Edelman financial

[Anonymous]

Anyone here use Edelman financial services and care to share their good or bad experiences?

[Anonymous]

We have been using them since 2006. We were paired with a guy about our age. Our first meeting was basically to tell him what we want out of life (retirement, kids, lifestyle etc.). He took all that and suggested how much we should save to reach our retirement goals. He also talked to us about a piece of property we own. We decided to go ahead and invest some money with him.

We talk about once a year just to touch base (we moved overseas). He never pressures us to give him more money and always advises us when we ask questions (for example he told us to go ahead and invest in the VA 529 on our own if we are comfortable with it and that there was no reason for him to make money off our college savings).

Maybe we are a small fish and that is why he never pressures, but I like that he isn't trying to sell us anything.

[Anonymous]

Doesn't it cost like $800 a year plus 2% of assets under management? No thank you.

I love Ric's radio show, though.

[Anonymous]

2%!? No way ... really? That's larceny.

[Anonymous]

Total cost of everything is about 2.3 percent. I bet if you add up all costs for most advisors they are similar. Those include advisory fees, costs of mutual plans, cost of fees in custodial accounts (Schwab, Ameritrade, etc.). Prolly in line with most.

[Anonymous]

If the 2% includes fund expenses it's a bit more reasonable. Still too high IMO, but the average active equity fund is ~1% (maybe a hair higher) and average index is .3%, so assuming some blend you should be paying ~.6-.8% in fund fees. That implies 1.5% for the advisory! which is at the top top of the range, but at least it's not 2.3% for advisory only.

p.s. - long term returns for the best managed portfolios (good pensions, big endowments) target ~8%-10%. An individual should expect the low side of that range gross of fees. I.e., paying 25% of your expected return (2% of 8%) is a tough pill to swallow IMO.

[Anonymous]

Anonymous wrote:2%!? No way ... really? That's larceny.

You must be a minnow then. That's pretty standard. Our hedge fund is 3 and 30.

[Anonymous]

Ha! Good for you if you work there. There are very few HFs that can get 3/30. Even 2/20 is becoming more rare if the investor has scale. I know the HF industry quite well, and there are maybe 3-4 funds that have been able to justify 3/30 over time.

But you've missed the point ... people using retail advisory aren't investing in HFs, and if they are, they are getting bad advice because they certainly aren't getting access to the very few funds that are worth the fees. Paying 2% for advisory is foolish.

[Anonymous]

Anonymous wrote:Ha! Good for you if you work there. There are very few HFs that can get 3/30. Even 2/20 is becoming more rare if the investor has scale. I know the HF industry quite well, and there are maybe 3-4 funds that have been able to justify 3/30 over time.

But you've missed the point ... people using retail advisory aren't investing in HFs, and if they are, they are getting bad advice because they certainly aren't getting access to the very few funds that are worth the fees. Paying 2% for advisory is foolish.

Yeah, ours is a good quant fund. We tried to get into Renaissance back in the late aughts before the crash, but didn't quite have enough capital. Anyway, the 3 and 30 scale seems like a lot until you see our returns.

[Anonymous]

I'm guessing you already do this, but keep in mind quants are super high turnover which means lots of short term gains, which are taxable, so your net return post tax is what matters. Also, your phrasing implies it's your only fund ... I would diversify that. Quants are generally at the greatest risk of blow-ups. I prefer fundamental managers, but some quants/macros have been highly successful ... and the "3-4" I referenced.

[Anonymous]

I'm the first to reply to the OP. We discussed the fees at length and in the end, there is very little difference. We also feel this gives us access to our financial planner anytime, which is a nice perk. For us, we get another perspective and a sounding board. We have not always followed his advice, but it is still nice to hear it.

[Anonymous]

Most mutual funds are over 1%. If you use a place to hold your accounts, like a Schwab, you have to pay them as well. Then you have to pay an advisor.

Edelman's total cost is about 2.3% for all of that. I bet if most people add up their fund costs, advisor costs and custodial costs it's similar.

Of course it's much cheaper to do yourself, but most don't have the ability to manage (or the time).

[Anonymous]

Anonymous wrote:Most mutual funds are over 1%. If you use a place to hold your accounts, like a Schwab, you have to pay them as well. Then you have to pay an advisor.

Edelman's total cost is about 2.3% for all of that. I bet if most people add up their fund costs, advisor costs and custodial costs it's similar.

Of course it's much cheaper to do yourself, but most don't have the ability to manage (or the time).

Inaccurate.

Average equity mutual fund fees are well below 1% and bond funds are close to 0.5% ... index funds are approx. 0.25%: http://www.ici.org/pdf/per19-03.pdf

Most discount brokerages do NOT charge a user fee assuming assets are above a certain threshold, though they do charge for transactions. An astute investor can most certainly find a highly competent advisor for 1% or less.

Even a retail investor should not pay more than 1.75% for all-in management and advisory, and before you say 0.5%-0.75% is not a big difference, keep in mind that your long-term expected return is likely in the 5% range after taxes, so you're talking 10%-15% of your return that's devoted to extra fees. If the advisor is able to deliver excess value above that threshold, then s/he is 'worth it' ... but it's a high hurdle and on average investors paying lower fees will outperform those paying higher fees.

[Anonymous]

Sorry, most mutual funds are not well below 1%. In fact most studies have the average cost over 1%. For example, a study by Edelen, Evans and Kadlec found U.S. Stock Mutual Funds average 1.44% in transaction costs per year.

Another site lists average costs at 1.23%.
Both are well over.

Add in the advisory cost and it's pretty comparable or more expensive.

[Anonymous]

See average fees from ICI - the Investment Company Institute - effectively the trade association for asset management industry.

Smart investors don't pay 1.44% for run of the mill public equity. And if you're anywhere near 1% for bonds, you're being robbed.

ps - per the Edelman website, investors incur mutual fund expenses in addition to the flat fees which start at 2%. They better be damn good asset allocators to get over that hurdle.