Ferri, Evanson, or Gorlow as my new advisor? Help please!

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
DiehardDisciple
Posts: 85
Joined: Mon Jul 23, 2007 11:15 pm

Ferri, Evanson, or Gorlow as my new advisor? Help please!

Post by DiehardDisciple » Fri Aug 03, 2007 2:59 am

Dear Bogleheads,

I respect the fact that most people here manage their own portfolios and are getting sick of seeing threads similar to this, but I'm not strong enough to competently manage my portfolio, and having dredged the boards, I know this particular comparison question hasn't been posted:

I am deciding between three advisors, and I am wondering whom you would choose if in my situation. (Yes, I will be speaking with them or their associates soon.) I did consider Flagship’s advisory services, but the rates are too high. If you feel uncomfortable sharing your thoughts publicly, feel free to send me a private message (pm). The three advisors and their firms:

- John Gorlow, Cardiff Park, http://cardiffpark.com/
- Steve Evanson, Evanson Asset Management http://www.evansonasset.com/
- Rick Ferri, Portfolio Solutions http://www.portfoliosolutions.com

Yes, they all happen to have access to DFA’s funds, but I am not looking for an order-taker and would be happy to go with Vanguard, iShares, or something else for certain asset classes if that’s the best route considering the expected return/risk ratio and total costs. Investable assets will be about $1.65 million starting off (after cap. gain taxes on current individual stocks) and practically all taxable; I also have a mother and sister with larger accounts who will need a new advisor in 5 years when their current one retires. There are plenty of other good advisors out there, some of them reading this post, but either their firms’ fees are too high for me or they are aiming for comfortable do-it-yourselfers (like Epiphany).

Below are some concerns specific to each firm, but first, regarding all three, I am wondering how to gauge their total costs and also if they build ladders of individual bonds for their clients.

Cardiff Park

1. Cardiff Park has only been in business since 2003 (though Gorlow seems to have a lot of investment experience).
2. The smallest amount of assets under management among the three.
3. Lowest fees among the three might mean worst service.
4. From the CP website: “In the past he (Gorlow) has held the CIMA certification...” Why mention it if it was held in the past? What about current certification?

5. Comparatively unknown with limited writing on website
6. Would he help me roll an old 403b account that I have into a Roth IRA?

Evanson Asset Management

1. I wonder why this person did not want Evanson’s services; see #5. http://answers.google.com/answers/threadview?id=783047
2. I heard that he became very bearish at the market’s bottom in 2002/2003. Is he “too” conservative given an investor’s risk capacity? If he has a page called “asset allocation for bears” http://www.evansonasset.com/index.cfm?Page=18 ) why not have one called “asset allocation for bulls?” Truth be told, I would rather an advisor that’s too conservative than one that’s too aggressive.

3. I have heard about his 10x10 model. What about for taxable accounts? Does he use something more tax-efficient like Vanguard tsm funds or DFA core equity funds? (I do acknowledge that he has a page for tax-efficiency: http://www.evansonasset.com/index.cfm?Page=15

4. Evanson’s thoughts are well known through his articles on his website, but what about his associates in case I end up working directly with them? Do clients respect and have good rapport with his associates?

5. Is he too quick to include gold or commodities in a portfolio? There is some writing about it on his site.
6. Would he help me roll an old 403b account that I have into a Roth IRA?

Portfolio Solutions

1. See #4 for EAM above. How about Rick’s associates?
2. If PS is a fully discretionary investment manager, are they flexible at all when suggesting the portfolio to the client? For example, if I’m happy with all suggestions except for one or two recommendations, would they be willing to accommodate my wish? At the very least I would want to hear a polite rationale about why their choice for an asset class is a wiser path than what I had in mind. I wouldn’t want them to consider it a waste of time to explain the rationale of just one or two of their choices. I think I would agree with most of what they say but probably not 100%.

3. PS has very inexpensive fees in the industry, and what it might cost my portfolio might be lower than if I go with EAM – at least until my portfolio grows. The situation becomes more important when I consider my family members’ portfolios. If they choose to sign up with my new advisor in 5 years, it would cost them roughly $10,000 more per year to go with PS than with either CP or EAM. I am including in this figure the PS reduced rate of .15% for additional assets between $5m and $10m. What specifically would PS offer them that CP and EAM won’t, and to myself as well when my portfolio grows? My mom and sister might need more handholding than me, so service is important too, but I can explain to my family the investment theories, etc. We do have a competent tax accountant, estate lawyer, and insurance agent.

(To Rick’s credit, I saw this 2005 post from him about Steve Evanson, a rare compliment of one advisor by another: “Steve is a wonderful advisor, and his services are very reasonably priced.” see #15. http://socialize.morningstar.com/NewSoc ... 279#925940 )

Thank you for everyone’s help.

Sincerely, Matt

User avatar
gbs
Wiki Admin
Posts: 557
Joined: Tue Feb 20, 2007 12:41 pm

Post by gbs » Fri Aug 03, 2007 4:34 am

If you can't decide split the money 3 ways between the 3 advisers and rebalance after 1 year!

Regards, gbs

livesoft
Posts: 55916
Joined: Thu Mar 01, 2007 8:00 pm

Post by livesoft » Fri Aug 03, 2007 6:20 am

Let me be one of the first to respond to your questions. As I understand it, you want us to call up and interview each of these investment firms for you and ask your questions of them, right? Are you too lazy or afraid to call them up yourself? If (?!!?) you call them up, are you gonna tell us what the answers are that you got from them? Thanks!

