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Old 02-27-2012, 07:51 AM   #61
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Urn2bfree.

I have no personal knowledge of this guy, but Rick Ferri is regular on BogleHeads and seems to be respected over there. His company portfolio solutions provides an "efficiently managed portfolio" from a variety of fund families include DFA, and Vanguard for a fee .25%. His typical clients have assets in the 1-3 million. I think it is worth of a phone call and even if you don't switch to him the threat couldn't hurt.

A couple of months ago I got tired of my cable bill going up called up Direct TV and ordered the package. When I called up my cable provider not only did the immediately cut my bill from $122 to $93 for the same service, they through in a free on demand movie a month. They more than beat Direct TV price and I all had to do was threaten to leave.
The cable analogy is EXACTLY the same one I made to my wife when she asked why we are even going to talk to our current advisor about this and not just switching to a lower cost advisor...we had the same experience with threatening to switch from cable to U-VERSE.
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Old 02-27-2012, 08:31 AM   #62
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Originally Posted by urn2bfree View Post
The cable analogy is EXACTLY the same one I made to my wife when she asked why we are even going to talk to our current advisor about this and not just switching to a lower cost advisor...we had the same experience with threatening to switch from cable to U-VERSE.
Of course this might lead to the conclusion that if your FA really had your best interest at heart he'd have lowered your fees long ago. Perhaps you should consider the possibility your wife may (curse the thought!) be right.
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Old 02-27-2012, 10:31 AM   #63
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There are DFA advisors who charge .50 but do not require a $2000 or whatever "financial planning fee" every year. They may not be in your town but so what? is the $2000 fee a requirement? I would ask them for an contract that says you are waiving the annual planning fee.

Charging someone $2000 a year just to do AA and meet with you is ludicrous. If they hem and haw, tell them you're going to move the account unless they drop the fee. That line about "more money causes more liability" is pure BS. It doesn't cost them any more to manage $250,000 than it does to manage 10 times that much. They are already getting $12,500 a year from you in management fees, that should include ANY financial planning help you would possibly need........
I would add you should ask about the difference between
a) investment planning
b) financial planning
c) comprehensive financial planning

Paying $5000 or $10,000 for comprehensive financial planning every year is normal. Comprehensive accounts for all goals, all tax implications, all estate planning situations and managing debt too.

If you only focus on tax planning and asset allocation, I would not call that a comprehensive plan.

If you look at the fee you pay, as what rate are you paying per hour?
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Old 02-27-2012, 12:14 PM   #64
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I think that there is an appeal to paying a certain amount for something - sort of an implied value.

I was always amazed at the people that "just felt better" in a higher priced Mercury even though it was a Ford with a different grill.
Not really true. There were many years when Mercuries were more reliable than Fords; likely better assmbly. Also the dealers may have treated owners better. I had an Acura Integra GSR-I've been to Honda dealers and I've been to Acura dealers and I'll take Acura dealers.

Ha
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Old 02-27-2012, 12:34 PM   #65
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Not really true. There were many years when Mercuries were more reliable than Fords; likely better assmbly. Also the dealers may have treated owners better. I had an Acura Integra GSR-I've been to Honda dealers and I've been to Acura dealers and I'll take Acura dealers.

Ha
I'll defer to your expertise. I only spend 27 years designing Fords and Mercurys, most assembled on the same line. Maybe some truth to the dealer experience.
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Old 02-27-2012, 01:32 PM   #66
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I'll defer to your expertise. I only spend 27 years designing Fords and Mercurys, most assembled on the same line. Maybe some truth to the dealer experience.
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Old 02-27-2012, 04:41 PM   #67
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Trust me......where have you heard that before? But......if you're not really an active investor, go with Vanguard. It's cheap and honest. I don't know much about AF and 50 basis points is far less expensivee than others. So, if you want advice stay with AF, if you hate paying, drop AF and go to Vanguard. very simple choices but for you, it could be a difficult decision. Good luck.
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Old 02-27-2012, 05:07 PM   #68
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I would add you should ask about the difference between
a) investment planning
b) financial planning
c) comprehensive financial planning

Paying $5000 or $10,000 for comprehensive financial planning every year is normal. Comprehensive accounts for all goals, all tax implications, all estate planning situations and managing debt too.

If you only focus on tax planning and asset allocation, I would not call that a comprehensive plan.

