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I think for most people, a competent financial advisor would add value through proper asset allocation, as most people don't have the time, knowledge or understanding of correlation of funds to properly allocate their investments.
That's probably why many funds now are automatically allocated to retirement years as proper asset allocation can add 1-3% in returns vs poorly or unallocated funds, and a proper allocation can definitely minimize risk in the drawdown phase.
Compared to proper allocation - the picking of funds to match the market with a low expense ratio is a solved problem.
The obvious corollary of this: if you are talented at allocation, then a financial advisor will be of no value.
Actually the research has nothing to do with explicitly using the vanguard alpha tool, there's not proprietary about it and the value add. If you could read 3 pages and comprehend basic ideas you'd understand
Do you know what 1% of 50k is? Also the once a year appointment doesn't really help with temperament, coach or any of the behavioral issues. Let's hope the 08 selloff didn't occur in the middle of your year
It no more difficult to move an advisory account paying 1% than it is a transactional account. It's clear you lack an I depth knowledge of how the business works and simply are among things up
I have quoted the original paper wherein Vanguard states what the 3 % is based on and it is proprietary formula that they have trademarked. And yet to quote a flier from Vanguard and state it is not. I am not the one having reading comprehension skills, you are.
I do know what 1 % of $50K is. I don't know why you constantly push the advisory managed fee. Let me ask you frankly - are you are financial advisor?. I don't see any other reason for anyone to go on and on constantly against someone who takes an opposite view.
I am done with you and your constant harping about financial advisors and managed accounts. The readers of CD can glean from the thread what the motives are for your postings.
I have quoted the original paper wherein Vanguard states what the 3 % is based on and it is proprietary formula that they have trademarked. And yet to quote a flier from Vanguard and state it is not. I am not the one having reading comprehension skills, you are.
I do know what 1 % of $50K is. I don't know why you constantly push the advisory managed fee. Let me ask you frankly - are you are financial advisor?. I don't see any other reason for anyone to go on and on constantly against someone who takes an opposite view.
I am done with you and your constant harping about financial advisors and managed accounts. The readers of CD can glean from the thread what the motives are for your postings.
Goodbye.
They have trade marked the name not the concept. You don't even understand what you are trying to argue, they have trademarked the name and then detail out how you can implement the framework on your own.
I'm not an advisor but I am intellengent enough to understand simple concepts and facts not only about money management but also investor behavior. If you can't read the study and understand that's it's a framework for work not a proprietary model that no one knows of I can't help you.
Which human factors? I'm talking about an investor that sticks to their planned asset allocation, not someone making behavioral errors based on impulse.
I know you read the same retire early forums, clearly there are quite a few small investors (myself included) that didn't run for the exits in 2008.
the behavioral errors unfortunately are built in to most of us . jason zweigs research and book showed how different parts of the brain come in to play when we have real money in play vs hypothetical .
the actual brain scans of people who were experiencing poor investments with their money showed that an illogical part of the brain came in to play when they thought about losing real money .
the scans were similar to the scans and patterns folks got smelling dog poop or watching a video of someone vomiting .
the human brain hates losing money more then making it and will have you doing the wrong thing at the wrong time naturally and most folks can't resist .
most can have the perfect plan and the logical brain will help you plan that . but once the pressure is on that part of the brain no longer does the reasoning .
when i bought in to the real estate partnership ,every day my brain pounded me with reasons not to do it . having read jason's book i knew what it was doing .
The value of the advisor is in keeping you from doing things that are really stupid, but that educated and well-informed people do anyway:
- Not saving enough
- Not taking advantage of tax-deferred accounts
- Taking money out early and paying huge penalties
- Allocating once and forgetting it for 40 years (you may have put it all in money market funds when they were earning 12%)
- Not integrating your accounts (you may have a very unbalanced allocation when summed across different accounts)
- Not integrating your investment strategy with your spouse's
and so on. We all know how to buy diversified portfolios of index funds, rebalance them, and never cash out early, but do we?
Spend half on wine, women and song. Squander the rest.
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