Laura
Posts: 7973
Joined: Mon Feb 19, 2007 7:40 pm

Cannot Comment

Post by Laura » Fri Aug 03, 2007 6:50 am

Matt,

I don't know two of the three you mentioned but I did meet Rick Ferri in person at the recent Diehards meeting. I was very impressed with his knowledge, ethics, and intelligence. He does not manage my investment so I have no experience with him in that regard.

Rick struck me as someone who wanted to work with his clients, not against them. What I mean is that per your question 3, it appeared he would take your concerns about something into account although I suspect that if you wanted to go too far out on a limb they would prefer not to work with you at all. (If you decided you wanted to go 100% into commodities or something like that.)

I encourage you to ask these questions to these advisors directly rather than posting here on the forum. I know you plan to do this but why wait?

Laura
The views presented are my own and not necessarily those of the Department of State or the U.S. Government.

User avatar
Mel Lindauer
Moderator
Posts: 27236
Joined: Mon Feb 19, 2007 8:49 pm
Location: Daytona Beach Shores, Florida
Contact:

Financial Advisor?

Post by Mel Lindauer » Fri Aug 03, 2007 6:58 am

Hi Matt:

FWIW, I told my wife to call Rick Ferri if she feels she needs a financial advisor after I'm gone.

Regards,

Mel

Bradley
Posts: 486
Joined: Tue May 01, 2007 2:41 pm

Advisor

Post by Bradley » Fri Aug 03, 2007 7:20 am

Matt,
In my opinion you won't go wrong with any of the choices you listed. I have been with Cardiff for over a year and I'am very happy with the service and performance.

Bradley

Angst
Posts: 1641
Joined: Sat Jun 09, 2007 11:31 am
Location: St Louis, MO

Re: Ferri, Evanson, or Gorlow as my new advisor? Help pleas

Post by Angst » Fri Aug 03, 2007 7:26 am

DiehardDisciple wrote:I did consider Flagship’s advisory services, but the rates are too high.

I thought anyone with $200k + assets received a free evaluation / suggested investment plan from Vanguard. Why not put that much in the money market and see what they have to say?

tibbitts
Posts: 6814
Joined: Tue Feb 27, 2007 6:50 pm

question

Post by tibbitts » Fri Aug 03, 2007 9:59 am

Are you sure that if you don't feeling confident sticking with investment choices on your own (seemingly why you want an advisor), you'll feel confident sticking with one of these firms when they "underperform" whatever your expectations might be?

It just seems like you're exchanging one problem for another.

Paul

SmallHi
Posts: 1718
Joined: Wed Feb 21, 2007 6:11 pm

Post by SmallHi » Fri Aug 03, 2007 10:11 am

For the benefit of others (DD and I have discussed this privately),

I don't believe any of these 3 firms are "Financial Advisors".

PS is a "money management firm" that you pay for set up, implementation, and ongoing management of your assets. I cannot imagine Rick is gonna call you when the market corrects or when S/V have gone through a dry patch.

(Rick, correct me if I am wrong, by all means)

For the other two...lets be honest, you are getting a "DFA Fund facilitator". A firm who can provide you access to DFA and set up an initial allocation. Hopefully they will also rebalance within bands of 20% to 25% or whatever, but Cardiff's site says quarterly (ouch).

I am of the opinion that, if an investor wants and needs ongoing support, guidance, education, and handholding, it is gonna cost more than $2,000 or $3,000 annually, (or 1/4% of assets).

Thats just how the business is I think. For better or worse, I think its better to know what you are getting than to fool yourself into thinking you've found something for nothing.

Should we go Vanguard, DFA, or ETF?
Should we go Core or Component?
Should we tilt more to Size or Value or less, or not at all?
Should our tilt be higher or lower in the US or Int'l Markets?
Are EM markets worth the risk?
How should we own bonds (individual or fund)?
Should we take TERM and/or DEF risk? How does this change based on my exposure to equity risks?
Why or why not own REITS, Commodities, Gold, and other "diversifiers"?
If we assume average, high, or low future premiums for risk factors, how would my portfolio perform relative to other strategies?
How much tracking error am I taking/can I take/should I take?
How much can I expect to lose during the next recession?
Whats the best way to tilt to size (mix of mid, small and micro, or just micro)?
What are the best ways to find value stocks (dividend, pe, or pb)?

All of these are questions I would spend hours and hours deciding and revisiting as time goes on.

SmallHi

User avatar
Sally
Posts: 308
Joined: Sun Mar 04, 2007 2:02 pm

Another Consideration

Post by Sally » Fri Aug 03, 2007 10:36 am

I understand from whence you are coming! :lol: I am in a similar situation and have been planning for the future when I may "need" or want someone to handle the investment portfolio so that I don't have to do so.

The firms that I talked to all indicated a solid interest when I divulged the approximate investable amount. My problem has been that the firms that I talked to including Portfolio Solutions stated that I would have to sell not only all the individual stocks that I own (which I readily agree to do despite significant tax consequences) but also all of the mutual funds that I own that they don't use (such as DODGX, DODBX, DODFX, TSP, etc.) in order to switch to the VG, DFA, and/or ETFs. This was just too big of a tax hit for me to do in one or two years, and trading the TSP low cost index funds for other index funds and losing access to the G fund just didn't seem to be in my best interest. However, I understand the firms wanting to have clients look alike (so to speak) because it sure makes it easier for them to run like accounts and in keeping fees down.

I would love to find a firm that would customize so that the charts/reports they develop reflect all of my holdings and not just the funds they have selected...at least until I could replace over time to lighten the tax ramifications...I didn't think this was asking too much considering the fees involved each year. But, after talking to about 5 firms about their services I gave up.

