Jettison the financial advisors

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Sagefemme
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Jettison the financial advisors

Post by Sagefemme » Mon Mar 12, 2018 9:48 pm

My first post! I am finally extricating myself from the fees of financial management. I know it's the right thing to do. The portfolio in question is at Schwab and I inherited it from my mom when she died in 2015. The FA is the firm she and my dad used forever, in the town where I grew up. My mom thought the world of this firm, and I do think they gave my parents, who were financially unsophisticated, very sound advice. They were also very helpful and so nice to me (and my sister) when my mom died. However they have me in 16 funds and charge 1% per year fees. I know how this affects the returns.

I do have one question however as I compose the email in which I fire them. The majority of the funds they have my portfolio in start with "DF" which I understand stands for Dimensional Fund Advisors. Why do they favor funds all from this place? What advantage might it have for the FA and is there any advantage for me? My decision to let them go is firm, but I want to understand this first, if any of you know the answer.


Thank you !

123
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Re: Jettison the financial advisors

Post by 123 » Mon Mar 12, 2018 10:48 pm

Prior discussion (one of many):viewtopic.php?t=207833

Prior to moving the assets to a new account you should ensure that you have copies of all statements from 2015 and after that you may need. These should be readily available to you online. You will need to know the market value of securities held on the day of the death to properly calculate capital gains when those securities are subsequently sold. When an accounts go away the statement history connected with it online also goes away.

If you like Schwab you could just open a new account by contacting Schwab directly and having move all your existing assets transferred into it. Poof no more advisor.
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Katietsu
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Re: Jettison the financial advisors

Post by Katietsu » Mon Mar 12, 2018 11:31 pm

If you are going to use an advisor, one who uses DFA funds is the way to go. You should read about the DFA fund family. It is my understanding that if you move away from a DFA approved advisor you can keep your DFA funds but can not buy more.

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mhadden1
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Re: Jettison the financial advisors

Post by mhadden1 » Mon Mar 12, 2018 11:41 pm

Many people think DFA funds have/do/might provide alpha mojo. I think they are normally only available via FA, and many people use FAs for the sole purpose of getting into DFA funds. There may be ways to hack this - maybe there are FAs with very low fees that can supply DFA? Or the DFA account could be a fraction of your portfolio.

You might end up choosing to go a different way, but I think you should educate yourself appropriately about what you have before making a final decision. I prefer very cheap index funds myself, no FA.
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White Coat Investor
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Re: Jettison the financial advisors

Post by White Coat Investor » Tue Mar 13, 2018 12:46 am

Sagefemme wrote:
Mon Mar 12, 2018 9:48 pm
My first post! I am finally extricating myself from the fees of financial management. I know it's the right thing to do. The portfolio in question is at Schwab and I inherited it from my mom when she died in 2015. The FA is the firm she and my dad used forever, in the town where I grew up. My mom thought the world of this firm, and I do think they gave my parents, who were financially unsophisticated, very sound advice. They were also very helpful and so nice to me (and my sister) when my mom died. However they have me in 16 funds and charge 1% per year fees. I know how this affects the returns.

I do have one question however as I compose the email in which I fire them. The majority of the funds they have my portfolio in start with "DF" which I understand stands for Dimensional Fund Advisors. Why do they favor funds all from this place? What advantage might it have for the FA and is there any advantage for me? My decision to let them go is firm, but I want to understand this first, if any of you know the answer.


Thank you !
Take your time firing these folks. The fact that you're asking this question suggests to me that perhaps you're not quite ready to do this yourself. It sounds like they've been doing a good job so far and your only beef is the fee. Why not see if it can be negotiated while you continue your education and prepare to transition to DIY?
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

chw
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Re: Jettison the financial advisors

Post by chw » Tue Mar 13, 2018 6:48 am

White Coat Investor wrote:
Tue Mar 13, 2018 12:46 am
Sagefemme wrote:
Mon Mar 12, 2018 9:48 pm
My first post! I am finally extricating myself from the fees of financial management. I know it's the right thing to do. The portfolio in question is at Schwab and I inherited it from my mom when she died in 2015. The FA is the firm she and my dad used forever, in the town where I grew up. My mom thought the world of this firm, and I do think they gave my parents, who were financially unsophisticated, very sound advice. They were also very helpful and so nice to me (and my sister) when my mom died. However they have me in 16 funds and charge 1% per year fees. I know how this affects the returns.

