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Old 05-07-2013, 08:52 AM   #21
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Just avoid the temptation to time the market. You will be buying back in to a more expensive market, so that can be tough.
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Old 05-07-2013, 09:29 AM   #22
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Why do you assume that way? I'm paying FA 625/quarter or 2500/year - which'll give me advise, second pair of eyes looking after my investment and access to DFA funds.
I have a general distrust for FAs, but at least yours is fee based it seems. I would still try to read up so you can eventually do it yourself and not have to rely on someone else. It's not rocket science, and you are obviously smart and talented if you have been able to save over 2 million by your 40s.

I never had an advisor and kind of stumbled and bumbled my way, eventually learning what not to do. My big flaw early on was impatience-- it was hard to wait for the right time to deploy cash.


The key IMO is not making big mistakes-- they are hard to recover from. So again, be patient!! Don't rush into anything!! Cash can be your friend, even if it doesn't earn anything .......
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Old 05-07-2013, 09:37 AM   #23
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I have a general distrust for FAs, but at least yours is fee based it seems. I would still try to read up so you can eventually do it yourself and not have to rely on someone else. It's not rocket science, and you are obviously smart and talented if you have been able to save over 2 million by your 40s.

I never had an advisor and kind of stumbled and bumbled my way, eventually learning what not to do. My big flaw early on was impatience-- it was hard to wait for the right time to deploy cash.


The key IMO is not making big mistakes-- they are hard to recover from. So again, be patient!! Don't rush into anything!! Cash can be your friend, even if it doesn't earn anything .......
Yep. agreed. I've done lots of reading over past six months and know enough so no one can take me for a ride. I just want a second pair of eyes and someone neutral/independent advising me during rough market without him having any financial interest(kickback/commission) - mainly save me from emotional selling.
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Old 05-07-2013, 10:26 AM   #24
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you may want to discuss with your FA decreasing your bond holdings (or at least non-short-term bonds) and increasing your cash holdings. With the low amount bonds are paying, you're not giving up much yield to protect against an increase in interest rates that could hurt a bond investment.
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Old 05-07-2013, 10:28 AM   #25
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... I just want a second pair of eyes and someone neutral/independent advising me during rough market without him having any financial interest(kickback/commission) - mainly save me from emotional selling.
Buy and Hold and and a set AA with annual rebalancing does that, and it doesn't cost you even $2,500 per year.

Think of the nice present you could buy yourself or a loved one each and every year (or charitable contribution) for $2,500.

-ERD50
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Old 05-07-2013, 10:43 AM   #26
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Yep. agreed. I've done lots of reading over past six months and know enough so no one can take me for a ride. I just want a second pair of eyes and someone neutral/independent advising me during rough market without him having any financial interest(kickback/commission) - mainly save me from emotional selling.
And yet you've just emotionally sold your entire portfolio without bothering to consult with your FA at all. Not sure exactly where you're getting your money's worth by hiring someone to save you from your emotions, and then impulsively giving into your emotions anyway. Maybe it will work out this time, but of course the danger is that you may make a small profit from a move into 100% cash right now, but then use the current example of successful market timing to justify additional market timing in the future.

I guess you need to decide whether you're calling the shots, or whether your FA is. Right now your FA seems like an expensive front man for you to justify any impulsive move you decide to make.
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Old 05-07-2013, 11:14 AM   #27
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Why do you assume that way? I'm paying FA 625/quarter or 2500/year - which'll give me advice, second pair of eyes looking after my investment and access to DFA funds.
I can see how a second pair of eyes can be comforting, but you're paying $2.5k for one pair when you get multiple pairs on here for free.

DFA are a lot better than many funds, but they talk up their passive nature and then go on to emphasise how they "out perform" a benchmark without going into the greater risk than you assume with many of their funds. Also having to pay an FA to get access to them just annoys me when you can mimic DFA strategies with funds from Vanguard or Fidleity and save a bit on ER and avoid the FA fees completely.
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Old 05-07-2013, 11:30 AM   #28
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karluk: That was just one time deal. I wanted to start fresh and I did inform my FA that I'll be selling most of it and he did not have any issue with it. Obviously, FA will be managing once he comes up with AA and target funds. He'll then periodically review and rebalance it after discussing with me. I'll not be selling on my own once he starts managing. Thanks for your feedback.
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Old 05-07-2013, 11:55 AM   #29
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Obviously, FA will be managing once he comes up with AA and target funds. He'll then periodically review and rebalance it after discussing with me. I'll not be selling on my own once he starts managing. Thanks for your feedback.
Many people choose to use an FA, but "managing" some passive funds and rebalancing isn't worth $2.5k IMHO, but I have this thing against FAs. Now if he is also providing some tax planning and doing rollovers to ROTHs and coming up with strategies to minimize your MRD it would be a better deal.
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Old 05-07-2013, 07:21 PM   #30
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Many people choose to use an FA, but "managing" some passive funds and rebalancing isn't worth $2.5k IMHO, but I have this thing against FAs. Now if he is also providing some tax planning and doing rollovers to ROTHs and coming up with strategies to minimize your MRD it would be a better deal.
0.125% to manage (and of course they consider taxes) and get access to arguably the best family of funds? And that percent will go down as the portfolio grows? There is a lot of research showing that DFA can deliver returns 1-2% better than any mimic and with no increase in volatility. There are those who argue otherwise but at that low and shrinking fee schedule along with DFA's low expenses and tax savvy investing--it is not a very risk bet of $2500....and it is a non binding arrangement. I get the skepticism about financial advisors, but the one he has chosen is far different from the skimmers and scammers who have given them such a bad reputation.
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Old 05-07-2013, 07:42 PM   #31
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Also having to pay an FA to get access to them just annoys me when you can mimic DFA strategies with funds from Vanguard or Fidleity and save a bit on ER and avoid the FA fees completely.
While I totally believe in factor loadings as the prime determinant of returns I don't think you can completely mimic a DFA portfolio with vanguard funds. Vanguard doesn't have funds in certain segments (int small cap value, etc.) and
typically their funds are not as pure as dfa (not sure if fidelity can fill the gap but I would guess not at a reasonable expense ratio).

