Someone recently came to me after realizing that they've been paying too much to an adviser (assets under management percent, plus taking commissions). They asked me "what I would do". I know what I would do, but doing it "formulaically" is turning out to be a problem. In general, I would say to get out of the high-fee mutual funds and transfer everything to Vanguard. My first attempt was using Morningstar Instant x-ray, but that doesn't really give me what I want in a way that I can iterate to hit the specific asset allocation target.
So what I would do first is define a target asset allocation with these categories (adding to 100%, so no overlap):
Cash
Domestic Bonds
Emerging Bonds
Hard Assets
Domestic Equity
Europe Equity
Non-Europe Equity
Emerging Equity
Then I would segregate my current holdings into things I wanted to
not sell, and things I could or would be willing to sell. In other words, there are some individual stocks that I might not want to sell, but instead adjust the other choices in the portfolio to compensate.
Finally I would iterate over available Vanguard ETF's and funds by trial and error until, when I combined the allocations for the selected funds plus the stocks I'm not selling, would hit my allocation target.
The problem is that instant x-ray has a breakdown by domestic stock, foreign stock, cash and bonds, so not detailed enough. They also list stock by region, so it would be possible to break-out europe, non-europe, and emerging, but there's no repeatable way to break out hard assets and no repeatable way to break out emerging from domestic bonds.
I think that the actual percentages are not highly critical, as long as the investor has a repeatable way to calculate an asset allocation, and keep consistently doing that calculation and re-balancing when called for. It's that the ability to repeatably do that asset allocation into the categories that's giving me the trouble, and worse, the trial and error with the wide variety of funds that could be made to fit.
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