How Does Your Investment Advisor Compare To A 3-Fund Portfolio

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So you've been using an investment advisor to manage your investments. They have your money in 10, 15, 20 or even more funds! And you start to wonder just how the performance of this absurd portfolio compares to a simple, 2, 3 or perhaps 4 fund portfolio.

Here's how to evaluate your advisor's portfolio with a free tool.

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#retirement #investing #robberger

ABOUT ME

While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.

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DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. Your investment and other financial decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary. I am merely sharing my opinions.

AFFILIATE DISCLOSURE: Some of the links on this channel are affiliate links, meaning at no cost to you I earn a commission if you click through and make a purchase and/or subscribe. However, I only recommend products or services that (1) I believe in and (2) would recommend to my own mom.
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Before we fired them our advisor had us in 16 funds. At the time we had less than 250k invested. Best decision we made was to fire them.

mattcramer
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Our advisor had us in over 60 investments before we terminated them. Now I’m left trying to clean up the mess. Lost over 25% last 3 years. Large national financial group.

markaz
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I've been retired for 2 years and am extremely happy with a small number of ETF passive index funds with very low fees. It was my great fortune to find Rob's videos just in time! BTW, the advice from my brokerage firm has been overly complicated and not supported by good reasoning. Glad I've had a plan and stuck to it.

peterizzo
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9:00
Why do people pay an advisor? I can think of only 1 positive reason and that would be to keep them invested during a market correction. Personally, if I was a broker/advisor I would not be able to sleep at night knowing that I was a parasite on my client's retirement funds.

ccrider
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Some people don't want to be bothered managing their money at all. In my dad's case he enjoyed the face to face contact of an Edward Jones or a Bank based advisor. I don't think he cared about it having lower returns cause otherwise it would just be in CDs at a bank. He had fewer funds but he could have just been put in a single balanced fund.

gcburkett
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Why do advisors have clients in so many funds? So they can what they call rebalance them periodically and make a transaction fee paid by the fund. Not only are you paying that fee plus the AUM fee, you're also paying the expense ratio of the individual fund or ETF. Now that's ridiculous and we only have ourselves to blame for being naive to the insidious thievery of the financial industry. Thanks Rob for the education and enlightenment you provide. You're the best!

adamwilliams
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Advisors know there is no way to justify their fee with a simple portfolio of index funds.

alphamale
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I’m 29. My 401k is 100% VTSAX (VTI) and my Roth IRA is 70% VTI 30% VXUS. Simple and easy

Jpsantos
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I can’t believe I never found this channel sooner. This is the format and information I’ve missed since DoughRoller Money changed. I’m glad to see you own DoughRoller again too. Just wish I would have known about this channel the past few years.

chrisbany
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Great video, I've been pondering the effectiveness of having an investment advisor to know if it’s worth it

RayFreddie
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This is an excellent, excellent video that has convinced me that simplicity is the way to go. I used to want to put money in every great fund that came along, but what was great for a couple years in a row, might be more average for the next 2 years. We talked to an advisor and decided that her fees along with moving us out of current funds would not be advantageous for us. I wish I could give this video 5 stars.

janethunt
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Excellent and valuable video! Your free advice is priceless. After watching your video for a while I also recently terminated my Fidelity financial advisor service. They put my money into more than 20 high fee obscure mutual funds and still performed below 60/40 stock/bond portfolio year after year. I am paying Fidelity advisor 1% total asset fee to get below benchmark performance for many years. It is a complete waste of money. I will follow your valuable advice and put my money into 3 Vanguard index funds from now on. Thank you so much!

cindyf
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26 funds for me, I am still trying to figure out what to do. One good thing I did, I fired my financial adviser. It was really a Creative Plan.... .

Marlin
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Rob, yet another valuable video, thank you! I did not know you could keep adding more assets in backtesting in Portfolio Visualzer, and have long been wanting to compare my self-managed portfolio that has now transitioned to the 3-fund portfolio + 3 tilts + 3 individual stocks vs the 3-fund portfolo. The default amount of assets that you can input is 10 assets, so making this comparison would need the space for 12 asset, which I thought was unavailable! I know this seems so trivial, but when you don't know something, you just don't know it, LOL! I can also now compare it to VBIAX as well to make future decisions about fully simplifying my portfolio to make it the easiest for someone else to manage it when/if I am no longer able to manage it myself. I realize these are just planning tools, and I am very happy to have them.

claricehirata
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I just moved away from my advisor ... we were in 92 stocks and 30 different ETF's. I am now convinced that they make it look complicated so you wont leave. They underperformed the S&P 500 for the last 5 years with this complexity.
Now working to clean up the mess ... contemplating the mix of VOO, VTI, RSP, VO, VIGI, VXUS etc ... as usual I am overthinking it, but I wont be in 120 different holdings.
I do have concern that the top few holdings in VOO now represent 30% of the index ... so feel that I have to diversify some of that risk.

rhmbob
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A complicated mix of investments from multiple different fund families including narrowly focused strategies like commodities, REITs, precious metals, etc. makes the portfolio look more “high level” and strategic than a simple mix of index funds, thereby allowing the advisor to justify their 1% fee.
The primary goal of a complex investment plan is to make more money …. for the advisor.

markwalters
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I had an advisor in 2008. After the crash, the portfolio took 6 years to get back to even. The S&P 500 took 4 years. I fired her after that. Advisors make money in fees, but don't have a better crystal ball than the S&P 500. What was I paying fees for? Not CAGR. Not lower volatility. What else counts?

HarshColby
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I am with Creative Planning a fiduciary type advisory firm and I am quite happy.

savagecub
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I got into the personalized planning through my job 401k and Roth. They have me on 9 or 10 different funds. Been researching them and some of them have a pretty high expense ratio and not much return. I'm thinking about getting rid of all that and going to a simple 2 or 3 fund. Tossing around the idea of 75% S&P, 15% international, and 10% total bond. Also thought about 90% S&P and 10% total bond.

korndawggy
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5 total:
Fidelity blue chip
Mid cap
Small cap
Fidelity 500 index
PIM Total ret A bonds

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