Not every acronym works perfectly.

For every SCUBA (self-contained underwater breathing apparatus), there's one where either the spelled-out word is not quite complete or something has changed, but the acronym remains. That's sort of the case with BRIC, an acronym used to describe Brazil, Russia, India, and China, but that also sometimes includes Turkey, Indonesia, or South Africa.

That makes the whole use of the BRIC acronym a bit confusing, but The Motley Fool's Alison Southwick and Robert Brokamp sort things out on this edition of Motley Fool Answers. The team also looks at exactly how much you should pay a financial advisor and they welcome an old friend to the show.

A transcript follows the podcast.

This podcast was recorded on Sept. 20, 2016.

Alison Southwick: This is Motley Fool Answers. I'm Alison Southwick and I'm joined, as always, by Robert Brokamp, personal finance expert here at The Motley Fool.

Robert Brokamp: G'day, Alison.

Southwick: G'day. Wait, you can do a better Australian accent.

Brokamp: I'm not even going to try. G'day. How's that? I don't know. I've never been in Australia.

Southwick: Well, this week we're going to talk about the BRIC. Or maybe it's the BRICs. Or the BRI-TI. Or the BRITs. Ugh! We're talking about Brazil, Russia, India, China, and sometimes Turkey, Indonesia, or South Africa. And while we maybe couldn't agree on the acronym, everyone used to agree it was the place to be investing. So, what happened? We're going to get some help from Uncle Joe Magyer, Foolish fan favorite, to break it down. All that, and more, on this week's episode of Motley Fool Answers.

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Southwick: It's time for Answers Answers, and today's letter comes from [Shauna]. [Shauna] writes: "I have a dilemma. I have been a Stock Advisor member for years, and as we approach retirement, I realize that the management fees I pay our investment advisors will be about 25% of the amount we withdraw each year. I know this is too much to pay out, but I'm not sure how to transition out of a managed retirement account to a self-directed one with Motley Fool advice. It wouldn't make sense to sell everything and start over. What have others in this circumstance done?"

Brokamp: Well, hello [Shauna]. First of all, I want to make everyone aware of what Stock Advisor is. It is one of the newsletters you can subscribe to, here, at The Motley Fool. Our flagship newsletter. And I'm going to take a guess, [Shauna], why you are estimating that you're going to pay about 25% of your portfolio withdrawals in retirement to your financial advisor.

And that's because many people have heard of the rule of thumb of how much you can take out of your portfolio in retirement. It's called a safe withdrawal rate and that rule of thumb is 4%. Some people think that nowadays it should be a little higher, and some people think lower, but still a good rule of thumb. So you take that out in your first year of retirement and then you adjust it for inflation afterwards.

But you also have a financial advisor, and a common way to pay a financial advisor is an annual fee. These days, the average is around 1%, so if you're going to take out 4%, but you're paying an advisor 1%, that's a large percentage of your retirement income.

Southwick: Yes!

Brokamp: So I think you're right to be concerned about this. And you're also right because if you look at the studies that determine this 4% safe withdrawal rate (and again, other studies will have it a little higher or a little lower) most of them either didn't incorporate the fees that you pay advisors, or they assumed that these would be like 0.2% [and that] you're investing in index funds. When you then incorporate a fee like 1% to a financial advisor, the safe withdrawal rate actually goes down quite significantly. So it is an important thing to consider.

My first piece of advice, to you, is to evaluate the investment advisor. It sounds to me like you're not satisfied, so you should definitely move on, but for anyone else in that situation, you want to see, first of all, whether they are providing superior investment advice (the stock investments are beating a relative stock index or bond investments are beating a relative bond index). Are they providing other types of advice that you find valuable? Maybe they're providing tax advice. Maybe they're helping you determine how much you can spend in retirement. Maybe they're answering questions about life insurance.

You should evaluate all that, and if they're doing a good job, that's worth something and you should pay them. But if not, you can transfer the account either to another financial advisor or to a brokerage account that you direct yourself. There's no need to sell everything. You can transfer it. Go find the new financial advisor, or the new discount brokerage, and say, "I want to transfer my account here," and they will initiate the process.

