The Average Investor Should Use An Investment Advisor: How to Find One

Should the average investor use an investment advisor? I used to think no, but now I would say yes.

I thought no because investing well isn’t that hard on the surface. In its simplest form, you invest in a Vanguard Target Retirement fund closest to the year you will retire. Done deal.

If you can’t invest in a Vanguard Target Retirement fund because it’s not in your 401k, you can mimic it. Look at how much it invests in stocks versus bonds, and how much in the US versus international. You will end up with three mutual funds in your 401k: a US stock fund, an international stock fund, and a bond fund, like this:

How hard can it be?

However, the average investors don’t invest that way. My co-workers sitting next to me sometimes talk about their stocks. They talk about when they bought this or that stock and whether it’s time to sell. When I went camping with a group of people, a woman told the group around the camp fire she switched everything in her 401k account to money market because she thought a crash was coming.

If you ask random people at your workplace “what’s your asset allocation for your retirement?” How many do you think will be able to tell you? If you get to see the investments in their 401k and IRAs, what percentage do you think have a risk-appropriate portfolio that’s within plus or minus 10 percentage points of a Vanguard Target Retirement fund?

These average investors will be better off if they use an investment advisor. Not just any random investment advisor, but a good one at an affordable price.

That’s the other hurdle of using an investment advisor. If you don’t know where to go, it’s very easy to find a salesperson as an investment advisor. You can’t just go by who appear to be knowledgeable and trust-worthy. When you don’t know much, a good salesperson who talk a good talk will appear to be knowledgeable and trust-worthy. Their training makes them master the art of making you trust them.

The best deal in financial advice comes from Vanguard Personal Advisor Services that charges 0.3% a year with a minimum investment of $50k. On a $100k portfolio, that’s only $300 a year or $25 a month; it’s less than most people’s cell phone bills. It gets your money invested right and you also get access to a personal financial advisor all year long. In my opinion it’s the best deal for investing $50k to $1 million.

Some may quibble how Vanguard’s service isn’t perfect. Considering the alternatives for the average investors, I would say it’s more than adequate. It’s better than what the average investors are doing now and it’s better than what they will likely find if they throw themselves out to the open sea.

If you don’t care about talking to a human advisor and you just want your money invested, you can use an automated service such as Betterment. Betterment charges only 0.15% if you invest $100k or more.

If you prefer DFA funds, AssetBuilder offers investment advisory service with a low $50k minimum at 0.45% a year. FPL Capital Management charges a flat fee that starts at $1,000 a year.

Once your portfolio goes above $1 million, you have more options, although Vanguard’s fee at 0.3% per year is still competitive. The fee numbers below are of course subject to change by the respective advisors.

Although most don’t like to admit, it’s very easy to be overconfident in one’s ability to resist behavioral mistakes. The hidden cost of such behavior can be many times the investment management fee we pay to an advisor. I think most investors will be better off using one of the advisors mentioned in this post.

[Photo credit: Flickr user SalFalko]

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  1. KD says

    Sorry to be a nag. But the first part explaining domestic stocks, international stocks and bonds can be illustrated with a graphic. Emphasis on behavioral mistakes aka “Simple does not mean easy” may drive home the point of fee-only financial plan.

    I personally have been toying about trying the Vanguard financial plan now that my assets are in six figures.

  2. Random Poster says

    I’d hate to spend the money for an investment advisor, only to be told “your portfolio looks perfect and you are totally on track to reach your goals.”

    In any event, with regard to the Vanguard “one time fee,” what does that mean exactly? You pay the $250 and you get one financial plan? You pay the money and get one plan per year?

  3. Harry Sit says

    @Random Poster – You pay $250 and you get a financial plan. If you have $500k or more with Vanguard, the plan is free and you get to ask a CFP any financial questions throughout the year. I don’t think it’s necessary to get a plan every year. Maybe every five years or when there’s a life event (marriage, divorce, child birth, new job, …).

  4. Sammy_M says

    I agree with practically everything you said above, but am surprised that *you* are considering hiring an investment advisor. What are your primary motivations?

    I also feel Vanguard’s planning service is a solid option, but would caution people that a good plan is worthless if you don’t have the discipline to follow it. Discipline is the product of education. if you’re not willing to invest in your financial education, go with a fee-only AUM advisor.

    Of course if people are reading these comment they’re on your blog so have already displayed that they’re investing time in their fin education.

  5. Harry Sit says

    @Sammy_M – My motivations are:

    * Recognize that I’m not immune to behavioral biases. There’s that old saying “A doctor who treats himself has a fool for a patient.” By using an advisor, I would put a firewall between myself and my money.

    * Validate if I’m on track for my goals. See if it’s necessary to make some adjustments.

    * Create a relationship between family members and an advisor. In case I’m incapacitated my family has somewhere to go. Let them participate in the process with me so it won’t be too overwhelming without me.

  6. Choy says

    This is a catch-22 to me. If you’re diligent enough to be able to find a good advisor, you’re probably able to create a basic asset allocation for yourself and might need even need one. If you’re one of those average joe investors around the camp fire that would benefit from an advisor, I doubt you’d have any interest in even looking up what qualifications makes a good one or ponying up the $250 to get one time advice from Vanguard.

  7. Steve says

    to Random poster:
    We go to investment free lunches or dinners and follow up with a complimentary look at our portfolio. We have done this about 5 times and NOT ONE adviser said that our portfolio is fine and that there is nothing I can do. Sure they have something to sell to pay for the free lunch, but everyone wanted to sell us something because of our bond holdings are at risk. OH PLEASE, we already took care of that with short and intermediate term bonds and know the risks.

  8. Rick Ferri says

    Full disclosure, I am an investment advisor and have been for about 23 years.

    Here’s my take on this issue:

    1) Everyone has the ability to do-it-yourself (DIY). Creating a portfolio of low-cost index funds and ETFs is not difficult once the principals of diversification, rebalancing, fees and taxes are understood. There are many websites and books that tell you how to do this, including website and my own books (pardon the plug).

    2) An advisor cannot add value (excess return) over what you can do on your own, providing you actually going to get it done. I fact, the amount you pay an advisor subtracts from return, and many advisors subtract a lot more because of a beat-the-market mentality among most advisors that almost always fails.

    3) The KEY is ARE you going to get done what needs to be done in an efficient manner so that you capture the returns your deserve? This is were most people are tripped up. They have good intentions of doing all the right things at the right times, but it doesn’t get done. In fact, many people never really get started by fully implementing their plan.

    4) If the answer to #3 is “that sounds like me”, then you should seek out an investment advisor to help. Choose an advisor of ‘like mind’, meaning who believes in what you believe, has acceptable fees, and who has a reputation in the industry for quality service.

    Rick Ferri

    • Danny Hill says


      I don’t know if you will ever see this e mail or not but if u do please email me on my email i listed, i have a portfoilio that is way out of whack and a Large amount or it is to me anyway, in the 7 digits, i would love to discuss this with you.
      littlhill2003 at yahoo dot com


    • Jonathan Crossley says

      Although 90, my cardiologist states my good health gives me many more years. My assets are securities in a 11m Fidelity brokerage acct. with Breckinridge Advisors running 2m in its municipal bond portfolio and me the rest. Kindly advise roughly your fee for managing the whole portfolio. I prefer fees to %. I am deaf and would not phone or correspond oftem. Regards, Jonathan Crossley

  9. V5 says

    Great article TFB. This has been on my mind lately as well. After implementing a Boglehead philosophy myself over the past two years, I agree it’s not very complicated, but it is an abstract task. I forget where I read it, but most people have trouble starting and completing abstract tasks compared to concrete tasks. Plus, most people are too wrapped up in their lives to monitor their portfolio. I know, a portfolio shouldn’t take a lot of work, but are they going to be able to TLH and rebalance when necessary?

    Secondly, I think most families would actually benefit more from a financial planner looking at their finances in a holistic way than just a pure investment advisor. It’s great to invest a client’s portfolio in a low-cost indexed approach, but if the client doesn’t have enough life insurance, still has credit card debt at 15% APR, and doesn’t have their family budget under control, then what’s the point. I bring this up because I love talking about investing and have broached the subject with many friends. But it always becomes clear early on in the conversation that what 95% people really need is not an investment advisor, but someone to help them budget and manage their debt effectively. Just my 2 cents…

  10. Portfolioist says

    Great post and comments.

    When reading, I thought, “that Vanguard deal sounds really interesting.” Why did I think that? Because I trust them as a company of sound judgment and fair treatment of their customers.

    The Portfolioist series wasn’t about blind trust, but rather about being able to sleep at night. To me, believing in your advisor’s strategy is a component of trust. But I take your point . Failing to focus on strategy would be serious mistake when evaluating your options.

    Nanette Byrnes, author of the 3-part series.

    • PDX_investor says

      With the Vanguard personal advisor services, I would like to put part of my assets under management by the PA, and with the remaining assets, ‘shadow’ the allocation and any moves that they make. This way, I can both reduce the fees I pay (the PA is salary based, not fee/commission based), as well as keep some ‘flexibility’ in how I choose to follow the recommended mix or tilt based upon that.

      I feel this is perfectly reasonable, and something that is fair. Comments?

    • Harry Sit says

      PDX_investor – You can certainly do that. Vanguard’s allocation isn’t a secret. The value in the service is primarily in actually performing the moves consistently without second guessing. If you are going to shadow, be sure you can really shadow and not chicken out when the noise level gets high.

  11. DIY Investor says

    I agree with Rick Ferri. A couple of additional points though: (1) I’m not sure how his is deemed an abstract activity. For example, if you go to Schwab (’ll see they have several well defined models. Choose a model. It is spelled out exactly how to do this. It depends on the usual stuff: age, risk tolerance etc. You will this with or without an advisor. And here is a little secret: you know your risk tolerance better than an advisor! Then you have commission free funds or any others that you may want that you can invest in to meet the model specifications for the various asset classes. If the asset weighting gets 5% out of range rebalance. (2) I think there is some confusion between a financial plan and investment management. These are two separate activities. Typically a good plan will cost around $2,500. It will run Monte Carlo studies and tell you how much you need to save to reach your retirement goals, the insurance you need, how to tax efficiently save for your children’s education etc.
    I would urge everyone who is on the fence to take a weekend and read Ferri’s our many thers of the same ilk before making up your mind.

  12. Bob S says

    I can attest to the Vanguard financial planning as I have just completed the process. Actually with $100,000 invested, the Plan is free (I believe once per year). I was very impressed with all parties that I interacted with. The approach was good. As expected you do the legwork of identifying all of your financial assets, your risk appetite, retirement target dates, etc. I am ecstatic to have gotten away from Merrill Lynch, their fees, loads, etc. I wish I had done it 5 years ago. For folks with a decent investment background, I think Vanguard can provide an understandable diversified recommendation that can be pretty easily implemented.

  13. A "medium fee" advisor says

    A good article with some glaring flaws: will the lowest cost fee only advisor always be the best solution? No.

    Most investors need more than a “once a year” checkin/email. In many instances, I’ve heard first hand that the ultra-low cost/fixed fee advisors struggle to do even that! One in particular has over 4,000 clients! Assuming you can conduct 2-3 reviews every working day (which, over a year is tough to do), you need 10 advisors dedicated soley to conducting reviews. That ain’t happening!

