DFA vs Vanguard Funds--Are the fees worth it? Live Q&A

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In today's live Q&A will start be comparing Dimensional Fund Advisors fund with Vanguards. Specifically, we'll look at emerging market funds offered by DFA and ask whether they are worth the 1% advisor fee many people pay for access to these funds.
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Video Resources & Timestamps
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0:00 - Welcome to the Financial Freedom Show!
0:44 - Tag me in the chat
1:39 - DFA vs Vanguard Funds
14:23 - Federal Funds Rate
16:35 - Dollar Cost Averaging
18:34 - Things to do/see in Boston
20:20 - PRMDX
25:52 - Apartment building purchase from family member in the future
27:59 - Financial sites I like
30:27 - Monday show start time
30:52 - Being charged a fee by a broker for 3 basis points for an ETF
31:27 - Kitces & Estrada's view on rebalancing after you withdraw from your portfolio for retirement
35:44 - BRK.B in a taxable account as part of my stock portfolio
36:33 - VIOV vs AVUV
40:02 - VBR vs AVUV
44:14 - Waiting for the bottom to buy
45:26 - Roth 457
47:21 - What is a Roth 401K?
50:22 - How to exit assets under management with high fees
55:12 - Interest rate threshold for paying off student loans aggressively
58:08 - 401K rollover out of market
59:18 - My prediction with how the S&P 500 Index ends up at the end of the year
1:00:07 - Donor Advised Funds
1:04:57 - Best funds at Fidelity
1:07:29 - My keyboard
1:08:16 - Is VT better than the 3 fund or 6 fund portfolio?
1:11:58 - Picking good quality companies for stock investing
1:13:54 - ACWI
1:17:35 - Indexed Annuities as a tool for retirement
1:22:08 - Auto investing with ETF's
1:23:06 - Berkshire meeting 2022
1:23:30 - Exchanging VTBLX to avoid capital gains dividends in a taxable account
1:26:35 - Best place to invest an emergency fund
1:28:00 - 2 years not in the market
1:29:43 - Supplementing portfolio with small cap value
1:32:40 - Financial Freedom0:00 - Welcome to the Financial Freedom Show!
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ABOUT ME
While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.
I'm also the author of Retire Before Mom and Dad--The Simple Numbers Behind a Lifetime of Financial Freedom (amzn.to/3by10EE)
DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. Your investment and other financial decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary. I am merely sharing my opinions.
AFFILIATE DISCLOSURE: Some of the links on this channel are affiliate links, meaning at no cost to you I earn a commission if you click through and make a purchase and/or subscribe. However, I only recommend products or services that (1) I believe in and (2) would recommend to my own mom.

Опубликовано:

16 мар 2022

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Комментарии : 50

@zackb3744 2 года назад

I love the level of detail for beginners. You make even complicated subjects simple to understand even for a average joe. Thank you for the dedication.

@Panelson74 6 месяцев назад

You are my hero, on this one. I am working on some research, and you essentially did it all for me right there. Or at least got me through to 85%

@pdureska7814 2 года назад

A few years ago i was contemplating going with a financial planning firm for my 401k etc. They had access to DFA funds at the "institutional" fee rate and even with the advisory rate which was maybe 50 basis points ( i dont really recall the exact number there) but suffice it to say it got me thinking seriously about some of the fees i was paying for some of my funds. I have since revamped to a much lower fee schedule and ultimately did not go with that advisory firm.

@paulavaden5139 2 года назад

Dang missed it again. Was all ready and waiting at 10:00! Didn't see you and got distracted with other things. What time on Thursdays?

@markmorris2517 2 года назад

My first wife had a retirement account in Fidelity. In her last few months, she called Fidelity to ensure that I was listed as her beneficiary. After she died of cancer I found out that she had 3 accounts with Fidelity and two of them had a $0 balance while the 3rd was much larger than that. The guy over the phone set me up as the beneficiary to only one of the $0 accounts. 10yrs later I still don't have the money. Maybe it was just one really bad customer service rep who really didn't think about what he was doing. But I won't ever do business with Fidelity out of principle.

@ghostl1124 2 года назад

1:26:00 A good place for short term savings in 2022 is VTIP. Current dividend yield is over 5%.