In industry parlance, it's called an ACAT (an account transfer). They will bring the investments over. Most investments will come over. Certainly individual stocks and common funds. Sometimes some won't. For example, it you're with a company and a financial advisor recommended to you a fund that only their company offers — if it's a proprietary investment like that — it might need to be sold. But the vast majority of investments can come straight over. You don't need to sell them.

The one thing I would say is you want to get all your cost basis information before you move, because sometimes cost basis information does not come over.

Southwick: What do you mean by cost basis information?

Brokamp: That is the amount you paid for the investment. So if you paid $10 for it 10 or 20 years ago, you want to make sure you have that information so that when you sell it, you have that so you can calculate the capital gains. It does not matter if it's in an IRA or 401(k). If that's the case, don't worry about it. And with anything that you've bought recently, the cost basis information has to come over, but for older investments, a lot of the information could get lost when you go to a new account.

But there's no reason to stay with a bad financial advisor. Choose a better option and transfer the account. You don't need to sell everything.

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Southwick: Joe Magyer, one of my favorite Fools, and now CIO of Lakehouse Capital is here.

Joe Magyer: Hello!

Southwick: Yeah!

Brokamp: Joe!

Southwick: If you're a longtime listener of Motley Fool Money or Market Foolery, you'll remember beloved Uncle Joe Magyer. He left us for Australia how many years ago?

Magyer: Three and a half.

Southwick: To go work on Fool.au. He's visiting this week, so we dragged him into the studio just like every other podcast, because we love him.

Magyer: And now I'm an uncle. Like a real uncle. This is why I came back for a visit.

Brokamp: Congratulations. You sound legit.

Magyer: Thank you.

Southwick: Why was your nickname Uncle Joe?

Magyer: Because I got into this big, cranky fight with Bill one time about Amazon and Wal-Mart, and it went on for a pretty long time. Chris was like, "You sound like an angry uncle." I was like, "Maybe a cranky uncle." I thought the angry part was unfair.

Southwick: Yeah. Well, we brought you in to give us an appraisal of the BRIC. You are based in Australia. You've turned your back...

Magyer: I am a Mason.

Southwick: You've turned your back on the United States, but I thought you would be able to provide us a unique perspective that's maybe not colored by our jingoist glasses, here, in America. So first some history with the BRIC. Are we ready? I might mess this up, so you guys feel free to chime in whenever.

Brokamp: Sure.

Southwick: The acronym BRIC has been around since 2001. It was coined by Jim O'Neill at Goldman Sachs in a paper titled, "Building Better Global Economic BRICs." Cute, right?

Magyer: Get it?

Southwick: A little bit of a pun.

Brokamp: Yup.

Southwick: The paper proposed that over the coming 10 years, the weight of the BRICs (ha-ha -- he really did say "the weight of the BRICs") will grow and continue to have a significant impact on the global economy, and basically the BRIC was on the brink of something great.

Brokamp: Are you going to tell us what's in the BRIC?

Southwick: So in the BRIC was Brazil, Russia, India, China, sometimes Turkey, sometimes South Africa, and sometimes Indonesia.

Brokamp: Yup.

Magyer: BRICTS.

Brokamp: BRICs-ta-ta-ta.

Southwick: It depends on who you ask. Fast forward 10 years, and I had just started working at The Motley Fool. Joe and I were buddies. Like we probably emailed on a daily basis...

Magyer: Daily...

Southwick: ...because he was so great about doing interviews. I would be like, "CNBC wants to talk about blah," and you'd be like, "I'll do it!" And he would do it. He was the best. So fast forward 10 years. I'm working at The Motley Fool and people were still talking about the promise of the BRIC. Fast forward another five years and that's where we are today.

Magyer: Hm...

Southwick: But where are we, really, Joe?

Magyer: The BRICs kind of got thrown through a window.

Southwick: See? I feel like a cute, little pun maybe got taken a little too far, here. Or Jim O'Neill got trapped by his own pun. But we're going to go through each of the countries. I'll give you bonus points if also want to tackle Turkey, South Africa, or Indonesia, but don't feel like you have to. First up is Brazil. What's up with Brazil these days, Joe?

Magyer: Bad things, unfortunately. They posted some major sporting events and poured a lot of money down the drain. The country is basically dealing with stagflation. Government issues. Stagflation -- they've got high inflation. It's been around 8% to 9% recently. Pretty painful. The economy is not doing well. It's hard for a central bank to get its way out of that. Kind of like the U.S. in, let's say, the late '70s or early '80s. Just not a good time.

