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Mar 1, 2008 4:15 am

Anyone use/been approved? What is process to be approved to use, aside from “fee only” status?

Mar 1, 2008 12:52 pm

I believe that you need to attend one of their classes, also. It’s something that reinforces their theories and thoughts concerning portfolio management and the active/passive debate.

I think the classes are a few days long.


Mar 1, 2008 4:53 pm

Really?  My b/d just sent out a mass mailing saying we signed an agreement to sell DFA in a wrap program.  Is this something different?  It did not mention anything about being “fee ONLY” or any classes.

Maybe we are using an intermediary?  I have not looked closely, and have never used them.
Mar 1, 2008 5:59 pm

Funny stuff… When I talked to them in the past, they told me that they didn’t even work with advisors that maintained a BD relationship, let alone the BD itself. This is from their website…

‘As a result, Dimensional fund shares are not available directly to individuals but are limited to clients of a select group of fee-only financial advisory firms.’

‘Fee only’, is what I read. If they’ve now mass marketed their funds through other non-fee only sources, I’d think they would have watered down their product. Additionally, they seem to think that they are something special, and since they are now on other platforms, DFA advisors will have something to complain about, I’d imagine.

Which BD are you referring to?


Mar 1, 2008 6:45 pm

ok, now that i look closer it is not “direct” with DFA.  it is through Beacon Capital:


Beacon Capital is excited about our new relationship with the XXXXXXXXX offering Dimensional Fund Advisors in five risk tolerant models. Our wrap fee program includes all transaction and custodial costs and is tiered at 55 bps up to $500, 000, 35 bps on the next $500,000 and 15 bps over $1M.  The advisor can add up to 125 bps not to exceed 1.80 combined program/advisor fee and is paid monthly. Advisors and clients will have daily online access to their accounts. You can visit us on our website at and simply click onto “advisor forms” and you will have access to all of our applications, articles and literature. <?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />


I have attached the Beacon strategy sheets that show yearly returns (reported net of the highest combined program/advisor fee of 1.80%), an advisor article on DFA vs. Vanguard and a Morningstar reprint for your review. Please contact me for literature or to answer any questions you may have.

Mar 1, 2008 6:46 pm

Looks like we are talking apples to oranges?

Mar 1, 2008 7:01 pm

Beacon Capital is simply one of a number of fee-only firms making DFA funds available to non-approved firms.  It looks like Beacon Capital is the wrap manager on your b/d (and other) platforms.  Their wrap models use DFA funds.

So you/your clients can “get access” to them via a wrap program, which means in addition to the client paying the normal DFA internal expenses they also have a wrap program sponsor (Beacon) fee tacked on, as well as your fee.

Beacon Capital is the only one interacting directly with DFA, and they would have had to jump through the various ‘qualifying’ hoops Captain correctly mentioned, including the required training sessions.

Mar 1, 2008 7:13 pm

right, which is why i did not think we were comparing apples to apples.  accessing them this way adds another layer (or 2) of expenses on top.

Mar 3, 2008 10:41 pm

I use DFA through LPL.

 The reason LPL can use DFA to my understanding is someone use to work for LPL and then joined DFA when he got there he explained how LPL is different from other (indy) BD's so DFA lets LPL reps who go through there training use them! My expense ratio is what you see on morningstar! I do not know if I would use them if a middle man was taking from the pie!
Mar 13, 2008 7:16 pm

Seems to me like they are the classic “you will want this really bad because only certain people can get it”.

  Brokers are stupid sometimes.  I would never put all of my assets with one company.  I know brokers who are doing this because they can charge clients the same fee--but put more in their pocket.
Mar 14, 2008 1:40 am

many are “passive” pioneers, so it’s not exactly a huge bet to use them. also, if other competitors are not DFA approved, can’t hurt to have a diff story without going “active”

Mar 14, 2008 1:58 pm

[quote=iceco1d] That, or some of the biggest names in academic finance and research are founders of, associated with, or employed, by DFA.  Some of the concepts plastered all over the glossy brochures you get get from your wholesalers were “fathered” by some of those gentlemen; I for one have great respect for many of them. [/quote]
Careful in placing too much emphasis on academic prowess, ice.  A number of these geniuses were also board members with Long Term Capital Management, one of the most spectacular investment failures of modern time.

If IQ and investment results were highly correlated, why are there so few wealthy geniuses?

Mar 15, 2008 1:18 pm

[quote=iceco1d]   A number of these geniuses were also board members with Long Term Capital Management, one of the most spectacular investment failures of modern time.

  Maybe they are looking at hiring some folks from Bear Stearns also.
Mar 15, 2008 1:48 pm

I think Pin may have just been trying to be funny, as opposed to taking a shot at you ice.

As for which guys at DFA were involved in LTCM, both the giants you mentioned were indeed involved as board members:

Long-Term Capital Management (LTCM) was a hedge fund founded in 1994 by John Meriwether (the former vice-chairman and head of bond trading at Salomon Brothers). On its board of directors were Myron Scholes and Robert C. Merton, who shared the 1997 Nobel Memorial Prize in Economics. Initially enormously successful with annualized returns of over 40% in its first years, in 1998
it lost $4.6 billion in less than four months and became a prominent
example of the risk potential in the hedge fund industry. The fund
folded in early 2000.

Mar 16, 2008 12:44 am

Not a shot at you Ice just making light of the current market (God knows we need to try and find a smile somewhere in this mess), corporate greed, what goes around comes around, and sometimes the “Smartest Guys in the Room” (excellent documentary by the way) come falling hard down to earth…besides I am sure there are some Bear guys looking right now.  

Mar 17, 2008 11:08 pm

[quote=iceco1d]Well then, I stand corrected.  My apologies!  I still have a great deal of respect for some of those guys (Scholes, Merton, Rolle, etc.); I guess I’m a bit of a dork sometimes!  [/quote]
As economists, one could certainly argue they have earned some respect (at least as much as economists warrant ). 

It’s an entirely different skill set to actually manage people’s money.  They didn’t win their Nobel Prize for managing money - they won it for their academic contributions to economic theory. 

Mar 18, 2008 12:11 am

I think it makes sense to have a part of someone’s portfolio managed passively & a part managed actively. For the the passive component I usually use strategy UIT’s & DFA doesn’t come close.

It doesn’t come close to my actively managed wrap program’s performance either.

All you Indy’s out there - sell 'em, I’ll be glad to transfer them away from you!

Dec 2, 2008 9:32 pm

Anyone still using this stuff?

Dec 5, 2008 2:13 pm

Yeah, I looked recently, and DFA doesn’t exactly look like a bunch of sages.

Unfortunately, these are the times when indexers get crushed.   U.S. Large Cap Value down 46.5% Small Cap down 42% Most Int'l Funds down 50% minimum   So much for managing risk.  Yikes.
Dec 10, 2008 4:31 pm

One of the founders of the Company, I think his name is David(?) Booth, just gave $300,000,000 to the UofChicago B School, so they have now named the school after him.

  As to portfolio mgt. they were an early pioneer in designing indexed funds, they now have about 90 or so offerings (I could be off on this #). I was told that they will not directly deal w/ RIA's below $20M, but if you have a BD they'll only deal with them, and they have a bunch of conditions for that. One a historic basis portfolios constructed out of DFA funds -- they do not do portfolio construction themselves -- generally experience excess returns of about 1%. It is of course almost impossible to design a true benchmark for a portfolio, and you obviously want such performance measures to be on 'risk-adjusted' basis.