After a big response to yesterday’s post on investment consulting, I thought that I would share some of the academic findings I quoted in a presentation format.
Just to clarify, I’m not against pension funds and charitable trusts using a consultant. There are important ways in which consultants add value — particularly with behavioural coaching.
The problem is that most consultants like to give the impression that they can identify “star” fund managers in advance, and most trustees seem to believe them. The evidence clearly shows, however, that consultants don’t add value by recommending funds. Indeed, after costs, the hiring and firing of managers that their advice usually leads to, subtracts value from the investment process.
If you’re a trustee yourself, and based in the UK, why not sign up for one of two breakfast seminars I’m going to be running in conjunction with RockWealth in October? We’re holding one in Cheltenham and the other in London, and we’re going to be looking at what trustees should be doing to ensure the best possible outcomes for their members. You’ll find all the details here.
Do investment consultants add value or subtract it?