    Further, most of these “low touch/low cost firms” are worried about a short stint of market tracking error that they have significant overweights to the “market” and large growth stocks they miss out on the potential for an additional 1% to 2% per year of portfolio growth. To make up for this deficit, they take additional risks by buying longer term or lower quality bonds and overweight riskier sectors like REITs or commodities.

    Still others have tried to get cute with their fixed income allocations, getting tripped up on auction rate securities in the meltdown, costing investors YEARS of higher fees via underperformance.

    Finally, I see most stick with 4-6 model portfolios that are almost never deviated from. In the extreme, I saw one model index approach that seemed to base it’s entire allocation decision on the last 5-7 years, with over 65% of the equity allocation in international, emerging, and commodities. Sure, that backtests well starting in 2000, but good luck getting through the 90s with such a remote policy.

    Also, I’d love to know what percentage of these investors were rebalancing back to stocks in the Fall of ’08 and Spring of ’09 when it looked like the world was coming to an end. At a 0.2% fee or $2,000/year, you simply cannot afford to spend the time necessary to keep ALL their clients disciplined and on track. It is much easier to give in, postpone what needs to be done until the dust settles, and pay the huge associated costs of bad behavior (which is much larger than small advisor fee differences).

    No, most investors are better off with a fee-only advisor who stresses passive investing but builds custom tailored allocations and works closely with clients to educate them and keep them on track with multiple reviews PER year. This costs a little more than $2,000 per year, but is worth every penny.

    1% should be the maximum fee charged, with rates declining to 0.75, 0.50, and 0.25% based on larger amounts or where the investor is so busy working/living that they can only commit to 1 review a year (and of course more in ’02 or ’08).

  14. Harry Sit says

    @medium fee advisor – Thank you for your comments. There’s no direct link between the FUD you raised and low-fee advisors. A low-fee advisor can do a poor job. So can a high-fee advisor, or a medium-fee advisor. Maybe Rick Ferri should add your allegations to his 8 Bad Excuses for High Advisor Fees.

    Let’s use your numbers for the moment. If an advisor performs 2 reviews per working day, one advisor can do 500 reviews in a year. With 4,000 clients, a firm needs 8 advisors, not 10. Meanwhile, at $2,000/year per client, this firm receives $8 million in revenue. Allow a 50% overhead and owner’s profit, there is still $500k per advisor. It looks like a viable economic model to me.

  15. Rick Ferri says


    Thanks for your comments. You are correct in that “medium fee” advisor makes many allegations about lower fee advisors that are far from reality and should go on the list. Like other higher fee advisors, the assumption is made that low fee means low service. Nothing could be further from the truth. Technology has advanced to the point where an advisor can managed 5 times the number of clients with 1/2 the staff than we could just 20 years ago. Productivity gains have happened in all other industries, and it has happen end in the advisor industry. So why are so many advisors still charging 1% or more? It’s unnecessary.

    Very low fee advisors exist because the owners make a conscious decision to earn a much lower personal income than medium fee and higher fee advisors. I often joke that in my next life I’m going to be a 2% + 20% hedge fund manager because I deserve it!

  16. Ev Luecke says

    Very good commentary. DIY investor for 25+ years – by darn good luck I did well – over time lost interest, decided I wasn’t as smart as I thought I was, feared making mistakes as I approach retirement and wanted a passive asset class investing approach. Got overwhelmed/paralyzed in trying to make the change of philosophy myself.

    I am happy with my choice of advisor – Buckingham Asset Management (Larry Swedroe’s firm). I know your article focuses on mid-sized portfolios – what I wanted to point out is chosing an advisor is a very personal thing – the Rick Ferri firm did not suit my needs, nor did the pre-set portfolios offered at Asset Builder. For me there was more than cost. My suggestion is the cheapest isn’t necessarily the one that is going to meet your needs. Chosing an advisor is not easy – it takes time, thought, and consideration in deciding what your expectations are, and why your need one in the first place.

    I saved and keep handy what Wm. Bernstein noted in Investor’s Manifesto ( which will be controversial with those that practice DIY investing and are confident they know what they are doing):


    Thanks for the energy and thoughtfulness you put into your blog – very informative.

    • DK says

      Ev – I just read a lot of your posts on the “financebuff” website/blog — one said you got overwhelmed — another that it took a while to find the right advisor — another that you were out of the market in 2008 and lucky — I was out too but unlucky – I am still out – no advisor and can’t decide on one and can’t figure how to get back in by myself – market now at highs I am afraid with all the Fed manipulations etc. it will go down as soon as I invest — and I am 59 – don’t know if should wait two years or just bite the bullet and go in — I too think I need a financial advisor – but paying 1% is that much less to compound if it is going to just be buy and hold — that makes me lean to Vanguard – but as someone said – they will probably just recommend 3 different funds……any advice — I see your posts are from 2011 and it is now 2014 so you might not even see this — but if you do — would appreciate hearing from you soon. I am so depressed and I think I need to do something…..d

    • Ev says

      Yes DK I saw your response to one of my posts in this thread – reason I saw it was I subscribed to email notices when a post was added to the discussion.

      I will bring you up to date since my 2011 posts – time passes by quickly.
      From 2009 until Dec. 2013 I was very satisfied with BAM advisor services – not one complaint. My goals were accomplished beyond the portfolio that was developed and maintained over the time. Things BAM helped me accomplish: advisor went with me to the estate attorney twice to provide support for putting the trust together (keep in mind I am single and no family member to turn to on these things), helped me organize my retirement which will be in about 10 weeks (woo-hoo!), The adviser’s research found a strategy I would have never, ever on my own thought of – had to do with buying back some yrs. of service; calculated out I could not do better investing this money so I needed to buy years. Added a good amount to my pension. Any number of other things I could go into.
      I appreciated everything they did for me – it was far more than managing the portfolio.

      In Dec. I decided to explore a possible lower-cost fee only advisor. I was not paying 1%; but it was still a considerable amount each year. You are correct the fee takes away from your return.
      I now work with this small firm:
      I have been happy with Derek’s service albeit it has been a very short time – one thing I wanted to do was simplify the portfolio some – my portfolio was well organized in relationship to my need, willingness and ability to task risk – so a few changes were made not many. Derek patiently answered all questions, communicated promptly and got the portfolio adjusted quickly. I did not have to change brokerage firms so no accounts needed to be set up. I did not need a plan put in place – I have that; but Derek will develop one for a separate fee.

      I’m not really qualified to give advice, but fwiw I know the feeling about kind of having a paralysis and just can’t move – its not fun. That was the way I was for a good long period of time when I went almost totally to cash thinking I was going to going with Vanguard and manage it myself. I feared making mistakes.

      I believe might be helpful for you to forget worrying about the ups and downs of the market – you can not time it to get in at the “right” time or for that matter get out at the right time.

      Seems like first step is to develop a written plan – that plan will drive how your portfolio is structured.

      These two boglehead posts are about the best I’ve seen on the topic of plans – this takes time to put together, but will be needed even if you chose to work with an advisor. When a good advisor develops a portfolio they have to know YOUR overall financial situation – your goals, history, etc.

      Going through the process of an itself will serve you well.
      Keep in mind it will not cost you anything to explore a Vanguard advisor, or any other advisor. You can explore advisors – as you do it may come clear to you, “yep I need this, or shoot I can just do this myself.”

      Each person’s financial picture and needs is different – one advisor does not fit all, no way, no how. Nor is DIY investing suited to everyone.

      Hope this helps – ask any questions and I will try to answer the best I can.

    • Harry says

      Thank you @Ev for mentioning Purpose Wealth as another low-cost advisor. At a fee of 0.25% capped at $6,000 it may be considered as a flat-fee advisor once your portfolio goes over $2.4 million. I’m adding Purpose Wealth to the main article.

  17. Ev Luecke says

    Sorry in my previous comment – I may have exceeded the limit – but the William Bernstein notes I referenced – these were like ah-hah moments for me:

    I have come to the sad conclusion that only a tiny minority will ever succeed in managing their money even tolerably well. Successful investors need four abilities.

    #1 – an interest in the process

    #2 – more than a bit of math horsepower, far beyond simple arithmetic and algebra, or even the ability to manipulate a spreadsheet. Mastering the basics of investment theory requires an understanding of the laws of probability and a working knowledge of statistics.

    #3 – a firm grasp of financial history, from the South Sea Bubble to the Great Depression.

    #4 – the emotional discipline to execute their planned strategy faithfully, come hell, high water, or the apparent end of capitalism as we know it.

    I expect no more than 10 percent of the population passes muster on each of the above counts. This suggests that as few as one person in ten thousand (10 percent to the fourth power) has the full skill set.

  18. DIY Investor says

    re: EV I understand exactly where you are coming from. What i question is the need to understand. Most of us don’t understand how the combustion engine works. Most are clueless in understanding what happens when we turn the ignition on. Yet most of us can drive a car.
    There is very strong evidence that if you put your age percentage in bonds and he rest in stocks, using low cost funds, that after all fees and costs an indexed strategy will outperform 70% to 80% of advisors over the longer term.
    For those who are slightly more sophisticated they can do a bit better by mimicking a lifestyle fund which reallocates over time.
    So, you’re 40 years old buy 60% SPY and 40% AGG and that’s the simplified version. Actually a bit conservative for my tastes but anyways…
    For the investor who insists on knowing why this works there are great books out there explaining the fees advisors charge and the hidden costs of trading etc. The same books detail the evidence on stock pickers and market timers. Granted learning all this requires a mathematical background and time.

  19. Steve says

    Self filling prophecy is a principle that if you think that 90% of the public is too stupid to learn investing for whatever reason, then it will be true. I was sorry that Bernstein had to go in that direction. He didn’t have to. I love everything else he said. The problem is that we don’t know how many people are doing it themselves and are successful because they don’t talk about it publically. We only hear of the victims and the horror stories. Of course the people, who come for help, don’t know, thats why they come for help. But to announe that 90% of the public are too stupid to learn or don’t have the motivation or courage is just an opinion. We don’t know.

  20. One New Voice says

    I like the post. A lot of info. I would have to say that I think that there needs to be more personal learning going on. Financial education is the key to true freedom. Don’t get me wrong, I think everyone need a financial advisor, but people need to know more about what they are getting one for. To say I am getting an advisor for retirment is to vague. We need to know why we are getting an advisor because their job is to give us suggestions. If we don’t know what they are talking about how can we tell if they don’t know what they are talking about.

  21. Anthony DuBon says

    I agree that something like 10% of investors have the interest and capability to manage their own money. 90% need an advisor. I say this as a partner in a company that sells information on mutual fund investment capabilities. We have individual investors and advisors subscribing to our service. The individual investors self=select. They meet most of the criteria listed by Ev Luecke in comment 18:
    #1 – an interest in the process
    #2 – more than a bit of math horsepower, far beyond simple arithmetic and algebra, or even the ability to manipulate a spreadsheet. Mastering the basics of investment theory requires an understanding of the laws of probability and a working knowledge of statistics.
    #3 – a firm grasp of financial history, from the South Sea Bubble to the Great Depression.
    #4 – the emotional discipline to execute their planned strategy faithfully, come hell, high water, or the apparent end of capitalism as we know it.