I decided that if I have to maintain spreadsheets of the totals (of what I retain along with whatever the my portfolio with the firm has for me) that I am essentially running two portfolios which sounds harder than doing what I have been doing which is selling slowly individual stocks and replacing with mutuals. It has just seemed easier to keep one portfolio than two. At least this way I know my AA diversification and numbers at (most) given times. :o

Hopefully this isn't hi-jacking your thread in anyway but as you talk to these folks it is something to consider and if you get different answers please let us know!!!

With that said, I can't wait to hear what advice you get on this question!!!

thx
Sally

User avatar
bolivia
Posts: 330
Joined: Mon Jul 02, 2007 9:11 pm

Post by bolivia » Fri Aug 03, 2007 10:53 am

.......such as DODGX, DODBX, DODFX,......


Wow - of all the funds in fundland I can see why it'd be tough to give these up. If only most folks could be so fortunate!

Bolivia

User avatar
Taylor Larimore
Advisory Board
Posts: 25859
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Choosing an advisor

Post by Taylor Larimore » Fri Aug 03, 2007 11:00 am

The three advisors and their firms:

- John Gorlow, Cardiff Park, http://cardiffpark.com/
- Steve Evanson, Evanson Asset Management http://www.evansonasset.com/
- Rick Ferri, Portfolio Solutions http://www.portfoliosolutions.com


I don't know anything about John Gorlow or Steve Evanson. However, I know Rick Ferri fairly well from his thousand's of contributions to the Morningstar Vanguard Forum and long talks with him at several Diehard Reunions.

In my opinion, he is one of the most outstanding men I have ever met. He was a Marine fighter pilot, Wall Street broker for 10 years, highly regarded author of several investment books (proceeds of one go to charity), and publisher of his free online book, "Serious Money":

http://www.portfoliosolutions.com/v2/main.aspx?id=books/seriousmoney

Disclosure: When Mel, Michael and I were writing our own book, "The Bogleheads' Guide to Investing," we asked Rick to verify certain passages. Not only did Rick make the necessary corrections, but Rick volunteered to review our entire book before publication. He would not accept renumeration for his many valuable suggestions.

Like Mel, I have asked my wife to contact Rick Ferri if she needs help after I'm gone.

Best wishes.
Taylor

rich
Posts: 924
Joined: Fri Mar 16, 2007 6:51 pm

my preference

Post by rich » Fri Aug 03, 2007 11:38 am

I manage my money myself but if my family ever needed assistance I would recommend Larry Swedroe or Rick Ferri.
Best regards, | Rich

User avatar
Rick Ferri
Posts: 8201
Joined: Mon Feb 26, 2007 11:40 am
Location: Vagabond, USA, Twitter: @Rick_Ferri
Contact:

Post by Rick Ferri » Fri Aug 03, 2007 12:25 pm

.
Thanks for all the kind words from so many Bogleheads.

Please let me clarify a couple of points about Portfolio Solutions:

Matt asked:

1. rri’s thoughts are well known through his articles on his website, but what about his associates in case I end up working directly with them? Do clients respect and have good rapport with his associates?

I have no individual clients. Portfolio Solutions has clients and our investment professionals manage their portfolios. My role in the company is research and marketing. My partner, Scott Salaske is the president of the company. He manages the operations of the firm on a day-to-day basis. All clients of the firm get to know Scott because he runs the operations side, although they also have access to me just by calling and asking for me.

Is Portfolio Solutions flexible at all when suggesting the portfolio to the client? For example, if I’m happy with all suggestions except for one or two recommendations, would they be willing to accommodate my wish?

It depends on the suggestion. For example, the answer is yes if a person did not want REITS in their portfolio because they already own commercial real estate. The answer is no if a client does not want REITS because they believe the asset class is overvalued.

If a client wants a particular fund that we do not hold in a portfolio, we will assist that client in opening a non-managed account and they can buy the fund himself. That account is not associated with the portfolio we are managing. We will not monitor it, comment on it, or will we accept have any liability or fiduciary duty to the investments in it. Such is the harsh reality of today's investment management environment.

PS has very inexpensive fees in the industry, and what it might cost my portfolio might be lower than if I go with EAM – at least until my portfolio grows.

Six of one; half dozen of the other. Whichever advisor you choose, do us both a favor and stick with them for the long run.

SmallHI wote:

PS is a "money management firm" that you pay for set up, implementation, and ongoing management of your assets.

We start the asset management fee after all accounts are set up, assets are transferred, and we begin management. There are no set-up fees (not sure what you meant there).

I cannot imagine Rick is gonna call you when the market corrects or when S/V have gone through a dry patch.

No. We will not call. As with any investment, SV is included as a long-term allocation to small and value risk factors in the market that are expected to pay a premium over market returns in the long-term. It may not happen in the next few years, but we 'expect' it to eventually happen.

For the other two...lets be honest, you are getting a "DFA Fund facilitator".

I'm not going to comment about the strategies of the other two firms. At Portfolios Solutions, a client with a tax-deferred account can expect to own three DFA funds; Small US Value, Small International Value, and Core Emerging Markets. Client with only a taxable account can expect to own the Core Emerging Markets (possible more depending on taxes).

Sally wrote:

My problem has been that the firms that I talked to including Portfolio Solutions stated that I would have to sell not only all the individual stocks that I own but also all of the mutual funds that I own that they don't use (such as DODGX, DODBX, DODFX, TSP, etc.) in order to switch to the VG, DFA, and/or ETFs. This was just too big of a tax hit for me to do in one or two years.

For liability reasons we no longer accept legacy investments that are to be held in an account. Those investments would become our legal responsibility even though we did not buy them and cannot sell them.

