Using a Financial Planner and Portfolio Performance
Using national data that collect information on family finances, this study explored the relationship between investors’ entire household investment portfolio’s performance and the primary source where they obtain information when making retirement investment decisions. The primary information sources that individuals reported were either using a financial planner or being “self-directed.” Self-directed refers to using information sources with little or no monetary cost, such as consulting with friends/relatives and/or a spouse/partner, conducting personal research or calling around, belonging to investment clubs, or accessing media.
Among the investors surveyed, 78 percent did not seek professional assistance when making saving and investment decisions while 22 percent used financial planners. Investors who used financial planners achieved significantly higher returns than self-directed investors for the same level of investment risks they took in their investment portfolio.