I do have one question however as I compose the email in which I fire them. The majority of the funds they have my portfolio in start with "DF" which I understand stands for Dimensional Fund Advisors. Why do they favor funds all from this place? What advantage might it have for the FA and is there any advantage for me? My decision to let them go is firm, but I want to understand this first, if any of you know the answer.


Thank you !
Take your time firing these folks. The fact that you're asking this question suggests to me that perhaps you're not quite ready to do this yourself. It sounds like they've been doing a good job so far and your only beef is the fee. Why not see if it can be negotiated while you continue your education and prepare to transition to DIY?
This is good advice. DFA funds are generally good low cost/value oriented institutional funds only available thru a FA. The fact that the FA uses them is a plus. Schwab won't make you sell these funds (Vanguard would) if you leave the FA- assuming you maintain the account with Schwab when you leave the FA. Depending on your asset allocation, many or most of these funds may fit well into your allocation.

I left a FA many years ago that also used DFA funds- I still hold many of those funds today (mostly in my taxable account).

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Re: Jettison the financial advisors

Post by dettom » Tue Mar 13, 2018 7:32 am

I dropped my FA 2 years ago. All DFA funds
transferred quickly and easily into our Flagship account(s). Still holding 3 funds as of today incorporated with all Admiral Index funds. 55/45. Total expense savings for 2yrs over FA....18k! Thank you Bogleheads!!

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Rick Ferri
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Re: Jettison the financial advisors

Post by Rick Ferri » Tue Mar 13, 2018 7:39 am

You may retain DFA funds in your portfolio after terminating the adviser relationship, but you won’t be allowed to buy more because you’re not authorized. This includes dividend reinvestment.

Your decision to retain these funds or swap should be based on many factors; how well you understand what DFA does and why, whether you intend to hire another adviser, the cost differences to go into alternative funds, the entire complexity of “factor” investing, and taxes and fees if you hold compared to taxes and fees if you sell.
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chw
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Re: Jettison the financial advisors

Post by chw » Tue Mar 13, 2018 9:14 am

Rick is correct about not being able to make further DFA purchases if you decide some of their funds meet your investment objectives. I also hold my DFA funds with Schwab(as mentioned previously I left my FA about 10 years ago)- I just want to mention that Schwab does allow me to reinvest dividends and capital gain distributions from DFA funds. I don't know if this is an oversight, or perhaps DFA allows Schwab to do this as custodian by arrangement with Schwab.
Last edited by chw on Tue Mar 13, 2018 9:38 am, edited 1 time in total.

livesoft
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Re: Jettison the financial advisors

Post by livesoft » Tue Mar 13, 2018 9:18 am

If the advisor isn't doing much for you other than holding the funds, another tack is to negotiate the AUM fee to a lower amount. I know somebody who did that with an inherited DFA/Vanguard portfolio. The portfolio was a great set-and-forget portfolio and the list of transactions in the prior two years was practically nil, so the advisor was mostly being paid for hand holding.
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rkhusky
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Re: Jettison the financial advisors

Post by rkhusky » Tue Mar 13, 2018 9:22 am

Sagefemme wrote:
Mon Mar 12, 2018 9:48 pm
However they have me in 16 funds and charge 1% per year fees. I know how this affects the returns.
If you manage to negotiate a lower fee, have the advisor put you into fewer funds, 5 should be the max and you may be able to get it down to 1 or 2.

retiredjg
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Re: Jettison the financial advisors

Post by retiredjg » Tue Mar 13, 2018 10:09 am

Many people here feel the DFA funds have value. Whether they are worth an extra 1% plus a higher expense ratio is a matter of opinion. Some think yes. Others think no.