If you look at the fee you pay, as what rate are you paying per hour?
well I guess that begs another question...what do they do in a COMPREHENSIVE PLAN--because they did suggest that I have an estate plan (I already have a lawyer for that) I don't have any debt to manage, they did review my insurance needs and said I should get rid of all of my life insurance policies because I had more than enough $$$ to cover my obligations should I croak and I was wasting the premiums. But that is all done...so why should I go on paying $14000+ a year and more as my nest egg grows? I am also thinking it would save some little bit to remove my kids's college accounts as one will start this fall and one in 3 years and so there is little advantage to be gained from their "expertise" or even the DFA advantage in such a short run before I start depleting those accounts that have to be conservatively invested at this point anyway....
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Old 02-28-2012, 09:37 AM   #69
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Travelover...

How did Lincoln fit in the Fords and Mercury mix?
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Old 02-28-2012, 09:50 AM   #70
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well I guess that begs another question...what do they do in a COMPREHENSIVE PLAN--because they did suggest that I have an estate plan (I already have a lawyer for that) I don't have any debt to manage, they did review my insurance needs and said I should get rid of all of my life insurance policies because I had more than enough $$$ to cover my obligations should I croak and I was wasting the premiums. But that is all done...so why should I go on paying $14000+ a year and more as my nest egg grows? I am also thinking it would save some little bit to remove my kids's college accounts as one will start this fall and one in 3 years and so there is little advantage to be gained from their "expertise" or even the DFA advantage in such a short run before I start depleting those accounts that have to be conservatively invested at this point anyway....
You decide what fee is appropriate for comprehensive analysis, and how often you want the analysis done.

And how many hours will it take to put this analysis together?

For example, an estate plan is not one and done, it should be looked at every second or third year- make sure beneficiaries are still alive and if you named an executor to your will and no longer have that person in your life, get that updated... maybe you named a charity you don't work with anymore...

Insurance is a good way to leverage wealth... it does not always make sense to get rid of it, even with higher wealth. Is this a fee only advisor, or a fee based advisor? If you don't know the difference, start there and you might discover why the fees are so high (fee only is the only way to go, that is what I do for a living...)

A financial plan covers one of 4 disciplines:
Accumulation
Distribution
Protection
Legacy (estate planning).

For example you might have 7 accumulation goals, its possible a financial plan only covers one of the 7 goals (retirement). If the plan is comprehensive, it covers all issues in all 4 disciplines.
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Old 02-28-2012, 10:35 AM   #71
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Is the investment in DFA giving you enough added return over a similar portfolio comprised of ETFs or low cost index funds, to pay your financial advisor? If the answer is NO, then maybe you should give your adviser his $2000, have him create a financial plan, and then implement it yourself.

If you can spare a couple of hours a week to do some study, track your portfolio and re-balance when necessary, you can do this yourself with the same asset allocation you have today. Implement the plan using ETFs or no-load, low cost index funds.

Maybe start with a small amount and when you feel confident in your ability to match your financial planner's performance, take on the whole amount.

You'll have to take a deep look at yourself and determine if you can manage your own money & still sleep. A financial planner does give you a person to blame when things go south - however, that does nothing for your financial reality.
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Old 02-28-2012, 11:36 AM   #72
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Would they give me access to DFA? And would they allocate me in the most tax advantaged way?
No, only certain firms can use DFA, and they are only distributed through DFA advisor network.

All you have brought up is the fees. Are you happy with DFA and/or American Funds or not??
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Old 02-28-2012, 07:27 PM   #73
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No, only certain firms can use DFA, and they are only distributed through DFA advisor network.

All you have brought up is the fees. Are you happy with DFA and/or American Funds or not??
I am very satisfied that DFA adds value enough to generally pay up for the privilege. that said I don't feel any need to Overpay if I can get the same for less. I am fairly certain I have neither the time nor the inclination to myself at this time...and without DFA I don't believe I can match the returns... their funds are extremely well run and have very low expense ratios that are hard to beat even with Vanguard.

I pay an attorney a yearly retainer to manage my estate and had him long before I had this advisor, so I don't see how this planner earns anything on that front....and I do believe the advice to get out of my insurance plans was a wise use of my money. So that was food, but not worth on going payment.

I am learning that outside of my little community there are plenty oft advisors who are fee only as my advisor is... But whose fees are more reasonable... I really failed to look outside of my area when I settled on this one, my bad. But I am learning and I have these forums to thank.
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