One of the most costly missteps investors can make is trying to “out-smart” the market by market timing and picking “better” stocks. The second most dangerous idea is to rely on the “advice” of non-advisors (brokers). These two ideas, in tandem, are truly concepts of the past and have no place in planning for your financial future.
Much of the major academic research on investment pricing and markets was done in the 1950’s, 1960’s, and 1970’s. During this timeframe, studies were produced documenting the failure of professional money managers to outperform the markets. This reinforced the idea that market timing and out-selection are very difficult to replicate and sustain.
Until the mid 1970’s, stockbrokers functioned on fixed commissions and there was little confusion about what brokers did and didn’t do. When negotiated commissions began, a new era opened up and the lines of demarcation between brokers and advisors shifted. It’s no wonder that investors were confused at first, but we are now four decades removed and many investors still look to brokers for advice, when, in fact they are not advisors.
The aggregate cost to investors in lost returns from reliance on these outdated practices is enormous. The U.S. Department of Labor recently estimated this cost at $17 Billion per year for U.S. investors (and this estimate only included retirement plan accounts).
Are you and your finances still stuck in the past? There is another way…find a fiduciary advisor (like us), and apply modern market science to your financial future. Your financial future is….more than numbers. Ready for a real conversation?