The Ultimate Financial Plan by Tim Maurer & Tim Maurer

Author:Tim Maurer & Tim Maurer
Language: eng
Format: epub
Publisher: Wiley
Published: 2011-07-19T00:00:00+00:00

Economic Bias Alert!

Are you wondering why you would need to pay a financial advisor to manage a generally passive asset allocation portfolio for you if the whole point is not to touch it? You don’t, and you shouldn’t. When the big financial institutions foresaw Modern Portfolio Theory changing the investing landscape, they realized that if everyone bought into the notion that no one could beat the market, no one would need brokers! So the financial services institutions decided, “If we can’t beat ’em, we’ll join ’em.” They fused the EMH and MPT together with another study done by the trio of Brinson, Hood, and Beebower positing that 90 percent of an investor’s return was simply based on maintaining the appropriate asset allocation mix according to the investor’s risk tolerance. That other 10 percent or so, however, was reason enough to fill each of the pie slices with the company’s own proprietary mutual fund managers, netting them even more fees.

The result? Most people are paying a broker or advisor commissions or fees of one to two percent per year to simply tell them to hold on when things get ugly in the market.

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