From page 9 of the report:Each scenario in the analysis is based on a 10,000-run Monte Carlo simulation. Taxes and Required Minimum Distributions (RMDs) from the portfolio are ignored. The analysis assumes a 1.0% fee, or negative alpha, that is deducted from the portfolio value annually. This fee is included to account for unavoidable retirement portfolio expenses paid by the investor (e.g., mutual fund fees, advisor fees, account fees, etc.) for investment management.</snip>Well, duh. I agree that you can only withdraw 3.00% if you're letting a financial advisor skim 1.00%, but why would you do that? You can put together a diversified portfolio at Vanguard for 0.10% in fees or less and take the 4% SWR you're entitled to.intercst I got banned from the Morningstar boards yesterday because I called Pfau out on this exact same issue. He responded by accusing me of lying about his data and his research. He claimed that he had never included a 1% annual fee in his calculations and that all of his calculations were based on "no fees" being included. He then stated that his results were actually worse than 3% if you counted fees. I was banned from the boards about 10 seconds after he posted his reply. He then spent the rest of the day praising his research. I'll confess, I did suggest that his 3% rule would become true due to his belief that everyone should pay a financial advisor a 1% annual fee for help with investing, because investing is so complex and stressful that most people need help. I then suggested that he should disclose how much money he gets from his speaking tours that are designed to scare retirees into thinking they can't do it themselves, plus what he gets in grants from the financial services industry at his university position. I get banned for simply telling the truth. Of course, Morningstar also has its head up the rear of the financial services industry, so I guess I shouldn't be surprised. Would someone please tell me what's so hard about putting your portfolio in 2 or 3 Vanguard funds, and only paying 99% less than Pfau's 1% annual fee. Of course, Pfau's 1% fee really isn't correct, because the financial advisors usually charge more and also put your money in funds that charge another .5% to 1%, making for a total of closer to 2% or more, thus leaving a person with a withdrawal rate of less than 2%.
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