@celtosaxon 2 года назад

To the extent you need to rebalance & need to invade principle… withdraw from those asset classes that bring you back into balance first.

@timelston4260 2 года назад

I do half VIOV and half AVUV, for 20% of my portfolio. But, yes, I have no idea which will do the best over the long run. I got super lucky and transferred 10% of my portfolio from long term bonds to small cap value exactly on March 23, 2020, the very bottom of the pandemic crash. But it was luck, not prediction. Why do I like your videos so much? I guess you're an entertainer, in addition to your other talents.

@I..cast..fireball 2 года назад

I do avuv and avdv.

@timelston4260 2 года назад

@@I..cast..fireball I also do AVDV for 8% of my portfolio.

@ghostl1124 2 года назад

Black coffee and a black coffee mug. ...... good touch.

@martinhanson4342 2 года назад

Another good video--thanks. Point-of-Order: I'm still learning Portfolio Visualizer. I searched and searched for the option to add management fees to my backtesting analysis. That feature is ONLY available with their top-tier account @ $39 per month. You have biased me to be fee adverse; therefore I haven't yet splurged for the $468 per year tool.

@Panelson74 6 месяцев назад

might be worth it, get a market watch subsciption, to.

@uaeio 4 месяца назад

Many DAF are now available as ETFs… no admin fees. What now? Is this still actual what you said?

@thomasknight604 2 года назад

Hey Rob, love the content. As an advisor who lives on 1% fees, and doesn't use DFA, I think you are totally correct there should be no reason you pay a 1% fee for advice, but if you sat in the meetings with clients you would probably be a much bigger proponent of the setup pretty quickly. If you are getting tax advice, estate planning advice, portfolio management, and dealing with a complex family dynamic, that 1% is money well spent. Half my clients barely know how to use a smart phone, let alone analyze ETFs and mutual funds. They are worried because their wife has never managed a portfolio, and their health is failing, and need someone who they trust to look after the portfolio so their widow doesn't just stick it all in cash. I am in agreement that someone sophisticated with a good plan in place for when the dementia kicks in, who has been to an EP attorney, who has a good relationship with their tax guy, and who very carefully monitors and understands their investments can probably DIY it just fine. I also think a lot of advisors are spoiled by charging their fee for only portfolio advice, meet infrequently, and don't have the capacity to offer additional services wrapped into their fees. I think those also tend to be the people who get offended at the idea that their services aren't for everyone. As for why some clients are a better fit for portfolio fees rather than hourly, if you custody and manage the investments on a discretionary basis it allows you to assist in the estate distributions, make changes more rapidly if need be, bypass technological challenges with older clients, etc. You wont find people willing to custody and make discretionary decisions based on hourly fees. You may not care for that service, but it is a huge help when mom is in the nursing home, her competence is in question, and her PoA doesn't know the difference between a stock and a bond. It also makes billing much easier for retirement accounts for tax reasons.

@rob_berger 2 года назад

Thanks for the thoughtful perspective. But I should add that (1) there's no reason to pay 1% of AUM; there are great advisors for less, (2) one can always place a small portion of assets with a trusted advisor, who can then take over if medical issues develop. Still, 1% of all your wealth for 20 or 30 years because you may develop dementia is a very expensive insurance policy.

@ltmsimply 2 года назад

Wondering what would the financial advisors have their family/spouse do with their retirement if they pass away? Would they have a plan to go with Schwab Intelligent portfolio or Vanguard ? Or have them set up to fee only firms?

@thomasknight604 2 года назад

@@ltmsimply Part of it will go to the wind a bit through ToD beneficiary payouts for people who will be spending it on housing or college, and part of it would be managed by a buddy in a trust on a fee-only basis.

