2 years ago, I brought on a new client and asked them to help me with a little experiment. At the time, Robo-Advisors were all the rage and I wanted to see how they measured up to Professional Financial Advice (ie ME). If you are not familiar with the story, here are the posts for you to get caught up. (Set-up, Round1, Round 2, Round 3, Final Round)
TL;DR - Our client is a 26-year-old professional poker player who lives for risk. He went through Mr. Robot's risk assessment questions and they decided he was a balanced investor. I took him through our behaviour-based assessment and found he was (shocker) a growth investor. Based on that, we put together an aggressive portfolio for long-term growth.
Now to the numbers. Our Robo competitor has changed its holdings a little over the years and has seen stable growth. They had a very respectable 2020 return of 9.16%, as self-reported on their website.
Our portfolio has been up and down, sometimes better, sometimes worse, however, our portfolio comes with humans who can make suggestions based on the relationship we have with our clients. During the COVID dip in the first quarter of 2020, we saw a buying opportunity; many equity funds were down. A lot! We made a small tactical change and sat back to see how it would pan out. Turns out, it was a smart play. Our portfolio ended 2020 growing by 35.01%. (For all of those concerned, here are the disclaimers that I am required to post after the mention of returns.)
Needless to say, a little advice really does go a long way; 26% longer in this case. This is not a typical case so don't think that we can get you returns like this. If, however, you want to compare your current portfolio to one that is engineered to your financial behaviour (like Mr. Poker's) contact our office. #ChallengeAccepted
Kenneth Coombs CFP
Ken has worked in the financial services industry since 2005, is a Registered Retirement Consultant and a Certified Financial Planner. Ken has written financial planning columns and has been a guest in financial print, radio, and podcast programs.