    I happen to think that #4 is most important of all. Without discipline the best strategy will fail. How many people bailed out of the market in 2008, as it hit bottom and failed to regain losses by being present for the recovery. I do think that the industry could make it easier to find good investments. The tangled relationships between the large investment firms, brokers, other advisors, mutual funds complexes can be difficult to navigate. Independent sources of information need to be made available to deliver the information needed by investors. Advisors with integrity (many but not all of the advisors out there) add a lot of value in helping to sort through the confusing oversupply of information. My firm and others that provide analysis on the web also help individuals and advisors to find the investments that are likely to outperform.

  22. Anonymous says

    Excerpt from a Vanguard (former?) employee review on

    “Oh, and that certified financial plan that you may have paid a fee for at a price tag of $250 or $1,000 for; notice that the only real advise you received was to buy into the Vanguard total stock, total bond and total international index fund and tell you to hold onto them forever. Are you really doing what’s best for your clients or what’s best for your bottom line?”

    Only reason I post this is I was thinking of working for Vanguard and happened across your post and the glassdoor review in the same day.

    Personally, the advice I’d be most interested in would be their recommended asset allocation percentages and whether I’m holding the right funds in the right places, but the review didn’t go into that …

  23. Steve says

    “Oh, and that certified financial plan that you may have paid a fee for at a price tag of $250 or $1,000 for; notice that the only real advise you received was to buy into the Vanguard total stock, total bond and total international index fund and tell you to hold onto them forever. Are you really doing what’s best for your clients or what’s best for your bottom line?”
    Absolutely, over the long term, that $1000 advice will pay off in low fees and its elegant. But I did not even have to pay for any out of pocket for that advice. The only part that is always left out in this very simple plan is the REBALANCING. I have owned those three funds for years. I am an uncomplicated by nature and I like the simplicity, the diversification and the extreemly low costs. Go Vanguard!

  24. Ev Luecke says

    DIY investor noted: <<>>

    You’re correct I really don’t understand how the engine works – but what I do need to have is an understanding of what I need to do to keep the engine working properly for many years and awareness of safety issues – a plan for basic maintenance scheduling – keeping the finish polished and clean, tire checks, correct pressure, rotations, front end alignment, regular oil changes, longer term transmission fluid change, radiator flush, injector cleaning, timing belt change and so on. Behind all this it won’t happen correctly without a trusted mechanic that will provide excellent value for the money. No, I don’t need to know or do I really want to know all the details and ins and outs of the mechanics of the engine – but I sure need to pay attention to my car and see that the preventive maintenance is attended to properly.

    That said, my search and due diligence for a fee-only advisor was not a matter of understanding exactly everything about MPT and how it worked. It was certainly not plopping down my money in a couple of Vanguard Index or ETF funds – it was like the car maintenance – I needed a financial plan – not just a portfolio allocation – there was in my mind a big picture. As a financial advisor yourself (I peeked at your website) I’m sure you’ll agree.

    That big long term maintenance included things like transitioning to retirement, when to reitre, how much do I do I need, how much to withdraw from the portfolio and from what funds do I take the money, do I pay off the mortgage, what about long-term insurance, direction on a trust.

    Transitioning that thinking to the portfolio – frankly it became overwhelming: What type of passive instruments – index vs. etfs, how did the rebalancing work, can I do the rebalancing at the right time and in the rights amounts. How do I figure our a risk profile, and the needed asset class allocations – do I need commodities, REITS, foreign bonds. Had several active managed funds – do I sell them, all at once, or few at a time – what are the tax implications. I haven’t even touched on fixed income portion of the portfolio – should I have bond funds like V-guard Total Bond Market – or some combination of TIPS, CD’s.

    Plain and simple I was not confident in my ability to get it right. FIrmly convinced for ME the importance of planning, executing, and preventing mistakes pays for the advisor fee – and finally peace of mind. I’ve also discovered that my advisor encourages me to be knowledgeable and involved.

    I digressed from the Bernstein points and will address them on another post.

  25. Steve says

    Folks, you don’t have to be a math genius to know about investing. The constant reference to math only continues to intimidate people from learning investing. Is that what we want?

    Reference to the auto mechanic or any other profession I always find hilarious. The problem with comparing the mechanic and the financial adviser is that the adviser gets paid the entire time the investor is with him or her, sometimes for years and years and never sees the adviser. The mechanic charges a flat fee and is done. The mechanic is a great example of a fiduciary.

    Always use a fee only adviser, but the problem is that the investor still needs to know what their adviser is doing. Also the investor needs to know that advisers don’t “get it right.” No one knows future performance and advisers make mistakes too, lots of them. Case in point: Did you read all of the horror stories during the 2008 crash in the newspaper when 80 year old people had 90-100% equities and lost half of their money and they had advisers!!! A simple bond allocation could have saved them, now does that take a math genius to know about asset allocation with a bond allocation equal to ones age? I don’t think so.

  26. DIY Investor says

    @ Ev Hey, if you’re convinced that it is too difficult, that actively managed funds add value, that managing the funds as you move to retirement is too complicated to figure out then by all means hire an advisor.
    Do note however that I totally agree that people need a financial plan and that they should pay for it – on average a good plan will cost $2500. Note also that I’m not talking about estate planning. Actually as you know a planner cannot draw up a will or set up trusts etc. so that’s a whole different ball game in itself.
    An outcome of a financial plan is a recommended asset allocation. Once that is in hand I believe that the way to go is to use low cost, well diversified, index exchange traded funds.
    I realize it isn’t for everyone.

  27. Ev Luecke says

    DIY –
    I did hire an advisor – Buckingham Asset Management (Larry Swedroe’s firm) – and have accomplished all that you noted. No, it isn’t for everyone that is for sure.
    My portfolio is DFA funds and TIPS /CD’s on fixed income side. BTW, I thought the DFA funds were a nice little plus to working with BAM – I’d never hire an advisor to get access to DFA funds for sure.
    For ME a burden lifted.

    About those 4 items Bernstein listed.
    1 – I was losing interest in diy investing
    2. – Math horsepower – about none. I don’t think you really need to get factor loads, optimizing sharpe ratio and all the minutia – but I have trouble with the basics – understanding rates of return for example.
    3. A grasp of financial history – sort of get it.
    4. Emotional discipline to execute and stay the course – I think I have this – in 2007 I sold the vast amount of my holdings to Vanguard MMK – I knew I wanted passive asset class investing – but it took me until mid-2009 to get it organized. I also became paralyzed as I saw the market tumble and tumble – missed out on all that by pure luck. Prior to that over 25 yrs. thru up and down I sold little.


  28. DIY Investor says

    @ Ev I’m a fan of Swedroe so I think you’re in good hands. I’m a fan of Bernstein as well.
    On the 4 points:
    1. It doesn’t take long so a whole lot of interest isn’t required IMHO. It’s nothing like picking stocks for example where you need to be very passionate and willing to spend a lot of time at it.
    2. Math – Schwab does the performance numbers and for the performance numbers for the benchmark model you choose and they are up-to-date. For example, those clients of mine that use Schwab know their performance through Friday relative to the index! Most people have no idea how they are performing year to date or for the last 12 months.
    3. financial history- important but even more important is a sense of economics IMHO. People don’t understand that when prices rise forces come into play bringing them down. Example: housing prices a few years ago. People acted as if they would rise forever. Closer to home: watch how people act as oil prices go higher.
    4. Emotions – this to me is key. For those who can’t be unemotional hire an advisor. I will say though that something that I’ve not seen mentioned is the inability to get hold of your advisor in stressful times. Markets plunge and advisors don’t return calls! This exacerbates the situation greatly.

    I’ve enjoyed the dialogue and hope others have gained from your experiences and insights. It is a big advance when investors find what works for them.

    This whole topic and exchange has been one of the best I’ve come across in a while. Kudos to TFB!!!!

  29. Ev Luecke says

    Yes absolutely a good topic and exchange – perhaps something to be said for those that follow discussion on TFB, Oblivious Investor, more than likely are in that 10% that Bernstein refers to as being successful.

    My brokerage is Schwab as well – would you mind explaining how the client views their portfolio relative to the index benchmark. Is this something separate you set up within the account to view performance compared to a benchmark? You said:
    “performance numbers for the benchmark model you choose and they are up-to-date” I don’t understand what you mean by “the benchmark model you choose…”

    I don’t see this anywhere in the accounts section?
    BAM created a personalized benchmark that compares my performance to the portfolio return -which I think is important. BAM also reports the portfolio Internal Rate of Return in my quarterly performance report – whereas the brokerage performance is reported as Time Weighted Return – which if I understand correctly is how an index or benchmark should be compared to.

    Seems to me like IRR is important to have – “IRR as the personal rate of return they received for their particular investments, since it accounts for the timing of their buy/sell decisions, and/or portfolio withdrawals or deposits that affected the realized return. This gives the investor an indication of what factors were at play that caused the IRR to differ (positively or negatively) from the benchmark rate of return. ” Larry speaks about these differences:

    Anyway, thanks for explaining how your client has this index benchmark set up.

  30. Ev Luecke says

    Just to note – if interested my customized benchmark the composition, which is proportionately the same as the portfolio but less value oriented.

    Russell 1000 – 11.7%
    Russell 1000 Value – 3.7%
    Russell 2000 Value – 11.0%
    MSCI EAFE – 9.8%
    MSCI EAFE Small Cap – 5.6%
    MSCI Emerging Markets – 2.2%
    Dow Jones UBS Commodity (total return) – 3%
    Dow Jones REIT Index – 3%
    Barclays Interm Govt/Credit – 25%
    Barclays TIPS – 25%


  31. DIY Investor says

    Hi Ev,


    If you’re still a bit fuzzy on it email me at my site and I’ll give you more detail.

    I assume you’re in retirement or close to it or were burnt badly in the market previously because of the 50% bonds allocation. If so I like the allocation because you are well diversified. I would probably reduce TIPS and put 5% in JNK, a high yield fund, and possibly 5% in PFF, a preferred trust etf. I also would maybe put 5% or so in the equity portion in a dividend etf like DVY. But all of these are changes around the periphery and who knows if they would end up adding value.

  32. Ev Luecke says

    No I wasn’t burnt at all – especially the 2008 crash – I was by luck 80% out of the market. The 50 % fixed income is due to risk tolerance – the willingness, ability, and need to take risk. I don’t need to take a lot of risk in order to reach my objectives.
    I am close to retirement. For me the piece about NEED was the most important in terms of deciding on the risk tolerance.
    I will read your article referenced. – Thanks.

  33. Munir says

    Thank you for this informative and timely thread. I’m a retired Boglehead who has reached an age where I’m considering handing things over to an advisor primarily because I’m worried about what will happen when I “kick the bucket”. In addition to a passive, index, & fee only (e.g. using Vanguard & DFA funds), I want an adviser who will get along with my spouse and will maintain personal contact with her after I move on. I also want continuity from that firm and would be interested in how they address that issue if the main manager moves on, retires, or dies.

    Are these basic questions that don’t merit much discussion in these conversations because they are dealt with on a one-to-one basis during the setting up of a relationship with the adviser? To me this is the area where personal trust and reationships really count.

    Thank you.

  34. "medium fee" advisor says

    What always gets me with these “low fee” guys is they aren’t the LOWEST fee firm. And if advisor fees are all that matters when hiring a professional, why would anyone hire a firm at 0.25% when there are plenty of options at 0.2% or 0.15%?

