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Old 10-04-2014, 04:33 PM   #21
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My sister and I were talking about this topic today. She worked in a financial services office that handled 457 accounts and of course their own IRA's. It still amazes her that even working in that environment with the benefits of long term planing, or the financial disasters that follow not planning ahead being "in their face" every day, so many people ignored opening or contributing to their own retirement accounts of any sort be it Roth, IRA, or just simple ordinary taxable saving.

I have come to conclude that it is more the personality type rather than intelligence because we both agreed that there are so many otherwise apparently intelligent people who simply do not/cannot understand the benefits of delayed gratification. When I mentioned that my ex "couldn't stand to see a dollar in the bank" she remarked that the way she put it was that her ex "couldn't stand the weight of a dime in his pocket".

Almost everyone knows someone like that, or the sister in this post who, now 60, is suddenly aghast at what a pittance her SS benefit will be. Those on the forum here are almost unanimous in saying "What did she think was going to happen?" The rest of the population will be thinking it's a doggone shame but it can't be helped or "There's nothing you can do" or something along those lines. It seems to me that most people just do not have the capability of planning ahead long term regardless of how intelligent they are or are not.
It reminds me of healthcare workers taking a smoke break at a hospital.
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Old 10-04-2014, 04:36 PM   #22
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Millions of people smoke meth. Should OP light up along with them?
Well if its blue meth.
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Old 10-04-2014, 04:47 PM   #23
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It reminds me of healthcare workers taking a smoke break at a hospital.
An excellent comparison.
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Edelman vs Do It Alone
Old 10-04-2014, 05:06 PM   #24
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Edelman vs Do It Alone

1.4% fees are high. DW went with an advisor at 1% and my self managed fund returns almost always beat her returns. I know these comparisons are highly dependent on investment volatility and other factors. But it seems to me that even a novice investor could read a couple of books and invest in a 3 fund portfolio that could match or beat an advisor managed portfolio given the fees


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Old 10-04-2014, 05:22 PM   #25
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1.4% is criminal.

I got serious about retirement about 2 years ago. I just started reading here and on bogleheads every chance I got, while at the same time tracking expenses, building spreadsheets, etc. Any time I had a question, I just searched the forums and found a wealth of practical information from people with hands-on experience. I learned so much so fast that it gave me the confidence to pull the trigger last year and manage it all myself.

This really is not very hard at all. Nor is it time-consuming once you're up and running. The transition from working to retirement does involve a fair amount of planning, analysis, and decisions, at least for me. It's kinda been my main hobby for the last 2 years. But significantly winding down now.

Yes, there's definitely a DIY bias amongst the people here. But we're not talking about whether to change your oil in the driveway or take it to Jiffy Lube. This is your money and your future. You're not only going to save a small fortune by avoiding Edelman, but you'll do a better job than they ever would.
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Old 10-04-2014, 05:27 PM   #26
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..........The fee is based on the value of your account. So the more you invest, and the higher your account value grows, the lower your rate potentially providing valuable savings to you.

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Amounts above $25 million are negotiable
LMFAO
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Old 10-04-2014, 05:35 PM   #27
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Yes, there's definitely a DIY bias amongst the people here. But we're not talking about whether to change your oil in the driveway or take it to Jiffy Lube. This is your money and your future. You're not only going to save a small fortune by avoiding Edelman, but you'll do a better job than they ever would.
For me it comes down to - *I* care more about *my* money than any FA does. If a FA makes a bad choice - they might feel a little bad - but it's not *their* money... it's mine.

And as Walt said - once you get your investments set up - rebalancing takes all of 20 minutes... if you rebalance once a year - that's 20 minutes per year. Even if you don't like it - it's not a bit imposition.
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Old 10-04-2014, 05:44 PM   #28
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For me it comes down to - *I* care more about *my* money than any FA does. If a FA makes a bad choice - they might feel a little bad - but it's not *their* money... it's mine.
Y'know the part that irritates me so much? If the investments that they pick to put my money in tanked they still get paid and I don't. Their job is to make money for me and even if they don't do it they still got paid. I just hate that.

I don't know why so many people put up with that.
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Old 10-04-2014, 06:10 PM   #29
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......snip, good stuff I agree with.....
Want to focus here......

I've known several people who were financial advisors and it is 90% a sales career. Most of them have limited knowledge of actually managing a portfolio and just parrot advice that is fed to them by their research departments or whatever Barron's is saying. Buy they are really good at wining and dining potential clients because that is what makes them more money.

