Why do I need an advisor?

Envestat Intersection January 2016

21st Jan, 2016

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As we start a new year, many of us have made a resolution to get healthier in 2016. Most New Year’s resolutions are focused on physical health—but financial health is equally important. We contend that advisors are essential to the financial health of their clients. More than ever, they provide immense value, due to the digital advice movement. At the same time, they also are required to better articulate the value they bring to…

Bad Behavior Cost Mutual Fund Investors 8 Percentage Points in 2014: Dalbar

27th Apr, 2015

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Bad Behavior Cost Mutual Fund Investors 8 Percentage Points in 2014: Dalbar
Lou Harvey laments the scarcity and necessity of advisors’ client hand-holding

From: thinkadvisor.com

Calling all conscientious advisors: Dalbar’s latest investor behavior study shows — for the 21st time actually — that investors are their own worst enemies and that good advisors who step up and manage investor behavior can be their best friends.

The Boston-based consulting firm just released its famous…

Why Paying for Financial Advice Makes Sense

7th Apr, 2015

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Why Paying for Financial Advice Makes Sense

From: nytimes.com

If you are lucky to earn more money than you need each month, there was probably a time when you could have used some advice about how best to spend, save and protect it.

But if you looked around for a big national firm that swore to do the right thing, you would not have found it. Doing it right means putting your interests…

Why the big broker behind your financial adviser might be working against you

31st Mar, 2015

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Why the big broker behind your financial adviser might be working against you

From: marketwatch.com

They say that if something looks, acts and quacks like a duck, it must be a duck.

But what if you take a bite of it and it tastes like chicken?

That’s the conundrum facing the financial-services world right now as the big brokerage houses try to convince the public through advertisements and actions that they are fiduciaries — putting…

Award-Winning Research Explains Perplexing Investor Behavior

19th Mar, 2015

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Award-Winning Research Explains Perplexing Investor Behavior

From: northwestern.edu

Why are investors so keen to invest in growth firms like Uber or Facebook—growth firms that seem risky yet have historically produced low average returns—when, say, value stocks like General Electric seem like such an attractive bet?

In new research, Dimitris Papanikolaou, an associate professor of finance at the Kellogg School, investigates. His research recently won the Amundi Smith Breeden Award for best paper in…

How Much Is an Advisor Worth?

4th Mar, 2015

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How Much Is an Advisor Worth?
Eric Nelson Does the Math

From: thinkadvisor.com

The Servo Wealth Management principal shows what an advisor can add, and what the absence of one can cost.

Many a client relationship failed to materialize because the prospect balked at paying the annual advisory fee.

It’s an understandable concern, from the prospective client’s point of view, since he wants to invest in order to make money, yet the only immediate certainty is…

Why The Average Investor’s Investment Return Is So Low

11th Feb, 2015

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Why The Average Investor’s Investment Return Is So Low

From: forbes.com

According to the latest 2014 release of Dalbar’s Quantitative Analysis of Investor Behavior (QAIB), the average investor in a blend of equities and fixed-income mutual funds has garnered only a 2.6% net annualized rate of return for the 10-year time period ending Dec. 31, 2013.

The same average investor hasn’t fared any better over longer time frames. The 20-year annualized return comes…

Just How Dumb Are Investors?

10th Feb, 2015

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Just How Dumb Are Investors?

From: The Wall Street Journal

Investors may not be as stupid as some researchers think, but they still need to fight their own fear and greed.

A new study finds that the average investor in all U.S. stock funds earned 3.7% annually over the past 30 years—a period in which the S&P 500 stock index returned 11.1% annually. That means stock-fund investors underperformed the market by approximately 7.4 percentage…

When underperforming the S&P 500 is a good thing

5th Feb, 2015

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When underperforming the S&P 500 is a good thing

From: investmentnews.com

Matching the index last year would have involved too much risk.

As financial advisers roll through annual client reviews, many will face the task of having to explain how their portfolio strategies so badly lagged the 13.7% gain by the S&P 500 Index last year.

Fact is, a truly diversified investment portfolio should have returned less than 5% in 2014. It was that kind…