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Old 03-28-2014, 11:16 AM   #21
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You can self manage similar index mutual funds through Schwab. I believe they have similar expenses as Vanguard index funds. The OP didn't say whether their FA had them in low expense index funds. There are certainly many index funds that have much higher expenses than the Vanguard Admiral shares. One "given" I've come to expect from the traditional FA is that the mark client is put into high cost funds and with loads if possible.
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Old 03-28-2014, 12:58 PM   #22
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You don't need management of those funds, and the "misunderstanding" with the 72t is reason enough to leave your FP right now. Why not call Schwab, since your money is already there, and talk to someone there? I think your portfolio is at a level where most fees might disappear if you worked with them directly and someone there should be able to advise you about what happened with the 72T and maybe work around it.

Investing Costs: Charles Schwab: Fees and Minimums

We use Vanguard but hear only good things about Schwab.
I was with Schwab for many years. They are more focused on active trading. Lots of benefits if you are an active trader. I wasn't and was still mostly happy. I moved to Vanguard several years ago. I think Schwab has lowered their prices since then but I am no sure.

The one issue that got me to move to Vanguard was when I asked them for a small cap index fund. They put me in one that used an index created by Schwab. That was not a good move on my part. My opinion is that the fund went through the standard process of dieing and being reborn with a slightly different name to hide the lousy returns it always seemed to get when compared to other similar funds.
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Old 03-28-2014, 01:31 PM   #23
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I think everyone agrees the answer is yes. With the funds already at Schwab reproducing the couch potato portfolio is easy and you just gave yourself a $7500/yr raise. Low expenses and no commissions

Universal retirement tool: Build a Couch Potato Margarita portfolio | Dallas Morning News

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Old 03-28-2014, 01:38 PM   #24
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It seems to me the conservative index funds are the way to go. In 2013 we had a return of almost 7% after expenses.
What do you mean by a "conservative index fund?"

Choosing to be "conservative" in one's asset allocation is a completely different decision than choosing to invest in index funds over actively managed funds. It's a distinction you should have well in hand.
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Old 03-28-2014, 02:47 PM   #25
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Is the FA doing any tax planning? If it is just investing, do it yourself. On the good side, 0.75% is on the lower cost side for an FA paid like that. Of course screwing up the 72T kind of impacts the cost/benefit ratio.
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Old 03-29-2014, 12:16 PM   #26
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should I go it alone

My Vanguard account averages .10%. That's total cost. No other costs whatsoever. I could get it down to .08 with a little shifting - like getting rid of international stocks.

$1000 a year vs $7500 a year. That's $130000 over 20 years which could have been reinvested. Or paid for several cars. Or one very nice car.

Your choice.

And that doesn't include your current funds' ERs. That may be doubling your cost.

Roll them over into Vanguard Admiral accounts. Your FP us doing nothing to earn that $7500 a year. He's merely pocketing your potential returns.
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Old 03-29-2014, 12:25 PM   #27
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Just checked there is a Charles schwab office five minutes from our house here in the Villages FL.
My financial advisor wants to keep us and has offered to fall on his sword and give us something to make up for their mistake. A year or two with no fees.
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Old 03-29-2014, 12:48 PM   #28
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My financial advisor wants to keep us and has offered to fall on his sword and give us something to make up for their mistake. A year or two with no fees.
With the assumption that once your free period of underperformance is up, you'll stay with him and go back to paying his fees out of sheer inertia and a misguided sense of appreciation.
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Old 03-29-2014, 12:49 PM   #29
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Do you really want to stay with someone who has been sucking $7500 from your portfolio each year, messed up your 72t (which is causing you hardship), and now says, "Here's a deal for you."?

Drop the salesman and handle your own portfolio. Don't get suckered by his fall on my sword appeal.

You might want to post your funds and percentages of your portfolio, as well as types of accounts the funds are in, to get advice on further reducing costs. As someone else mentioned, several Schwab ETFs have no trading commission and are very low expense, as can be seen in the charts posted by rbmrtn.

It's nice that the Schwab office is nearby, but it shouldn't really matter. It is fairly simple to handle your accounts using the schwab.com website.
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Old 03-29-2014, 01:17 PM   #30
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My financial advisor wants to keep us and has offered to fall on his sword and give us something to make up for their mistake. A year or two with no fees.
Even your FA knows what a bad deal you have been getting.
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Old 03-29-2014, 01:26 PM   #31
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Just checked there is a Charles schwab office five minutes from our house here in the Villages FL.
My financial advisor wants to keep us and has offered to fall on his sword and give us something to make up for their mistake. A year or two with no fees.
Oh, sure. Then you will be last on his list when you have a problem vs the client paying his fees. Stop in at the Schwab office this week and discuss your goals with them.
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Old 03-29-2014, 04:46 PM   #32
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Here are my current holdings.


DFA Intl Core equity 20.93%
DFA Real Estate 2.42%
Schwab S&P 500 index FD 15.17%
Vanguard Short Term Bond 32.43%
Vanguard Total BD mkt 27.85%
Total $664,000

DFA Emerging MKTS Core 12.98%
DFA US Core Eqty 2 Port 48.41%
DFA Small Cap Port Instl 16.04%
DFA US Targeted Value 21.76%
Total $203,000

DFA US Core Eqty 1 Port 100%
total $29,000

DFA Emerging Mkts Core 100%
total $21,000

Wellesley Incom Fun Adm 100%
total $72,000
the Wellesley fund is independent of my managed stuff.
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Old 03-29-2014, 05:36 PM   #33
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I'm new here, so I won't comment on the numbers aspect.

