conversation: User (skeach101): "I love this sub. I really do. However, I have found  this board to be pretty wrong when it comes to student loan repayment options. /r/studentloans is just a better resource.\n\nWhat are some other areas thst you have experience poor advice in general from this board? Do you suggest an alternate source?"
  Self: "If you have money you can afford paying financial advisors instead of random people on the Internet. Some posts here are almost "I have $1,000,000, what should I do with it?"."
  BigPeeOn (BigPeeOn): "On to of that, there's a lot of "haha! That financial advisor didn't even beat the S&amp;P!" \n\nThat's a meaningless comparison unless you know that beating the S&amp;P was their goal. A lot of financial advisors/money managers are aiming for wealth preservation instead of growth. Or maybe the client is very risk adverse. Or any one of a hundred other reasons that can inform a portfolio. \n\nIt's annoying. Would you compare a bond fund to the S&amp;P and claim it sucked because it doesn't beat it? Of course not, because that's not the goal of the fund. But make it a professionally managed portfolio and for some reason people think it's a valid comparison. "
  RexualChocolate (RexualChocolate): "What stock picking formula is an advisor going to do with 1MM that beats the 3 fund portfolio on a risk adjusted basis?\n\nThe answer? None. Its mathematically impossible, and that's before adjusting for the 100% guaranteed loss of their fees.\n\nYou need more like 10-15M to get into hedge funds and PE. At the super wealthy levels, absolutely use more advanced tools. Before then and thus for 99.9% of the population, FA's provide no value past the psychological, GIVEN the assumption you are a rational investor in index funds. \n\n"
  loopy212 (loopy212): "Case in point."
  RexualChocolate (RexualChocolate): "I don't follow, care to elaborate?"
  loopy212 (loopy212): "He was pointing out that the /r/pf hivemind thinking that advisers have no value is based on incorrect assumptions and then you cited a bunch of those incorrect assumptions in support of the same conclusion."
  RexualChocolate (RexualChocolate): "What are the incorrect assumptions? "
  loopy212 (loopy212): "&gt;What stock picking formula is an advisor going to do with 1MM that beats the 3 fund portfolio on a risk adjusted basis?\n\nThe average stock picking fund manager outperforms indexing on both a risk adjusted and absolute basis after fees.  [Here's](http://www.cfapubs.org/doi/abs/10.2469/faj.v69.n4.7) Petajisto with a recent study on the topic.\n\nThe trick is identifying stock pickers from other "active" managers of course, which isn't easy to do (probably beyond the knowledge of people with a casual finance background) and why it is generally discouraged around here.\n\n&gt;The answer? None. Its mathematically impossible, and that's before adjusting for the 100% guaranteed loss of their fees.\n\nSaying its mathematically impossible would imply that the highest possible Sharpe ratio would be achieved from a Lazy Three Fund portfolio.  That's not the case from a theoretical perspective as a Three Fund Portfolio does not include all known assets and therefore its Sharpe is lower than a theoretical Market Portfolio.\n\nIn practice, the highest Sharpe ratios possible are from a portfolio comprised of stock picking and an index.\n\n&gt;You need more like 10-15M to get into hedge funds and PE. \n\nAny qualified investors are able to invest in either hedge funds or private equity funds.  Qualified investors have either income of $200k ($300k joint) or $1 million in investable assets."
  108241 (108241): "You claim:\n&gt;The average stock picking fund manager outperforms indexing on both a risk adjusted and absolute basis after fees.\n\nYet your link says:\n\n&gt;The average actively managed fund has had weak performance, losing to its benchmark by –0.41%."
  loopy212 (loopy212): "Yeah, one of those things where you actually have to read the study and not scan a screenshot of the abstract.  The entire point of the study is that stock picking and active fund management aren't the same thing.  Unfortunately for investors, most active fund managers aren't stock pickers.\n\nHere's a decent summary though if you can't get all the way through it:\n\n&gt;Using Active Share and tracking error, the author sorted all-equity mutual funds into various categories\nof active management. The most active stock pickers outperformed their benchmark indices even after fees,\nwhereas closet indexers underperformed. These patterns held during the 2008–09 financial crisis and within\nmarket-cap styles. Closet indexing has increased in both volatile and bear markets since 2007. Cross-sectional\ndispersion in stock returns positively predicts performance by stock pickers."
  108241 (108241): "You counter that you have to read the study, not just the abstract, and then literally quote the entire abstract to prove your point?"
  