Dimensional Funds and Our Find an Advisor Listing: What It Means for Our Clients
Here's the short answer. Since October 2024, Generous Wealth Management has been listed in Dimensional Fund Advisors' Find an Advisor directory. That means we have access to Dimensional funds, and we use them in client portfolios. It doesn't mean Dimensional manages your money or gives you advice. We're still your adviser and your fiduciary, and nothing about how we work with you has changed.
Who is Dimensional Fund Advisors?
Dimensional is an investment firm that's been around since 1981. It builds and runs mutual funds and ETFs. It isn't your custodian, and it isn't a financial planner. Think of it as one of the companies that makes the investments, not the people who put your plan together.
Dimensional is known for building its funds on academic research.
A bit of history
Dimensional was founded in 1981 by David Booth and Rex Sinquefield, who met through Eugene Fama's finance class at the University of Chicago. The firm has worked closely with academics ever since. Fama has been involved as a director from the beginning. In 2013 he shared the Nobel Prize in economic sciences with two other economists for their empirical analysis of asset prices. Kenneth French, a Dartmouth professor who has done a lot of research with Fama, also sits on Dimensional's board and consults for the firm. Robert Merton, who shared the 1997 Nobel Prize in economic sciences, works with Dimensional as its resident scientist. We share this because it's where the research behind the funds comes from. It's background, not a promise about results.
How Dimensional approaches investing
Markets do a pretty good job of pricing information. Every day, millions of buyers and sellers trade on everything they know, and news gets folded into prices fast. It's a little like trying to pick the fastest checkout line at the grocery store. Everybody else is eyeing the same lines, so the "obvious" fast one rarely stays that way. Dimensional doesn't try to win by forecasting which stocks will do well next.
Diversification does a lot of the work. Instead of a handful of big bets, Dimensional funds generally spread money across a large number of companies, often in many countries.
Some company traits have been linked to differences in expected returns. Dimensional calls these dimensions of expected returns. The main ones it talks about are company size (smaller companies), relative price (companies priced low compared to their fundamentals, often called value), and profitability (more profitable companies). Dimensional tilts its funds toward these traits. The key word is expected. Research has linked them to higher expected returns over long periods, but they don't show up every year, and there can be long stretches when they don't show up at all.
Costs and trading matter. Dimensional funds generally aim for low turnover, meaning they don't buy and sell constantly. Every trade has a cost, and costs come out of what you keep. Dimensional also tries to be patient and flexible about when it trades.
None of this is a promise of better results. It's a disciplined, research-based way to invest, and that's what we like about it.
What the listing means, and what it doesn't
Dimensional keeps a directory on its website where people can look up independent financial advisers near them who use its funds. If you search near Norwell, MA, you may see our name. Being listed means we have access to Dimensional funds and use them for clients.
Here's what it doesn't mean:
- Dimensional doesn't vouch for us. Its own website says it doesn't evaluate, supervise, or recommend the advisers in the directory.
- Dimensional doesn't manage your account or give you advice. We do.
- Dimensional doesn't pay us. We're fee-only, so the only people who pay us are our clients.
- It says nothing about future results.
How Dimensional fits our approach
We're of the opinion that most people are better served by a diversified, low cost portfolio they can stick with than by trying to guess the next hot stock. Dimensional's research-driven approach lines up with how we already think, and that's why we use its funds.
But the funds are one piece of the puzzle. The investments should serve the plan, not the other way around. We start with what you're actually trying to do, like retiring or selling a business. Then we look at taxes, which accounts to use, and what you own and why you own it. Our team brings advanced planning and tax experience to that work.
A fund company can't do that part for you. That's our job, and it stays our job.
Frequently asked questions
What does it mean that my adviser is listed in Dimensional's Find an Advisor directory?
It means your adviser has access to Dimensional funds and uses them with clients. The directory is a list Dimensional keeps of independent financial advisers who work with its funds. Dimensional says it doesn't evaluate, supervise, or recommend the advisers on that list, so a listing isn't a judgment about any adviser's quality or results.
Who founded Dimensional?
David Booth and Rex Sinquefield founded Dimensional Fund Advisors in 1981. Since then, the firm has worked closely with academic researchers, including Eugene Fama and Kenneth French.
Does Dimensional manage my account or give me advice?
No. Dimensional runs the funds. Generous Wealth Management is your adviser and fiduciary, and we're the ones who manage your portfolio.
Do I need to do anything?
No. Your accounts, your custodian, and the way we work together all stay the same. If you're curious which Dimensional funds you own and why, just ask us at your next review.
Can I buy Dimensional funds on my own?
Partly. Dimensional's mutual funds are generally available only to institutional investors and to clients of independent financial advisers who work with Dimensional. Dimensional also offers ETFs, which trade on stock exchanges and are available through a variety of brokerage platforms. Some Dimensional funds also show up as options in certain retirement plans and 529 college savings plans. Whether a fund fits you depends on your whole picture.
Does this change our fees?
No. Our advisory fee stays the same. Like any fund, each Dimensional fund has its own internal expense ratio, which is listed in its prospectus and is separate from our fee. Dimensional earns a management fee from its funds, like every fund company does, but it doesn't pay us anything for using them.
Is Generous Wealth Management affiliated with Dimensional?
No. We're an independent, fee-only, state-registered investment adviser. Dimensional is an unaffiliated fund company.
If you have questions about Dimensional or anything else in your portfolio, feel free to reach out. We're alwa
Generous Wealth Management LLC is not affiliated with Dimensional Fund Advisors. Dimensional Fund Advisors is an unaffiliated third party, and its funds are offered by prospectus. Please read a fund's prospectus carefully before investing.
Important Information
Generous Wealth Management LLC is a state-registered investment adviser registered in Massachusetts and in other states where required. Registration does not imply a certain level of skill or training.
This article is provided for educational and general informational purposes only. It is not personalized investment, tax, or legal advice, and it is not an offer or solicitation to buy or sell any security or to provide advisory services where we are not registered or exempt. Please consult a qualified professional about your own situation before acting on any information here.
The information in this article is believed to be accurate as of the publication date shown above and is subject to change without notice. Tax laws and regulations change often, and how they apply depends on your individual circumstances. Investing involves risk, including the possible loss of principal.
You can review our Form ADV and other information about Generous Wealth Management LLC (CRD 318091) at https://adviserinfo.sec.gov/firm/summary/318091.
Diversification and asset allocation do not guarantee a profit or protect against loss in a declining market.