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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Simple question to any financial advisor/wealth management offering - show me you returns that beat the relevant market index net of fees.  It usually stops the discussion and I never hear from them again.  Investing has been made so easy by the likes of Vanguard and Fidelity.  You can buy target date funds that rebalance over time - it doesn't get any simpler.  Why would you give up 1% when you can get professional management basically for free?

I am trying a SMA account that is suppose to map the S&P with additional tax loss harvesting - it has a .9% fee but outperformed the S&P last year by 10 points.  So we'll see.  Professional management that outperforms is worth paying for all day long, it's just not very common, especially for the average investor.[/quote]

A financial advisor putting you in an S&P 500 index fund will not beat you investing directly in that fund ,that's for sure. There would be 2 benefits to an advisor in that case:
1. If you have a different risk profile. They are going to diversify and put some in bonds, some international, etc. This means you are probably less exposed in down years, for example 2008 when the S&P was down 37% in one year, or 2018 when it was down 4% -- you'll probably do better than that.
2. If you need other financial advice -- tax planning, estate planning, etc.

If neither of those apply, then an advisor isn't worth it.

As for target funds, that's not much different from an advisor except you don't get any advice (#2 above). The funds have built-in management fees in the 0.25-0.5% range usually. It's less than a financial advisor, but you also get less service.

There's no right or wrong answer here -- it comes down to your needs and what works best for you.[/quote]

“Different risk profiles” isn’t a reason to have financial advisor mange your investments— everyone needs to think hard about their risk profile and appropriate asset allocation, and yes a professional can help some people with that, but you don’t need to spend money [b]every year [/b]just to get that and there’s no reason a target fund should have an expense ratio approaching .5%.

Likewise, it’s unlikely you need [b]estate planning advice [/b]but if you do you should hire a lawyer for that and pay them hourly for their work, not according to how much money you have. [/quote]

Things change. I can't stress this enough. People who stay busy making money and tending to other aspects of their lives aren't constantly looking at their portfolio or even thinking about it. The market itself also shifts. Is value investing passe, or is it still a good idea? Almost everyone who does DIY fund portfolios choose some sort of "total market" or S&P500 index. Does that really mesh with your risk tolerance? IMO anyone who has more than 20 years to work is leaving yields on the table if they are doing this.  It is *not* an inconsequential amount of time you have to invest to learn and study current market trends. Anyone who is still pumping money into a bond fund demonstrates how out of step people can become. Individual circumstances may also significantly affect a person's investment strategy. Is there a pension, some other annuity or fixed income from past employment? Any other significant investments such as real estate? You mention estate planning as if it's something you can just get done, but how many people know what the current proposed changes are, and how it may affect them? What are the ways you can structure pass on your wealth to your child in tax-efficient manners while still exercising some control so that they don't go off and buy a Ferrari. More importantly, how does anticipated future wealth growth based on current investment strategies affect any checkpoints that may be necessary to re-examine estate planning.

I don't doubt that for someone who has only had one or two W2 incomes from normal jobs, with the one house, a couple of cars, and a bunch of money in 401k/Mutual Funds that may add up ultimately to 1-2 million, it's probably fairly simple to just set it and forget it. Those people are likely wasting their money if they are paying a financial advisor.

Disclosure: I am *NOT* a financial advisor but happily pay the fees for one on a portion of our wealth. [/quote]

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