Thursday, November 4, 2021

Being Smart with $$ - Don't Believe that You Need to Pay a Fortune for Financial Advice

 

If you are looking for a financial adviser, you may wonder if all those dazzling claims of brilliance by financial companies on TV advertisements can be true. The ads imply that if you pay the boastful adviser $10,000 every year (on a $1 million portfolio) then they will do all kinds of magic to add so much value to your portfolio that you will be glad you forked out more money than you pay for anything else in a year except maybe your mortgage or real estate taxes.  Advisers will claim they have a crystal ball that lets them time the market and outperform a boring buy-and-hold allocation.  They even say that they are especially talented in a volatile market like the one we have seen since Covid began.  The facts are very different than the claims.  Morningstar recently reported that far more than half of actively-managed portfolios did worse than a simple, boring, buy-and hold portfolio in the same category.  They further reported that over the past 10 years, the actively-managed funds as a group did abysmally.  Why? The managers couldn’t add just a small amount of value to offset the large fees they take from client accounts.  An adviser is useful to help you create a plan and invest properly.  But paying an adviser giant sums for false confidence is likely to cost you money compared to hiring a flat-fee or hourly adviser that helps you create a buy-and-hold mix of investments, tells you to sit tight and takes reasonable fees for their effort. 

Larry Pike, CFA

Client Priority Financial Advisors LLC
www.clientpriority.com
Blog:
clientpriority.blogspot.com

Hourly, Fee-Only Financial Planning and Advice.

No Commissions.  No automatic, annual fees.

https://www.cnbc.com/2021/11/01/in-one-of-the-most-volatile-markets-in-decades-active-fund-managers-underperformed-again.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail

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