IFA Fee Page

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Ten Reasons to Hire Index Funds Advisors:

1. Just like other competitive fields in which professionals dominate, the amateur investor is not likely to enjoy success. The study above confirms this point. The average amateur investor only gets 18% of the overall market returns and only 16% of the DFA mix of indexes. This is due to their lack of knowledge about how risk and return are related. There is also an emotional bias that forces investors to avoid risk instead of buying and holding the proper amount of risk. The advisors at IFA are professionals who have invested years of research and study into modern portfolio theory. The content and design of this website provides the most comprehensive presentation of investment information available for the purpose of educating the prospective IFA client. Current academic research on financial markets is constantly applied to our clients' investments. The majority of investors do not have the resources, time or interest to do this.

2. Our fee may be considered a casualty insurance premium with our role being to protect investors and their capital from themselves. As Benjamin Graham (1894-1976), the legendary American investor, scholar, Warren Buffet mentor, teacher and co-author of the 1934 classic, Security Analysis, stated, "The investor’s chief problem - and even his worst enemy - is likely to be himself." According to behavioral finance author and professor, Mier Statman, "When the market drops, our instinctive fear to flight is so strong, even the most rational investors find themselves caving in to their own demise." IFA takes the emotions out of the decision making process.

3. The main concern with amateur investors is that they do not know the facts about the financial markets. This is clearly demonstrated by survey after survey. In a recent one by Money Magazine, the average score of 1,500 investors on twenty basic financial questions was a mere 37% correct. You will pay a high tuition for your lessons if you do not understand the potential risk exposure of the stock market and the efficient market theory. Amateur investors suffer from emotional swings of irrational exuberance for risk and subsequent irrational avoidance of risk. Remember that every trade, mutual fund, or stock has someone on the other side that probably knows more than you. Nearly 80% of trading volume is handled by professionals. The alarming fact is that many of these "professionals" have little understanding about the way the market works. In two different studies of ten year periods, 97% of stock pickers and 100% of market timers under performed a simple index fund. Investment policy is the only thing that matters. IFA will create, maintain, and add discipline to that investment policy. We act as your Chief Financial Officer and coordinate your financial management team of lawyers, accountants and insurance agents.

4. IFA provides extensive investor education and access to low cost, pure style, customized, and risk concentrated institutional index funds. These funds are not available to amateur investors. They are created by the number-one rated mutual fund company, Dimensional Fund Advisors. They are building blocks of risk, offering worldwide diversification in the risk factors that explain virtually all of stock market return levels. (See Step 8, page 5 and Investment Policy.)

5. IFA refines your Risk Capacity™ survey to insure that you are optimizing the maximum level of returns for your level of Risk Capacity™, based on long-term historical data of indexes. For example, a simulated passive investor in an Index Portfolio 90 woould have grown $100,000 to $9,329,075 and would have earned a net gain of $613,635/unit of risk (a 15.09% Std. Dev.) on a $100,000 investment for the 35 years ending 12/31/2010. These are simulated index returns after IFA and DFA fees, but before taxes and transaction costs. Past performance is not an indicator of future performance. If this characterization of risk and return is missing from your current strategy or the concept is foreign to you, we can add significant value to your investment policy. The review and editing of the Risk Capacity™ survey is only available through IFA and its approved network members.

6. We have a very high level of customer service and contact due to our implementation of technology. You can talk or chat live with one of our advisors, while viewing a streaming video of them. With more than ten advisors, we have coverage for times of absence. The ability to video conference with your advisor brings about an entirely new level of communication. Our team will provide the highest level of service to maintain your trust and confidence.

7. IFA will provide additional quarterly reviews of the performance and rebalance status of your accounts. We maintain our own portfolio management software that provides virtually any type of analysis of your investments. We choose what we believe to be the most relevant information and send it to you with our invoice at the end of each quarter.

8. IFA will monitor the balance of your current portfolio compared to the investment policy target portfolio and insure that your risk exposure is kept constant. We provide the complicated process of rebalancing the portfolio, minimizing trading costs and taxes, and maintaining investment policy. The time, computer hardware and software, data maintenance, and expertise are of significant value to our clients. In addition, we monitor your portfolio for tax loss harvesting opportunities, asset location optimizing, and glide path risk reduction strategies.

9. IFA provides the opportunity for you to spend your precious time on endeavors of interest to you instead of worrying about your investments. We want you to be well educated about the way the market works, allowing you to relax and enjoy the investment process even in times of market declines.

10. Finally, this quote is important to remember when deciding on whether you should hire an index funds advisor. "It is unwise to pay too much, but it's worse to pay too little." - John Ruskin (1819-1900)

 

B. Index Funds Advisors Management Fee:

Figure F-7 (See the Fee Calculator for IFA blended fee and DFA fees.)

Attention New York Times readers: Not all passive advisors have the same capabilities or provide the same services, so fees alone are not a good comparison. Learn more about IFA from our webcasts at www.IFA.tv and the About Us page. You can also call IFA toll free at 888-643-3133.

It’s Unwise to pay too much…
But it’s worse to pay too little.  When you pay too much, you lose a little money – that is all.  When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do.  The common law of business balance prohibits paying a little and getting a lot – it can’t be done.  If you deal with the lowest bidder, it is well to add something for the risk you run.  And if you do that, you will have enough to pay for something better.
— John Ruskin (1819-1900)

*The blended annual fee at $1 million in assets under management is 0.825%, at $2 million is 0.7125%, at $4 million is 0.581%, at $6 million is 0.4875%, at $10 million is 0.3923% and at $20 million is 0.2961%. Due to a limitation of only five tiers in our billing software, clients with $6 million or more in assets will receive an invoice with the first 3 Tiers compressed into one Tier, so that on the first $2 million the rate is 0.7125%. Then, from Tier 4 down, the above schedule will be the same. For a precise calculation of your fee, see this fee calculator. Please call 888-643-3133 to obtain a copy of the IFA Client Agreement and Form ADV Part II. IFA's recommended account minimum is $100,000.

C. Custodian Fees:

Transaction fees may apply to certain no-load funds which do not participate in the Schwab Mutual Fund OneSource service, such as DFA mutual funds. Such funds are subject to Schwab's standard transaction fees. None of this fee is paid to Index Funds Advisors. The reason investors pay a transaction fee for DFA fund transactions is because DFA does not charge ongoing quarterly fees (12b1 fees) from it's mutual funds. Instead, investors pay a one time transaction fee for Schwab to execute the trade. This will cost less over the long term because it is a one time fee, as opposed to an ongoing quarterly fee of approximately 0.25% annually.

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D. Mutual Fund Fees

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