Episode Details

Our guest today on The Long View podcast is Rick Ferri. Ferri is an hourly fee-only investment consultant at Ferri Investment Solutions; he's also a CFA charterholder. Prior to starting his new firm in April 2019, he was the founder and head of investing at a $1.5 billion advisory firm that specialized in low-fee asset management using index funds and exchange-traded funds. Prior to that, he worked for a brokerage firm, where he was an early adopter of inexpensive index products for client portfolios. Ferri is a Marine Corps officer and retired fighter pilot.

Ferri has written several books on low-fee investing, including All About Asset Allocation, The ETF Book, All About Index Funds, and The Power of Passive Investing. He has also authored numerous investment-related articles and research papers, including a research paper on index investing that won S&P Dow Jones Indices' third-annual SPIVA Award.

Introduction and Background

• Rick Ferri's bio 
• Ferri's philosophy 
• Ferri Investment Solutions 
• Ferri's books
• Ferri's Forbes column
• "Bogleheads on Investing" podcast hosted by Rick Ferri
• "Ferri: 3 Keys to a Successful Investment Strategy," Morningstar.com video

"The conversation about asset allocation comes later, and the conversation about investments comes after that." Ferri discusses how his definition of value-add has changed over the past 10-15 years. (0:55-3:24)

"I've been through the whole gantlet." Transitioning from broker to Registered Investment Advisor. (3:25-5:14)

On clients who have needs that go beyond investment management. (5:15-5:56)

"You get the work done, you pay for the work." Why Ferri's new advisory practice charges clients by the hour, not by their assets under management. (5:57-9:44)

• "Rick Ferri, Back in Business, Drops Bomb on AUM Model," ThinkAdvisor article
• "Move Over 1% Advisor Fee: Change Is Here," Ferri's blog post on Forbes 

"Advisors talk about how they add value behaviorally; I think a lot of that is created by the advisor and not so much by the client." The role of advisors in managing client behavior. (9:45-11:12)

Asset Allocation

• "Ferri: 3-Fund Portfolio the Simplest Way to Best Return," Morningstar.com video
• Ferri's Core-4 Portfolios

"There are no average investors." How investors of the same age can vary widely in their appetite for equity risk. (11:13-15:03)

"Those are the things that are going to add value to a client's portfolio." Focusing on keeping taxes and investment costs down, not trying to play factors. (15:03-18:21) 

"There seem to be a lot of factor renters, rather than factor owners." Ferri is skeptical that factor investing will outperform in the future.