    If advisor fees were all that mattered, then a firm charging 0.25% (let alone 0.5% or 0.75%) would be out of business. Far from that being the case, both my firm and Buckingham are larger than Portfolio Solution, clearly not out of business. And this is without me advertising my firms’ name or services on Internet chat sites.

    The reality is, low (but not lowest) fee advisors will tell you there is VALUE in hiring them and paying more than the lowest fee firms. I am simply taking their argument and applying it to our (medium fee) advisory firms. Are we really supposed to believe there is really something magical about 0.25% whereby anything less is “insufficient” but more than 0.25% is highway robbery?

    Please. 0.25% is based on the 12b-1 takedown these guys used to get in their brokerage days. My guess is, after years of disappointing active fund results, most people wouldnt stay on board with a new startup firm for more than 0.25% and they just got painted in that box.

  35. "medium fee" advisor says

    I also find it interesting that no discussion ever takes place about how different advisors develop portfolios and how firms that meet with or review their client portfolios more frequently can afford to diversify more fully between market risk and return factors. Are we to assume all firms achieve the same returns simply because they use indexes? Far from it.

    Lets look at 2 examples:
    The first firm charges 0.2% annually, develops a 60/40 stock bond allocation for their new client and plans to call them once per year for a review. The stock allocation has a heavy Total Stock Index tilt, with only 30% in small and value asset classes (this works out to about a 15% size tilt and a 15% value tilt). On the bond side of the portfolio, they hold longer term and lower quality debt arguing for “better diversification”.

    The second firm charges 0.75% annually, determines a 60/40 stock bond allocation is also appropriate but prefer to meet with their clients 2-3 times per year. This advisor believes in more overall diversification between market, small cap, and value risk and return factors on the stock side. They also prefer to keep bond allocations shorter term and higher quality to provide better risk reduction.

    We will model firm 1s allocation since 1928 (longest period available) using a 60% combination of DFA US Core 1 Index (the same size/value loadings as their model index portfolios) and 40% Ibbotson Long Term Corporate Bonds.

    Firm 2s allocation is instead 24% DFA US Core 1 Index, 36% DFA US Targeted Value Index, and 40% Ibbotson 5YR t-notes.

    Net of both advisor’s fees from 1928-2010, we saw returns of +8.9% and +9.6% respectively. Furthermore, neither portfolio showed any meaningful difference in downside risk.

    So what we find is that differences in portfolio construction (which are possible because more frequent reviews = more opportunity to “coach” investors through short periods of market tracking error regret) are far more important than small differences in advisor fee.

    In this example, the opportunity cost associated with investing with the lower fee advisor was about -0.7% per year, for a total cost of about 0.9% total, or close to the 1% fee they seem to despise so much.

    The irony here seems to be that investors/advisors are so concerned with advisor fees (which never vary by more than a few tenths of basis points) they completely ignore huge differences in portfolios taking varying degrees of market, size, and value risk. Here we are talking about several hundred basis points of performance difference! And it is just those firms that charge a bit more, allowing for more client face time and more education and discipline, that are able to prescribe these more diversified allocations without living in fear of temporary market underperformance.

  36. Aaron says

    @medium fee advisor,

    I have personally nothing against medium or high fee advisors. It’s really about what someone is looking for, and if the adviser provides a value in return for said fees charged.

    That’s really what this is about. To broadly characterize the categories is fair, but it’s categorically unfair to then judge one adviser in any of the groups based on what most in the group does. With that said, you’re also categorically throwing out how medium fee firms are better than low fee firms, virtually always, or that low fee firms are inevitably inferior to medium fee firms.

    The question is what does the customer want? If they’re wanting someone to determine an asset allocation, rebalance for the customer as time goes on often, etc., then they probably should have a medium fee adviser. If they want instead someone to simply help them determine an appropriate allocation, and then the customer will take it from there, how could it possibly be in the best interests of the customer to pay a medium fee adviser?

    Very simple: it isn’t.

    Not everyone is looking for an adviser to do all your firm is doing. I certainly am not. I’m completely comfortable with rebalancing my portfolio, and do so often. However, I definitely see the value of talking to a reputable low fee adviser. But that’s me. I wouldn’t say anyone turning to a medium fee adviser is wasting their money just because they cost more than the low fee adviser I chose.

  37. "medium fee" advisor says


    All good points. However, I would argue we should apply the same logic to low fee firms who constantly pound the table about how anybody who charges more is ripping investors off.

    The reality is, I have some clients at these lower fee levels. Most firms do, and we acknowledge there are clients out there like this that we are happy to work with. Low fee firms, on the other hand, are completely unwilling to admit some investors require more attention and it costs more to service them and meet their demands.

  38. Lowell Herr says

    In Daniel Goldie and Gordon Murray’s little book, “The Investment Answer,” decision one is to decide whether or not one should manage their own portfolio. G & M recommend seeking a fee based advisor, just as this article advocates. It is probably the right choice for many investors in the market, but I prefer to watch over my investments as I don’t think any advisor would have the patience to measure some of the risk factors I consider extremely important.

    For example, most advisors still use standard deviation or mean-variance to measure risk while SD is now considered to be outmoded as it penalizes a manager for volatility to the upside, something we all desire.


  39. Ev Luecke says

    Your questions are in my mind very important to establishing your advisor relationship. What I found as I went through the process is the more information I had written down (so I don’t forget ) related to my overall financial situation the easier it was first to compare apples to apples, knew what I wanted, and made things clear for the advisor. So it wasn’t a matter of waking up one day and saying, “I’m going to get an adviosr today.” It was a process that took time.

    Key in my mind to having a successful for YOU relationship with an advisor is exactly what you are talking about – the personal trust and relationship you establish is the very most important part of having an advisor.

    Any firm that is not interested in your wishes when you pass on and establishing a good relationship with your wife is not worth their salt. The discussion will and should be as lengthy and as often as necessary so you and your wife are comfortable. In my case I am single but had questions like yours – actually the advisor approached the subject before I had time to ask in our first meeting. My advisor has established a relationship with my sister related to questions about my taxes (I just don’t get taxes period). My sister has someone to contact about the taxes and the advisor knows I don’t get it so she will phone my sister.

    Establishing the foundation of an advisor relationship is not a ten minute phone call in my opinion.

    About succession of advisors – this is important question – your advisor should be able to explain how this is handled. I’m going to ask my advisor about this – good thinking.

    Let me know if I can answer any questions for you based on my experiences. Its a big step to hire an advisor for sure. evluecke at gmail dot com


  40. Munir says

    Hi Evelyn,
    Thank you for the response. It has helped me think matters thru more clearly. To elaborate on what I’m looking for, and asking others’ opinions about, is how realistic and feasible is my request. My issue is that I believe with the knowledge I currently have as a Boglehead, I don’t need much “care” but only want someone to suggest & execute an asset allocation, and then rebalance maybe no more than once or twice a year. I suppose a “low-fee” advisor would be fine for this role. But I also want this person to be able to explain finances more fully and spend more time (at more cost) with my widow when I’m gone. I also want him/her to assure me that my widow will receive a monthly or quarterly check from my investments for her living expenses. How can I judge at the initial interview that the advisor I’m conversing with can serve this dual before-my-death and after-my-death role?

  41. Ev Luecke says

    I believe your request is not only reasonable Munir; it is for you an expctation that has to be met period. These advisors are there to meet our needs – if one can’t do it, there is someone else who will be happy to. I can’t tell you if a low-fee advisor can meet your expectation, or you will require a more which I call full service one. I believe your gut will tell you with reasonable certainty if the advisor will meet your needs as you begin speaking with advisors.
    Perhaps when you do the initial interviewing/question asking your wife should be a part of this too – and she will get a feel for who she is comfortable with. And can support you as you both make an advisor decision.

    I was also thinking perhaps because your wife will require as I understand it, more hand-holding perhaps an advisor in your local area that you and she can visit with face to face would create a good atmosphere in establish the relationship. My advisor is local and I have had several face to face meetings and it was a good thing for me.
    I don’t know if this is helpful or not – if I wrote it confusing just ask again.

  42. DIY Investor says

    @Munir Let me throw a couple of ideas at you. First, you may want to seek an hourly, fee only registered investment advisor. He or she will sit down with you and come up with an asset allocation, make sure your investments are located correctly and overall make sure you are positioned to reach your goals.
    Some people have the goal of leaving an inheritance, some are fearful of running out of money and some want to ensure (as you do) that their spouse is taken care of.
    One thought on the latter is to consider putting a portion of your assets (maybe at your death) in a single premium immediate pay annuity. This will provide your spouse with a paycheck for as long as she lives. Be careful that this is handled by someone who knows what they are doing. Insurance product sales people sometimes talk the unwary into products that aren’t appropriate. Believe me – this is a huge understatement.
    When you sign an agreement with your advisor make sure it clearly specifies the investment approach that will be used. I’m currently involved with a client who lost a lot of money. The advisor went into the church, signed up about 20 people, traded on margin and for some of the clients lost all of their money. Now the advisor can’t be found and, for sure, he’s no longer going to that church.

  43. Munir says

    Thank you for the helpful responses. I feel I am hogging this conversation, and so I’ll be brief.
    I have researched the local advisors in my area and none of them meet my criteria of a passive low cost indexing style. I may end up with someone initially on an hourly-basis advice, but that does not meet my longterm needs. Including my sposue more into this whole process is a valuable suggestion.
    I do have one SPIA, and plan on purchasing more within the 100K limit each of the state guarantee rules- hopefully when interest rates rise a little. Currently I’m focusing on one of the California “low-cost” advisors mentioned in the article referenced at the beginning of this thread.
    This dialogue has helped further my thoughts in this area, and galvanized me into taking a more assertive search. Thank you.

  44. "medium fee" advisor says

    The one time fixed fee route probably isn’t a good one, or at the very least insufficient. Setting up a plan is the easy part. The value of financial advice comes from ongoing support. In 15 minutes we can google appropriate allocations for our age. Staying with them over the next 20 years is something else entirely, and because of this, you should pay for advice that makes this possible.

  45. Lowell Herr says

    If one is looking for a 20-year advisor relationship then it is important to seek out a firm where it is not just a one person shop but there is some plan of sustaining the company for years.


  46. Rick Ferri says

    I’ll say this one more time and maybe it will stick. The BIGGEST difference between a medium/high fee advisor and THIS low fee advisor is size of our paychecks. I take home a MUCH lower amount per assets under management than advisors who charge higher fees. The pseudo-excuses you’re reading above about medium/high fees is a cover-up for a fat profit margin.

  47. Jeff says

    I’d like to see a study of how effective advisor hand-holding is at keeping jumpy clients from fleeing the market during a downturn. I hear a lot of how this is the big bonus to having an advisor vs. not, and it sounds good in theory, but I wonder how much of one it really is. I also wonder how many advisors bailed in the last downturn.

