The Value of a Financial Advisor

How do I perceive the value of a financial advisor? It depends on a myriad of factors, including your knowledge base in  matters of investing and personal finance and more!

Dr. Jim Dahle pokes holes in a couple of studies offered up by two highly reputable behemoths in the investment industry.

 The Value of a Financial Advisor 

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DIY investors are fond of adding up all the asset-based fees associated with advice and extrapolating them out for decades.

The Hard-Core Do-It-Yourselfer

Vanguard did a study a few years ago, and their conclusion is routinely trotted out by  financial advisors trying to convince you to use their services.

The Vanguard Study

The Morningstar study discusses three greek letters—the well-known “alpha”, the equally well-known “beta”, and a new, unknown letter, gamma.

The Morningstar Study

There are three main criticisms of the DIY argument. The first is that it ignores the effects of poor returns on AUM fees.

Criticizing the DIY Argument

It should come as no surprise that some advisors are better than others.  Not convinced of that? I encourage you to try an experiment I have  undertaken over the last half-decade.

The Advisor

As important as the advisor is to this equation, the investor matters  even more. You see, the value of even a good advisor depends a great  deal on the investor.

The Investor

If you think this stuff is interesting, or if you just can’t stand the  thought of paying someone else thousands of dollars a year to do it for  you, then go for it.

It Is Okay to Be a DIY Investor

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