How do you know if a CFP’s portfolio recommendations are good?

[Anonymous]

Federal News Network has an article every month on TSP performance. It should be pretty quick and easy to compare your portfolio with the TSP 2045 Target Date fund.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:80% of the time, index funds do better than financial advisors (see Jane Bryant Quinn). Save your money.

Perhaps index funds perform better than actively managed funds, but individual investors are a different story. Their emotions get in the way of their success. And a good planner can help you avoid making emotional decisions about your investments.

https://www.ifa.com/articles/dalbar_2016_qaib_investors_still_their_worst_enemy

I don't need to pay a planner thousands to remind me to stay the course.

DP. Then don’t pay one. But given the stats that PP lined up, many investors do underperform because they make poor decisions and *could* benefit from someone telling them nothing more than to stay the course.

I’m in sales (not a CFP) so I know how hard these jobs are – and I’m always amazed at how much vitriol there is toward financial professionals. If you don’t think you need their services, just don’t use them.

They get lots of vitriol because they pump their services here and they do ridiculous things like refuse to compare their performance against any benchmark. Then they throw in some bullshit about how they can help you avoid "emotional decisions", while underperforming the benchmarks they refuse to compare themselves to.

[Anonymous]

A CFP is frequently focused on getting you to a financial goal with the least amount of risk. That is very different from gunning for maximum total return. Since the objectives are totally different, it doesn’t make sense to compare the two.

For example, if your goal is to send your kid to college a year from now and you have the necessary funds, the appropriate financial investment may be a money market or short duration bond fund. Those options may return very little compared to FANG stocks, but the financial goal doesn’t require FANG-like returns and the volatility of such an investment is unwarranted.

Basically, a CFP is investing for a goal. You can’t compare that to a rando maximum total return strategy.