Jesse (a.k.a. jesserivera67), you asked:<< Curious on this. Would you say that the empirical evidence you are referring to is more historical than present and results from the fact that most people did not know any better? >>No, from what I've gathered it's nothing to do with not knowing any better. It's about being able to minimize or take one's emotions out of the decisions for the buying, selling and holding of investments. So, you might see that the issue of such emotions has little to do with historical returns of any certain kind of investment. But the issue of emotions can have a lot to do with any individual's ability to maximize returns within any particular asset allocation.Studies have been done over and over and in my own experiences and observations over many years has shown that people in general tend to let their emotions dictate their actions to a great degree . . . . no matter how smart and/or knowledgeable they are. And if anyone knows anything about the stock market, it's known that it's driven by emotions making it quite unpredictable. It's about a way to stick to a solid investment plan and minimize the emotional issue attached to the buying, selling and holding of one's investments.<< It seems like more people are becoming educated on their finances and learning how to manage it for themselves because they're finding it's not that difficult. I'm sure there will always be those who do not want to deal with it and refer to a financial advisor. >>As you suggest, the knowledge for managing finances and investments is not that difficult . . . particularly for anyone of average or better intelligence. But it's the emotions that most often get in the way of making sound decisions and then mix in a little greed and you've got a recipe for financial disappointment.<< Despite who might do better is the question, "Do people go to financial advisor because they think they can do better?" or "Do people go to financial advisors because they don't know any better?" >>In a great many cases, people go to financial advisors for both reasons. And I also feel that a great many people go to financial/investment advisors for the wrong reasons. For example, a wrong reason would be that the advisor could pick a better investment or along that line, pick an investment that will outperform other investments. On the other hand, a right reason would be using an advisor to help keep you stay on track towards your goals, making any prudent adjustments that may be needed as the market changes and/or life experiences change things.A professional advisor deals with many issues in a much broader range on a daily basis, that individuals of another persuasion do. This “experience” with many different people with many different issues give an advisor incites that many people with less experience might not have. And so I would argue that such experience brings a lot of value to the table, which can help people consider issues that they may have never thought of resulting in better results.And this very point is what also makes message boards such as these a wonderful tool for individuals as they get more exposure to various people and their philosophies and experiences. Such experiences can help use knowledge more effectively in obtaining those sought after “better results” (not necessarily, maximum results).<< Some obvisously go because they don't want to deal with their finances and perhaps just don't have the time. Certainly nothing wrong with that as long as they know and understand the fees associated with the service. >>Those people who go to financial advisors for these reasons are often the one's that are going to get burned as it's often used as a lazy way to deal with one's finances. If they don't have the interest or time for this, they tend not to take the time or interest in choosing a good advisor either. It's not that these reasons are not legitimate reasons for using an advisor; I just find that most people don't put enough effort into choosing advisors and then wonder why they find themselves in a situation where they feel they've been ripped off.
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