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Dimensional Fund Advisors Review

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This review was produced by SmartAsset based on publicly available information. The named firm and its financial professionals have not reviewed, approved, or endorsed this review and are not responsible for its accuracy. Review content is produced by SmartAsset independently of any business relationships that might exist between SmartAsset and the named firm and its financial professionals, and firms and financial professionals having business relationships with SmartAsset receive no special treatment or consideration in SmartAsset’s reviews. This page contains links to SmartAsset’s financial advisor matching tool, which may or may not match you with the firm mentioned in this review or its financial professionals.

Dimensional Fund Advisors is a large asset management firm based in Austin, Texas, with a network of hundreds of advisors located throughout the world. The firm has hundreds of billions of dollars in client assets under management (AUM), and its client base consists of mostly institutional clients and clients of other independent financial advisors. The firm does have some individual clients on a separate account basis. Investment advisory services are the primary focus of this firm, as it does not have any financial planning offerings.

Dimensional Fund Advisors Background

Dimensional Fund Advisors was founded in 1981 by executive chairman David Booth. The firm acts as the investment advisor to five separate investment companies that represent over 130 distinct investment funds, which are collectively called the U.S. Dimensional Funds. The firm is owned by Dimensional Holdings, LLC, which is in turn owned by Booth.

The firm's offices are scattered throughout North America, Europe, Asia and Australia. Its U.S. branches can be found in Santa Monica, California; Austin, Texas; and Charlotte, North Carolina.

Dimensional Fund Advisors Client Types and Minimum Account Size

Dimensional Fund Advisors works with three types of clients: institutions, clients of other independent financial advisors and high-net-worth individuals. Institutional clients are the most common, as they include investment companies, pooled investment vehicles, retirement plans, charities, government entities, insurance companies, sovereign wealth funds and businesses. The firm only works with a handful of individuals.

Certain accounts at Dimensional may have minimums, but these requirements tend to be negotiable.

Services Offered by Dimensional Fund Advisors

First and foremost, Dimensional Fund Advisors is an investment manager. The firm's investment services are typically limited to the management of equity of fixed-income securities on a long-term basis. While its focus is on the management of investment funds, it oversees some separately managed accounts (SMAs) for individuals as well.

Another aspect of Dimensional's business is the licensing of software programs to defined contribution benefit retirement plans. This software helps these plans organize their participants and put them into model portfolio groups, all while providing technical support and maintenance.

Dimensional has created a number of retirement-focused indexes that it then licenses out to unaffiliated independent financial advisors. The firm's Index Committee continually maintains these indexes.

Dimensional Fund Advisors Investment Philosophy

Dimensional Fund Advisors describes itself as having a single investment philosophy that spans all of its strategies. More specifically, this involves taking a long-term approach to investing, while relying on expected returns instead of market-timing, short-term trading, stock-picking or interest rate forecasting. The firm's investments tend to be within the groups of equities or fixed-income securities.

Advisors at Dimensional primarily utilize fundamental methods of analysis to evaluate securities, though they may sometimes also use technical analysis. When applicable, the firm uses securities analysis as a means of eliminating investments from portfolios rather than adding them. The firm continually reviews its strategies to ensure that their intended goals are still being met.

Fees Under Dimensional Fund Advisors

Advisory fees for separate account services at Dimensional Fund Advisors are generally negotiable, meaning fee rates will vary based on different factors. Fees are typically charged as a percentage of each client's total AUM, and they are usually billed quarterly, in arrears.

Dimensional Fund Advisors Fee Schedule
General Investment Strategy Annual Fee
U.S. Equity 0.06% - 0.60%
Non-U.S./Global Equity 0.12% - 0.65%
Fixed-Income 0.05% - 0.25%
Real Estate Securities 0.10% - 0.24%

What to Watch Out For

Dimensional Fund Advisors has no disclosures listed on its SEC-filed Form ADV.

The fact that Dimensional Fund Advisors sometimes charges clients performance-based fees presents a potential conflict of interest. This is because advisors who manage these accounts may have an incentive to invest in riskier or more speculative securities, which wouldn't exist under a non-performance-based fee arrangement. Despite this, the firm is bound by fiduciary duty to act in clients' best interests.

It's also worth noting that Dimensional does not offer financial planning services. So if you're looking for financial planning offerings, including tax planning or retirement planning, use SmartAsset's free tool to get paired with suitable advisors in your area.

Opening an Account With Dimensional Fund Advisors

If you're interested in learning more about Dimensional Fund Advisors services and investment funds, call the firm at (512) 306-7400. To find an advisor that uses Dimensional's services, visit the firm's website and enter your zip code.

Investing Tips

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How Long $1mm Lasts in Retirement

SmartAsset's interactive map highlights places where $1 million will last the longest in retirement. Zoom between states and the national map to see the top spots in each region. Also, scroll over any city to learn about the cost of living in retirement for that location.

Rank City Housing Expenses Food Expenses Healthcare Expenses Utilities Expenses Transportation Expenses

Methodology We analyzed data on average expenditures for seniors, cost of living and investment returns to determine how many years of retirement a $1 million nest egg would cover in cities across America.

First, we looked at data from the Bureau of Labor Statistics (BLS) on the average annual expenditures of seniors. We then applied cost of living data from the Council for Community and Economic Research to adjust those national average spending levels based on the costs of each expense category (housing, food, healthcare, utilities, transportation and other) in each city. Using this data, SmartAsset calculated the average cost of living for retirees in the largest U.S. cities.

We assumed the $1 million would grow at a real return (interest minus inflation) of 2%. Then, we divided $1 million by the sum of each of those annual numbers to determine how long $1 million would cover retirement expenses in each of the cities in our study. Cities where $1 million lasted the longest ranked the highest in the study.

Sources: Bureau of Labor Statistics (BLS), Council for Community and Economic Research