Podcast for 12/14/06: Financial Advisors are Useless

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According to a groundbreaking study, the do-it-yourself investor did more than 100% better than financial advisors when it came to selecting equity mutual funds. After inflation and taxes, that means clients of financial advisors lost money and lost purchasing power. That should be criminal.

MP3 Download: Hi (128k) | Lo (24k)

Length: 06:51

Notes:
1:10  Raw returns of equally weighted mutual funds were much better for the do-it-yourselfer.
2:34  Five questions the study attempted to answer to find tangible benefits of hiring a financial advisor.
4:50  Using an advisor to choose your investments is just plain dumb when you can do better on your own.
5:00: You need to get educated. If you need a financial professional, avoid commissioned salespeople.

Resources:
1. Barbara Whelehan. "Do-It-Yourself Investors Win the Race." BankRate.com 6 Dec 2006.
2. Donald Moine. "The Study of the Decade." MorningStar Advisor 22 June 2006.
3. Bergstresser, Daniel B., Chalmers, John M.R. and Tufano, Peter, "Assessing the Costs and Benefits of Brokers in the Mutual Fund Industry" (January 16, 2006). AFA 2006 Boston Meetings, Forthcoming Available at SSRN
4. Mercer Bullard and Edward S. O'Neal. "The Costs of Using a Broker to Select Mutual Funds." Zero Alpha Group November 2006.

 

Kim Snider, Kim Snider Financial Communications, Chronim Investments and/or Snider Advisors make no representation that the information and opinions expressed are accurate, complete or current. The opinions expressed should not be construed as financial, legal, tax, or other advice and are provided for informational purposes only. Call 866-952-0100 to request the Snider Investment Method™ Owner's Manual, which includes a description of the Snider Investment Method, investment objectives, risks, suitability and other information. Please read and consider carefully before investing. All investments are subject to risk including possible loss of principal.