That said I have almost everything with vanguard + a few ishares/bridgeway funds. However, if I could get access to dfa for a very small er (maybe 0.2% or less) I might consider them.
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Old 05-07-2013, 08:04 PM   #32
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While I totally believe in factor loadings as the prime determinant of returns I don't think you can completely mimic a DFA portfolio with vanguard funds. Vanguard doesn't have funds in certain segments (int small cap value, etc.) and typically their funds are not as pure as dfa (not sure if fidelity can fill the gap but I would guess not at a reasonable expense ratio).
You might not be able to slice a dice exactly with Vanguard, but you could come close.

As I said DFA has low fees and good performance, I just wish they were a bit more forthright in the risk/reward department. Also I've never liked "gatekeepers", but it is a good marketing strategy for them as it gives them an air of exclusivity and I'm sure people have gone to certain FAs just to get access to DFA funds so the FAs that DFA approves also do well out of it.
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Old 05-07-2013, 08:41 PM   #33
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Can't complain about selling high. I made a big transaction like that a few years ago. Not quite as big as yours. I was surprised that Schwab charges you more than $9.00 for commission. I thought it was a flat rate.
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Old 05-07-2013, 08:56 PM   #34
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Can't complain about selling high. I made a big transaction like that a few years ago. Not quite as big as yours. I was surprised that Schwab charges you more than $9.00 for commission. I thought it was a flat rate.
Right. I've been selling this year too. I'll be happy to kneel behind someone who advises you to buy annuities, and you can do the rest.
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Old 05-08-2013, 03:53 PM   #35
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0.125% to manage (and of course they consider taxes) and get access to arguably the best family of funds? And that percent will go down as the portfolio grows? There is a lot of research showing that DFA can deliver returns 1-2% better than any mimic and with no increase in volatility. There are those who argue otherwise but at that low and shrinking fee schedule along with DFA's low expenses and tax savvy investing--it is not a very risk bet of $2500....and it is a non binding arrangement. I get the skepticism about financial advisors, but the one he has chosen is far different from the skimmers and scammers who have given them such a bad reputation.
+1

I share the skepticism of most FA, but DFA adviser are a different breed.

14 years ago when I first got serious about retirement, I would have gladly paid someone $2,500 who knows as much as I currently do about retirement (or at least 30 other board members), to come up with a detailed plan. I also did a large portfolio makeover when I first retired rolling over my 401K into an IRA, and selling a bunch of company stock and other tech stocks. It was somewhat scary process and second pair of smart eyes would have been valuable.

It is all fine for us to say put ~70% in total stock market and ~30% in total bond market, while educating yourself. That is fine advice but there are tax implication, and other opportunities, that you won't pick up by reading a few books and calling Vanguard.
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Old 05-18-2013, 10:56 PM   #36
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Just avoid the temptation to time the market. You will be buying back in to a more expensive market, so that can be tough.

I see the market is up a little over 4% since you did this. Did you buy back into a more expensive market, or are you standing by for a pull back. This is why I try to reallocate in the same day, or I delude myself that I can time the market.
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Old 05-19-2013, 01:14 AM   #37
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What did you make the highest % of profits on?
SC, LCG, LCV, INT'L......just wondering because I have never been a "buy and hold forever" type of person and wonder what my portfolio would have looked at if I was.

Problem is I did HOLD during last crash until I couldn't take it any longer. When mkt started to recover I purchased company stock and recovered my losses, then purchased PTTRX and I feel safe though this yr it isn,t so hot yet..
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Old 05-19-2013, 08:56 AM   #38
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I see the market is up a little over 4% since you did this. Did you buy back into a more expensive market, or are you standing by for a pull back. This is why I try to reallocate in the same day, or I delude myself that I can time the market.
I was thinking the same thing. This thread didn't start out as a market timing discussion, but circumstances have certainly conspired to make it a perfect illustration of the dangers of making wild deviations from one's target asset allocation, however temporary. The extremely large amount of money converted to cash plus the unusually sharp increase in the stock market since OP sold his equities have combined to generate a rather painful missed opportunity. We would have to know more details of what was actually sold and for what price, but it seems likely that the losses from this ill-timed move to cash are somewhere in the mid to high five figures. Ouch!

So OP is paying thousands of dollars for advice from a financial advisor who has already cost him tens of thousands in missed profits. As you say, the only choices now are to bite the bullet and repurchase equities at a higher price, or sit with a large cash position and hope for a correction. But holding all that cash for an indefinite period creates additional risk that the market will continue to rise while OP is on the sidelines.
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Old 05-19-2013, 09:31 AM   #39
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We sold 1/3 over the past month too. Making a loan to DD for her 2nd home. We call it our 30 year annuity...
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Old 05-19-2013, 12:20 PM   #40
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Retire2020,

If your willing to share I am very interested in your experience, both positives and negatives with your new financial adviser.

Thanks!
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