  48. DIY Investor says

    @ Jeff Interesting question. I think advisors do a good job keeping clients from bailing as long as they themselves believe that bailing is the wrong thing to do. I had 26 clients and 2 bailed. One was down 19% in ’08 when the S&P 500 was down 37%. She had said on a questionairre that if stocks were down 20% she would buy more! Get this – she’s a psychologist!
    But a bigger problem I think, that you alluded to are the brokers themselves who try to time the market, got out (for emotional or whatever reasons) and never got back in. This is actually a big source of business. When I ask people why they are seeing ny services and they say “the advisor I have now has messed me up” I pretty much get the picture.
    It is interesting that FINRA, the Financial Industry Regulatory Authority maintains no performance data on brokers and advisors. People are flying blind when they go with the “market beaters”.

  49. Dennis J Liverett says

    As an advisor who works on commission, I agree with many of the comments already made. Most clients are simply too busy living life and earning their savings to set aside yet another block of time to devote to their financial education. And that is not anything to be shameful of. There is a lot of information, good and bad, out there. For the average saver to be on top of it and have the knowledge and experience to filter it is to ask alot! Not to mention, when you need the answer to a question, a highly individualized, specific question, based on your circumstances, you don’t have time to search for the answer – call your advisor. Again, most people have good intentions and want to do the right thing – when? During lunch, between homework and showers and getting the kids to bed, and cutting the grass, etc etc. And I agree with Ev Luecke – its a personal choice and price doesn’t always define the relationship. Find an advisor you feel comfortable with, who has a good reputation in the community. Dennis J Liverett

  50. Dennis J Liverett says

    I should add, my “commission” is never on the front, and I earn every bit of it on the back-end. DJL

  51. pippy says

    @TFB: Thank you for a good analysis. After all of the discussion have you decided to use an advisor? If so, can you say which one and why? Thanks.

  52. Munir says

    I’m not sure if this last comment from Pippy was directed to me or not, but I did decide to use Bill Schultheis of the “New Coffeehouse Investor”. I had heard about Bill and read his book and his comments on the Boglehead Forum. He has been recommended by a number of people whose opinion I respect. He follows the low-cost, passive, and index philosophy of investing. He was described by more than one person as a “standup” guy.

    As to cost, I will not presume to classify him in any one group. He has an AUM arrangement and I would have preferred a fixed fee, but I relaized I’m not going to get everything I want. He has partners & associates which was reassuring as far as succession is concerned. I appreciated the phone interview I had with him. I felt we clicked- an important characterisitc that I was looking for. In my situation, where I also need someone to connect with my widow after I “pass on”, I felt he would be a good fit. These were the main reasons I didn’t just choose the lowest-cost advisor.

    To sum it up, the factors that mattered were philosophy of investing, size of advisor group, cost, and maybe most importantly that I felt we would be a good team together. One last factor, which may seem silly to some, is that he is from the Northwest and from an adjoining state (I’m from Oregon).

  53. Harry Sit says

    @pippy – As to me, I decided to get a financial plan from Vanguard first to see if I’m on track toward my retirement goal.

  54. Karan Batra says

    How can I find an Investment Expert who does not charge a Fixed Fee?
    As in I’m looking for an Investment Expert to whom I can pay percentage of profits, in case their is any and no fee in case of loss. Are there such Investment Experts who are willing to work on these Terms ?

  55. DIY Investor says

    @Karin You may want to find someone who will work with you on an hourly basis. The problem with sharing profits is that it creates an incentive to take inordinate risk. Give me $500,000. If i double it by putting it in risky investments I hit a home run. If I lose it all it would be no big deal – from my viewpoint.
    The regulators recognize this and frown on it. You can of course, if you have enough, go the hedge fund route. I personally would review the story of Long Term Capital Management before I did that.

  56. Diane says

    No one has commented on this subject for eight months – is anyone still watching? I have comments but don’t want to send them to no one!

  57. pippy says

    @tfb: It’s been a few months and I was wondering if you were happy with the Vanguard Plan or have decided to use an advisor. If you’ve chosen an advisor can you share which one and why in general terms.

    I have been using a “low fee” advisor for about 5 years but am not particularly happy with the situation. I retired early (mid 50s) and have a somewhat atypical split between taxable (75%) and tax deferred (25%) assets. My priorities are net income after taxes and fees, capital preservation and modest growth. The advisor is not pro-active. Yes, I get the quarterly report but it is just numbers and an overall market commentary, nothing specific to my situation. I already know all the numbers from Quicken. My desire is to find an advisor who “earns their keep” so to speak. I am not hung up on the % of compensation as much as the net returns and service provided. Any guidance is welcome.

  58. Ev Luecke says

    I was surprised when this topic popped up in my email. I’m not TFB, but will comment.

    Interesting you noted your experience with a low cost advisor – not that its right or wrong, good or bad. Reinforces my view that chosing an advisor is a very personal thing – none can be all things to all people, What one person see’s as value added, the next sees it as unnecessary cost. Further, one person that is very pleased with a particular advisor low cost, or higer cost – the next might not be satisfied.

    I might suggest make a short list of fee-only advisors you might be interested in and interview them with well thought out expectations, etc.
    Perhaps of help – Larry Swedroe has written on principles for selecting an advisor:


  59. Steve says

    I haven’t used an adviser for over 20 years since my last two only sold me annuities for my 403b plans. After a $6000 surrender fee, I have learned to invest myself and have never looked back. The skills to find a truly fiduciary adviser are the identical skills to be a DIY. Why should I pay somebody else to find a low cost index fund? In that situation, a good adviser can help people stick with their plan should the market start acting up (or down).

  60. pippy says

    Thanks Ev. You are certainly right about everyone having different priorities. I’ve followed Larry Swedroe on the Bogleheads forum for years and his list is a good starting point. Having used a passive oriented advisor and an active oriented advisor in the past I have seen quite a spectrum. My experience is that the advisors I have spoken with all seem to have their recommended portfolio for everyone and simply change the allocations. That does not seem appropriate as all situations are different, but when you have a hammer everything looks like a nail.

    Another challenge these days is balancing the advisor fees vs. portfolio return, particularly when the investments are one’s sole source of income. If a portfolio were earning 8%, a 1% management fee is effectively a 12.5% hit to gross return but with returns these days at 4% or less that same 1% fee eats up 25%+ gross returns. Passive investing preaches keeping costs low yet passive advisors’ management fees are typically more than that of the investments they recommend. Maybe it is me but this does not seem right.

    Anyway I’m going to start my list of interview questions. Thanks again for your feedback.

  61. Ev Luecke says

    You hit the nail Pippi –
    “Another challenge these days is balancing the advisor fees vs. portfolio return”
    To me doesn’t matter if someone is retired trying to generate portfolio income or still working – its still huge question.
    I wrestled with this time and time again – even after I was working with my advisor. After a couple yrs. I shopped/considered getting a low cost advisor – spoke with 3. One wanted to sell my entire portfolio and start completely over, one was a fixed portfolio that you chose one that fit your risk profile, the other I can’t remember what the concern was.

    Finally decided if its not broke for me leave it alone. Different things have helped me that the advisor has provided beyond the actual investments.
    One big example – I will get a teacher retirement pension – I had several years in the system that I could buy back – it never dawned on me that it could be in my best interest to purchase these years. Advisor spent considerable time contacting the retirement system gathering the info – and calculating if I would be better off continuing to invest that amt. or buying the years. Bottom line it would have been foolish for me not to buy these years of pension credit. They completed the paperwork and facilitated the transfer of funds. They also did some research on the financial stability of my pension system.
    The advisor initiated all of this – it wasn’t me questioning anything.

    The point – the effort will be more money in my pocket with no risk. This was the emphasis – I could probably make a little more but would take a lot more risk.

    I’ve also gotten hand-holding on a variety of other things – that either helped me save some money, or reassured me on one thing or another.

    Should note – I am single and really don’t have anyone knowledgeable to work thru / figure out some of the different financial issues. Decided for ME preventing a few mistakes has the potential to pay for the advisor fee.

    Good luck – again, its very individual. If I had the financial “know-how” and confidence to do it myself I would. In fact I did manage my financial stuff / portfolio myself for many, many years and did fine (I think) – near to retirement I can’t afford to make mistakes – so I have the advisor.

  62. Harry Sit says

    @pippy – I have not used Vanguard’s financial planning service yet. I’m hoping to get my asset level up soon to reach the next tier so the service will be free.

  63. Nony Mas says

    TFB– It’s been a half dozen years or so but I wasn’t all that impressed with Vanguard’s financial planning service. The planner seemed competent and all but it was fairly evident to me that it was pretty much a computer program that was making the recommendations and with limited options and it wasn’t much different than a portfolio one could have recommended by Bogleheads. It was free for me so I can’t complain but I really didn’t consider it “financial planning” in the true sense of the word.

    Pippy said: “Passive investing preaches keeping costs low yet passive advisors’ management fees are typically more than that of the investments they recommend. Maybe it is me but this does not seem right.” Advisor fees are all over the map even with passive managers. I happen to believe the DFA premium argument and that pays my advisor fees. There are several recent Boglehead threads about picking an advisor. I’ve had experience with a half dozen advisors over the years (some were before I decided to go the passive route), all but two were AUM fee schedule and the one I have now, which I can highly recommend–Cardiff Park Advisors–is fixed fee, the lowest cost and yet has the best service, fewest errors, best communication and response time of any advisor I’ve ever had.

  64. pippy says

    @Nony Mas: Are you still in accumulation phase or distribution phase (retirement as my situation descried above)? I ask because my observation is that one needs a different approach in distribution. Firstly, I could fill my tax deferred accounts with bonds and that would not come anywhere close to filling my fixed income allocation. Second, I need reliable, spendable income on a monthly / annual basis. The notion that one sells equities in your taxable portfolio to generate cash doesn’t work so well when the market behaves how is has for the last several years. For example, equities could be down 30% when you need cash. While I generally agree with the passive investing approach, the studies and all are based on 30 year time horizons. As I mentioned, I need spendable income every month so predictability is important, particularly as I don’t have a pension (I don’t) or Social Security (I’m 7+ years away from that).

    Can you share more about your experience with Cardiff and if you have spoken with them about structuring portfolios where income is higher priority than growth? Thanks, in advance for any insight you can provide.

  65. Harry Sit says

    @Nony Mas – Remember the post talks about the average investor. However inadequate Vanguard’s plan is, I believe it’s still better than what most people do on their own. Even if it’s a computer-generated output, there’s still a human being out there explaining, answering questions and maybe tweaking with additional inputs. Yes, people can get suggestions on the Bogleheads forum but it’s not definitive — you get many opinions, not just one you can jump into. I think for $250 at the $50k investment level, one-time or every 3-4 years, the Vanguard plan would be good enough for most people (I’ve seen many even though I haven’t got one myself yet). Most average investors will still find $1,800 a year from Cardiff Park expensive.

  66. Nony Mas says

    You make a good point about the “average” investor although I’m not sure I’d peg the level at $50K. Do you have any data? I found this but I know it includes home equity:

    As an older investor–and I must admit I’m thinking much more about those over 50 having enough investment assets to engage an RIA–the Cardiff fee is much less than 40 bps. I also agree with your assessment of BH advice.

  67. Harry Sit says

    @Nony Mas – The $50k number is just the cutoff where Vanguard reduces the fee for the financial plan from $1,000 to $250. Once you have $50k, I think it’s worthwhile to pay $250 for a plan. I agree Cardiff Park is a good choice for investors with $500k or more. I listed them in that category together with Evanson. FPL Capital aka offers a service starting at $1,000 a year. I will add it to the middle category to join AssetBuilder.