If you have decided the extra 1% is not worth it for you, you might still consider keeping some of these funds. However, 16 positions is far too many funds to keep. And since you won't be able to buy more, their portions in your portfolio will be getting smaller and smaller as time goes on. Small positions are a bit of a nuisance.
The majority of the funds they have my portfolio in start with "DF" which I understand stands for Dimensional Fund Advisors. Why do they favor funds all from this place? What advantage might it have for the FA and is there any advantage for me? My decision to let them go is firm, but I want to understand this first, if any of you know the answer.
The DFA funds follow a particular philosophy of investing in smaller cap stocks and "value" stocks. There is some apparently reliable academic research showing that small cap and value stocks have outperformed the overall stock market in the past. People who invest in small and value believe that trend will continue in the future. Many people here follow that philosophy (small cap and value tilt) even without using the DFA funds. Many people here do not follow that philosophy, preferring just to hold the "whole market as it is".

I am not positive about this, but my understanding is that all DFA advisors have a fiduciary duty to their clients. That means they are obligated to put their clients' best interest first. Other advisors....not so much. They are allowed to sell a "suitable" product to their clients rather than put their clients' best interest first and foremost. Many seem to sell what will give them a good commission. If I were going to use an advisor and if I could not use the Vanguard PAS (very low costs), I'd look for a DFA advisor and try to negotiate a fee lower than 1%. Much lower if my assets could sway that. (They wouldn't :happy )

Before jumping ship, try to make a plan and if you choose to do so, try to incorporate only a few DFA funds (after consolidation) in your plan since you already have them. While making the plan, consider the tax consequences of selling these funds and just how fast you want to get it done. If all the funds are in an IRA or Roth IRA, this is not an issue.

People here can help you make a plan but you should first learn some basics by doing some reading here. Be sure to watch the videos.

https://www.bogleheads.org/wiki/Getting_started

Once you get your feet wet, post your information in the format suggested in the link at the bottom of this message. The closer you follow the format the easier it is to help you (and the more help you are likely to get).

Here is some information from the Wiki on DFA funds/advisors. Spend some time there and explore the links to help you decide what you want to do with the DFA funds.

https://www.bogleheads.org/wiki/Dimensi ... d_Advisors

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Re: Jettison the financial advisors

Post by schabetc » Tue Mar 13, 2018 12:37 pm

Check out Index Fund Advisors (IFA.com). They show why DFA funds are superior to other funds with excellent graphics and diagrams and backtesting. It is common for those advisors who are qualified to sell DFA funds to use many funds because that is part of the philosophy of the DFA organization which requires its sellers to follow their philosophy.

Again, check out IFA.com. Your questions will be answered there.

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Rick Ferri
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Re: Jettison the financial advisors

Post by Rick Ferri » Tue Mar 13, 2018 3:44 pm

To clarify, there is no such thing as a “DFA Adviser”. DFA does not have advisers. There are only independent advisers who have gone through DFA training and are authorized to use DFA funds. It’s not mandatory for any adviser who is authorized to actually use DFA funds in client portfolios.
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retiredjg
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Re: Jettison the financial advisors

Post by retiredjg » Tue Mar 13, 2018 4:14 pm

Rick Ferri wrote:
Tue Mar 13, 2018 3:44 pm
To clarify, there is no such thing as a “DFA Adviser”. DFA does not have advisers. There are only independent advisers who have gone through DFA training and are authorized to use DFA funds. It’s not mandatory for any adviser who is authorized to actually use DFA funds in client portfolios.
Thanks Rick. That's an important clarification.

That casts doubt on my belief that advisors selling DFA funds are all performing in a fiduciary role, doesn't it? But it sure seems like they are, at least the ones we've heard about here. What's the scoop on that?

rgs92
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Re: Jettison the financial advisors

Post by rgs92 » Tue Mar 13, 2018 4:17 pm

There is nothing wrong with Schwab per se. You can just do an index portfolio right there. Why not just transfer it all to 2 or 3 Schwab funds and rebalance once a quarter or 6 months?