Southwick: What about Russia?

Magyer: Also not a good time. They have moved away from being open toward being more closed. Made it more difficult for foreign capital to move in and out. Pretty painful if you're an international investor and you bought based on a BRIC-like thesis. Putin has really tightened the screws on the economy. Not invested to take the economy beyond a very oil-based one and it's coming back to bite them in a very bad way. They're running pretty massive deficits.

Brokamp: Right. As of the first three months of this year, according to CNNMoney, Russia was the No. 1 oil producer in the world. When you have an economy so reliant on oil and oil prices plummet, you're in a lot of trouble if that's what you're relying on.

Magyer: Mm-hmm.

Southwick: Next up is I -- India.

Magyer: India. So this is a bright spot. The country has been a little slower relative to others, at points, but I like where the country is going over the super long term, and I think Modi is doing a great job of liberalizing the economy in India. However, it's a super, super long-term play. There's a lack of infrastructure. Bureaucracy has run amok. There's a lot to be cut through there. I think there's still a very bright future in the country, but it's going to be a slower burn than China has been.

Southwick: Then that brings us to China.

Magyer: Yeah, so China. Looking back, China has definitely been the star student, or the strongest part of the BRIC, and they have grown at very high rates for a very long time. However, that has been significantly fueled by debt, so between 2007 and 2014 the aggregate debt in the country quadrupled. That's a lot...

Southwick: It sounds like a lot.

Magyer: ...as is the pace at which they've grown their debt load during that time. Of the only four countries that were comparable, three of them were PIGS and the other was Singapore. Not really a group of countries that, overall, you want to be associated with. And roughly speaking, if their debt increased by the same proportion from 2007 to 2014 (again seven years forward), they'd be in the league of where Japan is in terms of debt to GDP, and Japan is choking on debt. They're drowning.

So it's not a sustainable situation. I went to China early last year for a couple of weeks. Came away extremely bearish. There's just so much overcapacity in the country. They're building stuff they don't need, because the government's legitimacy is ultimately based on the economy and helping it to grow with steady growth. So the first airport you build in a city makes a lot of sense. The third one — not a lot of payback on that. That's kind of where they are.

Southwick: And you went to one of the ghost cities, right?

Magyer: We did.

Southwick: What was that like?

Magyer: Ghostly and creepy. We went to the city that's about an hour outside Tianjin. It's a massive city that nobody's heard of, because China is a gigantic country and you just don't keep a scale of how big it is. This ghost city was exactly what you would think. It was loosely a replica of Manhattan. There were hardly any cars or people around. Probably more awkward private security walking around.

I don't know if they were private, or who exactly they worked for, but we took photos and some video and tried to get in and out pretty quickly, because none of those people looked very welcoming. Just a massive overbuild that has no real economic value -- and is pretty unlikely to come around -- and there are many of them in the country.

Southwick: What happened? Did somebody lump a bunch of countries together where each had their own story? That each one had, in its own bad or even worse way? So all those people who were like, Get in the BRIC! Invest in the BRIC! invested in this big bundle of stocks from these countries and each one went sideways for different reasons?

Magyer: Yes, they went sideways for different reasons. Russia and Brazil were both pretty oil-based and they both got tagged pretty hard. China was a very different thesis, as is India. I think it's really cute and convenient to be able to lump these things in together. In reality, they all had pretty different risk profiles. Different leadership regimes which have all played out very differently.

And it's a good reminder, to their credit, that you do need to think about this in terms of a basket approach. I think anyone who's looking at any of these individual countries and going all in on them is exposing themselves to a lot of risk (political risk, commodity risk, currency risk). Risk, risk, risk.

I think overall it's nice to have a sleeve of these kinds of countries and emerging markets in your portfolio, but you don't want to go too heavy on that and you need to take a long-term view that they're going to be really volatile over the short term, for sure, and over the medium term, as well.

Southwick: What do you recommend individual investors do?

Magyer: What do they do?

Brokamp: Especially when it comes to international investing. Because when you worked here at the Fool, you were working on services that picked U.S. stocks, and now you've gone to Australia and you're focusing on that stock market. Do you have a more international viewpoint in terms of your own portfolio, now, and where you invest?

