34.75% Return since 11/04 VS 1.75% Annual Advisor Fees

[av8r]

It's been 48 hours and I still have not received a call back from the advisor after 2 calls. It's making me feel less guilty about dumping him.

Without talking to him it's difficult to find out exactly how to transfer my account elsewhere. The devil is in the details since I know so little about how a 401k is structured. I am waiting for a call back from a Vanguard advisor. I'm hoping they can guide me thru. I won't be using another advisor. I've learned a lot from this site and others like it, and have had good results with my SEP IRa.

 

[Nords]

It's been 48 hours and I still have not received a call back from the advisor after 2 calls. It's making me feel less guilty about dumping him.
Without talking to him it's difficult to find out exactly how to transfer my account elsewhere. The devil is in the details since I know so little about how a 401k is structured. I am waiting for a call back from a Vanguard advisor. I'm hoping they can guide me thru. I won't be using another advisor. I've learned a lot from this site and others like it, and have had good results with my SEP IRa.

He knows that in a week or two he's going to get a letter from Vanguard saying that you've authorized Vanguard to transfer your account from your advisor to Vanguard. He's dropped you like a hot potato in favor of clients who will pay more commissions are more in need of his assistance...

You tell Vanguard what you want to do, you fill out the forms authorizing it, and then they contact your advisor to transfer your account assets "in kind" over to Vanguard's custody. Some of your advisor's proprietary products may not be able to be transferred in kind and they'll want to cash you out, but otherwise it'll all go to Vanguard with hopefully no tax impacts.

 

[ESRBob]

My experience is that if you drop the advisor, you get to keep your DFA funds at Schwab, (assuming that is where you have them), but that you won't be able to trade in them (or at least buy more). By signing on with another advisor that charges less (Cardiff Park, Evanson, and a few others) you'll be able to re-open access to the funds which will stay with Schwab, and you can pay a lot less -- .2% of AUM, or $2000 a year or similar range. That only needs to apply to your DFA funds or maybe a few other institutional funds you are in that need an advisor to get you in at the lower minimums. Beyond that you can probably move them to VG Brokerage or Vanguard. Your new advisor might or might not be willing to do asset allocation information on the whole shebang if he/she isn't managing it, but I suspect you can make a little spreadsheet and to the math yourself in discussin with them at rebalancing time.

1.75% -- the words I want to use to describe that aren't printable here...

 

[Alex]

I am a portfolio manager for a firm that works with DFA. I was trying to save some confusion.

BTW: I have done the research and I am convinced

good for you.

 

[accountingsucks]

You guys in the US are lucky. In Canada, MER's of 2%+ are the norm...many funds are into the 3%+ range...

 

[ESRBob]

Think of it as the welfare state for fund managers? Gee at those rates I might need to become a Canadian asset manager in my semi-retirement

Seriously, you don't have to invest up there, do you? Will Vanguard open an account for you? If not, could you buy their fund through some sort of international brokerage with a fund supermarket? I actually am curious as I don't know whether non Americans can buy US mutual funds. Maybe that is another reason ETFs are so popular?

 

[JustCurious]

I actually am curious as I don't know whether non Americans can buy US mutual funds.

ESRBob, the issue is not whether someone is an American, but whether the mailing address is in the United States. After all, there are many non-Americans who have U.S. mailing addresses and who also have brokerage accounts in the U.S. Did Vanguard check your citizenship papers when you opened an account?

 

[txdakini]

We're thinking of moving our portfolio to DFA. you might want to check out ASSETBUILDER as your manager for DFA. Their advertized fees are from .5 of one percent (50 basis points) for accounts of 5k to 50 k down to .25 of one percent for 4M and up. A 1M account would cost .30 of one percent. There are additional trading fees but relatively small. ($550 for 11 funds) This group has Scott Burns as a consultant to them so they prepackage risk effiecient groupings of DFA mutual funds or let you buy what you want.

 

[2B]

We're thinking of moving our portfolio to DFA. you might want to check out ASSETBUILDER as your manager for DFA. Their advertized fees are from .5 of one percent (50 basis points) for accounts of 5k to 50 k down to .25 of one percent for 4M and up. A 1M account would cost .30 of one percent. There are additional trading fees but relatively small. ($550 for 11 funds) This group has Scott Burns as a consultant to them so they prepackage risk effiecient groupings of DFA mutual funds or let you buy what you want.

