[quote=William] <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

"In my searches I found a draft of it from the 90's, so I wonder how it's "news" today. "

Yes, that does seem strange. Especially since the data went through 2002. Perhaps you should look further, or ask for help.

I sit corrected. The draft's date was 2004. How that makes it "news" today is still a mystery...

How sad that I present a study that deserves consideration and what you are interested in doing is 'slapping me'.

Slapping you had to do with your obvious trolling efforts. Just what is it about a "study" that looks at mutual fund cash flows and not client accounts and then attempts to draw conclusions about the value brought to clients of everyone working in the industry that you feel deserves “consideration”?  Just what of the many bullet point rebuttals I produced didn’t make sense to you? I notice you didn’t bother to address a single one of them….

As far as the 'reasoned response', the article 'Is Your Broker Just Making You Broker?' (MONEY Magazine), is not much of a response at all, let alone 'reasoned'. It mentions the study but does not draw conclusions or challenge or even discuss the study.

I suppose this just isn’t going to sink in, but the methodology of the study wasn’t the point of the article, the application of the study’s conclusion was. IOW, just what is someone using an advisor to do with the information the “study” (chuckle) produced as it attempted to judge the value brought to clients by everyone the authors labeled as “brokers” based on nothing more than mutual fund cash flows?

But hey, maybe your definition of 'reasoned response' is much different than mine.

Given that you think MorningStar is “pro-broker” I think it’s pretty obvious we differ on a number of definitions.

You’ve now heard from a few people laboring in the fields on the subject of your “study”, how about offering your own opinion on it?

[/quote]

[quote=mikebutler222]

The BCT study also found that the clients of advisors are less educated and have lower net worth than do-it-yourselfers. 

Granted, I didn't conduct a study and I'm not here to profit by helping you counter said study, but I've found the above to be 180 degrees out of reality......

[/quote]

Say, "William", while you're working up your next post, how about addressing the fact that the study's claim would be contradicted by the real world experience of every FA I've ever met?

This is such a silly argument I can't even understand why everyone gets so up in arms about it.  The question always posed is: "Can your advisor invest your money better than you can?", which isn't actually the point.  Some people definitely would have made themselves a few bucks more than their advisor made them.  I have no doubt of this.  Some of my own clients have brought things to my attention that made a lot of sense for their portfolio's that I'd never considered.  Again, not the point.

The point is that although your money is valuable, your time is the most valuable thing you have, and in order to make the most of it you outsource everything that's not your specialty.

If my clients did all their own investing, which I know many are intelligent enough to do, they'd have to give up something else that they spend time on.  Less time at their job would give them less money to invest.  Should they spend less time with their family?  Less time travelling?  Less time reading a good book?

My clients utilize my services because they trust that I'll do well for them, they know that their interests and mine are aligned, and they like me.  If any of those things aren't true they're free to find another advisor and I've never given them a hard time about leaving me (and I've gotten a few back who simply though the grass would be greener on the other side and found out that grass is just grass, wherever you are).

Some people will want to take their time and do their own investing.  Some will call me to do it for them and spend more time with the things that are important to them.  I'll outperform some and some will outperform me.

When a new client comes to my office, I NEVER tell them that I can invest better than they can; how the heck do I know how the investments they haven't made yet will do?  I can simply take this one task, which is a VERY time consuming task, off their hands if they'd like me to.

There's really nothing more to it than that.

Thanks Freedom…you just hit the nail on the head.

[quote=dude]Thanks Freedom.........you just hit the nail on the head.[/quote]

Agreed.  One other point is that some people simply do not have any interest in learning enough about investing to do it themselves.

I agree the time issue is part of it, inclination is another. I also wouldn't tell a client I'll do better investing than he will, although I'm certain that that's the case because there's no need to insult the client.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

 OTOH, there's not much that can be gained from a "study" that claims that "brokers" (whatever they are) add nothing to a relationship because mutual fund cash flows, and not client account balances suggest something. It assumes that every FA uses funds, every FA is of equal ability and uses the same amount of due diligence and every client has the same needs in terms of financial goals.

If you really need to see the weaknesses behind the “one over the world” approach the academics used to reach their dubious conclusions about you and your industry, take a look at page two, second paragraph and page eleven where they insert several “we can’t measure” caveats that you can drive a bus through.

Freedom, outstanding post. I always think about the yard guy or oil change guy. What they do isn’t difficult or hard. It’s just that I would rather have someone else do that and I can have that time to do what I want.

