Quote:
Originally Posted by Slava
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.
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Yeah "free" trades are brutal in terms of incentivizing over trading, and they're not actually free given the payment for order flow. But obviously I'm not talking about someone who decides to yolo on meme stocks or single day to expiry options or something. (Even though I personally benefit from that type of trading, I would never encourage it).
I do think a bogleheads/couch potato type portfolio with a couple of ETFs is going to work out comparably to most advisors and be a fee savings, assuming it gets left alone. I would certainly grant that's a big assumption, and that many will decide to add the hot stock the guy at work told them about or sell at a bad time.
And as I mentioned the "don't panic during this downturn" type advice has huge, huge value.
Basically, I think building a pretty good portfolio is actually extremely easy, but not screwing it up somewhere along the way is pretty hard, and imo I think that's where most of the value from an advisor comes in.