FAQ

When selecting an advisor, consider the following questions:

• Is your advisor a fiduciary? Fiduciary advisors are required by law to act in your best interest.
• Is your advisor fee-only? Fee-only advisors are compensated only by you, the client. If your advisor is also compensated by third parties, you have to wonder if they truly are committed to your best interest. For example, could your advisor be recommending a certain mutual fund or annuity because he or she gets a commission, sales charge (load), or another form of compensation for selling that product? If they are fee-only, then they are free from potential subjective outside influences.
• Does your advisor use index or asset funds? If not, then why not. What are the reasons that your advisor is using to promote the stocks, mutual funds, and other financial products in your portfolio? Demand data that support the claims, specifically how has your portfolio performed against the underlying indices, net of all fees (not just any index, but one that closely represents the assets within your holdings). These data should be easily generated and clearly presented.

If you have the emotional strength to implement and maintain an intelligent portfolio, to remain disciplined, and to rebalance when necessary, then you may not need an advisor. Educated, disciplined, and do-it-yourself investors can construct efficient portfolios using low-cost Vanguard index funds and etfs, and hiring an advsisor for access to Dimensional Funds to simply boost performance may not provide enough of a value. The majority of investors who don’t have enough knowledge, discipline, or emotional stamina to invest on their own should consider a Dimensional-approved advisor. Dimensional advisors don’t simply provide access to Dimensional funds. Dimensional clients typically capture higher returns than conventional and index investors because DFA advisors encourage smart behavior and discipline. Feel free to give us a call to chat about this or any other topic. And, don’t worry, we don’t use sales tactics when giving advice. Our goal really is to spread the word about rational investing through education, even if that leads to you investing on your own or finding someone else who may be a better fit.

The first question really is whether you need an investment management advisor at all. Then, it may turn out that we are not the right fit. We are not the typical advisor that uses a conventional approach to investing. We don’t look for mispricing in individual securities or mutual funds, nor do we try to time the market. We use an evidence-based approach to investing. Feel free to call us anytime. We can discuss this and any other topics when you do.

A fiduciary is a person or a party who by law must put their clients’ needs before their own. That inherent “trust” that a client can place in a fiduciary is in stark contrast to the “suitability standard” under which most advisors and brokers operate. Non-fiduciaries do not have to put your best interest first, indeed their investment advise must merely be “suitable” for your needs. Sabela is a fiduciary.

We don’t believe that stock picking or market timing is a winning strategy. We only advise clients to use an evidence-based approach to investing. We offer low-cost, globally-diversified portfolios using Dimensional mutual funds.

We believe that stock picking is a losing strategy. Evidence-based investing relies on years of research, which suggests that markets are efficient, that diversification can reduce the uncompensated risk from individual securities, and that there are dimensions of higher expected returns (see Philosophy). Stock picking is speculation and not part of this philosophy. We promote buy-and-hold strategy using a low-cost, globally-diversified portfolio. However, you can choose to hold individual stocks in a separate account that is not included as part of our management services.

We provide independent, fiduciary investment portfolio management using these services:

We don’t believe that a one-stop shop can maximize value for each service to all clients. We advise clients to also use estate planning attorneys, fee-only insurance advisors, and tax accountants in collaboration with our asset management services.

Our investment advisory fee is based on percentage of client’s assets that Sabela manages and is calculated and charged in accordance with the following fee schedule:

First $500,000	.80
Next $500,000	.65
Next $1.000,000	.50
Next $2,000,000	.35
Next $5,000,000	.20
Next $5,000,000 (+)	.15

Our initial account minimum investment is $100,000. We treat each client independently and may in some cases waive the initial minimum investment requirement. Solely at our discretion, in some cases the fees may be negotiable.

No. Sabela charges a fee based on assets under management only.

Sabela is a fiduciary, fee-only investment management advisor. We do not get paid by any third parties, including brokers, custodians, and mutual fund companies for using or promoting their products (this includes Vanguard and Dimensional Fund Advisors), nor do we get paid commissions or get a cut from custodial transaction fees. We only get paid directly by our clients, which means that we remain true to our fiduciary standard by making decisions that are solely in your best interest.

At minimum, we communicate each quarter whether your account qualified for rebalancing. However, there is nothing special about a quarterly time frame; indeed it’s just an arbitrary frequency. We monitor your portfolio continuously and weigh the market dynamics against the transaction costs generated by rebalancing. We may actually rebalance intra-quarter and also reserve the right to skip rebalancing altogether, if we believe that doing so is in your best interest.

Buy-and-hold is a long-term, evidence-based strategy that has to do with ignoring day-to-day market fluctuations. It does not have anything to do with discounting your changing risk dimensions. As a client gets older, his or her time frame changes. Since time frame is a dimension of risk, the client’s customized risk capacity will also adjust. As your risk capacity adjusts, so should your asset allocation, in this case gradually moving away from equities and into bonds. Keep in mind that even in retirement, clients should have exposure to equities.