You folks are pretty quick to surrender to the idea that your years of study, effort and attention bring nothing to the table that can’t be gained by reading Money Magazine and catching a couple of episodes of Cramer’s TV show. That doesn’t sound like a profession as I’d define one.

Actually Mike, you're right.  Perhaps I was overgeneralizing a bit.  But much of those years of study is to prepare us to invest for a wide variety of clients, as opposed to one (ourself).  How much could we have shortened the learning curve if we only had to study enough to invest our own money and not anyone else's?

Of course, when I first started out and WAS only investing for myself I did much of my learning through trial and error.  Now THAT was a heck of a lot more expensive than letting an established FA invest for me!  Anyone else put money into Putnam's OTC & Emerging Growth fund at the end of '99 beginning '00?   I never sold a share of it.  In fact I keep that fund ticker (POEGX) scrolling across my computer screen to remind me that nobody's perfect...

[quote=FreedomLvr]

Actually Mike, you're right.  Perhaps I was overgeneralizing a bit.  But much of those years of study is to prepare us to invest for a wide variety of clients, as opposed to one (ourself).  How much could we have shortened the learning curve if we only had to study enough to invest our own money and not anyone else's?

Of course, when I first started out and WAS only investing for myself I did much of my learning through trial and error.  Now THAT was a heck of a lot more expensive than letting an established FA invest for me!  Anyone else put money into Putnam's OTC & Emerging Growth fund at the end of '99 beginning '00?   I never sold a share of it.  In fact I keep that fund ticker (POEGX) scrolling across my computer screen to remind me that nobody's perfect...

[/quote]

Double That! POEGX. I 'inherited' some accounts (less than $2MIL) and every account had that -along with Voyager I & II.

The day I found my 'value' as an 'advisor' was 09/11/01. My BOA and I were on the phone for three days calling every single client. We told them that when the market re-opened it was likely to be an ugly downturn, but not to panic.

We made many more phone calls during the next week. We didn't lose one client. And not even one asked to be out of the market.

"You folks are pretty quick to surrender to the idea that your years of study, effort and attention bring nothing to the table that can't be gained by reading Money Magazine and catching a couple of episodes of Cramer's TV show."

The thing is, there are many other choices besides reading Money Magazine and Cramer's TV show. Today, there are excellent resources for people that want to do their own investing. Have you ever honestly looked at them?

And those fees! I meet people on a regular basis that are paying 2%, 3%, 4% in fees! What in the world kind of value to do have to provide for that kind of cost.

Look at the results of this study.......do-it-yourselfers outperform financial advisors....financial advisors add no value......advisor-selected funds underperform funds that investors select on their own....the scientific evidence shows that many of the other advisors in America not only underperform indexes--they underperform what most people do on their own if they don't have an advisor.........advisors do not provide superior asset allocation.....investors pay billions of dollars a year for this underperformance......

Are there really any surprises?

I will just listen to Jim Kramer for now on then…

"You folks are pretty quick to surrender to the idea that your years of study, effort and attention bring nothing to the table that can't be gained by reading Money Magazine and catching a couple of episodes of Cramer's TV show."<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

The thing is, there are many other choices besides reading Money Magazine and Cramer's TV show. Today, there are excellent resources for people that want to do their own investing. Have you ever honestly looked at them?

Sure, I read them because I often have to point out to clients the errors in what they’re read, or how it doesn’t apply to their situation or the dismal record of the person doing the writing. And don't even get us started on the hacks that write newsletters for a living...

I’ve also noticed that any well stocked library carries a law library and a medical library. I can access information on law and medicine on any number of websites, I can watch legal and medical themed TV. There’s just no shortage of information. OTOH I’m not convinced that most people shouldn't use those “excellent resources” to practice law or medicine. Perhaps you disagree.

Gee, look at all the money I can save (I’d say, if I were someone like you that knows the cost of everything and the value of nothing) if I wrote my own estate plan. Then again, what are the costs if I get it wrong?

If you want some real fun, ask most any FA in the biz over five years about some of the horror stories former “do it to yourselfers” brought to them after they realized that managing their finances on their coffee break with a copy of Money Magazine and an Etrade account isn’t necessarily a wise idea. You'll have to block out a few hours for that.

And those fees! I meet people on a regular basis that are paying 2%, 3%, 4% in fees! What in the world kind of value to do have to provide for that kind of cost.