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patrick013
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Re: Jettison the financial advisors

Post by patrick013 » Tue Mar 13, 2018 5:32 pm

Well you should read one or two books or just maintain a
very simple portfolio or keep the advisor for a bit longer.
I talked to someone recently who did not know what a
certificate of deposit was. Has aged parents, new job, etc..
age in bonds, buy-and-hold, 10 year business cycle

livesoft
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Re: Jettison the financial advisors

Post by livesoft » Tue Mar 13, 2018 6:13 pm

schabetc wrote:
Tue Mar 13, 2018 12:37 pm
It is common for those advisors who are qualified to sell DFA funds to use many funds because that is part of the philosophy of the DFA organization which requires its sellers to follow their philosophy.
I certainly have seen the situation personally where an advisor put someone into DGSIX which is like the Vanguard LifeStrategy fund with all asset classes. Then when that person talked to a bank financial salesrep, that salesrep said something like "How can your current advisor be doing a good job with less than 12 funds?!?"
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Re: Jettison the financial advisors

Post by dutchglider » Tue Mar 13, 2018 6:18 pm

We had six different retirement accounts at Schwab, managed by a firm, and paying almost the same fee (1%), and about the same number of funds.

We terminated our advisor relationship but was able to keep all the accounts at Schwab. Internally Schwab initiated changes which took place 90
days after the advisor relationship ended. Fees changed on somethings, like Vanguard buy fees were negotiated by the advisor for $25, maybe $30
per order. After the 90 days, the fees went to retail rates.

After research on this board, I moved to a three-fund portfolio, retaining some Vanguard ETFs but mostly relying on Schwab ETF's
(SCHB, SCHZ) with international fund ETF's from Vanguard (VEU we kept from advisor days, now buy VXUS).

I think the Schwab Mutual Funds (SWISX, SWAGX, etc) are good choices (no fees, $1 min buys, etc.).

We have a brokerage account at Vanguard and Nevada 529's at Vanguard. We are happy with both Schwab and Vanguard.

Look into if you can keep the accounts at Schwab without any transfers!

Also, ask your advisor about how to terminate the contract, particularly how much advance notice required.
You may have pre-paid fees extending into the future.


Best wishes on your new journey.

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Rick Ferri
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Re: Jettison the financial advisors

Post by Rick Ferri » Tue Mar 13, 2018 8:15 pm

retiredjg wrote:
Tue Mar 13, 2018 4:14 pm
Rick Ferri wrote:
Tue Mar 13, 2018 3:44 pm
To clarify, there is no such thing as a “DFA Adviser”. DFA does not have advisers. There are only independent advisers who have gone through DFA training and are authorized to use DFA funds. It’s not mandatory for any adviser who is authorized to actually use DFA funds in client portfolios.
Thanks Rick. That's an important clarification.

That casts doubt on my belief that advisors selling DFA funds are all performing in a fiduciary role, doesn't it? But it sure seems like they are, at least the ones we've heard about here. What's the scoop on that?
By law RIAs are fiduciaries. Do they all act that way? Well, I have a strong opinion on that, and it’s not related to having DFA access.
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Re: Jettison the financial advisors

Post by cfs » Tue Mar 13, 2018 8:28 pm

Good conversation!

A Lot of First!

Sagefemme, welcome aboard, your first post!

Dettom, welcome aboard, your first post!

Schabetc, welcome aboard, your first post!

Also, thanks Mister Ferri for all the good information.

Good luck with your investments, y gracias por leer ~cfs~
~ Member of the Active Retired Force since 2014 ~

retiredjg
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Re: Jettison the financial advisors

Post by retiredjg » Tue Mar 13, 2018 8:32 pm

Rick, you said "By law RIAs are fiduciaries". Are you saying that people who sell DFA funds are all RIAs?

Sagefemme
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Re: Jettison the financial advisors

Post by Sagefemme » Tue Mar 13, 2018 9:44 pm

Thanks to ALL of you who replied. I'm amazed and impressed by the collective knowledge on this forum.

I didn't expect anyone to say anything other than "dump the FA." I was so sure that 1% fees was a deal breaker, and I needed to get free, that I already initiated the process! Here is the email I got back from the FA:

Hi S****,


We have started the process on our end. We will remove ourselves as advisor. You accounts will remain at Charles Schwab. In the coming days you will receive a check for the unused portion of your management fees. Let me know if you have any questions.


We have enjoyed working with you. If we can be of help in the future please let us know.


Best wishes.


I do believe this organization has looked out for my best interests and those of my parents. I very much appreciate and value that. I am happy to hear that DFA funds are good for investors. But I figured a basic three or four fund portfolio would do as well for me, and that over time the possible advantages of their mangement would be eaten up by the fees. Also, there is a position in a Tweedy-Brown Foreign Large-Value fund with ER of 1.38%. It's a small percent of the overall portfolio, but that's hard to stomach.