  68. Nony Mas says

    I’m in the decumulation/distribution phase. My asset allocation is 25 equity/75 fixed and Cardiff and I worked that out together. What you’re speaking of is exactly what a good advisor should do. Determine your psychological/emotional risk level, determine the risk level you need to take based on your assets and how long they need to last, deal with income needed and your time horizon. The only real predictability I’m aware of is MM accounts, CDs or bonds held to maturity–one has to take some degree of risk (It’s also of huge concern to me especially in this environment with low interest rates and volatile markets. I think the most important thing a fin. adv. can do is assess how much risk you need to take with tools like Monte Carlo and others and then help you determine a portfolio that will allow you to sleep at night even when the market is trending down and not sell at the bottom and also having the knowledge and tools to rebalance, tax loss harvest and deal with asset correlation in order to further reduce the portfolio risk– two risky assets that are not correlated with each other if combined in a portfolio will have much less risk than either would alone.
    I just had an extensive discussion with John Gorlow of Cardiff about small caps which have not performed well for me this year wondering whether I should reduce my exposure exactly because I probably don’t have a 30 year time frame. Go to and search on Cardiff Park for more details. Also go to the website and read about the services they provide. Read the entire site but first look at the section on the front page “Full Service, Customized Solutions “

  69. pippy says

    Thanks Nony Mas. I will give John Gorlow @ Cardiff a call and re-look at the Cardiff Park postings on Bogleheads.

  70. Nony Mas says

    Another advantage of a fixed fee advisor is that you don’t have to pay a management fee for CDs, TIPS, Ibonds, etc. I know several advisors who have recommended CDs in the last year–perhaps yielding 2% or much less (.25% in the case of short-term CDs)–and then charging a management fee that eats away more than half of the interest or makes it a negative return.


  71. shamann says

    All these disparate kernels are fine& wonderful but let’s get go the bottom libe; how does one split hairs between the big name portfolio management services, eg. FIDELITY, Schwab, Smith-Barney, etc., etc. and choose one based on results?

  72. Ev Luecke says

    Your Question arrived in my email because I had subscribed to discussion. No one else has responded so I’ll give a try. Typically the brokerage firms like Schwab, Fidelity, TD Ameritrade, etc. would be thought of as firms that would provide you a brokerage account to buy and sell things such as stocks, bonds, index funds, exchange traded funds (ETF). This discussion is centering on fee-only advisor firms that would manage your portfolio, i.e. perhaps help you define your risk tolerance, create portfolio, manage the portfolio to help you rebalance your portfolio based on your criteria, perhaps help with tax loss harvesting and so on. They would be considered as a wealth management or portfolio management service company.

    To decide which of the brokerage firms you might want to open account with Schwab, Fidelity, etc. you could start with some of the various rankings like this one – there are others but this will give you an idea of services and help you decide one over the other:

    How to select an investment advisor (wealth management firm) here are some criteria that might be helpful:
    (from Larry Swedroe – Director of Research for Buckingham Asset Management a fee-only investment advisor service)

    With all that said one of those brokerage service you recommended Smith Barney is considered a full-service brokerage that will gladly manage your portfolio – however, if wanting to consider a passive investing approach they will discourage you and the focus will be buying and selling a portfolio of expensive mutual funds or individual stocks / bonds.

    If you could be a little more specific in regard to want you wish to accomplish I or someone could address your question better.

    Its really not about splitting hairs – but rather what is it you want to do?
    Ev Luecke

  73. JN says

    Sorry for starting up this thread once again but I found this thread interesting. It talks about the search for advisors, but where did people look for the advisor?

    I think it would be good to revisit the idea of where do people find the advisors they are working with. It seems, from interviewing 2-3 different firms that most of the ones I’ve been able to find are fee-only AUM. Not necessarily a bad thing, several are also RIA, again not a bad thing. The problem I have is that they want you to hand over control of the assets to them to manage. The idea that they will sell stuff and leave me with capital gains at tax time is not something that i could bear (assuming there are gains). Perhaps I’ve been looking in the wrong place for the kind of advisor I think I want, essentially someone who could provide a second opinion and is not afraid to talk about individual stocks or mutual funds or bonds. Sounds kind of like the Vanguard opportunity, but who else is out there with similar programs? If I found an advisor I liked perhaps I’d even migrate to an AUM client, once they have become trusted, who knows…

    So, where to find those advisors who will do the second opinion. Thoughts? Perhaps another blog topic?

  74. Harry says

    JN – I’m intrigued by the advice-only service offered by Dylan Ross, CFP of Swan Financial Planning. One-time $250 and then $40 per month, cancel anytime. You manage the assets and you just get your questions answered.

    Some people just don’t want to deal with managing money at all or they are convinced by the advisor it’s too complex for them to handle themselves. I think that’s a very expensive way to hire help. Retaining an advisor only for questions makes a lot of sense. I wish more advisors offer this type of service. They don’t because they can charge more when they manage your assets and the revenue automatically grows every year as assets grow!

  75. Ether says

    Note that as of this week Portfolio Solutions has raised their fee from .25% to .37% for AUM of less than $3 million. For amounts greater than that, the fee is .20%. I plan to investigate Buckingham and Cardifff Park as soon as time allows.

  76. Wolfpackjack says

    I use Portfolio Solutions and am not thrilled by the nearly 50% increase in their fee although they are still one of the lowest cost investment managers to be found. My underlying fund costs is about .15 so combined cost is just over .50%. I have been vey happy with the services they provide and the communication I receive but I am a low maintenance investor. I have been looking at moving to Evanson or Cardiff Park.
    Any comments would be appreciated.

    Note-Buckingham fees are to high. Cardiff is lower than Portfolio Solutions and Evanson is the lowest.

  77. Ether says

    Wolf: Have you contacted Portfolio Solutions to voice your concerns? I too have been a low maintenance client who had been satisfied with the services provided until now. Apparently their recent survey of clients indicated that many wanted more direct contact and interaction with an assigned “Investment Specialist.” Perhaps Rick Ferri will revisit and comment again on this thread. The unanticipated substantial fee increase has driven me to look very closley elsewhere and I have been favorably impressed so far with Cardiff Park. Good luck in your decision and keep us posted!

  78. Nony Mas says

    Based on personal experience and that of others I trust, Evanson may be cheaper but their advisors work out of their own homes, may have other jobs (check their ADV and then LinkedIn profiles for advisors) AND you get a very, very limited amount of time–less than 2 hours for setting up portfolio and limited time going forward.
    As I have written above, I am extremely impressed with Cardiff Park. John Gorlow is always available for consultation, he spends lots of time setting up portfolio and his ethics are above reproach. He’s always willing to discuss portfolio questions and spend time with clients. Once on the Boglehead forum a poster spoke so highly of John Gorlow and Cardiff Park, the poster was accused of being a shill for Cardiff Park which was absolutely untrue.

  79. Dave says

    Sorry, but the advice given by Vanguard is cookie cutter and a lot of added value is missed by only revisting a plan once every couple of years. A true RIA is proactively involved and able to employ strategies for reducing taxes, ensuring that you are properly positioned in the event of a lawsuit, and is there when the family is in need. You are missing an opportunity to develop a mutually beneficial relationship if you are not working with a local fee only investment advisor. A big institution serving hundreds of thousands of investors simply can not give you the personal attention you need and deserve.

  80. "medium-fee" advisor says

    I thought it would be interesting to update this thread from a few years ago.

    Here’s what’s happened with low-fee firms of late: the firm mentioned that “builds assets” has completely blown up their model portfolios, removing their huge overweight to commodities (that performed terribly) and are now recommending huge overweights to US and non-US small cap stocks — in the case of Int’l, they are 100% small cap (!) So clients have paid a low fee but had no portfolio stability, just performance-chasing portfolio adjustments and paid a very high price in terms of poor performance.

    Another low-fee advisor with a (formerly) 0.25% fee has increased his rate by over 50% to almost 0.4% per year, pretty much in-line with the 0.5% to 0.75% I referenced above. Clearly supporting my view. I guess that paycheck isn’t as small as it used to be.

    Finally, and most importantly, on the portfolio side, small and value have continued to outperform and portfolios more tilted to these expected returns have benefited in a meaningful way. And a sampling of large & small value funds finds at the 3YR point, DFAs large and small value have bested Vanguard large and small value by about 3% per year. On the bond side, rates have started to rise, investors in intermediate/long-term bonds are panicking, and those who chose to keep it short and high quality and take risk in stocks are sleeping comfortably.

    Remember, what matters with professional advice is not the top-line fee, but the net of fee end results that come from well-designed portfolios using the best-run mutual funds and well-timed discipline and counseling. Sure, you can find a lower fee, but the cost can be very high indeed.

  81. cowboy Mike says

    Three years ago we used Vanguard’s services to build us a financial plan. We were very happy with the service and thought it was money well spent. We took their plan and massaged it a little.

    One problem I had as a do it yourself investor was what Rick Ferri called “analysis paralysis”.

    As some what of a perfectionist I was making an effort to get the ‘perfect’ portfolio and asset allocation. Motivated by the feeling of great responsibility to me and my wife I had at times difficulty pulling the trigger, afraid to do something wrong. The Vanguard plan was an additional validation that we were on the right track which helped me.

    I don’t know if you will allow this but one service we recently found very helpful was paying someone to map out our options with regard to when, as a married couple, to take social security. Jim Blankenship, a social security expert, did it for us just this last week. The Social Security Analysis Report results gave us 6 different scenarios and included for each scenario, year by year estimated monthly social security benefit summary, annual cash flow summary including total lifetime benefits.

    The price was very reasonable and included a conference call with him to get answers to any questions we had. His website is

    Happy trails, cowboy Mike

  82. mike says

    IMHO, in important things in life, one should have a backup, to review, what one has done, eg a 2nd opinion on a medical problem.

    this grow in importance, with assets and age. i for one, inherited some positions, that i can’t undo, without being taxed, and even amonst Bogleheads, there are areas, of disagreement, eg international bond indexing, i personally am also wanting a structure whereby i can semi-retire, and even with a simple portfolio, and lots of reading, it seems unwise to do alone.

    VG, please their heart, “plan” really is barebones, and in my case, had no real idea to tailor to my situation, i believe, the trouble is, the ‘advisor’ needs to also understand taxes, and various other aspects, and then to be available for questions, ongoing, and to be pro-active, to look for areas to polish, from what i gather, many advisors want to get in / get out or they want to manage one’s money fully …….

  83. Stevi says

    I spent over a year reading various investment books to try to “do it myself” after retirement. In the end, I just could not write the checks to do the investments. It was emotional – not a lack of being able to understand the relatively simple Vanguard concepts. I finally got an adviser and yes, I am paying him 1%. But he spent several hours talking to me before I became a client. We fully discussed my investment goals and needs as well as his approach to my situation. He does not do free lunches, dinners or presentations. He gets clients by referral. He spends at least a couple of hours a month discussing things with me. I am happy and comfortable with him. And I did not give him every penny. I still have about 25 – 30% of my funds locked in short term guaranteed vehicles so I sleep at night in case the financial markets as we know them all crash totally. It works for me. And I am watching other friends go through the same thing – thinking about investments but not doing them. The low cost options here do sound intriguing.