Fees of any kind need to be justified with a substantial amount of history and evaluated frequently. I'm not familiar with DFA funds and don't intend to research them for a better informed reply. I will say that before I'd recommend anyone consider them I would want to see a minimum of a 10 year history of the fund beating their most appropriate index (or mixture of indexes) by 3 to 4 times the management fee.

Numerous research studies have shown managers do not add value over diversified indexing. The same research shows that sans manager a high fee fund also does not add value of diversified indexing. Until someone can show a longterm, consistent record to the contrary, I'll rely on the earlier studies.

 

[kcowan]

You guys in the US are lucky. In Canada, MER's of 2%+ are the norm...many funds are into the 3%+ range...

But you can buy ETFs through a discount broker that rival Vanguard in fees and performance. TD eFunds for example.

 

[saluki9]

good for you.

Well isn't somebody snippy Who pissed in your cheerios?

 

[saluki9]

Fees of any kind need to be justified with a substantial amount of history and evaluated frequently. I'm not familiar with DFA funds and don't intend to research them for a better informed reply. I will say that before I'd recommend anyone consider them I would want to see a minimum of a 10 year history of the fund beating their most appropriate index (or mixture of indexes) by 3 to 4 times the management fee.

Numerous research studies have shown managers do not add value over diversified indexing. The same research shows that sans manager a high fee fund also does not add value of diversified indexing. Until someone can show a longterm, consistent record to the contrary, I'll rely on the earlier studies.

well, research into DFA (Dimensional Fund Advisors) would be well warranted. Dimensional was founded by one of the creators of the first index fund. They follow a strategy of asset class investing as opposed to strict indexing. The risk adjusted returns of many of their funds have been far in excess of comparable index funds.

In addition, for a long time they were the only game in town when it came to a diversified method of investing in the stocks comprising the CRSP deciles 9-10 (i.e. Microcap) They base their methodology on the Fama & French three factor model.

Anywho, it's an interesting organization and worth taking a look at.

 

[2B]

well, research into DFA (Dimensional Fund Advisors) would be well warranted. Dimensional was founded by one of the creators of the first index fund. They follow a strategy of asset class investing as opposed to strict indexing. The risk adjusted returns of many of their funds have been far in excess of comparable index funds.

In addition, for a long time they were the only game in town when it came to a diversified method of investing in the stocks comprising the CRSP deciles 9-10 (i.e. Microcap) They base their methodology on the Fama & French three factor model.

Anywho, it's an interesting organization and worth taking a look at.

I gave DFA a cursory look and was not overwhelmed by the funds with 5+ year track records. I don't see any reason to rush out and look for a FA to allow me to buy them. Vanguard will remain my base for the foreseeable future.

 

[Alex]

Well isn't somebody snippy Who pissed in your cheerios?

Sorry, I didn't mean to come off that way. I think DFA funds are great by themselves. But when you add the typical advisor fee of around 1% they are no longer special.

 

[ESRBob]

Alex
(Glad you clarified your earlier post to Saluki -- I may even be able to start eating cereal again one of these years )

With typical advisor fees these funds are a non-starter, as would any be. Thus the big hunt for people who can get you access to these funds at fees which are somehow palatable. I use the funds fairly intensively to supplement Vanguard in such areas as U.S. MicroCap, emerging markets small, emerging markets value, international small, international small value. I used to use their international medium term bond, but it is hedged, so I use PFUIX now, though am always wondering whether that is a good idea. The DFA-advisor lets me get into these non-DFA low-fee institutional class funds too with low minimums (though there are other ways now to get into them) Examples include PFUIX, PCRIX. All these are asset classes where Vanguard does not have offerings at all, or they are not open to new investors.

Each year there seem to be more ways to get into these asset classes (for example via commodities ETFs), but all the international small stuff seems to either be closed to new investors (VINEX) or have atrocious fees, so maybe there could even be a way to justify the DFA advisor's fee based just on savings in your fees overall if you really want to implement one of the broadly diversified portfolios.

 

[FinanceDude]

Any advisor that is willing to return fees when returns are bad is not somebody who you should be doing business with.

 

[FinanceDude]

So you're actually paying over 2% when you include all the fees.

Which is somewhat high. EVERYBODY makes money in a bull market, but how many can make it in a bear market?

 

[FinanceDude]

Let me make sure I understand this.

I thought that DFA only sold their funds through an advisor. Would it be possible to use the advisor to buy an allocation of DFA funds, pay the fees, "fire" the advisor, and transfer the shares in-kind to Fidelity?

Ok...........in a word: NO!!