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Re: Jettison the financial advisors

Post by Sagefemme » Tue Mar 13, 2018 9:59 pm

A few other thoughts:

123, yes thank you for the advice about the value of the portfolio on the day my mom died. I do have that number as I needed it for the estate tax return.

mhadden1, I dearly wish I knew what alpha mojo is. Alas, I am old and out of touch. I think it must be good, though :happy

Live soft: I feel like there is a fair amount of buying and selling the FA does, so it's not just hand holding and keeping the same funds.

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Rick Ferri
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Re: Jettison the financial advisors

Post by Rick Ferri » Wed Mar 14, 2018 7:17 am

retiredjg wrote:
Tue Mar 13, 2018 8:32 pm
Rick, you said "By law RIAs are fiduciaries". Are you saying that people who sell DFA funds are all RIAs?
By law, Registered Investment Advisers (RIAs) are fiduciaries. No RIA “sells” DFA funds. Unlike broker sold funds, no sales commission is paid to an adviser. An RIA my also be a broker (dual licensed), but there is no financial benefit to an RIA for using DFA over using Vanguard.
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retiredjg
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Re: Jettison the financial advisors

Post by retiredjg » Wed Mar 14, 2018 8:10 am

Thanks Rick. Is it fair to assume that only RIAs are selected to go through DFA training and become authorized to use DFA funds?

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Re: Jettison the financial advisors

Post by mhadden1 » Wed Mar 14, 2018 8:15 am

Sagefemme wrote:
Tue Mar 13, 2018 9:59 pm
I dearly wish I knew what alpha mojo is.
Alpha: more return than risk level would indicate.

Mojo: associated with a kind of folk magic, check out Muddy Waters on youtube,

https://www.youtube.com/results?search_ ... jo+working
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Re: Jettison the financial advisors

Post by Rick Ferri » Wed Mar 14, 2018 8:25 am

retiredjg wrote:
Wed Mar 14, 2018 8:10 am
Thanks Rick. Is it fair to assume that only RIAs are selected to go through DFA training and become authorized to use DFA funds?
That’s my understanding. DFA controls 100% of this process. A potential adviser contacts a DFA rep, goes through an interview of sorts, is invited to attend a two day DFA training seminar at their own expense, then there is a mutual decision.
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Re: Jettison the financial advisors

Post by nedsaid » Wed Mar 14, 2018 8:45 am

Sagefemme wrote:
Mon Mar 12, 2018 9:48 pm
My first post! I am finally extricating myself from the fees of financial management. I know it's the right thing to do. The portfolio in question is at Schwab and I inherited it from my mom when she died in 2015. The FA is the firm she and my dad used forever, in the town where I grew up. My mom thought the world of this firm, and I do think they gave my parents, who were financially unsophisticated, very sound advice. They were also very helpful and so nice to me (and my sister) when my mom died. However they have me in 16 funds and charge 1% per year fees. I know how this affects the returns.

I do have one question however as I compose the email in which I fire them. The majority of the funds they have my portfolio in start with "DF" which I understand stands for Dimensional Fund Advisors. Why do they favor funds all from this place? What advantage might it have for the FA and is there any advantage for me? My decision to let them go is firm, but I want to understand this first, if any of you know the answer.


Thank you !
You have run into the classic dilemma caused by the cost of financial advice. Even in the case where you get great service and really good portfolio management, you wonder what the proper pricing point is. 1% a year for managing assets seems to be pretty high. I went to a couple of Paul Merriman seminars back in 2007-2008 and was very impressed by his firm, but I just couldn't get over the hurdle of the ongoing costs. When you added their fee plus the expense ratios of the DFA funds, you were looking at about 1.34% a year to run your money. It just seemed too much.

The academic model that they use favors Small/Value tilting in their portfolios. Over long periods of time, this model should generate enough excess return to pay for the extra fees and more. But what we have seen is a Large Growth stock market since the 2008-2009 financial crash. So for almost a decade, those using DFA strategies are likely to be disappointed, Value has been trailing the market. So you would get the double whammy of the fee drag and the underperformance. My best guess is that at some point, Value will return with a vengeance but do investors have the extreme patience that it takes to wait? History suggests this will happen but obviously there are no guarantees.