We understand the tax consequences of selling. That is why we suggest separating the the low-cost basis assets in a self-managed account and having us manage only the assets that can be placed in our investment strategy.

Thanks again.

Rick Ferri

SmallHi
Posts: 1718
Joined: Wed Feb 21, 2007 6:11 pm

Post by SmallHi » Fri Aug 03, 2007 1:07 pm

Rick:

PS is a "money management firm" that you pay for set up, implementation, and ongoing management of your assets.

We start the asset management fee after all accounts are set up, assets are transferred, and we begin management. There are no set-up fees (not sure what you meant there).


Rick, sorry I wasn't clearer--I didn't mean that those aspects carried fees, just that those are services received for the fee paid.

Put another way, I just meant your fee covers all work required to "research and deliver" the recommended asset classes and overall asset allocation plan. Next step is mutual agreement and implementation. Third step is discretionary managment and periodic reporting.

I was just trying to explain in layman's terms what my impression of your approach is based on your comments here. You (as opposed to the other 2 mentioned) have a very clear cut approach to what you do and don't do, which is nice.

SH

User avatar
mlebuf
Posts: 1776
Joined: Tue Feb 20, 2007 8:27 pm
Location: Paradise Valley, Arizona

Post by mlebuf » Fri Aug 03, 2007 2:04 pm

Sorry I'm late to the party. Like Taylor and Mel, I have instructed my wife to contact Rick when I am no longer around and she wants someone to manage the portfolio. The combination of low costs, high competency and high ethics make him an excellent choice.

Best wishes,
Michael
Best wishes, | Michael | | Invest your time actively and your money passively.

livesoft
Posts: 55916
Joined: Thu Mar 01, 2007 8:00 pm

Post by livesoft » Fri Aug 03, 2007 6:24 pm

I didn't see this link added to any DFA discussion yet, so here it is.
http://www.retireearlyhomepage.com/dfaadv.html

User avatar
Rick
Posts: 328
Joined: Sat Apr 07, 2007 2:28 pm
Location: South West

Portfolio Solutions

Post by Rick » Sat Aug 04, 2007 7:45 am

livesoft wrote:I didn't see this link added to any DFA discussion yet, so here it is.
http://www.retireearlyhomepage.com/dfaadv.html


On an e mail from Rick Ferri dated July 17 July 2007, it says:

"...1) Portfolio Solutions is a fully discretionary investment manager. Among other things, that means our clients are not involved in the actual selection of investments. We decide which DFA funds to use in each portfolio if any. "

How can the it be that the investor is not involved in the actual selection?

Can some one explain?

Rick
"Money doesn't grow on fees." "Money in motion-costs money"

livesoft
Posts: 55916
Joined: Thu Mar 01, 2007 8:00 pm

Re: Portfolio Solutions

Post by livesoft » Sat Aug 04, 2007 7:53 am

Rick wrote:How can the it be that the investor is not involved in the actual selection?

Can some one explain?

Rick

I'm gonna guess that it has to do with the description "fully discretionary" in Mr. Ferri's statement.

DiehardDisciple
Posts: 85
Joined: Mon Jul 23, 2007 11:15 pm

Post by DiehardDisciple » Mon Aug 06, 2007 7:16 pm

livesoft wrote:Let me be one of the first to respond to your questions. As I understand it, you want us to call up and interview each of these investment firms for you and ask your questions of them, right? Are you too lazy or afraid to call them up yourself? If (?!!?) you call them up, are you gonna tell us what the answers are that you got from them? Thanks!


Nope. I didn't want any of you to call anyone for me. I was planning to call them up and speak in depth with each one, but since I had already analyzed each of the three so much and since speaking with one of them would give me feedback far more subjective than what I could get here, I figured I could save time and $$ on my phone bill by first coming here and then calling.

Thank you, everyone for your responses, both the public and private ones. I decided to go with Portfolio Solutions.
Last edited by DiehardDisciple on Tue Aug 07, 2007 1:50 am, edited 2 times in total.

Bradley
Posts: 486
Joined: Tue May 01, 2007 2:41 pm

SmallHi wrote

Post by Bradley » Mon Aug 06, 2007 8:21 pm

"For the other two...lets be honest, you are getting a "DFA Fund facilitator". A firm who can provide you access to DFA and set up an initial allocation. Hopefully they will also rebalance within bands of 20% to 25% or whatever, but Cardiff's site says quarterly (ouch). "

I think that it is unfortunate that someone would call anyone a "facilitator" without actually speaking to the man and then misquote his website. What the Cardiff's site actually says is " we personally review stock/bond ratios and individual asset class allocations for each client every quarter. We suggest rebalancing when asset classes have significantly diverged from the clients investment model."

Bradley

User avatar
orthros
Posts: 440
Joined: Fri Feb 23, 2007 7:56 pm
Contact:

Rick's organization

Post by orthros » Mon Aug 06, 2007 11:50 pm

One thing that surprised me about Rick's organization was that it has full discretion to make trades. I always thought of this as a huge red flag, although Rick has a sterling reputation. Does anyone have thoughts on this?

DiehardDisciple
Posts: 85
Joined: Mon Jul 23, 2007 11:15 pm

Post by DiehardDisciple » Tue Aug 07, 2007 12:16 am

deleted
Last edited by DiehardDisciple on Tue Aug 07, 2007 1:49 am, edited 1 time in total.