Magyer: Yes, I've got less of a home bias. I'd say for normal, everyday people it's hard to get emerging-market exposure in a good way. Tim Hanson is always fond of talking about how you can get passive investments (you can do an index fund or ETF), but the trouble is you just end up owning what are effectively these massive state-owned banks. Oil companies that are public, but they're controlled by governments. And you're not getting the exposure to the better part of the story, which is the consumer story, and a rising middle class.

So it helps to actually try to find the individual consumer companies, but if you're busy and you're a normal person, that doesn't make a lot of sense. So one option could be just looking for funds that scratch that itch and that have really good track records with low and reasonable fees.

Brokamp: And a good one, by the way, is T. Rowe Price. They have a great emerging-markets fund that people should consider if they're looking for this. And I think the whole story behind emerging markets was the foundation for the BRICs. When you look at 10 years ago, or so, people felt the developed world was getting older and a little stodgier.

When you look at the growth rates of a lot of emerging-market countries, I think, to a certain degree, the BRICs got picked out because they were the biggest and the ones that had the highest profiles. But a lot of it was this emerging-market story. If there's a big story like that (that drives up the stocks of those companies in those countries) if you get into it, to an extent you almost get in too late.

Vanguard did a couple of good reports earlier in this decade (in 2010 and 2013) looking at the correlation between a country's growth and the growth of its stock market. Surprisingly, there's actually not that much of a correlation. It's sort of what I just said. To a certain degree, when you see the GDP growth that drives the stock market up too high, it's become overvalued and it's become a bubble. And also along the lines of what Joe said in that a nation's stock market isn't necessarily reflective of its true economy. A lot of the growth can be driven by other companies and it's not reflected in the stock market.

Magyer: That's so super true. That's something I've experienced in Australia, which is a very large, developed economy, but the top half of the market is 10 companies and it's basically four big banks, a couple of large retailers, and a couple of commodity companies. Then there's another 2,000 that make up the rest of the index that are more representative of everyday life.

Southwick: So that was the BRIC. A lot of articles I read lately say the BRIC is dead, but they somehow turn it into a pun.

Magyer: Broken.

Southwick: Yes, the BRIC is broken.

Magyer: It's hard.

Southwick: So what's the lesson, here, going forward? If there is one at all.

Magyer: To tap something Bro said earlier, I think by the time a really cute acronym has come up for something, that probably means a lot of the money has already been made. Like FANG jumps out, right?

Southwick: Right.

Magyer: And I don't know if people...

Southwick: Facebook, Amazon, Alphabet? I feel like the A changes as much...

Magyer: I guess it would be FAANA? But yes, it was Facebook, Amazon, Netflix, and Google. They'd all done incredibly well. I own Amazon and what is now Alphabet. I think they're great businesses -- all four are great businesses. That said, everyone is pretty well latched onto that at this point, so I think anytime you distill something down and it's that cute, reality is just not that cute. You need to be more diversified than that, and it's easy to get caught up on that focus when you should think bigger.

Brokamp: Yeah, when everyone is agreeing on an investment premise, it probably means that the money has already been made and it's not necessarily the best place to be. When it turned for the BRICs, and they did not do so well, then everyone hated them. Well, what's been the best-performing country so far this year? Brazil, because after a few years of being among the worst countries, everyone hated it, and everyone talked about how the BRICs were falling apart. That's probably the time to start buying.

Magyer: And to flip this around for Americans and the handful of Australians listening...

Southwick: They do listen. We do have Australian listeners. Hi, Scott.

Brokamp: They're upside down, though.

Magyer: This is a common thing you'll hear from people in Australia: The property doubles in value every seven years. That would be like 10% annualized growth in property. And property has done incredibly well over 20 years in Australia. There's been a huge bull run. There hasn't been a recession in 25 years. Life's been great, however...

Southwick: Life does sound great in Australia.

Magyer: Honestly, it really is great. But an American (hearing that property keeps going up 10% a year, every year, and someone who has seen that logic before when people felt that way, and then seen how it plays out after) is a little more skeptical of that.

Brokamp: Can you buy property there at this point?

Magyer: Not with my current visa, but I'm working to change that.