I've known 2 guys that 'retired' from Megacorp to use their financial knowledge to manage their money and some family members.

Well today they're back working, both their families are ticked off. I don't know why anyone would give $.10 to either of them. The one guy had to use a map to find his cube, the other was even slower. They both could entertain.

It doesn't take much to get the needed certification.


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Old 10-04-2014, 07:13 PM   #30
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+1 on what everyone said here. If you are the type that doesn't want to do it themselves, then there are lots of cheap ones out there that will do the selection, rebalancing and tax harvesting for under 40 basis points. Vanguard I think has one for .30%. Rick Ferri is about the same. There are also the robo advisors that will do it as well like Betterment or Wealthfront.

However in my opinion the only reason to use any of these is so that u can set it and forget and not get emotional in a bear market. If u feel like u may be one to sell at the bottom, then u may need some handholding. Nothing wrong with that


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Old 10-04-2014, 07:55 PM   #31
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If investing and saving for retirement is so easy you really have to wonder why so many Americans cannot save enough(or anything) for retirement.

DIY investing is now easier than ever. Schwab,Vanguard,Fidelity,Scott trade give people the tools for DIY. At a super low cost.

So maybe some people do need their handheld. Better to save something than nothing.

I know several married couples that stress over saving and investing because they dont agree on how to invest it. So they use a FA at Fidelity.
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Old 10-04-2014, 08:11 PM   #32
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This is a (nominally) free country. People are free to do what they wish with their after tax money. SS is a compulsory saving arrangement already. After that, you may do as you wish. I think that is a good thing.
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Old 10-04-2014, 10:30 PM   #33
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Originally Posted by purplesky View Post
If investing and saving for retirement is so easy you really have to wonder why so many Americans cannot save enough(or anything) for retirement.

DIY investing is now easier than ever. Schwab,Vanguard,Fidelity,Scott trade give people the tools for DIY. At a super low cost.

So maybe some people do need their handheld. Better to save something than nothing.
I'll substitute 'simple' for 'easy' in the above.

Sure, it is as simple as I stated. Whether people follow up and do it is another matter. I could say that losing weight is as simple as eat less, exercise more. But that doesn't mean it is 'easy' for everyone, and some will want to hire a dietitian and personal trainer. But there is a cost.


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I know several married couples that stress over saving and investing because they dont agree on how to invest it. So they use a FA at Fidelity.
They are still making the financial decisions - this is a shell game/illusion. If they can't agree on how to invest, how the heck can they agree on an FA (who is going to invest their money in a specific way)? There is an old saying 'not to decide is to decide', IOW, you are deciding to accept something - in this case the FA's plan.

If someone really wants to spend years to build up their nest egg to 25%-33% more than they would need if they went DIY, and probably spend more time with the FA each year than if they just went DIY, that's their business. I'm just outlining the consequences. It isn't rocket science, and it's not like performing an appendectomy on yourself. That's what the industry wants you to believe.

-ERD50
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Old 10-05-2014, 03:16 AM   #34
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I'll substitute 'simple' for 'easy' in the above.

Sure, it is as simple as I stated. Whether people follow up and do it is another matter. I could say that losing weight is as simple as eat less, exercise more. But that doesn't mean it is 'easy' for everyone, and some will want to hire a dietitian and personal trainer. But there is a cost.




They are still making the financial decisions - this is a shell game/illusion. If they can't agree on how to invest, how the heck can they agree on an FA (who is going to invest their money in a specific way)? There is an old saying 'not to decide is to decide', IOW, you are deciding to accept something - in this case the FA's plan.

If someone really wants to spend years to build up their nest egg to 25%-33% more than they would need if they went DIY, and probably spend more time with the FA each year than if they just went DIY, that's their business. I'm just outlining the consequences. It isn't rocket science, and it's not like performing an appendectomy on yourself. That's what the industry wants you to believe.

-ERD50
The cool thing about Ric Edelman is that he agrees with you.

Edelman often reminds his listeners that investing is easy and he recommends people use low fee firms like Vanguard or a Schwab or a Fidelity.
But Edelman offers a service that some people prefer to use.
Maybe its a behavior thing. Some People just invest with real discipline when using a FA.

Kind of like people straightening up their house before the cleaning service arrives.

I listen to Edelman and yes he does encourage people to call his firm.
But he also tells many people that they don't necessarily need a FA if they feel comfortable DIY.