User avatar
zalzel
Posts: 557
Joined: Sat Apr 21, 2007 7:40 pm

Post by zalzel » Tue Aug 07, 2007 1:37 am

DiehardDisciple wrote:Deleted by admin at request of DiehardDisciple (who took zalzel's criticism to heart)


Thank you for reconsidering your post.

zalzel

User avatar
Rick Ferri
Posts: 8201
Joined: Mon Feb 26, 2007 11:40 am
Location: Vagabond, USA, Twitter: @Rick_Ferri
Contact:

Post by Rick Ferri » Tue Aug 07, 2007 11:32 am

How can the it be that the investor is not involved in the actual selection?

Can someone explain?


All the investments we use in a portfolio are fully disclosed in a written proposal and then again in the Investment Policy Statement. As such, a potential client knows exactly what they will own and how much they will own before signing our management agreement. There is no need to be redundant by obtaining a client's permission each time we invest new money or do a rebalancing.

Rick Ferri

User avatar
Sunny Sarkar
Posts: 2417
Joined: Fri Mar 02, 2007 1:02 am
Location: Flower Mound, TX
Contact:

Re: Financial Advisor?

Post by Sunny Sarkar » Tue Aug 07, 2007 6:00 pm

Mel Lindauer wrote:Hi Matt:

FWIW, I told my wife to call Rick Ferri if she feels she needs a financial advisor after I'm gone.

Regards,

Mel


Ditto. Clearly mentioned in the "If something happens to me" letter explaining our rather simple (thanks to Taylor and other diehards) finances.
"Cost matters". "Stay the course". "Press on, regardless". ― John C. Bogle

SmallHi
Posts: 1718
Joined: Wed Feb 21, 2007 6:11 pm

Post by SmallHi » Wed Aug 08, 2007 10:55 am

Bradley --

I think that it is unfortunate that someone would call anyone a "facilitator" without actually speaking to the man and then misquote his website. What the Cardiff's site actually says is " we personally review stock/bond ratios and individual asset class allocations for each client every quarter. We suggest rebalancing when asset classes have significantly diverged from the clients investment model."


I gave your comments quite a bit of thought, and I think you are right. I don't really know much about Cardiff, so to say I know how they operate is unfair. I want to openly apologize to Cardiff.

I have concerns over how much education/guidance/discipline that investors of these lower cost firms are actually getting (I am sure more than a few don't even think they need it), but that is a topic for another day.

SH

maardvark
Posts: 1
Joined: Tue Oct 28, 2008 8:30 pm

Ferri Evanson Gorlow

Post by maardvark » Tue Oct 28, 2008 8:49 pm

Have used Ferri and Evanson for years; contemplating Gorlow. Both Ferri and Evanson have been fine FA's, doing what every Modern Portfolio Theory implementer should, albeit with some stylistic differences. SIgnificant performance difference between them over the past five years reflects the market more than the advisor, and how their allocations have either benefitted or not. That said. Ferri is passionate and knowledgeable, but very rigid. Salaske is the real current determiner of your investment vehicles. Evanson is passionate and knowledgeable, but flexible but within appropriate limits given the theory, MPT. Gorlow may be less passionate but seems involved, and very hands on, like Evanson, and extremely flexible. He even describes his service as 'not discretionary,' ie, each client decides investments together with him. Maybe in the future I can comment more about him. The one thing my five years experience with three advisors taught me is that if you are a MPT investor, and you are committed to this methodology, performance and accessibility of the advisor is NOT FEE RELATED. Details of reporting may be.

User avatar
Drain
Posts: 1392
Joined: Mon Feb 26, 2007 1:27 pm
Location: Maryland

Re: Ferri, Evanson, or Gorlow as my new advisor? Help pleas

Post by Drain » Tue Oct 28, 2008 9:16 pm

DiehardDisciple wrote:Evanson Asset Management

1. I wonder why this person did not want Evanson’s services; see #5. http://answers.google.com/answers/threadview?id=783047

I wouldn't worry about it. If the person didn't see fit to post the reasons, the feeling was probably that the reasons wouldn't apply to most readers. And even if they would, you're not in a position to judge whether they'd apply to you.

2. I heard that he became very bearish at the market’s bottom in 2002/2003.

No, he's been bearish since the late '90s, at least. He may have expected a bounce at some point in '00-'02, but I don't believe he ever thought the market and the economy were in great shape. And he was essentially right, wasn't he?

Is he “too” conservative given an investor’s risk capacity?

I don't think he's conservative--I think he's been bearish. They're not the same thing. And if you'd asked for a bullish portfolio, he might have made one up for you. You'd have to ask him.

If he has a page called “asset allocation for bears” http://www.evansonasset.com/index.cfm?Page=18 ) why not have one called “asset allocation for bulls?”

Because there are a gazillion pages already with AA for bulls. It's not a topic that would have distinguished him from other advisors.

Truth be told, I would rather an advisor that’s too conservative than one that’s too aggressive.

Again, I don't see him as conservative. He's just willing to be bearish and allocate accordingly.

3. I have heard about his 10x10 model. What about for taxable accounts? Does he use something more tax-efficient like Vanguard tsm funds or DFA core equity funds? (I do acknowledge that he has a page for tax-efficiency: http://www.evansonasset.com/index.cfm?Page=15

Well, what's wrong with that page? :)

4. Evanson’s thoughts are well known through his articles on his website, but what about his associates in case I end up working directly with them? Do clients respect and have good rapport with his associates?

I can't answer that.

5. Is he too quick to include gold or commodities in a portfolio?

I don't even know what that means. If you say you don't want gold or commodities, he won't buy them for you. On the other hand, if you disagree too much with his basic investment philosophies and approach, then he may not be the right guy for you.