Seems to me you’re grossly exaggerating costs here. But, as to value, all it takes to overcome even the exaggerated costs you’re talking about at 3 or 4% is to keep a client from committing financial suicide, like going 100% to the hot dot tech funds in 1999 (All my friends are making 69% a quarter in them") or 100% to cash when they get rattled in mid-2000. Showing them how to reach their financial goals (which can’t be done via a website or newspaper column where individual situations can’t be discussed in detail), via wise, consistent investments, savings and planning.

Here’s a quick example that overcomes the exaggerated fees you’re talking about, getting clients out of mutual funds with embedded cap-gains before they got a massive and unexpected tax beating in 2000. Then again, that’s the sort of “intangible” your study admitted they couldn’t measure, but had massive financial implications for my clients.

Look at the results of this study.......do-it-yourselfers outperform financial advisors....financial advisors add no value.....

That’s the problem with putting “studies” in front of people like you. The study you provided didn’t say what you’re now claiming. It came to some very, very narrow conclusions using (imho) dubious statistics (looking only at mutual fund cash flows, not client accounts) and ignored the vast majority of the tasks that advisors provide for their clients (those "intangables" they admitted they couldn't measure). But, in the hands of people like you, it “proved” a great many things that even the authors would tell you they didn’t come close to proving.

Are there really any surprises?

There sure weren’t any about you, pal. You were spotted as a troll, you protested that your “study” deserved some “consideration” and when pressed on it, you exposed yourself for what we all knew you were from <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Jump Street.

Here’s some news for you; “studies” “proved” long ago that "brokers" don’t “help” and that even active asset management doesn’t “help”, yet every real pool of money you can name has some active management and some advisors involved. Now, why is that so?

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[quote=William]

Look at the results of this study.......do-it-yourselfers outperform financial advisors....financial advisors add no value......advisor-selected funds underperform funds that investors select on their own....the scientific evidence shows that many of the other advisors in America not only underperform indexes--they underperform what most people do on their own if they don't have an advisor.........advisors do not provide superior asset allocation.....investors pay billions of dollars a year for this underperformance......

Are there really any surprises?

[/quote]

You talk a great deal about what "do-it-yourselfer's" can do positively for themselves "superior asset allocation", for no fees. Does your study (which I have not read) mention what can happen when DIY goes wrong for investors? Have you personally looked into the eyes of any of those people?

I cannot recall how many investors we have met in past years who were determined to DIY -- because they "had it dialed in". Whether it was a magazine, book, computer program, internet subscription, a seminar they'd attended, television guru they watch religiously they were planning to manage their own retirement accounts.

E-Trade and the tech bubble literally made paupers of a retired couple we met in 2000, who DIY'ed their entired retirement account right away! Taking advice from Money magazine on "the 10 Stocks you MUST buy NOW!" is like taking advice from the kid in Home Depot on tiling your floor who was flipping burgers a week ago.

You talk about financial advisors adding value. I cannot speak for others, however with all of our clients we follow a disciplined strategy of managing client expectations through establishing financial goals, and selecting investments to match those goals. Every portfolio review consists of re-evaluating those goals, and the investments.

Something we discuss with all clients, is the fact that they are emotionally tied to their money. Which will cause them to make irrational decisions in times of crisis, emotional instability, and economic upset. We, are not emotionally tied to their money and  can offer objective advice, while still allowing them to do as they wish.

It sounds as if the study was comprised of people who had very negative relationships at one time and were burned very badly.

Oftentimes it’s the people who respond to the studies that skew it.  It’s going to be the people that do the best on their personal investing that are the quickest to brag about it.

[quote=William]

And those fees! I meet people on a regular basis that are paying 2%, 3%, 4% in fees! What in the world kind of value to do have to provide for that kind of cost.

Look at the results of this study…<SPAN =highlight>…do-it-yourselfers outperform financial advisors…financial advisors add no value…

And those fees! I meet people on a regular basis that are paying 2%, 3%, 4% in fees! What in the world kind of value to do have to provide for that kind of cost.

As far as the 'reasoned response', the article 'Is Your Broker Just Making You Broker?' (MONEY Magazine),

Ad hominem: The last resort of those who know they’ve lost the debate.

[quote=William]Ad hominem: The last resort of those who know they've lost the debate.[/quote]

Actually, no.  That is Godwin's law.  No one has brought up Hitler.....yet.

If it were possible to obtain a link to the original article, I would be interested to see what everyone is blathering about.

[quote=William]Ad hominem: The last resort of those who know they've lost the debate.[/quote]

This from the guy that can't respond in any fashion other than to distort the study he provided.... call me when you can respond a single bullet point rebuttal addressed to you.