Brokamp: But you're working on it.

Southwick: Are you going to become a citizen?

Magyer: I'm going to become a permanent resident.

Southwick: Aw!

Magyer: Yeah.

Southwick: All right.

Magyer: Hopefully they don't kick me out, because I think property is expensive. It's a sacrilegious thing to say in Australia.

Southwick: Yes?

Magyer: Yes. Love Vegemite, though, so think of that.

Southwick: Well, our listeners know that I do not, so we'll have to agree to disagree on Vegemite.

Magyer: You are wrong.

Southwick: I am right. An opinion.

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Southwick: Joe, you've been in Australia for a few years now, and you really love it, right?

Magyer: Mm-hmm.

Southwick: How does one put in to get transferred to Australia here at The Motley Fool?

Magyer: Hm. I think a time machine would be helpful.

Southwick: Oh, ding it.

Magyer: I just got moved over there to help grow the business. Almost four years ago there was a decision. Back then, Scott Phillips was the only other investor on the ground. Now we've got seven, so things have grown quite a bit. But I am super bullish on Australia. I love Australia. The quality of life is amazing. We're just settling down roots and that's where we're staying.

Southwick: So that was your polite way of saying, "Sorry, Alison, we can't transfer you to Australia."

Magyer: I believe so, yes.

Southwick: OK, all right. Anyway, today for our fun time segment, we're going to test how much of a local Aussie you have become with a quiz of Aussie slang.

Magyer: Oh, boy.

Southwick: Are you ready? There's only three, so if you get one out of three, I'm going to be impressed.

Magyer: All right.

Southwick: The first one is "budgie smugglers."

Magyer: What? That's like a male swimsuit that's like a Speedo.

Southwick: It's in the Australian-English dictionary.

Brokamp: Say that word again, please.

Southwick: Budgie, which is a bird. Smuggler. It's what they call a really tiny Speedo.

Magyer: Yeah.

Southwick: I'll let you figure out why. Ding ding ding ding. You got one right.

Brokamp: Do you own a budgie smuggler?

Magyer: No comment.

Southwick: When in Australia...

Magyer: When smuggling budgies.

Southwick: The next one is -- and this one I had to talk to Peter Varley to make sure I was pronouncing it correctly -- "furphy."

Magyer: I don't know what that one is.

Brokamp: Peter Varley, by the way, is from Australia.

Magyer: Yes, he's legit.

Southwick: Furphy. Neither of you know what a furphy is?

Magyer: No, it sounds like a Furby.

Brokamp: I was going to say the same thing.

Southwick: A furphy is a rumor or an unreliable story.

Magyer: Hm.

Southwick: Do you want to know what it comes from? It's pretty cool. It comes from WWI. It comes from World War I and trench warfare. This company, named Furphy, created these wagons to carry supplies, water, trash, or whatever from trench to trench, the idea being that a story might travel from trench to trench, and with every trench it goes to, the story changes a little bit so by the time it makes it to you, the story is unreliable.

Brokamp: It sounds like the telephone game.

Southwick: Yes, like the telephone game.

Magyer: It's a good one.

Southwick: That is a good one. Are you ready for the next one?

Magyer: Yeah.

Southwick: A "tall poppy."

Magyer: Oh, I know what a tall poppy is.

Southwick: You do?

Magyer: A tall poppy is someone who thinks they're above everyone else, and they've risen above the rest of the crowd. The tall poppy syndrome is a big thing in Australia.

Southwick: The tall poppy syndrome. Yes. Have you heard of tall poppies?

Brokamp: I have not. Are poppies a big thing in Australia? Do they have a heroin bubble?

Southwick: No!

Magyer: They're grown in Tasmania.

Southwick: But this is super interesting. The tall poppy syndrome is basically what Joe is talking about. It's this culture where people of high status are resented, attacked, or cut down, because they've been classified better than anyone else.

Magyer: Well, part of it is they're looking toward the sky and they think they're too good for the rest of the poppies.