@thomasknight604 2 года назад

@@rob_berger Fee compression is a mixed bag. There are different types of clients, for example the advisor you mentioned in the video has very low percentage fees, but only works with people with $10MM plus, and minimum $30K billing. If you want to work with mass affluent people ($250K - $1MM liquid) charging a 0.4% fee is going to be very difficult if you do anything besides stick them in a portfolio and talk to them once per year. If we all anchor on how every fee must be as low as possible, that means the advising those mass affluent get is going to be exclusively asset management services, which if you have an ABLE trust candidate, or a small business owner, may not actually be best for them. It also is a big driver of industry consolidation which results in much the same limitation of services. This is a bit of a flaw of the business model, in that you bill on the assets for performing multiple roles. The tendency then, would be to reduce services as you price-take on fees. Not everyone needs more service than asset management, and if that's the case, you should only pay for asset management, which is much less than 1%. In my opinion the solution is adding a billing floor, then having a fee-schedule that drops off sharply, while offering clients a modular service plan, and some limited hourly consulting.

@I..cast..fireball 2 года назад

Id much rather pay you by the hour for professional advise than be charged 1% on everything all the time.

@danielalexander799 2 года назад

Couldn't you buy the stocks in the DFA fund individually and avoid the high expense ratio?

@mihandsplitters705 2 года назад

CIT bank is 2% on savings

@Bettadenyou1 2 года назад

I would love a video with your opinon/commentary about Avantis ETF funds? The paul merriman and his team seems to like them quite a bit. Seems like a good cheap option for access to some DFA like funds? Thanks!

@rob_berger 2 года назад

I've added it to my list. Looking forward to doing a deep dive.

@leeward1717 2 года назад

Haven’t dived

@Beakerandgreg 2 года назад

Rob, I see you have a trackpad for your left hand a mouse for your right. I've used that for years. I only use the mouse for work that requires that level accuracy. Nice to see I'm not the only one :-) lol.

@rob_berger 2 года назад

Takes a lot of stress off my right arm.

@Panelson74 6 месяцев назад

Here is an idea, do a video on trade corrections, when an advisor does not follow youre trade instructions.

@timhouck7464 2 года назад

There is fine print but check out HM Bradley savings

@rob_berger 2 года назад

It's certainly a good option for some.

@logoutjason4689 2 года назад

I think Avantis uses a five factor approach that includes profitability, and vanguard just uses a three factor

@redrobin1193 2 года назад

You think. Well, that's not what I call great research.

@logoutjason4689 2 года назад

@@redrobin1193 it doesn't take great research, it takes a five minute google search.

@robertjohannes4659 2 года назад

How long has it been since you've played (under) tournament "classical time control" conditions? What was your highest rating?

@rob_berger 2 года назад

I played in the U.S. Amateur Team East in February. Highest rating was around 2015. I'm currently about 1915.

@ghostl1124 2 года назад

Rob: The basic tennant of investing is that the investor DOES want capital gains. That is how he/she makes money.

@fib6156 Год назад

Always choose a fee-only based advisor. Never pay a percentage over AUM

@MrTTrac 2 года назад

Not sure I agree with 34:00 regarding withdrawals. If stocks are up, would your stock allocations not be off target? If so does it not make sense to withdraw from those stock allocations to bring you back into alignment? I think the best approach is to use your rebalancing to tell you what to take from. Christine Benz from Morningstar also talks about using this strategy of rebalancing to meet cash-flow needs.

@rob_berger 2 года назад

As a practical matter, it may make sense to withdrawal from the asset classes that are up. BUT, if you immediately rebalance, the end result is the same.

@I..cast..fireball 2 года назад

@@rob_berger the point is that you are rebalancing by taking from what is up.

@fib6156 Год назад

0940. You really needed to tweek the handles to find a way to have DFA underperform after costs;). Now with the DFA ETFs all is available without advisor costs. QED DFA is superior

@timflatt8879 2 года назад

👍

@Panelson74 6 месяцев назад

The 4K prediction....

@Panelson74 6 месяцев назад

BND return so bad they changed the web page and dropped that info from the landing page.

@ghostl1124 2 года назад

I predict S&P 500 to be at 4700 by year end, 2022, because several have predicted it would rise in 2022. But I don't know about 2023, could be a drop then.

@grigorirasputin425 Год назад

Keep your day job for now

@AsianTaile 10 месяцев назад

Cool but not as relevant now since dimensional is also publicly funded now.

@Bobventk 8 месяцев назад

“You can’t just pick one date in the past and see who wins” *as he picks 17 dates in the past and picks the ONE where dfa doesn’t outperform. We get it dude… you hate financial advisors

@timflatt8879 2 года назад

👍