6. Would he help me roll an old 403b account that I have into a Roth IRA?

Wouldn't any advisor? The process might or might not go smoothly.
Darin

Edor
Posts: 11
Joined: Sun Nov 09, 2008 12:52 pm

Re: Ferri Evanson Gorlow; my opinion and thoughts

Post by Edor » Sun Nov 09, 2008 3:05 pm

maardvark wrote:Have used Ferri and Evanson for years; contemplating Gorlow. Both Ferri and Evanson have been fine FA's, doing what every Modern Portfolio Theory implementer should, albeit with some stylistic differences. Significant performance difference between them over the past five years reflects the market more than the advisor, and how their allocations have either benefitted or not. That said. Ferri is passionate and knowledgeable, but very rigid. Salaske is the real current determiner of your investment vehicles. Evanson is passionate and knowledgeable, but flexible but within appropriate limits given the theory, MPT. Gorlow may be less passionate but seems involved, and very hands on, like Evanson, and extremely flexible. He even describes his service as 'not discretionary,' ie, each client decides investments together with him. Maybe in the future I can comment more about him. The one thing my five years experience with three advisors taught me is that if you are a MPT investor, and you are committed to this methodology, performance and accessibility of the advisor is NOT FEE RELATED. Details of reporting may be.

This topic seems to have been revived even though OP has made decision. I have worked for several years now with Portfolio Solutions but never spoken with Rick Ferri though I know he is available to me. Scott Salaske has been "trained" by Rick and is quite knowledgeable and a good communictior/explainer (rather than salesman). I believe that they offer good implementation based on the theory and research at a very fair price. I also believe from recent research for a Trust that I am attempting to educate on the value of a passive/index approach that Steven Evanson would also be a good person/company to work with. Not researched Gorlow. Nonetheless, I do see, as others have pointed out that there are some differences amongst the highly qualified index managers. Here are my own thoughts on a basis for choosing. Sorry for such a long post, perhaps it will be of use to some.
1) Personal connection; ease and clarity of communication and other "personality" factors. After setup of the account; determination of asset allocation; and the initial launch be it lump sum on day 1 or dollar or value averaging until achieving the %age allocations, my own experience over years is that telephone communication is rare - less than once a year. Managers are available, but I expect that they are perhaps happiest with clients who have read the books and articles and are already committed to the theory and research. Nonetheless, this is I believe is an important element in a decision for if one is ever tempted to abandon this approach then the clarity and ease of communication that was initially established can prevent one from altering allocation (particularly equity to bond) due to things such as recent stock market action. In addition, one might also sleep better and have more confidence at such times.
2) Continuity of management: If the adviser is likely to outlive you, then this is not a factor. While the portfolio is not that hard to implement and many will choose to not use an adviser, continuity is a ?. Some very qualified advisers are very small operations and this is good as commission can be low (0.20 to perhaps 0.35%), but what is plan for succession should the founder die prematurely? In my own case I am near retirement age, and have been training my college aged son in this approach. I wanted an adviser (as is the case for Scott) who is somewhat younger and to whom my son could probably relate easily should I myself die prematurely. While any qualified index adviser (especially if they are trained to work with DFA funds as well as Vanguard and ETFs) could easily pick-up the account that had been managed by another such adviser, I prefer (in keeping with the whole approach) to think of myself as a lifetime client and likely a multi-generational client.

