Who REALLY is better off with an advisor?

[ER Eddie]

ER Eddie is one of the few people on the forum in recent years that even had an objective measurement of his FA. "The FAs investment returns were better than mine". But even that is only a B- answer.

Hey, I deserve at least a B.

I have yet to hear a single person person say. "I know my FA is good because he has delivered positive alpha over the last 5 or 10 years."

Yeah, I wouldn't hold your breath on that one.


Midpack, your 2nd qualifier (grey area) is tough to address. Maybe you could compare the DIYr's returns to results from an average DIY'r, if those data are available somewhere. If he/she fell short of the average DIY'r, perhaps he/she could've benefitted from an FA. Unless the average FA results are even lower...

p.s. Although that ignores the other potential advantages of an FA, such as good advice about other areas (e.g., taxes, estate planning, whatever).

 

[dtbach]

I invested with an Advisor (a good friend) but had the knowledge of 25 years of investing and took note of the fees that were being generated. After 4 years I compared the results and fees with Vanguard Windsor fund and immediately fired him and moved all the funds to Vanguard Windsor. I told him it was just a "business" move and had nothing to do with our friendship. That remains to be seen. . . .

 

[growing_older]

Many people, except possibly the most knowledgeable DIY folks, would be better off with a good adviser. The problem is that most advisers are actually pretty poor advisers who take fees and commissions to further reduce the returns of the already sub-optimal strategies they suggest. It is all but impossible to find the "good" adviser that everyone uses to recommend the advantages of advisers. Most advisers I have talked to were very good at sales and not nearly so good with actual advice.