  84. Steve says

    Hi Stevi,
    Good for you for learning how to invest. So it looks like you need a professional for the “emotional” part of investing because you already know what a diversified portfolio is like. Why wouldn’t your adviser work for an hourly fee? The 1% seems small but you also have the costs of the investments to add on. Not saying that what you are doing is wrong, just saying that you might get the same results, being able to sleep, with a fee-only Registered Financial Adviser with fiduciary standards as required for membership in the National Association of Personal Financial Advisers (NAPFA). Perhaps your adviser is a member.
    Good luck,

  85. Nony Mas says

    I’m responding to a comment from “DK” which I received in my finance buff email subscription today but I don’t yet see it here.
    DK– and others– you might be interested in a low cost *fixed fee* advisor. I used to use a 1% advisor figuring you “get what you pay for” but found it definitely was not worth it for a variety of reasons.
    I’ve been using Cardiff Park Advisors for almost three years now and could not be happier. John Gorlow gives exemplary personal service, extensive *monthly* reports (not quarterly as do most advisors) and has an extensive website of information to educate yourself about the firm and investing. For client conferences he uses “go-to-meeting” software so you can have the same report up on your screen as he does and this really helps with client discussions and the worksheets he prepares for these discussions.
    Yearly fees range between $3,000 and $6,000 and are based on the number of accounts (regular, IRA, Roth) and complexity and NOT on the amount in the account/assets under management/AUM. Cardiff uses passive and index portfolio management.

    Take a look at the website and then send an email or give a call and see if you think John Gorlow is right for you. (He’s highly spoken of on the Boglehead’s forum).
    Phone – 888 332 2238


  86. Mainer says

    I’m just reading this thread which seems to span several years.

    Ev – Are you still happy with Purpose Wealth? I’d be interested in hearing more about why you left BAM, given all the good things you said about them. Was it mainly the cost? Do you still have DFA funds? Do you think Purpose Wealth would have invested you as well as BAM if you had gone with them initially?

    Nonnie/Nony – you seem to spell your name both ways? Are you still happy with Cardiff Park Advisors?


    • Ev says

      I have only been with Purpose Wealth since Dec. 2013.
      It was difficult decision for me to leave BAM – the ONLY reason I left was cost.
      Yes, I believe PW would have developed the portfolio similar to BAM had I gone with them to begin with . I am low risk person – 60% fixed and 40% equity with a moderate tilt to small value. In 2009 I was 50/50 and seems like it was 2011 I went 40/60.
      Other reason seems to me I would have been invested similarly is that Derek saw no reason to sell a big % of the portfolio and reorganize.

      BAM as well as PW as well as other fee-only low cost advisers mentioned in this discussion have the same philosophy – i.e. passive asset class investing.
      My funds are DFA – with one Vanguard, one Bridgeway fund, one international that I brought to BAM that I’ve held for many years that has too big of tax consequence to sell.

      I was aware of PW from 2009 when I was looking for an adviser – I had spoken with Derek and we had good discussion then which is why I remembered him.

      FWIW – I believe chosing an advisor is a very individual thing – its helpful to get ideas/recommendations from others; but what works for one does not necessarily work for another. The best is to speak with each one you might be interested in after you’ve established some basic ideas of what you are looking for.

    • Nony Mas says

      Hi Mainer,
      Yes, I spell my name both Nony and Nonnie (Bogleheads)–maybe happy Cardiff clients. Ity has to do with me email address and the different times I signed up for various websites.
      I’m extremely happy with Cardiff Park Advisors and John Gorlow. I’ve recommended the firm to a number of folks and have gotten excellent feedback from them. A few folks have said they get double the service they had previously gotten with other low-cost fixed fee advisors and are very please. I found more than than with my 1% advisor. One thing about John Gorlow is that he’s very ethical and he will tell you what he doesn’t know. If you do need hand-holding, haven’t educated yourself as to passive and index investing, it might not be the firm for you. Another thing I get at Cardiff that I’ve never gotten at another advisor–even a 1%–or more AUM firm–is *monthly reports.* It allows you to see your target percentage range for various funds and lots of other things. I wanted access to DFA funds and that’s one of the main reasons I went with my previous advisor and then switched to Cardiff although they are open to Vanguard and other funds.
      The best way for you to figure this out is to give them a call, talk to John Gorlow and see if there is a good fit.

      Do take advantage of all the excellent educational and informative material on the website.

      888 332 2238


  87. Mainer says

    Thanks Ev. In the past I’ve had some good talks with Larry Swedroe and I have no doubt that BAM would provide good service and provide help on the total picture, as they did for you. It would be comforting to think that one’s advisor is considering all the angles and not just narrowly focusing on asset allocation. But I couldn’t get past BAM’s cost. It seems to contradict everything I read about how important low cost is. Then again, Larry explained and others have written that the results of a more sophisticated allocation can make up for the increased cost. So after reading how pleased you were with BAM and how they recognized it’d be in your interest to buy back years from your pension (or whatever it was about), you chose to leave. Are you in accumulation or spend down phase? Does BAM have expertise in both, do you know? Any more thoughts on this would be appreciated. I have great faith in Larry but the annual cost is daunting, and I just don’t know that I need complex guidance, let alone year after year. I guess I could try them for a while and then leave if I want to (Larry’s suggestion), but there are costs for that, plus lots of disruption…. Do you think PW would have provided the same overall / big picture guidance that you got from BAM, or do they more focus on asset allocation? I wonder if Cardiff provides that overall guidance? Thanks for any more insight.

    • Ev says

      Well Mainer you hit the nail – the idea behind working with an advisor for me in 2009 was there was a bigger picture than an asset allocation. I really don’t think my financial picture is or was complex. I probably could have gone with a low cost provider to begin with; for right or wrong I just clicked from the beginning with the advisor and because it was a step by step process to look at my financial picture, write a plan an Investor Policy Statement that drove the asset allocation based on my risk tolerance it just seemed right for me.

      Another thing was at the time I just wanted to get my portfolio organized and the plan put in place. I had spent a year being mostly in cash – that needed to stop.

      In 6 weeks I will be in withdrawal phase – however I shouldn’t have to withdraw from my investments very much for a good period of time – I live simple lifestyle and don’t have big spending needs except international travel once or twice a yr.

      Personally I don’t think it would make much difference what stage you are in accumulating or withdrawal as far as BAM goes. They do have specialists on staff to turn to if needed for different things like social security and bonds – they have a bond desk which makes buying bonds cheaper. I didn’t have individual bonds. That situation with buying back years of my pension – what was also important to me about that was – that five figure amount to purchase these years – buying these yrs. was 5 figures less than BAM had as assets under management. It was about my best interests; not BAM’s interests – to me this is what you get with a fiduciary. You certainly get a fiduciary with a low-cost advisor; but that low cost advisor would not have contacted my pension office and figured it out. I did not ask BAM to do this – the thought never crossed my mind to buy these years.

      Chosing an advisor is something not to take lightly. You’re right it is somewhat of a hassle to change – but if you are changing to another DFA advisor its relatively painless. If you are changing to Vanguard and would want to sell your DFA funds it is expensive – you get around that by selling the DFA funds while you still are under the umbrella of the DFA advisor.

      You could also do the opposite – if a low cost advisor is not giving you enough service or you’re not comfortable then see BAM. So you’re clear – you know you will not have Larry as your advisor – you will have another BAM advisor.

      I don’t know if I made anything any clearer – or just muddied it up for you. Everyone does not need an advisor – if you are able to write down why you need and want one in a paragraph or two – then talk to a couple of low cost advisors – you’ve already talked to Larry. See if things come clearer for you.

  88. Ev says

    Whether interested in having an advisor or comfortable and happy with DIY this piece last week from Charles Ellis – one of the greatest investment minds is timeless must-read advice. He offers a letter to his grandchildren on how to invest. Its one of those pieces to read more than once and save.

    Relative to having an advisor or not he offers:
    “What really matters most is figuring out—often best done with a professional investment adviser—the long-term investment program that is best suited to you: your financial resources, your spending objectives, your time-horizon and your ability to stay the course.”


  89. not2late says

    I started my search for an advisor a few months ago, and came across this site by accident. The search turns out to be much more complex than I anticipated, and is still a work in progress. I would like to share my experiences with those in similar situations. I’ll begin with the reading materials.

    I started out with google search results such as these, and there are plenty more. In no particular order:

    Then I read a few books:
    In much more detail, but still incomplete. However, learning the importance of ADV forms is worth the price of the book.
    While the book is mostly for retirees, the two chapters on advisors (7 and 20) are for everyone. Much better written than the entire book mentioned above.

    These material helped me tremendously in knowing who’s who (i.e. the alphabet soup of titles), and what to look (out) for. But they failed me miserably when it came to implementing their suggestions.

    I’ll save those for the next installment, should there be any interest.

  90. CV says

    So I came across this site while doing research. I’m also looking for advice on finding an advisor to get me started while I get more educated. I heard about Cardiffpark from this site, has anybody heard or had business with PortfolioSolutions or AdviserInvestments?

  91. Jack says

    I have used both Portfolio Solutions(PS) and Cardiff Park. I doubt you can go wrong with either one. Portfolio Solutions charges based on a percent of assets under management and that fee is currently .0037 while Cardiff Park charges a fixed fee. I will not quote a percent for Cardiff Park(CP) as it varies but my experience leads me to believe it is around .0025 of your initial investment. The fixed fee does not change as your assets change.

    Both managers use the same concepts and there is only slight variations in funds used. Neither firm calls you. You have to call or e-mail both if you want information. John Gorlow at Cardiff Park will not make any changes to your portfolio without your consent. PS will make changes as they sees fit but that is rare but does occur if your portfolio needs rebalancing. They will also decide where to reinvest income and dividends.

    PS is a bigger firm and has many more employees than CP. I like talking to the principle at the firms I am doing business with so in that regard I like CP much better. I only talked to Rick Ferri once, however he did reply to every e-mail I sent in great length which I greatly appreciated. I felt like I knew him quite well despite the lack of actual conversation. Having read most of his books and many comments on the internet, I knew what he believed. As to results managing your money, it is a tossup. You are the one that ultimately determines your own results as both firms provide guidance and suggest how to allocate your money based on your particular situation. I feel that any gain or loss that happened in one vs the other were based on my own decisions.

    In summary, I like both firms and trust the integrity of both principals. One has a lower cost (CP) and is smaller than the other. That may or may not matter to you so go with your feelings and which firm seems to match your needs .

  92. CV says

    Great thanks Jack for the replay, concise and to the point. I did read a book by Paul Merriman “Live it up without outliving your money” that got me started on the road to lower fees. I will take a look at the books mentioned above.

  93. Nony Mas says

    I’d like to add a slightly different perspective to what Jack has said. I’ve posted before in this forum about Cardiff Park and I continue to be a satisfied client. Unless things have changed with Portfolio Solutions there is a fairly fixed offering of funds that they use in each category and this is NOT flexible. You are not able to say– how about we add Vanguard Bond Fund or DFA Small Cap. The funds they offer in each asset class are the funds you get. That may work very well for you. It didn’t for me and that’s why I turned to Cardiff Park. John Gorlow does have his favorite funds, mostly DFA but also some Vanguard but I’ve never found him unwilling to discuss a fund I bring up or want to talk about and he’s very open to my suggestions and I find Cardiff Park and their size just right for my needs as I don’t feel as though I’m getting pre-packaged advice.


