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What Is The Value Of An Advisor? Vanguard Totes Up 'Advisor's Alpha'
Vanguard estimates that the value of using an advisor is around 3% additional net annual gains for the investor.
Does this estimate make sense?
Do you need an advisor?"
The answer appears to be, it depends. (Please note that the Vanguard paper cited in the article was written for advisors. This article is his thoughts on the matter.)
I like to access an originating source when available, and I did so. The Vanguard report is rather lengthy so I have not yet read it. I'm not highly motivated to do so because the article is very self serving for Vanguard advisors and because of one objective stated on the opening page. It says:
".... the Vanguard Advisor’s Alpha concept in 2001, we outlined how advisors could add value, or alpha, through relationship-oriented services such as providing cogent wealth management via financial planning, discipline, and guidance, rather than by trying to outperform the markets."
So the authors did not attempt to make a case for their (Vanguard's) active managers selections over their Vanguard passive product offerings. They were developing an argument for financial planning and for client discipline and patience. That's a real world practical problem that many of us endure with often severe portfolio penalties.
Of course, MFOers don't suffer from those shortcomings!
They were developing an argument for financial planning and for client discipline and patience. That's a real world practical problem that many of us endure with often severe portfolio penalties.
Of course, MFOers don't suffer from those shortcomings!
MJG, I think you are just trying to be politically correct with that statement. In my opinion from many of the posts I've read here on MFO, I believe there are MFOers that would benefit from adviser advice and discipline. I'm sure, I know, I was one of them for many years.
Comments
I like to access an originating source when available, and I did so. The Vanguard report is rather lengthy so I have not yet read it. I'm not highly motivated to do so because the article is very self serving for Vanguard advisors and because of one objective stated on the opening page. It says:
".... the Vanguard Advisor’s Alpha concept in 2001, we outlined how advisors could add value, or alpha, through relationship-oriented services such as providing cogent wealth management via financial planning, discipline, and guidance, rather than by trying to outperform the markets."
So the authors did not attempt to make a case for their (Vanguard's) active managers selections over their Vanguard passive product offerings. They were developing an argument for financial planning and for client discipline and patience. That's a real world practical problem that many of us endure with often severe portfolio penalties.
Of course, MFOers don't suffer from those shortcomings!
Thanks for the reference.
Best Wishes,