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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 SaP 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. (18:23-20:44) Factor investing defined Dr. Wesley Gray interview on factor investing, "Bogleheads on Investing" podcast   "I don't use anything that doesn't have an expected real return." Why Ferri sticks with plain-vanilla asset classes. (20:45-21:56) How to go about making return assumptions for the major asset classes. (21:57-24:14) "It depends on how much money the client has." A total bond market index as a one-stop option for fixed-income exposure. (24:15-27:20) International bonds as a core asset class. (27:21-28:46)  "Global Fixed Income: Considerations for U.S. Investors," Vanguard research paper "Six Advisors on Investing in International Bonds," OregonLive article "I don't think they're pivotal." REITs as a direct allocation.  (28:47-31:45) "REITs and Your Portfolio," Ferri's Forbes blog post Decumulation   "The software doesn't seem to be very good at this." Decumulation is inherently more complicated and customized than accumulation. (31:46-34:19) "There seem to be better ways of doing it than the classic way in which we've been taught." On whether the traditional declining equity glide path makes sense. (34:20-39:28) Indexing and the Legacy of Jack Bogle "It's been around forever." Direct indexing: the wave of the future? (39:29-42:09) "Could Direct Indexing Help Your Portfolio?" Forbes blog post by Simon Moore "I don't see it as big of a threat as other people do." Should investors be worried about concentration in very few ETFs, and do index funds and ETFs own too much of the market? (42:10-44:07) "I was having a real moral dilemma." How influential Jack Bogle was in shaping Ferri's career path. (44:08-46:08) "The Worth of a Man: A Tribute to John C. Bogle," Forbes blog post Ferri's interview with Bogle, "Bogleheads on Investing" podcast "Vanguard Founder Jack Bogle Passes Away," Morningstar.com article