Imagine if robo advisers could do emotions — Andrew Lo

MIT Sloan Professor Andrew Lo

MIT Sloan Professor Andrew Lo

From The Wall Street Journal 

At a conference last year, I was approached by an audience member after my talk. He thanked me for my observation that it’s unrealistic to expect investors to do nothing in the face of a sharp market-wide selloff, and that pulling out of the market can sometimes be the right thing to do. In fact, this savvy attendee converted all of his equity holdings to cash by the end of October 2008.

He then asked me for some advice: “Is it safe to get back in now?” Seven years after he moved his money into cash, he’s still waiting for just the right time to reinvest; meanwhile, the S&P 500 earned an annualized return of 14% during this period.

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How to get financial advice worth your money — Antoinette Schoar

From WSJ MarketWatch and MIT Sloan. Innovation@work Blog

In an effort to create a successful retirement portfolio, investors often find their way to professionals who loosely call themselves “advisers” or their services “financial planning,” even though they are de facto sales agents paid commissions by their company. This compensation structure can lead to conflicts of interest between financial professionals and their clients.

Yet, despite numerous anecdotes that pay structures influence investing advice, there is little reliable evidence about the quality of advice that financial professionals actually provide. Do financial professionals help retail investors make better financial decisions and educate investors? Or do they put their own interests first and attempt to generate more commissions and fees? Read More »