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A typical actively-managed high net worth individual will underperform a passive index investor by from 2% to 5% a year (William Bernstein, The Four Pillars of Investing). When this is done really well -- and it usually is -- clients can be completely unaware of the poor performance they are getting. Dr. Bernstein estimates that with the standard wrap account at a full-service brokerage, it should take about 23 years for them to have more of your money than you do. The mahogany furniture, market analysis double-talk, and impenetrable quarterly statements are just there to distract you from the real show going on behind the curtain: the siphoning of your wealth to them. You might call this, "Taking the client's dreams and making them our own." The top 1% of earners already pay 40% of our country's income taxes. Then this is how their remaining savings are treated by the very people they hire to help them. If you do not know how your portfolio performs (net of fees) compared with a precisely matched set of total-return benchmark indexes, you are flying blind. |
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