Quote:
Originally Posted by bizaro86
It's quite likely you could save the fees and build similar exposure via ETFs. Generally speaking the value of an advisor is the "soft" part, not so much returns/portfolio construction, imo. If they talk you out of panicking and going to 100% cash the next time a March 2020 style panic happens they've earned their fee for your whole life. If you didn't even consider selling in March 2020 then maybe you didn't need that service. Some people need other stuff (estate planning, etc) but I think it's quite likely you're better off buying that type of advice a-la-carte, not bundled into your money management.
If they're showing you a % return I'm fairly sure that would be a compound annual growth rate (ie, not affected by contributions) so you should be fine there.
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It's not that I entirely disagree, but I've seen plenty of portfolios that amateurs build "because they can". Frankly, a lot of them are brutal for a variety of reasons. So sure, they're saving 1% by not paying someone and costing themselves much more.
I also think that DIY companies offering free trades or super cheap trades are almost certainly doing a disservice to investors. We know that this has people trading more, and we know that more trading means more poor decisions. So again...you might "save money" in terms of the upfront cost, but are you actually coming out ahead?
As far as quantifying the value of an advisor, there have been plenty of studies on the subject that come to a value of in and around 3%. That isn't going to be the same for everyone, of course, but that's the figure they come to in more than one study that I've seen.