Wednesday, March 08, 2006

Is a Financial Advisor's Hand-Holding Worth It?

A recent survey by Environics Research Group indicated that self-directed investors were more likely to be nervous about value fluctuations in their portfolio than those that had an investment advisor.

The survey asked over 1,600 investors between age 21 to 80 various questions. Amongst those included was one that both a majority of self-directed and advisor-driven answered relating to what they'd do if they had a large amount of money to invest over the next five years. Both groups answered positively that they'd choose an investment that offered "a substantial opportunity for returns with moderate risk of losing some of your original investment".

However, overall the self-directed group felt more uncomfortable with "any fall in value" of the investment (22% agreeing with that), compared to only 16% in the investment advisor driven group agreeing with that sentiment.

So I guess that the education and "hand-holding" function that is offered by investment advisors is generally helpful to their clients, in that they help keep their clients in the market during soft periods. The question remains as to whether that hand-holding function alone offsets the cost of the advisor.
  • If you aren't willing to see the value of your investment fluctuate by up to 50% annually, then you probably shouldn't invest in the stock market.

- Superinvestor Warren Buffett


The Confused Capitalist

1 comment:

Larry said...

For retirees who seek a specialist, there is a directory of Certified Retirement Financial Advisors at Retirement Planners. Note that these are not specialists that assist baby boomers trying to retire, but those ALREADY retireed seeking the specialized assistance consistent with their financial situation.