  94. Jack says

    I will agree with Nony. Having said that, the fund selection from Portfolio Solutions did work fine for me. I never had a serious issue with Rick’s selection. When I did question him(via e-mail) about the use of certain funds he always responded thoughtfully as to why he uses certain funds and not others. Cardiff Park accepted my portfolio completely, rebalanced it as necessary, and made two changes to fixed income at my request. Only time will tell if the changes I made will be beneficial. So far they have not been but that is my fault not Cardiff Park’s. I am a relatively low maintenance customer but I do like to speak directly with John Gorlow when I have a concern.

  95. netmouse says

    I have an amount with Vanguard that gets free financial plan advise. I have not gotten a new update for years. This was due in part to strong suggestions to switch to some other of Vanguard’s funds that did not do very well, like a growth stock fund (forget name). They have since changed fund management. I also never get advise on getting a non-Vanguard fund (at least not to me) so you are limited in advice to what they sell (and push). Even their tie to Financial Engines only suggests Vanguard funds. I ask FE about this, and their person said it is because Vangaurd funds are the best so that is why they pop-up in recommendations, but I’d imagine you should see once in a while a non-Vanguard fund somewhere.

    Also, three items they advised for me to reduce, but I never did as I got crazy busy in life and never got to it, did extremely well weathering the recent recession and are now doing really well. So I’m glad I did not reduce these: 1) reduce amount with New Jersey (the tax free muni fund), 2) reduce company stock, 3) reduce actively managed fund with value stock. I realize they were right from a financial management 101 perspective, but my investments are soaring for many years. Now I might best rebalance a bit.

    I agree with above that the Boglehead forum is an excellent place to ask questions and get lots of input from people with good and varied knowledge.

  96. Laura says

    The comments have been very useful for this new investor.

    I recently inherited money and I am overwhelmed with the choices.

    I am 51 yrs old and I am interested in growth investments.

    I was excited about Cardiff Park however they have a million dollar minimum.

    I was wondering if anyone has heard of Creative Planning in Kansas or Baker Ellis LLC in Oregon? My father uses Baker Ellis and is recommending them to me. I was researching and saw that Creative Planning has received multiple rewards.

    My sister said she is just going to keep our deceased mothers investments where they are at Schwab and let them sit.

    I am overwhelmed and lost. Any help would be appreciated.

    My other thought is Van Guard.

    • Ev Luecke says

      I can’t believe how times passes – I first made a comment on this thread discussion in 2011. This discussion has to be all time most posts in the history of TFB.

      I’ll gladly make a few comments – hopefully won’t be too much direct advice – I’m not qualified.
      That said – for a start some ideas.
      I know full-well that feeling of being overwhelmed – its not fun.
      You might wish to take your project in small chunks – kind of ticking things off as you go.

      – You do not need to be in a rush to make decisions – take all the time you need to feel comfortable in your decision making.
      – Suggest reading this article very carefully – I’ve recommended it before. To me its priceless, timeless advice that can serve as a good guide to beginning a journey to achieving investment success.

      That said, even if you work with an advisor it is critically important that you understand and buy into the advisor’s philosophy/mission. You will feel much more comfortable if you understand the general differences in how the different firms go about their business.

      I looked at the Baker Ellis website – I can’t tell exactly; website is very limited information. But I think they manage portfolios of individual stocks based on a value approach. I would discuss with your Dad how they work and importantly how much their fees are.

      The Creative Planning seems to invest in actively managed funds – read # 8 from the Ellis article. I’d advise awards aren’t important.

      Now turning to Cardiff Park – are you able to explain why you thought this might be a good choice. Cardiff Park is very similar in philosophy to what is presented in the Ellis article. There are many fee-only firms that follow this same philosophy that do not have the million $ requirement. This requirement has been put in effect – my guess couple years ago. Point I want to make about Cardiff Park – they are highly respected, well thought of by many; for me they did not meet my needs. Again an advisor choice is a very individual thing.

      After you read and take in the Ellis article you could come back here and ask questions.

      Hope this helps. Step by step it will begin to make sense and you will know what your needs are, and what you are looking for. And definitely Vanguard might be good choice – either investing on your own without an advisor or perhaps using their advisor service.


    • Harry Sit says

      Laura – The article already listed several good options for investing less than $1 million: Vanguard, Betterment, AssetBuilder, and FPL. I would start with Vanguard.

  97. Hank says

    Hi Harry,

    Thanks for a wonderful website and your pro-activeness in helping others. I really enjoy reading the articles and the excellent comment posts from your readers.

    I have a question for you and others on this thread.

    What low cost advisor service(s) would you recommend for someone with assets between $1.5 – 2 million? I’m currently residing in Middlesex county in Massachusetts.

    I’m currently 46 years old and have been investing on my own until now. I would consider myself between average and above average investor. I haven’t necessarily been a disciplined investor following a single strategy and rebalancing etc.. on schedule but I’ve been fortunate enough to have accumulated what I’ve accumulated.

    But now getting to a point where I’d like to put a wall between me and the money. Besides just the investment part, I’m also getting to a point where I feel I need advice on things like:

    * Will (I have basic will but would like to discuss it with someone)
    * Insurance (umbrella policy etc..)
    * Long term care
    * Trust accounts
    * Preparing for college (Have a child who will enter college in 2 years and have a 529 plan but what happens if we don’t use up all of the money etc..).
    * Backdoor Roth
    * Putting away up to $52k for retirement and converting 401k to Roth etc..


    • Harry Sit says

      Hank – Your wish list is quite typical. Contact any of the five I listed for above $1 million or all five of them. Ask whether their services will cover what you need. Pick one you like the best.

  98. Nonnie says

    To Hank:

    I’ve been using Cardiff Park Advisors for almost four years now and could not be happier. I’ve recommended John Gorlow to half a dozen folks and they feel the same. Gorlow gives exemplary personal service, extensive *monthly* reports (not quarterly as do most advisors) and has an extensive website of information to educate folks about the firm and investing. For client conferences he uses “go-to-meeting” software so you can have the same report up on your screen as he does and this really helps with client discussions and the multi-page reports/worksheets he prepares for these discussions.
    Yearly fixed fees range between $3,000 and $10,000 and are based on the number of accounts (regular, IRA, Roth) and complexity and NOT on the amount in the account/assets under management/AUM. Cardiff uses passive and index portfolio management.

    Take a look at the website-there’s lots and lots of information- and then send an email or give a call and see if you think John Gorlow is right for you. (He’s highly spoken of on the Boglehead’s forum).
    Phone – 888 332 2238


  99. Fred Wagner says

    I have been talking to quite a few advisors and I do think the first one that can give me a coherent answer to the appropriate asset allocation for my XOM lump sum pension and 401k rollover associated with my September retirement from Exxon wins. So far, no winners. I do have a discussion with John Gorlow of Cardiff tomorrow coincidentally. Everyone seems to want to talk about the make up of the portfolio which is important, but where to park myself on the efficient frontier has me uptight. Do I go with the U distribution and start out high in bonds and increase stock allocation later or go conventional and start out higher equity and wind down. PS: 59 years young on my graduation date from Exxon.

  100. chatham says

    Hey everyone:
    First of all, thank you for this post, TFB. We just switched our portfolio of DFA funds to FPL Capital Management based in part on information I found here and on a couple of other sites.

    We had been with an adviser who charged us less than one percent of our assets under management. When we originally opened our accounts, there were no flat-fee advisers for non-millionaires.

    The flat rate we pay at FPL covers everything we need (assessing risk tolerance, setting up the portfolio, couple of teleconferences a year, quarterly reports, custodian web access, etc.). If for some reason we need anything beyond that, we can pay an hourly rate for consulting.

    I really love this pricing structure. We have the exact same portfolio at a fraction of the management cost. Paying a percentage of your assets can make sense at lower balances, but it can quickly get expensive beyond a certain point.

    Thanks again for the post, TFB. You laid out some great options for advisory services for passive investing for the middle class. I wish that I had seen this sooner.

  101. Roy Jones says

    There is no way you would know this since we do almost no advertising, but Vanguard Personal Services is absolutely not the best deal in advice.

    Many RIA firms like ours offers far more robust portfolio management for less. Our comparable service to Vanguard’s is 17% lower cost with no minimum and no transaction fee and goes down for all our clients as our assets under management increase. Our ETF portfolios are agnostic: They are comprised of ETFs selected by Morningstar, without any of the conflicts of interest at Schwab, Vanguard, Fidelity etc. We are DFA approved and compliment core passive portfolios with individual securities for tax harvesting purposes. Individual securities, while not intended to outperform the market or replace passive investments, are selected by a research process with an independently audited track record going back to 1965. 100% of our compensation comes from our clients, never from revenue sharing with financial institutions.

    Our firm is profitable, debt-free, in business since 1998 and we do answer to shareholders, venture capital firms or anyone else that gets in the way of our client’s interests.

    • Harry Sit says

      Roy – 17% lower cost as in 0.25% versus Vanguard’s 0.30%? Does the service include consultation by phone or in-person throughout the year as needed? If so, on a $50k account, you are happy with making only $125?

    • Roy Jones says

      Harry, yes:

      .25% versus Vanguard’s .3%. Once we bring in $10million on this platform the cost for all investors will go down to .24% and eventually down to 0.2%, 1/3rd the cost of Vanguard, once we hit $100mm.

      Additionally, the underlying investments are likely to be equal or lower cost: Right now the majority of the ETF portfolios are comprised of Vanguard ETFs. However, we could shift some or all of the portfolio to iShares if Morningstar identifies an advantage in cost, cash, tracking error etc. That way investors can benefit from the current price war and have real protection against underlying costs going up as well.

      We have a lot in common with you and many of your subscribers: We look under every rock to extract any value we can. We even stay away from index funds and investor shares since they are less diversified, have higher underlying trade costs and maintain higher cash balances.

      This is an online investment-only service that includes quarterly educational conference calls conducted by CFPs with occasional CPAs and CFA guests. Clients are encouraged to email in questions for the newsletter and topics they would like addressed, and they are always welcome to call if they need account related assistance. Like Vanguard and everyone else in this space, we offer advice related services separately and/or based on account size and we are extremely competitive on price… do not get us started about quality.

      We already have a sunk cost of almost $300,000 a year for our infrastructure including technology, systems, research, staff etc., so it costs us almost no additional time or money to offer this service online. We recognize that some people just want quality investment management and do not want to also pay for a comprehensive financial plan and complete wealth management they do not need. Shoot me an email and I can send you a short video demo of the technology.

      There are a few catches: We are selective about who we work with. First, we offer this service to investors with the understanding they are disciplined, long term, primarily passive investors who truly understand the risks of investing. Second, to keep costs and minimums lower than anywhere else, we will penalize short term traders for any sales within 30 days after purchase. Third, we will only work with people who are a good fit for our firm ie. those with realistic expectations and are respectful of our time and staff.

      This is the plan, but we are open to input.

    • Harry Sit says

      Sounds good. A good product also needs good marketing. Give Wealthfront and Betterment a run for their money, if only you can have their ad budget.

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