Reply to Talk to me about why we should or should not use a financial advisor

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I believe the long and short of it is that people with high HHI can afford paying the 1.5% fee just because they can.

But if you know all these facts and are still on the fence, it might mean you're just not satisfied with letting that 1.5% go.  In that case, why not give 50% of your investment amount to the financial planner to play with, and dump the other 50% in an index fund.   Wait a year or two and you'll have a better picture [/quote]

Previous poster -- that's not a bad idea.   Thanks!    The "not letting the 1.5" go is mainly because of boards like these - people who say you are stupid for doing this.    What I don't understand is that I readily outsource lots of other parts of my life that I could do myself.    If I take what the fee is that the investment place would charge on the assets -- I pay 3x that amount every year just on my housekeeping service.   Of course I could clean and vacuum myself but I don't and I don't even really think twice about it.   So why is it so insane to pay someone to do this part of my life too?
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Because, as many people have told you, the advisor doesn't get you better results.  Netting the fees they charge, not to mention the expenses of the managed funds and other investments they'll inevitably put you in to justify their existence, the annual return would have to be exceptional to beat the 3 fund strategy a PP described (and s/he even suggested the funds!).  Now, some managed funds/investment do that every year.  But many don't, and your advisor most likely won't guess right every year.   There are reams of research that show that over time, a buy and hold strategy index fund strategy is best for casual investors (thouse without millions and millions of assets).

To continue your housecleaning analogy, it's like paying a housekeeper every 2 weeks to make your house kinda clean, instead of spending, at most, 2 hours one time (to set up the account) and then 15 minutes each year (to rebalance it) to have your house be far cleaner.   You don't have to make this a second career.  [/quote]

I appreciate this.   I should add -- over the past two years, based off of advice I read in various places, I have been using a target date retirement fund.   Both years it trailed the market -- last year by more than 3 percent.   The target date fund was explained to me as a low cost way to this, very safe, blah blah.   I guess the bad performance (at least as compared to the overall market) has made me question whether it would be better to use someone else.

I understand the index fund approach but even that isn't as easy as everyone makes it sound.   There are tons of index funds options -- you can easily spend hours just looking at all of this stuff.  And that's the problem -- I don't have hours to spend looking at it.

I really do appreciate the different opinions on this.  [/quote]

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