Overactive Investment Advisers

Here is a simple way to check on overactive investment advisers, based on my experience with studies of how they operate.

As you probably know from my reports, I find professional advisers too expensive for most ordinary investors. They take as much as 20% and more of earnings when their cut is 1½% or more of assets managed. Only investors who require estate and tax advice need additional consultation.

To make themselves appear necessary, advisers will make up portfolios with as much as ten and more individual funds when just a few, low cost funds will do. But the odd assortment appears to be the result of more selective investment thought. The end result is meaningless, apart from marketing the adviser’s service.

I have written volumes about the subject, but to sum up, let me repeat a simple lesson: Once you learn investment basics, you can manage with low-cost index mutual funds, (See the Earl J Weinreb NewsHole® comments.)