A Russell Investments study showed the value of having an advisor is 2%.
“The average stock fund investor’s inclination to chase past performance cost them 2% annually in the 33-year period from 1984-2016. In that sense, an advisor’s ability to help their client stick to their long-term financial plan, and thereby skirt irrational, emotional decisions, is worth 2.0%”
Jay Moreland, of the Emotional Investor confirms this:
“It appears investor behavior, while providing short-term relief by appeasing momentary emotions, has a cost of anywhere between 2% and 4% (or more) in a given year. There are lots of reasons why investors perform poorly, but the bottom line is that many
investors are incapable of actually investing. Rather, they cross that fine line from investing and into speculating.”
An advisor can add 2.25– 4.1% annually. A Vanguard study identified behavioral coaching as adding 1.50% per year on average. They identified 4 other areas where having an advisor adds value.
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