John, I realize this will come across as the usual party forum line, but…
runchman said:
So I made the decision:
...Queue up an advisor to keep me out of my own way
Are you
sure it will? If you can’t prevent yourself from unsuccessful stock investing, can/will an advisor really keep you from making bad investment decisions?
runchman said:
...paying that .5 or .8 or whatever fee is practically guaranteeing we'll do better than we would on our own.
I hope you do well but...
If you have the ability to select a good advisor, follow his advice and “stay out of harm’s way”, then you have the ability to develop your own asset allocation and do your own investing. That will at least guarantee you won’t be reducing your return by the .5 to 1%
or more in fees, loads, etc. Heck, there are some excellent “lifecycle” funds out there that do most of the heavy lifting for you.
I have first hand knowledge of the consequences of following the advice of experienced, reputable advisors with good track records. (For the record: I’m
not saying all advisors are all bad, only that using an advisor isn’t “practically guaranteeing” anything.)
Example one: A lifelong friend (engineer with an MBA) sacrificed his soul and (sorry Dory) family life to work for a Saudi oil company. He made big bucks, followed his advisor’s guidance and retired in 1999 at age 51 with a nest egg in the 2.5 million range. At our HS reunion in the fall of ‘99 he told me he’d just met with his financial guy (big name company, his personal advisor officed in NYC) who told him, “You're financially set, you will never have to work another day in your life.” Right. A year later his portfolio had lost 60% of it’s value and he was suddenly unretired.
Example two: At the corporate offices of the company where I spent the last 27 years of my working life, many of my contemporaries used the same financial advisor. He was such a frequent visitor to the executive wing that some employees actually thought he worked for the company. For years I heard what a great job this guy was doing, and although I had always been a DIY low-cost mutual fund type investor, I decided I would give the guy a chance to manage my portfolio.
He did the usual evaluation of my financial situation and made recommendations of how I should change my asset allocations and what funds I should use, emphasizing one particular fund which had a long track record of above-market performance. When I checked the fund out, I found not only the big front-end load (which I had expected), but also learned the long-time fund manager had left to go to another fund company three weeks earlier. This was a fund where the manager picked all the holdings, not a committee-run fund. When I asked him about it, he had what I can only describe as a ‘deer-in-the-headlights’ look on his face.
Bottom line, I stayed with the average but low cost investment advisor I saw in the mirror each morning while shaving. That guy retired a few years later…the guys who used the other financial advisor are all still working.