So now onto the financial and performance factors:
3) The research shows that the preponderance of future performance is most likely to be highly correlated with the the asset allocation and within this the most critical one is the equity/bond choice. I believe, but am not certain that there might be some meaningful differences here. All of them will ask you to do a ?aire and will discuss your tolerance and capacity for risk, and I believe that all of them would be quite comfortable with your decision as long as they felt that you truly understood the risks. The differences might come in what articles they point you to, their own writings about the subject, and the questions that they ask you. I think this is an excellent area to delve into in some detail as one interviews your short list of choices. I have read a lot but only recently read this interesting presentation (stocks for the long run?) by Evanson (on his website; I am too new to post the link) which for me puts the research in a somewhat different and meaningful context. Bottom line is to really understand and research this vital decision and get support from any adviser. Note, the fact that I refer to Evanson does not mean that I was unhappy in hindsight with how this was handled when I began my account with Portfolio Solutions. While I list and will look at other financial/performance factors this first one will probably dwarf all of the rest.
4) Equity implementation: Advisers who can purchase DFA funds for your account seem to differ in whether they feel that DFA funds are almost always the superior vehicle due to factors of purity of asset class and/or better tax management. All of those that I have interviewed seem to have taken a hard look at the full range of options available for implementation and have reached "justifiable" though differing conclusions. Just as it seems to be true that one can only know in retrospect what asset allocation for a given level of risk is going to be the most efficient, the choice of virtually all DFA use to only some DFA use will probably only be known in hindsight. Certainly if one thinks that at some point in the future you will manage things on your own (and save the modest management fee) then it will be much more feasible to do so if the portfolio only uses some DFA funds as these would no longer be available to you for purchase, however you can always sell things if you are not working with a DFA type adviser. Thus future self-management would be easier for re-balancing if their were less DFA.
The relative allocations to equity assets is likely to differ perhaps significantly amongst advisers however all will follow MPT principles and the future performance of such differences is unpredictable and I expect that over longer periods of time (>15 years) will not have great impact on performance. What I think is more important is their willingness (within limits) to adopt the tilts that make you as the client most confident/comfortable. If your own read of research suggest a somewhat greater tilt toward S/V is that acceptable; somewhat more to International and to emerging markets, acceptable? I tended to get hung up on this aspect until I read that really what one is after is not trying to find the efficient frontier, but to find an allocation that will likely perform going forward across a wide range of future scenarios.
5) Re-balancing approach: Again advisers seem to have some meaningful differences here and amongst others Evanson has a good discussion of some of the research on his website. For larger accounts, as was true for the OP and is also the context of all of my comments, the transaction costs of re-balancing each 6 or 12 months versus longer periods is probably insignificant. The issue is more of whether their is asset class persistance over the time frame compared to the likely tax consequences. If one is in the circumstance where there are inflows (or outflows) to the portfolio on say a semi-annual basis then I believe that this makes the re-balancing choice easier to implement. Again I believe that this factor is again one more of comfort/confidence in the approach/adviser and the incremental addition to performance of one approach over another is probably frosting on the cake.
6) Fixed income approach: I expect that all advisers if the $ amount is large enough would be using individually owned positions held to maturity rather than any bond fund or ETF. For those that I have interviewed there are some differences in the recommendation of how to ladder the positions and what the effective maturity should be. Again, if you expect that interest rates will be going up how much flexibility within limits will an adviser allow for in the portfolio to accommodate your own timing/trend bet? Given that bonds are in a portfolio not only to reduce volatility/risk, but also for their returns the bond area although even more efficient than the equity market is a vital part of the portfolio (even with a 70/30 or 60/40 mix) and understanding an advisers approach is vital in differentiation. Given the kinds of clients that I am referring to I expect that most would benefit from munis if they live in a high tax state. Here having an adviser that chooses pre-funded (not insured) munis of high quality would be my own preferred choice. Given that I believe that equity performance over the next decade might be only modest, the adviser's expertise on the fixed income side becomes much more important. While long term equities outperform bonds, there are a significant number of years historically when bonds have outperformed equities.
7) Tax efficiency: By its nature index approach is tax efficient. DFA might have an added advantage in this area. All advisers would seem to have a good sense of this area though might differ in their willingness or lack thereof to implement tax loss harvesting. TLH has not been ruled on by the IRS and whether they would consider trades between two different companies sp500 index funds to be a wash sale remains to be seen. Personally I do not find that within an index approach that TLH typically has much benefit and the gray area of the IRS is a significant and difficult to assess risk. A good discussion of tax efficiency in the context of a re-balancing approach is a worthwhile topic to get clear on with an adviser.
8) I expect that all advisers would point to similar research regarding the launching of a portfolio. 1st starting with all cash: This becomes a "timing" issue and an index approach seems to recommend against timing. Since historically overall markets have an upward bias, research I believe favors a lump sum on day 1 approach as any cash held for later investment is a drag on return. However if we are in a secular bear market or one simply argues for at least some "time diversification" then dollar cost averaging or value averaging in 4 or 5 chunks over a period of that many weeks or months might be acceptable to most if not all advisers. Since as an individual account (rather than the research aggregate) it matters a lot to you, and given the extremes of market volatility and price action recently some time diversification even if in hindsight takes a hit to performance might allow for greater comfort. This is a personal choice factor but I believe an important one. While for an account it probably only occurs at start-up and therefore only occurs once, it is important by itself (at least emotionally) and is a significant part of your early relationship with an adviser. 2nd situation as some other posters have mentioned is what if any assistance does one get in transitioning from current portfolio holdings to a full index approach. It seems that most advisers I have interviewd, primarily for liability reasons if I understand it correctly, will not hold for more than a few months existing positions unless they are already index vehicles. So to some extent I believe that one is really in the all cash situation for starting with an index adviser. If you have current "inappropriate" positions, they would probably want you to sell enough of them to meet the minimum for starting an account. You would then choose the timing of selling other holdings (considering your own view of their prospects and tax considerations) and then add this cash to the new index account. Unfortunately for most of us it is this 2nd situation and managing the transition can be quite a challenge, and I believe that it can be even more challenging in our current environment.

9) How are changes to investment policy e.g asset allocation handled? The Vanguard target trusts handle this automatically. But how does a given adviser handle this, once each 10 years assuming that age and not other circumstances are the trigger? Would an adviser be OK with the following hypothetical scenario: A person in their late 20's with a moderately high salary who has just received a an all cash inheritance. After educating themselves and looking at their time horizon and risk tolerance decides that an 80/20 overall mix is appropriate. However on the advice of others (perhaps older? wiser?) they feel that the next decade might not be as great for equities and hence they propose that the new account start out with a 60/40 mix but would allow an overall drift to 70/30 before any "normal" re-balancing strategy would be implemented. Clearly this is a "violation" of typical Index principles. Would any adviser agree to such an approach as a statement of investment policy?

Again sorry for such a long post, and if you have gotten this far I certainly hope that there has been some value for you.

Edward

SmallHi
Posts: 1718
Joined: Wed Feb 21, 2007 6:11 pm

Post by SmallHi » Sun Nov 09, 2008 3:46 pm

Edward,

Just wanted to point out one area where I disagree with you:

6) Fixed income approach: I expect that all advisers if the $ amount is large enough would be using individually owned positions held to maturity rather than any bond fund or ETF. For those that I have interviewed there are some differences in the recommendation of how to ladder the positions and what the effective maturity should be. Again, if you expect that interest rates will be going up how much flexibility within limits will an adviser allow for in the portfolio to accommodate your own timing/trend bet? Given that bonds are in a portfolio not only to reduce volatility/risk, but also for their returns the bond area although even more efficient than the equity market is a vital part of the portfolio (even with a 70/30 or 60/40 mix) and understanding an advisers approach is vital in differentiation. Given the kinds of clients that I am referring to I expect that most would benefit from munis if they live in a high tax state. Here having an adviser that chooses pre-funded (not insured) munis of high quality would be my own preferred choice.


