2020 Dimensional Fund 401k review: advisory services fees, choosing investments, changing current allocations, rebalancing, IRA cons and pros. Is it worth the cost?


The Most Exclusive 401K plan out there, Dimensional Fund Advisors

Background on the company is very important to why someone would invest in them. Dimensional Fund Advisors is a multifaced company that not many people know about. It is located in Austin, Texas and has over 500 billion dollars under asset management.

Dimensional Fund advisors was found in the early 1980’s in Chicago in a Brownstone apartment and has since expanded to every country around the globe. A very exciting company to invest in, because they are known for funds making money over long term. They do this by targeting and recruiting advisors who are sharp (with a PhD) and then utilizing their knowledge of the market to come up with the best allocation of stocks per fund. These funds are then available to buy through a financial advisor. Dimensional Funds are not sold any other way. This exclusivity makes them seem shiny and neat to investors.

Why is Dimensional Fund Advisors different?

The Financial advisors who work at Dimensional Fund Advisors say they have their client’s good interests at heart. They want to see everyone succeed. As a result, they use an algorithm that determines the best stocks in each of their funds. This algorithm is the lifeblood of the company. It was established by using math from the future.

Seriously though, they have Nobel Prize Winners on their board of directors. Using the algorithm, Financial advisors then tell clients about which funds have the best long-term potential. This is Dimensional Fund Advisors motto. They want people to not worry about the future by buying the fund.

This works because people tend to look at the day to day and not the long term when it comes to the stock market. They want to sell, sell, sell. Sometimes though, its better to hold on to the stocks and let the dividend pay.

Dimensional Fund Advisors Fees and Cost

Dimensional Fund Advisors charges quite a bit of fees for maintain the account. Dimensional Fund Advisors has two sets of fees. Each fund has a different set of fees. For example, as of December 2020, the fees for DFA US Large Cap Growth Portfolio comes in at 0.23%, and the total net expense ratio is 0.20%.

On top of that fee, Dimensional Fund has a typical 1.00% fee that an investor pays to the advisor.

How is the Dimensional Fund Advisors Fund growth?

Growth of the DFA US Large Cap Growth Portfolio fund is also substantial. In 1-year it can grow as much as 23.78%. This is an exciting opportunity if you are putting in quite a bit of money at a time. Otherwise, it will look like one is losing money in the first two years. Overall, the fund will then even out, with a 10-year return investment coming in at 16.29%.

One of the interesting things about Dimensional Fund Advisors is that every Domestic entity (Fund or Bond) in the 5-year and 10-year return category is over 10%.

Over on the international side of options, a positive long-term growth potential. While it seems like the growth is smaller, it is actually more stable. The DFA International Small Cap Growth Portfolio for example can return as much as 10.82% over 10 years.

Is it worth investing in Dimensional Fund Advisors?

One of the things that an investor must come to terms with are the amount of fees vs. the dividend the investor is making. If the fees outweigh the amount of dividend that will be paid out per year, then it will seem like the investor is losing money. This is an account that an investor needs to put their entire life savings in, because otherwise it will be difficult to make actual money on the account. Investors putting in small amounts per month may not see the long term growth potential that investors who are putting 10x the money in comparison in.

Review of Dimensional Fund Advisors Website

The screenshot below shows the main page when you log in. it has an easy to read pie chart right in the investors eyeline. This portion of the site also shows how the portfolio is weighted with percentages. The right-hand size also shows how much money you have, and how much is vested.

Dimensional Fund 401k Review

An easy to read list of investments is then shown below that. Each fund in the account is clearly listed, and shows the following information: title, asset class, shares, price, price as of, balance, QTD change and YTD change.

The simplicity of this design though has a few cons. First off, it is too simple. If someone one wants to withdraw money, for example, then it takes you to a completely different portal that is hard to navigate. To get back to the main page, you have to navigate to another tab. This is kind of a pain. The only really easy page to view is the main page. The “Researching Investment” page for example, takes you to a very complicated tracker. That tracker, shows the investment name and price and also a month-end chart.

Dimensional Fund 401k Review

The thing is, Dimensional Fund Advisors does not give an investor any idea if these stocks are highly rated or not. They just lay out the facts. If an investor wants more information, about the fund just click the fund’s name and then the facts sheet appears. The site then takes you to another page that isn’t on the Dimensional Fund Advisors website, and it takes a long time to load. Advisors will wait up to a minute for the information to appear.

In comparison, when comparing funds on Ally Invest for example, there is no minute wait time. The fund’s information is preloaded into every fund ticker on the Ally's website, and their company rates the stocks within the fund.

Dimensional Fund Advisors other site pages for their 401k plan, are basically useless to someone who is working and putting money in. Honestly, there doesn’t need to be a retirement calculator inside the secure side of the site. This is like telling an investor that they do not have enough money in their account. Every time they log in.

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Should investor’s look to Dimensional Fund Advisors for their needs?

DFA has the mindset that you should not have to worry about your money once you put it in DFA. It is a great mindset if you have over a million dollars in funds with them. The fees are too high for the normal Joe to invest with. Yes, they have a set of very good offerings, but the overall fee structure isn’t worth it long term, unless you are putting over $100,000 into the account. Overall this fund would get a 3/5 rating.


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