Professional Advice--Worth the Price?

Here is an excerpt from an article at CNNMoney by Walter Updegrave (See link for entire article)

"In a recent study, benefit consultant Aon Hewitt and advice firm Financial Engines looked at the 401(k) returns of more than 425,000 savers from 2006 through 2010.

The findings: The median annual return of those who got professional help was almost three percentage points higher than the return for those who invested on their own, even after taking fees into account.  (emphasis added)

One reason for that performance gap is that the investors who flew solo were far more likely to be too aggressive or too conservative (see graphic below). Emotions also played a role: Do-it-yourselfers were more apt to cash out of stocks in the 2008 crash. As a result, their returns lagged substantially when the market rebounded in 2009."

Better performance is not just picking the winning horse or horses--it is choosing the right race track and the right strategy.  We propose that history teaches that a highly diversified, value oriented, risk managed portfolio, managed by a skilled and experienced pro will produce better than average long term returns.  

Link to: Should I Hire a Financial Adviser or Go It Alone?