So following the DFA model is really an exercise in faith. You believe that the academic researchers are correct that over long periods of time that smaller stocks will outperform larger stocks and that Value stocks will outperform Growth Stocks. Not everyone out there believes this and would attribute such outperformance to a historical fluke. Pretty good arguments for each side. The DFA approach really requires investor commitment.

Where I am working now, I am seeing the realities of what it costs to provide competent advice to people. A person giving advice on investments, taxes, business needs to hire people to help with the back office stuff. A lot of preparation goes into every client appointment, my guess is probably three to four hours of preparation for every hour of meeting with a client. All this just doesn't come cheap.

Now Vanguard offers an advisory service for 0.30% a year but what they recommend isn't all that different from their Target Date Retirement funds or perhaps a LifeStrategy Fund. Pretty much the formula is 40% of stocks and 30% of bonds in International investments. Your asset allocation between stocks and bonds is determined by your age, risk tolerance, and personal circumstances. The formula seems pretty cookie cutter because it is. Vanguard has to generate economies of scale to make this work, they just aren't going to pick individual stocks and bonds for you.

My guess is that even the best and lowest cost DFA advisors can't make a good living on anything less than 0.50% a year, and that is with bringing a substantial portfolio to them to manage. My guess is that they would want at least $500,000 to manage. The reality is probably more like 0.75% a year. You need a certain scale in order to charge the lower fees. The world of tough competition and fickle clients makes doing this a big challenge for advisors.

So if you want portfolio management at rock bottom prices, you are looking at a Target Date Retirement Fund, a Target Risk fund like the Vanguard LifeStrategy funds, or a plain old fashioned 60/40 balanced fund. If you want face time with an advisor, you are going to have to pay up. Cheaper to do that by the hour than with an Assets Under Management arrangement. Hourly costs are $150 to $400 an hour.
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Re: Jettison the financial advisors

Post by boglemoe » Wed Mar 14, 2018 12:23 pm

.....
Last edited by boglemoe on Tue Apr 17, 2018 10:56 pm, edited 4 times in total.

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Re: Jettison the financial advisors

Post by boglemoe » Wed Mar 14, 2018 12:37 pm

.....
Last edited by boglemoe on Tue Apr 17, 2018 10:56 pm, edited 1 time in total.

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Re: Jettison the financial advisors

Post by Granby » Wed Mar 14, 2018 1:05 pm

I get that most don't want to pay fees, but why is there no discussion about performance, risk, allocation and/or service?

Perhaps service is not important, and that's fine.

But, what if long-term performance was solid? (Especially risk-adjusted returns) This investor's parents had been with this firm for years, so this would be good to know. DFA funds have recently lagged due to the growth-value paradgm and are out of favor. Also, I'm not sure how far back DFA goes... maybe 10 years, but not too much longer.

If performance has suffered, why? Is it because of the value-bent? (Russell Growth has crushed Russell Value since the crisis...) Or, was it because more was placed in international since the crisis?

Finally, is this firm a Fiduciary?

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Re: Jettison the financial advisors

Post by Sagefemme » Fri Mar 16, 2018 3:07 pm

After an initial shiver of fear when I read the first batch of responses (don't rush, take your time, maybe it's best to stay with FA, etc) I decided not to retract my email to the FA that said "I'm going solo." They have confirmed that they are simply removing themselves from the management position and not selling anything. So I will have the DFA funds still.

I am resolved to learn more about investing and pay more attention to my retirement portfolio (at the ripe age of 57; I've been paying little attention until now). Luckily I started my first 401k in my early twenties and have almost always had employer sponsored 401K plans since then. I have a spouse who is a university professor, retirement portfolio at TIAA, who pays no attention at all. He espouses buying index funds and holding, and that seems to have worked fine. He also has no concept of retiring--if you were to ask him when he thinks he'll retire he would probably look confused and say, why would I do that? I'm likely to retire first (maybe soon). We have great health insurance through the university he works for.

