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Message
Thoughts on financial advisors stock picking?
Posted on 2/16/26 at 8:58 am
Posted on 2/16/26 at 8:58 am
I just learned my parents’ financial advisor picks about 15 stocks and just rebalances (solely US large cap). When I pushed back, he claimed that’s the only way to “beat the market”. Has anyone else had encounters with advisors not just indexing in this day and age? I was honestly perplexed, and I feel like that is straight malpractice given the research that indices produce better returns (relative to risk).
7
Posted on 2/16/26 at 9:10 am to TigahsOnTop
They don’t want the clients to see how easy/effective it is to just invest in VOO, VTI, and QQQ and not have to pay them a fee to do so.
This post was edited on 2/16/26 at 9:11 am
Posted on 2/16/26 at 9:16 am to TigahsOnTop
Most FAs are terrible. You are better off just investing in low fee vanguard ETFs 90%+ of the time
Posted on 2/16/26 at 9:36 am to TigahsOnTop
How does he earn his fees. Does he receive a commission per transaction? A percentage of assets under management?
I'd assume if it's a percentage of assets under management, then he has strong feelings about these stocks (or your parents and him picked them), and he's using this as a method of "controlling the risk". Then again, if this were the case, he'd probably just use new investments to "fix the imbalance".
If it's a commission, then he's most likely using the line about "controlling the risk/beat the market" to beef up his sales. Because he could just use new investments to balance the portfolio
I'd assume if it's a percentage of assets under management, then he has strong feelings about these stocks (or your parents and him picked them), and he's using this as a method of "controlling the risk". Then again, if this were the case, he'd probably just use new investments to "fix the imbalance".
If it's a commission, then he's most likely using the line about "controlling the risk/beat the market" to beef up his sales. Because he could just use new investments to balance the portfolio
Posted on 2/16/26 at 9:57 am to TigahsOnTop
What's his track record? Has he consistently beaten the market for them? I know most don't but just curious if he happens to be one of the lucky/good ones.
Posted on 2/16/26 at 10:43 am to TigahsOnTop
If you want something done right, do it yourself….
Posted on 2/16/26 at 1:50 pm to TigahsOnTop
The best value in advisors in this day and age with the information out there, is in tax planning.
Posted on 2/16/26 at 1:53 pm to castorinho
The robo advisor at Schwab I use is averaging 20% returns since 2023 when I started using it. I don't trust people, so it works out.
Posted on 2/16/26 at 2:42 pm to castorinho
Exactly
Why CFP is also my CPA and that is the only reason I have a CFP
Why CFP is also my CPA and that is the only reason I have a CFP
Posted on 2/16/26 at 2:52 pm to TigahsOnTop
quote:
advisors indexing
Oxymoron
Index (you do not need advisor for this)!
Do not underestimate value of time (n)
Do not overestimate ‘beating mkt’ (k)
(1+k)^n
Leverage time and go enjoy your life.
Posted on 2/16/26 at 5:00 pm to Lsu05
quote:
They don’t want the clients to see how easy/effective it is to just invest in VOO, VTI, and QQQ and not have to pay them a fee to do so.
I agree. But haven’t those just mirrored the S&P 500 over the past 2 years?
Posted on 2/16/26 at 5:32 pm to Willie Stroker
quote:
But haven’t those just mirrored the S&P 500 over the past 2 years?
Is that a bad thing? Basically every advisor underperforms the index over time.
Anyone who says they consistently beat the market is most likely lying
Posted on 2/16/26 at 5:50 pm to UltimaParadox
quote:
lying
Or committing fraud. Sometimes both.
Posted on 2/16/26 at 7:43 pm to castorinho
I DYI, but advisors can be valuable for sticking to a strategy for those that would otherwise panic sell. Many people need their hands held. For instance, I recently found out my mom went 100% bonds in her 401k when she retired out of fear. She should have used an advisor or talked to me first.
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