So I realize that fees are expensive at EJ (I'm currently there). I'm in the Advisory Solutions account with a bunch of ETFs and I pay like 1.5% annually (I have the exact number at home) on the total under mgmt. I'm really considering the move but the reason I went to EJ was that I wanted a physical person to talk to not a group (via the phone) like Vanguard. EJ also rebalances as much as biweekly under the AS program via 90 days for EJ. So I guess what I am trying to decide is do I want just a few mutual funds for basic market exposure for the lowest cost or do I want to be in more focused ETFs? I also wonder if my 15+ ETFs really see more of a return than three of the Vanguard admiral funds would have over the same period? Is everyone driving at Vanguard just for costs or are they actually seeing better returns than elsewhere?
If you insist on having someone manage your account a Vanguard advisor will do it for 0.3%. You can do it yourself for even less. There are plenty of people here who will point you in the right direction.
I use to work at EJ years ago. I still have friends who are there. I also have friends who are planners at Vanguard(and TIAA, Merrill, Schwab, Ameritrade, Prudential, Wells Fargo.... I've been in the industry awhile.). One friend actually left EJ and about 6 months ago he went to Vanguard... I just asked him to clarify some of this for me.
Cost: 1.5%+ funds/ETFs at EJ VS 0.3%+ admiral shares at VG. All in that is probably 1.65% for EJ VS <0.5% for Vanguard with an advisor. (Probably less than 0.15% if you do it yourself.)
Face to face: Local office VS video conference. EJ clearly wins here, but that is a really expensive premium just to shake someone's hand.
Rebalancing: Based on my understanding of it your EJ advisor is not rebalancing your account bi-weekly. He has you in a mutual fund of ETFs or a fund of mutual funds that is rebalanced by a separate manager. There are probably tens of thousands of people in the same fund as you. At Vanguard they call that a lifestrategy fund and they are insanely cheap, around 0.15%. Example: VSMGX. Vanguard advisors actually build a portfolio for you, not some generic fund of ETFs for everyone, and they do check it every 90 days.
Performance: 92% of Vanguard funds have outperformed their peer groups over the previous ten years. This isn't out of the ordinary. Low cost index funds normally outperform higher cost active funds over long time frames. I work in the industry. I have my money at Vanguard. I know guys who are analysts or managers for big expensive active funds & hedge funds who also own Vanguard index funds. Vanguard funds didn't outperform because they are run by geniuses. They outperformed because they are lower cost. You could take the Total Stock index fund and break it down into a dozen different ETFs if you wanted to make it look complicated. Those ETFs are more expensive, they look more complicated, and they make you believe your advisor is doing more than he is. If Vanguard presented you with a few broad index funds it might look boring, but they were probably building you a lower cost more efficient portfolio.
Tax efficiency: When I worked at EJ this meant put tax free bonds in the taxable account. Active funds aren't tax efficient so it wasn't something we talked about a lot. When I talked to my friend who is a planner at Vanguard we got into a debate about tax efficiency. We agreed bonds go in IRAs, stock index funds are better in taxable accounts, but domestic or international? Domestic stocks normally have more qualified dividends which get taxed at a lower rate while international stocks can get foreign tax credits for the taxes paid overseas. If you have a choice which one is more tax efficient in the taxable account? I'll save you the boring details of that debate. I will say I would expect a portfolio built at Vanguard to be a lot more tax efficient than a portfolio built at EJ. Oh, as an example those broad index funds are probably more tax efficient than a bunch of ETFs that are getting bought and sold on a bi-weekly basis...