I plan to read more about the DFA philosophy this weekend, via the threads many of you helpfully posted and explained. Thank you nedsaid for your detailed post about that philosophy. Of course I don't need to change anything now. As the DFA funds become unbalanced and I'll need to change something. After a protracted "chat" about an unrelated topic with Charles Schwab yesterday evening the customer service rep gave me 10 free trades to try to soothe my frustration. Maybe those will come in handy although I think they only stay available to me for a year.

pascalwager
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Joined: Mon Oct 31, 2011 8:36 pm

Re: Jettison the financial advisors

Post by pascalwager » Fri Mar 16, 2018 3:46 pm

Rick Ferri wrote:
Tue Mar 13, 2018 7:39 am
You may retain DFA funds in your portfolio after terminating the adviser relationship, but you won’t be allowed to buy more because you’re not authorized. This includes dividend reinvestment.

Your decision to retain these funds or swap should be based on many factors; how well you understand what DFA does and why, whether you intend to hire another adviser, the cost differences to go into alternative funds, the entire complexity of “factor” investing, and taxes and fees if you hold compared to taxes and fees if you sell.
I have both a taxable account and a tax-deferred account, both with DFA funds only. I can't buy new shares in the taxable, but dividends are reinvested. In the tax-deferred account I can make exchanges between the funds, but have never tried to invest new money and don't want to.

I terminated the advisor relationship in 2011.

Sagefemme
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Re: Jettison the financial advisors

Post by Sagefemme » Fri Mar 16, 2018 8:26 pm

pascalwager, I interpreted what Rick Ferri wrote to mean I can't reivest dividends. Sounds like you are able to reinvest dividends. Mine is a taxable account. May I ask where your accounts are housed?

pascalwager
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Joined: Mon Oct 31, 2011 8:36 pm

Re: Jettison the financial advisors

Post by pascalwager » Fri Mar 16, 2018 10:56 pm

Sagefemme wrote:
Fri Mar 16, 2018 8:26 pm
pascalwager, I interpreted what Rick Ferri wrote to mean I can't reivest dividends. Sounds like you are able to reinvest dividends. Mine is a taxable account. May I ask where your accounts are housed?
Sagefemme,

My taxable account (six DFA funds) is at Charles Schwab (custodial) and my variable annuity (five DFA "sub-accounts") is at Transamerica.

I'm sure the dividends are being reinvested as the Schwab sweep account always shows $0.00 and I've discussed my dividend options with customer service in the past. In the VA, I've been managing it just like a bunch of funds at Vanguard, but I haven't tried to add new money. Actually, I use the VA sub-accounts to balance the overall portfolio which is comprised of the two accounts, taxable and VA. I'm able to do this as the two accounts are of similar size.

My former advisor, incidentally, was the first retail investment company to use DFA funds back in the early 90's. They convinced DFA to try selling funds in the retail market.

livesoft
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Re: Jettison the financial advisors

Post by livesoft » Fri Mar 16, 2018 11:06 pm

Sagefemme wrote:
Fri Mar 16, 2018 8:26 pm
pascalwager, I interpreted what Rick Ferri wrote to mean I can't reivest dividends. Sounds like you are able to reinvest dividends. Mine is a taxable account. May I ask where your accounts are housed?
I don't think it matters what anybody else tells you. If you want dividends reinvested, simply try to do that. You will know almost right away if you can or not ... no matter what the situation is for anybody else.
Wiki This signature message sponsored by sscritic: Learn to fish.

Sagefemme
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Joined: Mon Mar 12, 2018 9:31 pm

Re: Jettison the financial advisors

Post by Sagefemme » Sat Mar 17, 2018 3:32 pm

Yes livesoft, I will wait and see what happens. My funds are at Schwab too; with luck they will continue to reinvest dividends as the FA had been doing.

pascalwager
Posts: 1280
Joined: Mon Oct 31, 2011 8:36 pm

Re: Jettison the financial advisors

Post by pascalwager » Sat Mar 17, 2018 4:35 pm

Sagefemme wrote:
Sat Mar 17, 2018 3:32 pm
Yes livesoft, I will wait and see what happens. My funds are at Schwab too; with luck they will continue to reinvest dividends as the FA had been doing.
Also, you can go online (Schwab) and see your positions and reinvestment options. Then you can call and discuss with support.

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