Stop Trying To Beat The Market!

This emphasis on beating the market has become entrenched especially within the financial services industry. For people managing other people’s money in products like mutual funds, pension funds and other types of managed portfolios, your investment pedigree and more importantly, your performance bonus is defined not only by if you have earned returns in excess of the market returns but also by how much, or the “alpha”. This pressure to beat the market has now trickled down to the masses. Investment products of many stripes are being cranked out with a marketing premise that their fund will outperform the market. This is insane and it has to stop.

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Coming To Disrupt A Financial Industry Near You: Robo–Advisors

In the U.S. several companies have made a bit of a splash offering a service that will manage their investments online using sophisticated algorithms to automatically select appropriate investments based on the client’s risk and demographic profile. The kicker is that because of the minimal overhead, they can charge ultra-low fees. The premise is that the traditional financial advisory model is broken because advisors are focused on selling product rather than genuinely working to help people meet their financial goals. Well I thought I would mind map the pro’s and cons of what could be a model that could disrupt the whole advisory business.

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