The age of the advisor matters not because of the skills he is or is not able to transfer to employees but because it may effect whether he wants to bring you on as a client in the first place. Most wealth management practices are owned by a single advisor or a small number of partners who are more concerned about maintaining their lifestyle than ensuring that their firm remains competitive in perpetuity. If a 55 year old advisor has an established practice working mostly with clients about her age who she likes, she is unlikely to take on a 25 year old fr...
Vanguard may very well be better for you, and I am happy to tell people to take advantage of Vanguard if their fortunes are small or they don't want to spend a lot of time on their portfolio or hire an FA.
I want to quell the notion, however, that you're only worthwhile to a financial advisor if you have millions of dollars. The average FA is 50+ years old and so is generally more interested in how your portfolio looks right now than what it will look like in 20-30 years, but younger advisors are much more interested in the trajectory of your wealth. My firm has, and I have known other FAs who have, taken on younger clients with trivial amounts of current assets because they were dedicated to an aggressive savings plan.
This confuses me a little since the vast majority of the funds they invest in are Vanguard ETFs. Maybe you mean >something more specific that I'm missing?
Haha, ok. So you can just go buy a Vanguard target-date retirement fund and let the fund's internal structure take care of the asset allocation for you, or you can go talk to somebody at Vanguard who will either give you some straightforward advice about how to build your own portfolio for a one-time fee or build your portfolio for you for an ongoing fee, or go to Betterment where they will build yo...
I completely agree and would add that just because you know a lot about tech does not mean you are qualified to identify angel investment opportunities. Knowing a lot about accounting is probably just about as important. David Swensen, portfolio manager for the Yale endowment fund, and probably the most successful venture capital investor in the world, constantly stresses that only the top 10% or so of private equity funds have posted returns that have beaten small cap indexes and justified their costs and risks, and you're only going to have access to the top 10% of these funds if you have billions of dollars to work with.
Correlation doesn't imply causation. It is plausible that correlation actually goes in the way opposite than what you are >proposing: in wealthier nations people have more disposable money to play zero-sum games with.
Which is why I said predictors, not correlates. There is plenty of research to support my claim; the source I cite points to some of it. Obviously teasing out the arrow of causality is difficult in large scale, trans-generational, international macroeconomic settings, but economists have done their best and the evidence supports the Solow growth model that Metus has brought up.
Good point. Again, these strategies don't always work, and their returns are more skewed and leptokurtic than broad market averages, which is probably at least part of the reason they work in the first place. An interesting thing about value and momentum though is that the two strategies have negatively correlated active returns, i.e. value tends to outperform when momentum is underperforming and vice versa, which allows for portfolio construction that can be less volatile than a broad index.
It is true that momentum hasn't been very strong in the US equity...
That sounds like usual risk aversion. How is that a bias?
Loss aversion is different than risk aversion, though they are related concepts, the shape of an agent's utility function under loss aversion can lead to inconsistent preferences.
Why in recent years? Why aren't these funds more common? And since you are talking about "rebalancing" in the next >paragraph, are these funds really automatic, like index funds, or do they still require active portfolio managment?
I can only speculate as to what the average of all the millions of decision...
I've obtained my leverage mostly through credit card stoozing, the act of taking advantage of low and 0% promotional credit card balance transfers and rolling the balances over as necessary. As I said at the talk and every time I bring this up, I do NOT recommend this unless you, like me, have an Asperger's level attention to financial minutiae. This is also a strategy that only is worthwhile while your net worth is relatively low. I started doing it in college and am now winding the strategy down, to be replaced with portfolio margin, which is cheaper and...
The online services Betterment and WealthFront explicitly state they hold the efficient markets hypothesis is true and invest exclusively in broad-market index funds. I consider their approach to be an alternative to using Vanguard, which is to say, they offer an excellent service and many people would be well to use them, but I believe more optimal investing is possible. In my opinion it is not really possible to scale a market-inefficiency-exploiting strategy to the level that Betterment and WealthFront are after.
Part of my hope with this paper is that it would provide readers with the means of determining whether a financial professional is articulating a reasonable investment approach vs. the meaningless fluff that is typically touted if they are willing and able to engage an advisor. If you don't wish to use an advisor or don't have enough funds to make it worth one's time then going the Vanguard route is probably best.
DFA has a Find an Advisor feature which may be a good starting point for those looking for an advisor. Any advisor approved to use DFA funds will...
Learning to play an instrument is probably not something most people can get an 80/20 sort of benefit from, but it belongs in a class of activities in which some/many people can put minor effort in to reap the significant benefit of becoming a more interesting person, depending on one's innate proclivities. Other examples may include dancing, singing, drawing/painting, certain sports/physical activities, craft-work, etc.
There's nothing I strongly disagree with with what you just said, but I think you are probably underestimating the heterogeneity of peoples' financial lives and the degree to which many people enjoy a personal touch.
Since I have started working in my current role I have been impressed with just how complex and particular an individual's financial situation can be, especially when dealing wi... (read more)