Southwick: It comes from an ancient Greek story. I don't know. The specific reference to poppies occurs in Livy's account of the tyrannical roman king Tarquin the Proud. He's said to have received a message from his son, Sextus Tarquinius, asking what he should do next in Gabii, since he'd become all-powerful there. Rather than answering the messenger verbally, Tarquin went into his garden, took a stick, and symbolically swept it across his garden, thus cutting off the heads of the tallest poppies growing there. So basically he was saying go fire all your... Well, not fire. Kill! Come on. These people we're talking about would be killing them. Kill all of your eminent people, and that's what the guy did.

Magyer: It's not quite that severe in Australia.

Southwick: No?

Magyer: I should just clarify.

Southwick: But this gets to an interesting part about Australian culture. At least it taught me a little bit more. So I know that in Australia, their sense of humor and being friendly with each other is largely based on making fun of each and cutting each other down.

Magyer: Big time.

Southwick: Big time! And this goes to a deeper part of Australian culture, where everyone is equal.

Magyer: Yes.

Southwick: Which I didn't really think about. I knew they were big on taking the piss out of each other (as the saying goes)...

Magyer: Yes.

Southwick: ...but I didn't realize they had this strong sense of equality.

Magyer: Yes. It's a broad concept like "mateship." That everybody is equal. A simple, clean example that Americans could get is that if you get in a cab in Australia, and you were to sit in the back, that would be considered insulting...

Southwick: Really!

Magyer: It would be like, "What's the matter? Are you too good to sit up front?"

Brokamp: Really!

Magyer: Of course, I inadvertently offended numerous cab drivers.

Southwick: You got two out of three!

Brokamp: Congratulations.

Magyer: I'm pretty happy with that. I think the guys back home will be impressed.

Brokamp: You're going to get Carl Kasell's voice on your voice mail. No, wait. That's another radio show.

Southwick: That's a different show. I wish we were as funny as him. What about you? What do you think is some interesting slang that you learned while you were in Australia?

Magyer: "Gazumped." I love gazumped.

Southwick: What is gazumped?

Magyer: Gazumped is like you've made a bid on a property. You're excited. You're going to buy it. But at the last minute, someone swoops in and tops your offer and they get the house. They gazumped you.

Southwick: Real estate really is a big deal in Australia.

Magyer: Yes. I think that word is awesome.

Brokamp: Gazumped.

Magyer: Gazumped.

Brokamp: Today you gave a speech to Fools who chose to hear your speech, and you talked about an index in Australia, the S&P/ASX Small Ordinaries Accumulation Index.

Magyer: It just rolls off the tongue.

Brokamp: It does. Ordinaries. Is that what they call stocks?

Magyer: That's basically common stocks.

Brokamp: Interesting. Any other financial terms that are different there? Do they call them stocks, or do they call them shares like they do in England?

Magyer: They do use shares. Sometimes you might also say stock. I'm pretty sure I get it wrong a lot of the time, but I do my best. Anytime I would say zee I would say zed. I'm pretty good about changing my zeds to S's so Australians know what I'm talking about and that I make an effort.

Southwick: Thanks for coming and visiting with us.

Magyer: Thanks for having me.

Brokamp: It's great to see you again, Joe.

Southwick: It's great to have you on the show.

--

Southwick: That's the show. I want to thank Gary and Candice for sending us a postcard from Normandy, Kirk from the Minnesota State Fair, and Karim from Kazakhstan.

Brokamp: Wow! 

Southwick: Isn't that cool? Kazakhstan.

Brokamp: Yes, it's really cool.

Southwick: The show is edited larrikinally by Rick Engdahl. Apparently "larrikin" is an Aussie slang for a rowdy youth. I don't know. Whatever. Our email is Answers@Fool.com. If you haven't left us a review on iTunes, we surely would appreciate it or wherever you listen to the show. It helps us rise in the rankings and get new listeners and everybody wins.

Brokamp: And we just feel good about it.

Southwick: Well, if somebody is leaving good feedback...

Brokamp: Yes. If it's bad feedback, go leave it on some other website that doesn't really exist, or something like that. I don't know. Just don't go to iTunes.

Southwick: For Robert Brokamp, I'm Alison Southwick. Stay Foolish everybody.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Alison Southwick has no position in any stocks mentioned. Joe Magyer owns shares of Alphabet (A shares) and Amazon.com. Robert Brokamp, CFP owns shares of Facebook. The Motley Fool owns shares of and recommends Alphabet (A shares), Amazon.com, Facebook, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.