How much is reasonable for a financial advisor?

[BYU71]

Originally Posted by jay santos

Mike, here are my thoughts.

1. I don't think a financial advisor is EVER worth 1% of your return, unless you're into the $10M+ range of assets.
2. <$10M, don't even think about it--use Vanguard index funds and modern portfolio theory and balanced asset allocation. here are a couple places to learn. http://www.moneychimp.com/articles/risk/riskintro.htm
http://www.indexfundeducator.com/allocation.htm
3. >$10M you may think about additional diversification or the use of funds like Dimensional Fund Advisors. http://www.dfaus.com/
4. Any financial advisor who is telling you he beats S&P by 2-3% is probably dishonest or incompetent and I would run away as fast as you can.

Any financial advisor who tells him that?? I think you meant to say, verify what you are told. To say any financial advisor telling you that is probably dishonest or incompetent is something an arrogant asshole or dipshit would say.

[jay santos]

Originally Posted by BYU71

Any financial advisor who tells him that?? I think you meant to say, verify what you are told. To say any financial advisor telling you that is probably dishonest or incompetent is something an arrogant asshole or dipshit would say.

Nah, I'd say someone in finance who actually would say that to a client is the true arrogant asshole and/or dipshit.

[BYU71]

Originally Posted by jay santos

Nah, I'd say someone in finance who actually would say that to a client is the true arrogant asshole and/or dipshit.

Perhaps you ought to stick to your area of expertise, which obviously isn't investment advising.

By the way, the dimension system you suggested. What is their 5 year track record on their core value equity fund.

[Flystripper]

Originally Posted by jay santos

Nah, I'd say someone in finance who actually would say that to a client is the true arrogant asshole and/or dipshit.

There have been managers that have beaten the S&P over pretty long periods. The pertinent question is always for how much risk. I know what you are saying Jay and it is true that many managers or people that try to pass themselves off as managers won't consistently give you returns above the S&P for equal risk. However, to say that beating the S&P is impossible is discounting the results of managers with documented long-term track records and is just giving too much weight to efficient markets theory. Just my opinion.

[BYU71]

Originally Posted by Flystripper

There have been managers that have beaten the S&P over pretty long periods. The pertinent question is always for how much risk. I know what you are saying Jay and it is true that many managers or people that try to pass themselves off as managers won't consistently give you returns above the S&P for equal risk. However, to say that beating the S&P is impossible is discounting the results of managers with documented long-term track records and giving too much weight to efficient markets theory. Just my opinion.

My point is you can't say "any" investment advisor. If you want to say most or the majority, that is a debatable question, which I wouldn't argue with. "Any" means all. There are investment advisors who have track records that beat the S&P by 2-3%.

[jay santos]

Originally Posted by BYU71

There are investment advisors who have track records that beat the S&P by 2-3%.

How many investment advisors have track records of beating the S&P by 2-3%, including costs, which can not be attributed to pure random luck and therefore can be expected to endure into the future?

"Investment advisors" are the biggest group of con-men in America still yet to be exposed.

[BYU71]

Originally Posted by jay santos

How many investment advisors have track records of beating the S&P by 2-3%, including costs, which can not be attributed to pure random luck and therefore can be expected to endure into the future?

"Investment advisors" are the biggest group of con-men in America still yet to be exposed.

So are you standing by your claim "any" investment advisor................

By the way, the recommendation you gave, what are the 5 years returns on the core equity portfolios. I would also like the 10 year, but you seem to be having difficulty with the 5 year so lets start there.

[jay santos]

Originally Posted by BYU71

So are you standing by your claim "any" investment advisor................

By the way, the recommendation you gave, what are the 5 years returns on the core equity portfolios. I would also like the 10 year, but you seem to be having difficulty with the 5 year so lets start there.

We're not speaking the same language, so it doesn't do any good to argue.

[BYU71]

Originally Posted by jay santos

We're not speaking the same language, so it doesn't do any good to argue.

I agree why argue. Here is one investment advisors track record over the last 5 years. 10.53 vs the S&P of 7.58 net of fees, through June 30th of this year. Therefor no argument, this an investment advisor who can make the 2-3% claim.

Oh, the 10 yr is 9.4% vs 2.88% and the fifteen year is 12.5 vs 9.22%. I don't think that someone can be that dumb lucky over that long a time period.

If you have a grudge against "some" or even "most" so called investment advisors, you might be justified. However, just because you don't know any good honest ones, you shouldn't be painting them all with such a broad brush, IMHO.

[pelagius]

I'm afraid this is getting silly:

BYU71: ex post outperformance

JAY: ex ante outperformance

Jay, unfortunately didn't make that distinction clear at the beginning but the by the middle of the thread he is clearly is making an argument about ex ante performance and not ex post. A charitable reading of Jay's argument requires that you respond in terms of the ex ante probability of overpeformance.