I don't think there is anything wrong with individual bonds per se, but I think it is the most overrated aspect of portfolio management I have come across.

I do agree bonds should be used for portfolio stability and return. But I don't think its worth anyone's effort to get too fancy here. First of all, most evidence on fixed income within the context of a balanced portfolio indicates that its most beneficial when kept relatively short term (5 years or less), and very high quality (AAA or better). From there, diversification becomes paramount -- no different than on the equity side.

If you have access to DFA funds, then you can use their 5YR Global fund in tax deferred accounts or even taxable accounts if in a relatively low tax bracket. The global nature of the fund increases opportunities beyond a US only bond portfolio (especially when our yield curves are relatively flat but non-US bond market curves are steep). There is no way you could impliment this strategy with individual bonds -- as access to overseas bond markets is non-existent, and nobody wants to fool with selling short currency contracts on a monthly basis to hedge currency exposure.

For tax free bonds, I think its debatable whether an individual advisor can add value beyond Vanguard's Limited Term Tax Exempt Admiral Fund (0.08% expense ratio). Yes, it may expose you to some state taxes, but thats a minor price to pay for its significant diversification, the short duration/low volatility nature of the portfolio, and ease of purchase/liquidation. VMLUX sticks with bonds of 5 years or less with very high credit quality, while being much more liquid than individual bonds. Furthermore, for muni investors who have extended out to 7-10 years or longer, they have found out how much liquidity risk there is (which doesn't mix well with a small cap/value tilted equity portfolio) for what has amounted to very little excess return (1-5YR munis have underperformed 10YR+ munis in the last 30 years by only about 0.5% per year).

no need for individual bonds at any level of wealth, IMO. Institutional bond funds work best in the context of a balanced portfolio.

Given that I believe that equity performance over the next decade might be only modest, the adviser's expertise on the fixed income side becomes much more important. While long term equities outperform bonds, there are a significant number of years historically when bonds have outperformed equities.


I also disagree with this assumption. Implied risk is very high, prices have fallen dramatically from levels that weren't that high to begin with (00-02 removed a lot of the excesses), and expected returns from this point are noticeably higher than historical averages.

For this reason, the details of fixed income matters even less. Equity returns will drive the vast majority of portfolio results.

sh

edited to comment on equity premium
Last edited by SmallHi on Sun Nov 09, 2008 11:39 pm, edited 3 times in total.

tibbitts
Posts: 6814
Joined: Tue Feb 27, 2007 6:50 pm

my opinion

Post by tibbitts » Sun Nov 09, 2008 3:47 pm

You are working way, way too hard on this. Go buy TR 2015 or something and live happily ever after. You won't have to "manage" it, just leave it alone and spend your time thinking about how to spend your money.

Although many of us only wish we had so much, $1.65M is just not enough money to be fussing over DFA here and VG there, not to mention individual bonds (except maybe treasuries or savings bonds.) It's only worth thinking about things like that if you do-it-yourself as a hobby.

My basic philosophy is that if you have to ask how an investment adviser will use/allow your input, you pretty much don't need/want an investment adviser. You may need other services that people associate with an adviser, like estate tax or accounting advice, but you need to focus on those things and not six-of-one / half-a-dozen-of-another investment decisions.

Paul

Edor
Posts: 11
Joined: Sun Nov 09, 2008 12:52 pm

Thanks

Post by Edor » Sun Nov 09, 2008 4:40 pm

Thanks for comments.
SmallHi Appreciate your information about fixed income portion of things and will look into that further. Especially the return versus after tax return of state munis versus the much better diversification(both across muni and USA international markets) of fund.

tibbitts ... I basically agree that it does not need to be that complicated and for my own money it is not. I am in position of needing to educate trustees and they will only hire an adviser so in keeping with the OP, it is a question of how to differentiate them and how to go about choosing.

Again thanks, Edward

User avatar
Rick Ferri
Posts: 8201
Joined: Mon Feb 26, 2007 11:40 am
Location: Vagabond, USA, Twitter: @Rick_Ferri
Contact:

Re: my opinion

Post by Rick Ferri » Sun Nov 09, 2008 7:38 pm

tibbitts wrote:You are working way, way too hard on this. Go buy TR 2015 or something and live happily ever after. You won't have to "manage" it, just leave it alone and spend your time thinking about how to spend your money.

Although many of us only wish we had so much, $1.65M is just not enough money to be fussing over DFA here and VG there, not to mention individual bonds (except maybe treasuries or savings bonds.) It's only worth thinking about things like that if you do-it-yourself as a hobby.

My basic philosophy is that if you have to ask how an investment adviser will use/allow your input, you pretty much don't need/want an investment adviser. You may need other services that people associate with an adviser, like estate tax or accounting advice, but you need to focus on those things and not six-of-one / half-a-dozen-of-another investment decisions.

Paul


Paul,

That is wise and truthful post. I will add that the more involved a person wants to be in the investment decisions we make, the less likely we are to take them on as a client.

Rick Ferri

User avatar
Taylor Larimore
Advisory Board
Posts: 25859
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Acting foolish

Post by Taylor Larimore » Sun Nov 09, 2008 8:05 pm

Most of us understand it is foolish, and probably dangerous, to tell our doctor what prescripitions we want.

It is equally foolish to hire an advisor, and then tell her which funds we want.

Best wishes.
Taylor

User avatar
HomerJ
Posts: 10158
Joined: Fri Jun 06, 2008 12:50 pm

Post by HomerJ » Wed Nov 12, 2008 4:24 pm

Man, I hope Rick Ferri doesn't die before all these other guys... It appears that there would be a lot of wives in big trouble...

Post Reply