Recently the financial media has been extolling the need to cut expenses in your portfolio. Many experts claim if you find low cost investments and do it yourself you will improve results. While this is true most investors as evidenced by the Dalbar study would suggest otherwise.

Dalbar is an independent research organization that studies investor behavior. Each year they update their results. The 2014 results have not been published but I do not expect a substantial changes to the 2013 results. Please note the results are from 1984 thru 2013 average annual.
- S&P 500 10%
- Dalbar Average Investor – Equity Funds 69%
- CPI (representing inflation) 80%
This is evidence that investor left on their own will sell during downturns or lows and buy in upswings or highs. This means they are buying high and selling low. This is not the result of high investments costs but rather the result of investor behavior.
Please do not get me wrong, excessive or unnecessary fees will hurt your overall performance. What I am trying to say is that do it yourselfers will undoubtedly make emotion decisions with their portfolio. These bad decisions will result in returns reflected in the Dalbar study. Without the help of an investor coach/fiduciary adviser investors will receive lower returns over the long term.
There is book I highly recommend for anyone considering retirement ‘The New Retirementaility’ by Mitch Anthony. In the book Mr. Anthony asks a number of questions including:
- Do I know everything I need to know about asset allocation and protection, and tax reduction strategies and estate management?
- Do I want to invest the time and effort to learn these issues?
- Do I want to continue to invest the time it takes to keep up with the markets and remain competent as an investor?
Even if you answer yes to these questions it is not enough to insure a successful long term investing experience. These questions do not address your behavior and your tendency to make emotional decisions with your money.
I like a quote by Warren Buffet “With enough insider information (hot tips) and a million dollars, you can go broke in a year.” While I don’t agree with his investment philosophy for most investors I do admire his discipline.
An investor coach/fiduciary adviser will keep you disciplined to your strategy in both up and down markets. You may find a provider who tells you how cheap you can invest with them. If this provider will allow you to panic in down markets or buy the ‘hot’ asset class in up markets. No matter what this providers charges it is too high and excessive.
Avoiding excessive fees should be your goal as an investor. However cheapest is not always the best solution for all investors.
Find an investor coach/fiduciary adviser who will put you on the right path to a successful long term investing experience. An experience with less anxiety and improved performance, long term.