You can do it — we can help has brought in a fundamental change in attitudes towards home improvement. Before the time of Home Depot, an average person would not dream about making major home improvements without a professional. The Home Depot revolution has changed it forever. Now you can visit your local Home Depot and a knowledgeable specialist will help you meet your home improvement needs. A similar fundamental shift is currently unfolding in the investment industry.

Conflicts of Interest


Those return rates sound fairly impressive, until one considers that during the same period, the S&P 500 index had a return of 384.5%. Although the Dalbar research was conducted between January 1984 and June 1995 and was never repeated in the same format afterwards, one could question whether the results would be different now.


A similar fundamental shift is currently unfolding in the investment industry.


Over a ten-year period, Dalbars well-known research divided mutual fund investors into two groups; Do-it-Yourself investors and Sales-Force Advised Investors (i.e. investors who used advisors). During this time period, the first group had a return of 79.5% while the latter had 96.4%.


And what of those clients who are less than high-net worth? Anecdotal evidence supports the conclusion you have probably already arrived at, namely that those clients are even less enthusiastic about the service they receive. Even more so than is the case with high net worth clients, these clients have an all too intimate knowledge of the investment motto financial products are sold, not bought.


(PRWEB) February 2, 2006 — You can do it — we can help has brought in a fundamental change in attitudes towards home improvement. Before the time of Home Depot, an average person would not dream about making major home improvements without a professional. The Home Depot revolution has changed it forever. Now you can visit your local Home Depot and a knowledgeable specialist will help you meet your home improvement needs.


At the same time as dissatisfaction with the traditional investing model grows, new alternatives (both in terms of technologies and financial products) are gradually emerging, which are eroding investment advisors influence more than ever before.


The Emperor Has No Clothes


What those results lead us to conclude, of course, is that investment advisors were not able to add significant value in terms of higher returns — although they could potentially have added value by saving clients time, managing their anxiety and providing investment education through client service.


The revolution has just begun.


Emerging Alternatives


Statistics on the returns enjoyed by clients suggest that their dissatisfaction is justified.


Nowadays, with a click of a mouse, an individual investor can create an efficient portfolio (with a little help) that reflects his or her personal circumstances. And, recognizing the value of strategic long-term investing, many companies have created products that focus on tax and cost efficiency such as ETFs and life-cycle funds, as well as various types of software and Internet-based solutions that offer all-encompassing investment options.


Client Dissatisfaction


In the traditional investment model, an individual who lacked time or knowledge relied on an investment advisor for help with investing. The new breed of empowered individual investors is hungry for knowledge about investing, and as time goes by, they will seek the specialists, rather than hire the professional.


What has prompted this quiet revolution? For starters, the benefits achieved doing things the old way. According to Tiburon Strategic Advisors, a consulting and market research company, only 30 percent of high net worth clients declared being fully satisfied with their advisors while nearly half of the respondents have given recent consideration to changing their primary financial advisors.


It is widely known that a number of forms of client-broker relationships are still plagued by conflicts of interest, where recommended products are better for the company the broker represents rather than the most suitable for the client.


In addition, many clients express a view that the investment industry is paying insufficient attention to its fiduciary duties (i.e. putting clients interest first), while it is pursuing asset gathering strategies (i.e. maximizing its own returns). For example, John C. Bogle concludes in his ten-year research that the returns generated by mutual fund conglomerates (i.e. asset gatherers) lag significantly behind their competitors. Mr. Bogle, of course, was not referring to return of conglomerates own capital, rather the returns on capital entrusted by investors. As a Chartered Financial Analyst, I feel that in order to effectively deal with these challenges, we should first acknowledge that they exist and then move decisively to rectify them.


So, as millions of baby boomers have discovered the joys of dry-walling, the new breed of independent and empowered investors will enjoy learning about investing and taking responsibility for their losses and gains.


The full article available at www.investwellfinancial.com/articles/article_homedepot.htm

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