You Might Need a New Financial Advisor if …

With a nod toward Mr. Foxworthy, and full recognition that this list lacks any humor whatsoever: You might need a new Financial Advisor if: Individual stocks comprise a large percentage of your portfolio. The fees on the mutual funds you own average more than 30 basis points (3/10 of 1%). All of your mutual funds Read more about You Might Need a New Financial Advisor if …[…]

Choosing An Advisor

Choosing a financial advisor can be an extremely consequential (and difficult) decision.  Finding the right one can make a significant difference to your financial future.  Finding the wrong one can have devastating consequences.

Unfortunately, many (most?) of the 300,000 or so financial advisors in the United States are simply financial salesmen with excellent communication skills and just enough knowledge of the financial marketplace to be dangerous.  And, sadly, most of them work for the best-known Wall Street firms, banks and insurance companies (the part of the industry that those of us who are independent refer to as “the Dark Side”).  Suffice it to say, while it’s very easy to find someone with “financial advisor” on their business card, it can be frustratingly difficult to find someone who can actually dispense objective financial advice at a reasonable price.


5 Brilliant Authors

Most books about  investing aren’t worth the paper they’re written on.  That’s not the case with just about anything written by these five gentlemen.  Start with something by Bogle or Bernstein, and then move on to Ellis, Loeper (especially his Whitepapers) and Taleb.$$

William J. Bernstein is a practicing neurologist, self-taught investor extraordinaire and – remarkably – one of the most proficient writers on the topic of investment management.  He has one of the best (if somewhat dated) investment-related “newsletters” on the Internet ( and has written several outstanding (and bestselling) books on investing, including The Intelligent Asset Allocator (McGraw-Hill, 2001), The Four Pillars of Investing (McGraw-Hill, 2002), The Birth of Plenty (McGraw-Hill, 2004), and The Investor’s Manifesto (John Wiley & Sons, 2010).


The Prescient Are Few

The question is decades old: Can professional money managers consistently pick stocks that outperform the broad stock market averages – as opposed to just being lucky now and then?

Countless studies have addressed this question, and most have concluded that very few managers have the ability to beat the market over the long term. Nevertheless, researchers have been unable to agree on how small that minority really is, leaving the industry to debate whether it makes sense for some investors to try to beat the market by buying shares of actively managed mutual funds.


Controlling What’s Controllable

Active (Investment) Management is the practice of trying to beat the market by attempting to identify “great” stocks or mutual funds, or by attempting to time exactly when to get in to, or out of, the market. It is the antithesis of Passive Management, which is a buy-and-hold strategy that uses low-cost index funds to simply match the returns of various asset classes. Compared to Passive Management techniques, Active Management is riskier and almost invariably produces lower long-term returns. If you study the objective research, you can come to no other conclusion. As Charles Ellis so eloquently stated, Active Management is a Loser’s Game.