He just encourages people to save and invest anyway they want.


Thats why I enjoy his show.
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Old 10-05-2014, 05:47 AM   #35
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Many people don't understand the impacts of 1.4 vs. 0.4 percent fees. Sounds small. It took my dad two market crashes to get it.

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Old 10-05-2014, 07:31 AM   #36
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Thanks everyone for the responses. Learned a lot. Got the Four Pillars book and reading now.

More confident can do a DIY.

Still need to look at Vanguard or Schwabs or other websites which provide tools for developing a diversified portfolio.

I do like Edelman's multiple portfolios based on need, time, risk, ... Not sure if they are based on similar thinking as the Four Pillars. Reading Chapter 13 now.
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Edelman vs Do It Alone
Old 10-05-2014, 08:05 AM   #37
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Edelman vs Do It Alone

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Originally Posted by purplesky View Post

The fee is based on the value of your account. So the more you invest, and the higher your account value grows, the lower your rate potentially providing valuable savings to you.

The fee schedule for Traditional EMAP is:

First $150,000 2.00%
Next $250,000 1.65%
Next $350,000 1.25%
Next $250,000 1.00%
Next $2 million 0.75%
Next $7 million 0.60%
Next $15 million 0.50%
Amounts above $25 million are negotiable
This tells you all you need to know---they are misleading or flat out liars.

If I invest $300,000 - they charge me $5475 every year
if I invest $3,000,000- they charge me $29000 every year
First of all if I pay $29000 instead of $5475 I have a hard time seeing where I am getting "valuable savings" when I hand over $23,525 more of MY MONEY to these jokers for doing how much more work?
You really think they are working 5x more to invest the bigger amount? Let's see we think your allocation should be 30% in US stock ETF, 15% International ETF, 5% Emerging markets ETF, etc..
So they have to calculate what percent of your portfolio goes in which ETF...the only difference between doing that for $3,000,000 vs $300,000 is the number they punch in the calculator may have another zero! Yeah, that earns them $23,525 a year more!!! The size of the portfolio has no bearing on how much effort it takes to invest with passive investing. ACTIVE MANAGEMENT FEES do legitimately go up with larger amounts because you have to find new places to invest, and re evaluate if the old investments still hold for your prior choices. The problem is that all that extra effort does not generally payoff enough to offset the cost...which is why investing passively works better.

If you want a financial advisor (and there are good reasons to have one for some people), use one that:
1) practices PASSIVE INVESTMENTS
2) charges a flat fee

If your portfolio is so small now that the flat fee is higher than the 0.37% or whatever the low cost good guys like Rick Ferri charge, then go with Rick or one of those until your portfolio grows to the point that you can switch to a cheaper flat fee guy.

My current flat fee amounts to less than 0.06% (yes that is 0.0006 x my large portfolio)-and it has been shrinking (percentage-wise) every year as my portfolio grows. He helps me keep things tax smart and gives me low cost access to DFA mutual funds which some (me, William Bernstein,etc...) believe are better run index funds....


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Old 10-05-2014, 09:56 AM   #38
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But isn't the 1.4% on top of fund level expenses? So if fund level expenses average .4% then the total ER is 1.8% rather than 1.4%?

The historical return of a 60/40 portfolio is 8.9%. Let's say that prospectively it is 75% of that, or 6.7%. My DIY portfolio has a 0.2% ER, so my take would be 6.5%. If I used Edelman, my take would be 4.9%. On $1 million portfolio that's $16k a year so if i even spend an hour a week learning and managing that portfolio that's $300/hour!!

Another interesting way to think of it - if a $1 million investment portfolio at retirement declines to zero over a 40 year retirement then the average balance is $500k and if the leakage is 1.675% a year (1.475% FA fee based on the fee schedule above and 0.2% fund expense difference) then over that 40 years one will have paid $335k more in expenses than necessary. That's real money and well worth learning and DIY.
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Old 10-05-2014, 10:02 AM   #39
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Great thread. I 've been reading books and will pick up on the suggestions here. When I was working I didn't have time or just wasn't focused on the fees. I have an Edward Jones advisor but was thinking about doing it myself.
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Old 10-05-2014, 10:30 AM   #40
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But isn't the 1.4% on top of fund level expenses? So if fund level expenses average .4% then the total ER is 1.8% rather than 1.4%?
OMG, I think that's correct based on the disclosure above, I thought the 1.4 was outrageous. Add in fund management fees, wow.

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