things that he owned individually and things that he owned jointly with my mother, RMDs, estate taxes, etc. At the time, I knew zero about investing. My dad started investing for me many years ago, and although I had a portfolio, I didn't really know anything about investing, so, at the time, having this advisor was helpful. I come from the background of working in non-profits - not working in business - so to me, a nice thank you letter was appropriate.
RVD
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Re: How to break up with an advisor

Post by RVD »

I think it's easy for folks in here to say that financial advisors exploit, etc. But I had one for many years and at the time that I started with him, he did provide a valuable service to me. He was able to work with me to come up with a plan for long term savings, etc. He also got me to wrap my head around investing based on risk / loss (how much are you willing to lose?) vs gains (how much do i want to make?). until i started using him, i thought the s&p 500 was conservative so i was investing all of my money into individual tech stocks, etc. he told me that's just gambling money so he didn't want to manage that (he told me to just keep managing that part myself), etc.

about a year or two ago i started to gain the knowledge and confidence to do more of this myself so i got rid of him. but i wouldn't necessarily say that the 1-2% that i paid him was 100% a waste of money because if i tried to manage my money myself, i probably would have lost a lot more of it.

of course he did do some dubious stuff as well such as variable universal life policies, frequent trades (he'd call me every year or so wanting to move into a new family of funds), new investments (he started touting reits for awhile), and general salesman attitude (would always reach out to my contacts to try to drum up more business), etc.
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swimirvine
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Re: How to break up with an advisor

Post by swimirvine »

greenfire wrote: I would like to move Mom's account, but I don't have her power of attorney. She is 94, and not in the best of health. My story is a long saga. My dad passed away in 2007 and I was left to deal with his accounts. He had 67 different accounts. He didn't believe in having his egg in one basket. So he had 67 baskets. (Many were stocks with direct registration with the company, but also quite a few different brokerage accounts.) It truly was a nightmare getting things sorted out and consolidated. Mom is now down to this one advisor, and I'll probably hold on to him for her account because my mom doesn't want to have to stress or think about anything.

I consolidated all of my mom's accounts and moved them to Vanguard. I don't have power of attorney over her but I did all the paperwork and it just required her signature. If the account is large enough you might need a Medallion signature or to have it notarized. If you call Vanguard they will walk you through everything and help you with the paperwork. Then you just mail it to Vanguard and they take care of requesting the transfer.

I'm assuming that the advisor was cordial because they are still managing your mom's account ... but don't expect the same level of politeness if you move both accounts.
The way I invest my money is not the right way to invest, it's the right way for ME to invest.
epitomist
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Re: How to break up with an advisor

Post by epitomist »

hiddensee wrote:I find this all a little odd; just send a concise, matter-of-fact letter instructing him to perform whatever action you want and that he is contractually obliged to perform.
It's odd to me too but I have friends that are in the same boat. Their financial advisor fosters a feeling of family or at least friendship between them. Takes them golfing. Invites their family over to a massive holiday party for clients, etc.

One guy had lunch with me about two years ago. He told me the same old story how he pays no fees to his advisor. Turns out he was paying a 1% AUM fee, paying ridiculous expense ratios (3%+) on each fund, was paying transaction fees and his advisor was churning his account 90% every quarter as well as marking up buys and marking down sale prices. Even after I helped him figure all this out - two years later - he is still with him. His net worth is 7 figures too so he's paying a healthy 5 figures to this guy every single year.

But he does eat a lot of shrimp at the yearly holiday party though, so there's that.
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Alskar
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Re: How to break up with an advisor

Post by Alskar »

epitomist wrote:But he does eat a lot of shrimp at the yearly holiday party though, so there's that.
My Dad and my brother are both with the same Ameriprise broker dealer. When my mom was still alive she would wax poetic about how she got roses every year on her birthday from their broker dealer. It took all of my self control not to say "He should send you a new car every year on your birthday for what he's charging you". For a man that is so cheap that he thinks a 5% tip is generous I find it really difficult to understand why my father so happy paying this crook 2% of AuM and high ER's for really questionable advice. Maybe it's because he is invited to a Rockies game every year. That's one expensive ticket!
Lagom är bäst
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M_to_the_G
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Re: How to break up with an advisor

Post by M_to_the_G »

The mistake you made was in ever allowing the relationship to become anything that would make you hesitate for a minute to break it to him in simple, professional language. I would have told him the chocolates were inappropriate, frankly. I still don't understand how people get so emotionally enmeshed with these con artists.
"It’s basically the plot of 'Charlie and the Chocolate Factory.' If you stick around, doing nothing, while everyone around you ****s up, you’re going to win big." - John Oliver
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