One thing you mentioned is the screw up on their part. Sounds like it burnt your trust with them as a firm, and the FA as an individual. Business in general is largely dependent on trust. If you've lost that, it's time to move on. Giving someone $5 that you don't trust or think deserves it, creates a negative situation for you.
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Old 03-29-2014, 05:52 PM   #34
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Just checked there is a Charles schwab office five minutes from our house here in the Villages FL.
My financial advisor wants to keep us and has offered to fall on his sword and give us something to make up for their mistake. A year or two with no fees.

I would still change to manage yourself at schwab. I was in one of their managed deals and would not go back for free. They do not do well with tax management....and they are a bit of market timers....the best thing I have done has been to get rid of timing.
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Old 03-29-2014, 06:25 PM   #35
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Here are my current holdings.


DFA Intl Core equity 20.93%
DFA Real Estate 2.42%
Schwab S&P 500 index FD 15.17%
Vanguard Short Term Bond 32.43%
Vanguard Total BD mkt 27.85%
Total $664,000

DFA Emerging MKTS Core 12.98%
DFA US Core Eqty 2 Port 48.41%
DFA Small Cap Port Instl 16.04%
DFA US Targeted Value 21.76%
Total $203,000

DFA US Core Eqty 1 Port 100%
total $29,000

DFA Emerging Mkts Core 100%
total $21,000

Wellesley Incom Fun Adm 100%
total $72,000
the Wellesley fund is independent of my managed stuff.
First of all let me give you the good news. You FA has you in some fine funds. DFA is arguable the only fund family that historically has outperformed indexes. The only way to get access to DFA fund is through an adviser. Most adviser who have been certified to sell DFA charge 1% so the .75% is actually on the low side.

My guess is you are part of the Schwab managed portfolio service, which I'll say I've heard mixed things about.


If he is really going to waive the fees for the next two years, I'll be in the minority and say that maybe you should stick with for the next couple of years, while educate yourself a bit more. (I.e. read the forum and some of the suggested books.)

Now having said this what doesn't add up is his 2013 performance. I could basically replicate your portfolio (which I think is properly allocated assuming your comfortable with stock market risk) with 4 Schwab ETFs.
SCHB broad stock market
SCHZ bond market
SCHF international stocks
SCHE emerging markets.

When I plug in the numbers you gave I get 2013 return of 11.1% virtually the same as the 2015 target fund.

I think the FA owes you a detailed explanation of why your 2013 was only 7%, if I can't provide that. Then I'd join the crowd and say move.
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Old 03-30-2014, 04:47 AM   #36
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Most adviser who have been certified to sell DFA charge 1% so the .75% is actually on the low side.

My guess is you are part of the Schwab managed portfolio service, which I'll say I've heard mixed things about.
No, no, no. Do not accept this nonsense being peddled by these crooks! I agree that DFA may be worth using an advisor to get but with indexing there is no way an advisor earns or is worth ANY significant percentage of your money. It costs them no more time or effort to slice and dice up index fund portfolios,for $1million vs $2 million, but he will charge you double anyway.
Plan on firing him but as clifp said, I agree:

Quote:
Originally Posted by clifp View Post
If he is really going to waive the fees for the next two years, I'll be in the minority and say that maybe you should stick with for the next couple of years, while educate yourself a bit more. (I.e. read the forum and some of the suggested books.)
I will add learn about DFA advisors who do not charge so much. Evanson and Cardiff Park are flat rate DFA approved advisors, FPL also is flat rate. Portfolio Solutions by Rick Ferri I believe is reasonable for a smaller portfolio like yours at ?0.37%.? But again as your portfolio gets bigger it is absurd to charge you more as a percentage. Look into one of those if you decide you want to stay with DFA.

Finally I obviously do NOT approve of paying these guys by percent of Assets because they absolutely do not earn it, these rates are a carryover from Active management which DOES take more rime the more money you give them...it is also why Active management does not work as well as passive, because it costs too much! Still It is NoT really accurate to claim that an advisor charging you 0.75% while you use a 3% SWR takes a fourth of your money. This is misleading because while it is initially true, as time goes on, the advisors 0.75% is fixed at the percentage of whatever your portfolio is, but the SWR is likely going to be changing up or doen as the amount is just theoriginal amount adjusted up for inflation...it is not fixed to always be 3% of your portfolio value. If you always plan to spend a fixed percent of your portfolio, then yes it is true. No matter what, passive indexing should NOT be tied to portfolio size ultimately.
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Old 03-30-2014, 09:03 AM   #37
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How about if I ask FA to lower their fees to .375 %.
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Old 03-30-2014, 09:37 AM   #38
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How about if I ask FA to lower their fees to .375 %.
Do you really think you can't DIY?
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Old 03-30-2014, 10:10 AM   #39
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Do you really think you can't DIY?
I think we are nearing the point where the crowd shouts to the man on the ledge, "JUMP!"
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Old 03-30-2014, 10:45 AM   #40
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How about if I ask FA to lower their fees to .375 %.
No.
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