Gasem says:

What makes FIRE types experts? What makes Taylor Larimore an expert? What makes MMM or WCI an expert? Larimore was just an investing club guy who came up with an investing model back in the day that side stepped the brokerage fees common 40 years ago. It’s an adequate and mechanical model but I don’t see it as anyway optimized or “best”. In fact it wouldn’t even be adequate except for Vanguard’s approach to funds. He wrote some books and marketed the hell out of his idea. That makes it a sales operation PERIOD. It’s an easy theology to master. MMM? a miscreant engineer who created a rap and SOLD the hell out of it. Ride your bike sell the car!! WCI? an ER doc hellbent on creating a media empire. LIVE LIKE A RESIDENT I TELL YA! I got a book and a $500 course to sell ya! Why are these people saints and somebody who devoted years to understanding finance and being accredited a villain? You better believe MMM WCI and Larimore don’t do what they do out of altruism. Is the “simple math” truth or just a marketing lie? I’ve read FIRE books and I’ve read professional journals and articles. Color me not impressed by FIRE except doing something is better than doing nothing. It is certainly not about doing the best thing. It is not about doing the best thing because it doesn’t consider the end product which is retirement. It looks at retirement as a black box with an assumption that throwing an amount of money at it, pretty much plucked from thin air will work. It’s a stupid if not dangerous insight. Beyond that it proposes to “retire early”! Retire early absolutely means you have to leverage the future to make the cash flow work out, and leverage implies risk sometimes dramatic risk. You step up put your money on RED and hope for the best. Just because you hope hard doesn’t mean anything, yet you bet your whole future on this scheme. I see all kinds of stuff published by “financial blog experts” that is simply nonsense.

One of those is the AUM argument . The first thing some know it all DIY blogger does is talk about the 1.5% AUM adviser. There are none. OK the 1% AUM! Not really any of them either The AUM’s put a limit like 1.5% on clients with $50,000 accounts because they are not interested in those accounts. Even the beknighted legendary Ken Fisher doesn’t want your money if it’s less than 500K. I pay under 0.5% for my AUM but I won’t say how much under and get more than full service for that fee. I’ve seen guys with AUM for under .25% that will do basic custodial management using DFA funds, which I think are superior to Vanguard for some fund rule trading reasons. So when WCI or someone starts ranting about 1% turning into millions and millions of lost dollars the guy is just talking his book. He’s selling clicks and courses, books, bullet points and agenda. Why he seems like the very villain he is railing against.

How I chose my adviser. My adviser wrote a dozen books, based on the latest professional and academic thought regarding investing and he bases his portfolio design on that thought. The portfolio is quantitatively justifiable. I know the risk, return, and correlation and purpose of every aspect of my portfolio and the contingency it covers. I know what to sell and what to buy and when to sell and when to buy in the face of pretty much any market condition. I have a portfolio that portrays true mathematical diversity as described by the efficient frontier and not just a bunch of funds piled higher and deeper (the PhD bogglehead approach). I never just “maxed out my pretax accounts” because I have a destination for each dollar I own and each pile has it’s own tax treatment and liability and mitigation. I started planning early enough to effectuate a plan that had good efficiency to create a retirement portfolio that has good efficiency which is not overly burdened with tax bracket creep or risk. You don’t get that with PhD especially PhD in maxed out pretax accounts. My adviser keeps track of my money with software specific to tax loss harvesting. I tax loss harvested about 20K last year and my cap gains last year were 40K so I saved half of the taxes I would need to pay. I have a couple hundred K of tax loss harvest we have collected over the past decades so I won’t pay any cap gains this year or next year or for a very long time. Where does that tax savings factor into the AUM v DIY argument? It easily pays the AUM. Tax loss harvesting a complicated portfolio is not trivial. It requires knowledge of each tax lot. Acquiring that knowledge is not how I want to spend my retirement. Wen I want to re-balance or re-appropriate assets his software cooks up the cheapest way to accomplish the goal, more tax savings. He helped us design the correct SS strategy which will likely produce an additional 100K of SS income (give or take what happens in the future). An extra 100K buys a lot of AUM. The best benefit is I have someone to hash out issues and research my questions with reliable answers, not just some MMM puffery or 4th grade math formula. If/when I die my wife will be taken care of according to my plan, and my plan for her welfare is every bit as detailed as my plan for “us”.

DIY is typically about at best 1/8 of what you need to understand. It’s a land of jingles and bumper stickers and bullet points some of it useful, much of it not, and no way to discern. DIY addresses accumulation and not retirement which I like to call deflation. There is all kind of magic and mythology about deflation things like dividend income will somehow save you. There’s all kind of mythology about accumulation as well like the best way to invest a big wad of cash is to dollar cost average it into the market, to which I say Nonsense! DIY’s are pretty proud of themselves, yet the studies show they consistently leave 4% laying on the table, 4% that could be in their accounts growing. I’ll pay a one of those greedy AUM’s half a percent or less any day if he’s going to pay me a net extra 3.5% optimized in returns