Who is working with DFA?

[trumpeting_angel]

Hi Oliver,

Yep, it is Evanson. I had a conversation with the guy, who used to be a psychologist (as I am), and he's under consideration. THEN I found http://www.portfoliosolutions.com/fees.html
who charge only 0.25% for the first 5 million. Since it's going to take me a while to get to my first 5 million, this seemed like the lowest fee around.

Still pondering.

Anne

[ESRBob]

Anne,
I agree it definitely pays to shop around with the DFA advisors. If you 'know your Bernstein' you can get a guy to work with much cheaper I found, because much of their normal fee is spent in trying to un-educate people from a lifetime of listening to Wall Street marketing gibberish trying to make us al linto CNBC zombie daytraders. So that takes some time obviously. If you don't need the re-education, you're a dream client. My guy charged me for the 5 hours of time it took to work out the various categories we wanted to include and what percents in each one, using some nifty models and long-term data series he had to do monte carlos etc. and play other MVA and efficient frontier games, and then to set up the accounts at Schwab. Then I will pay him for an annual review and nice set of efficient frontier charts which will cost me a couple hours of his time.

THe main difference that doesn't appear yet in this thread is that DFA gets you stuff that Vanguard doesn't offer at all, or offers only in an actively-managed manner. I wouldn't dump a Vanguard fund to get a similar DFA fund; I went to DFA for stuff Vanguard won't give me at all.

(now I quote from a post I just did elsewhere)...

For example, they can get you micro-cap stocks (CRSP deciles #9 and #10) that are still reasonably priced (because they don't track the index so hard if it is going to generate massive spread/trading costs), as well as international small stocks, international small value, emerging markets value -- that sort of thing -- which will be harder to get precisely or actually impossible at Vanguard and important to you if you start to follow the advice of William Bernstein Also, Vanguard won't give you international bonds, which Bernstein and others advise you should have for diversification in your bond portfolio. DFA can get you 2yr or 5yr global bond funds at good prices.

you will get institutional money management fee prices on these and other funds through a schwab account your advisor will set up. DFA is basically for institutions only, but they'll sell to individuals using one of their approved advisors.

My DFA guy was able to get some of the Commodity funds (Pimco and Oppenheimer -which normally have loads for individuals) no-load and very low fee at prices normally reserved for the 50-million dollar account crowd. (Commodities is also one of the asset categories the efficient frontier literature pushes as being poorly-correlated with US Stocks and Bonds, and thus attractive for diversifying your portfolio -- reducing risk and/or increasing yield)

[trumpeting_angel]

Darn it. I had just about decided to eschew all possible fees and go with Vanguard. You give me pause to think again.

Grumble.

Thanks for the extra thoughts, though. It seems everything I can find to read about DFA is written by someone affiliated with them. I lean toward academic arguments, so I tend to be more vulnerable to Ph.D.'s arguing about obscure ratios and asset classes than I am to articles on websites with great graphics and Flash thingies.

But it's generally a good idea to pay attention to the affiliation of the academics. And everything I've read is by someone affiliated in one way or another, with DFA. Except here, of course.

Thanks!

Anne

[charlie]

Hi Anne,

Don't fall into the "paralysis by analysis" trap.
IMHO, using DFA may, or may not, be better than
sticking with all Vanguard funds, but I bet there
is not a dime's worth of difference in the long run
or else the decision would not be so hard. If that
is true, then the deciding factors should be
convenience, service, etc. BTW, you don't need
an adviser. Just study Bernstein's "4 Pillars....",
place your bets and go fishing like Cut-Throat.

Regards,

Charlie (aka Chuck-Lyn)

[AlanS]

Anne,

In case you have not looked at this link yet, I think it gives a good assessment of the DFA difference on a fund by fund basis http://www.altruistfa.com/dfavanguard.htm I am wrestling with the same decision and have not decided which way to go yet. I think if you do not need an advisor for some other reason, Vanguard is the way to go.

Alan

[trumpeting_angel]

Thanks, Alan, I had seen that page. One of the things that has been contributing to my not-quite-paralysis about this decision.

Charlie, good point! but the only reason to get the advisor would be to have access to the DFA funds, which one cannot access otherwise unless one is a giant pension fund. Which I am not.

I'm leaning in the Vanguard direction, though. I have a feeling that we will probably always come out better by avoiding fees, even if getting the asset advisor gives access to superior pie-slicing. I've been attracted to the simplicity offered by Scott Burns and by the Coffeehouse Investor, and I have a feeling that without a crystal ball, there may be no way to pinpoint the most ideal approach.

And I always have my $720 Sharebuilder account, to satisfy my gambling urge. That should keep me out of any serious impulse to switch around funds or other related trouble!

Anne, who thanks everyone for such a helpful, enlightening discussion. not to mention friendly.