The Derivative Project

Academic Study Reveals Billions of Dollars Wasted on Worthless Investment Advice

Academic Study Reveals Billions of Dollars Wasted on Worthless Investment Advice

The Financial Times reported in a September 21 article that a recent Oxford study revealed billions of dollars were wasted on investment advice that did not increase performance.  The article stated:

“The Oxford team found these flows, and the fact that consultants tended to recommend larger funds in the first place, explained the underperformance of 1.1 per cent a year, as unwieldy funds suffer from diseconomies of scale.
However, they found “no evidence that the recommendations … enabled investors to outperform their benchmarks or generate alpha [market-beating returns]”.
The paper speculated institutional investors continued to rely on recommendations either because they want a “hand-holding service”, a “shield” to defend their decisions, or are “simply unaware how accurate or inaccurate” consultants’ calls are.”
Not On My Nickel has proof the same scenario exists for U.S. retail retirement investors.  Not On My Nickel is the new service, the first to address the critical issues of poor and conflicted investment advice, that adds no value and eliminates the middlemen that cause Ponzi schemes and other types of fraud.
Read more here at Not On My Nickel  Academic Study Shows Investment Advice Waste of Money
Download the Oxford Said Business School Study here
Written by:
Tim Jenkinson 
University of Oxford – Said Business School; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)
Howard Jones 
University of Oxford, Saïd Business School
Jose Vicente Martinez 
University of Oxford – Said Business School
September 17, 2013