AAII Survey: Why Investors Don’t Use Advisers


Real-world returns show that, over the long term, stocks generate the highest returns of any asset class. That is not to say, however, that there are periods where stocks underperform other asset classes such as cash, bonds or real estate.

For long-term investors, the majority of your portfolio should be in stocks in order to maximize your returns. Some would argue that the “safety” lower-risk assets such as bonds offer are outweighed by the lower returns they generate. However, assets you will be needing in the next three to five years most definitely should be in “riskless” assets to ensure the money is there when you need it.

AAII Weekly Survey Question

While the data supports stocks as the best long-term asset, that doesn’t always mean investors feel that way.

To see which asset class our readers feel is the best for long-term investors, last week’s survey question asked:

Which of the following do you think is the best long-term investment considering a time horizon of at least 10 years?

In all, 2,408 readers participated.

By an overwhelming majority—91%—our readers believe that stocks, whether individual or stock funds, are the best long-term investment for those considering a time horizon of 10 years or more.

Coming in a distant third, with only 5% of the votes, was real estate.

By nearly a two-to-one margin, gold is seen as the better investment than bonds for those with at least a 10-year time horizon, although they only garnered 2% and 1%, respectively, of the entire vote.

Weekly Special Question

The weekly survey results actually tie into this week’s special question, while I wasn’t expecting them to. Seeing that our readers see stock funds as a better investment in the long-term than individual stocks, I started wondering why. Is it because more of our readers invest in stock funds compared to individual stocks? And if so, why?

The fact that stock funds received a simple majority of votes—51%—while individual stocks garnered 40% of the vote tells me that people do not have confidence in their individual stock-picking abilities or that the best they can hope for is a market return from an index fund. Share your thoughts in the comments section below.

In my 20-plus years working with AAII, I have met countless investors who question their abilities, which is why either they limit their investments to mutual funds or use a financial adviser. While the mission of AAII is to provide investors with the knowledge and resources to become better managers of their own portfolios, many of our readers and members do use an adviser.

However, a recent AARP survey finds 45% of Americans ages 40 to 59 would rather see a dentist than meet with a financial adviser. Which leads us to last week’s special question:

 If you have never met with a financial adviser, what are your reasons?

In all, we received 270 responses.

Of those responding, 20% said they do use an adviser or have used one in the past. I wouldn’t say this is representative of our readership, however, given the way the question was worded.

Among the other 80% of respondents that have never met with a financial adviser, more than a third (34%) say they have as much knowledge as a financial adviser or can get similar results by themselves.

Another 21% say they do not use a financial adviser because they don’t feel their best interests are being served.

Rounding out the top three, 15% say they do not use a financial adviser because of the fees they charge.

Here is a sampling of the responses we received as to why our readers have not met with a financial adviser:

  • “I feel confident that I can do just as well or better than with a financial adviser.”
  • “Not trustworthy, will try to sell me something.”
  • “I like to make my own mistakes.”
  • “I prefer to avoid the management fees/commissions and do my own reading and research.”
  • “I consider my finances to be personal.”
  • “Unless you have a big enough portfolio, you are not going to get enough attention for the cost.”
  • “Lack of trust that the adviser will give me the best advice for me.”

Everybody has an opinion! Why not give us yours? Participate in our weekly member poll, updated every Monday, and see the results online at www.aaii.com/memberquestion.



5 Replies to “AAII Survey: Why Investors Don’t Use Advisers”

  1. I don’t use advisers because of past experience where I find that I’m better informed and knowledgeable than the ‘expert.’ Seems I’m paying for their time but I’m training and educating them rather than the other way around. This even goes to cases where I’ve called out AAII presenters to correct incorrect statements they’ve made.

  2. I started in 1974 hedging farm commodities. Not my worst decision . In 1980’s I turned to a Merrill Lynch broker in Wichita. After we had worked together for several years he called and said if I put money into a bond he had picked out for 7 years I would get my capital returned. I trusted and as I recall sent him $20,000. At the end of that time I received $60,000. In the meantime 2005 we sold our farm and the banker with whom I had worked insisted we put our money with his nephew employed in his bank. My wife said for me to manage the money. I’m tired ,I said. In 2008-2009 she and I started yelling get us out of the mkt. He did after we had lost $60,000.
    Went o another broker and he was helpful got us pretty well ins up to 1 million ins in case of a lawsuit. Cost of 1 mil lawsuit damage for $47/year. Then as time went he had answered questions everything good. I was watching monthly balance sheets. My wife’s sheet was decreasing and mine was increasing. Then I started looking better, Mine was increasing about right to pay his $2500 yearly charge. My funeral acct was enough to provide me with a $35,000 funeral, and her bal was shrinking. I sent him a ‘I quit letter’ and turned over to her enough to get us balanced again. Now 2 years later both accts are close to equal . Now I’m getting info from AAII. Can’t say I’m getting answers to very many of my questions but maybe I’m supposed to look more closely at the info you send me. When you explain trading you fill in the limits of the metrics. I’m doing a good job of studying. Thank you! Carl S. Helmle

  3. TRUST. It boils down to the lack of trust with an individual you can’t really know. Sometimes it’s hard to trust your own decisions, much less someone else’s when it comes to your money and your wealth. If I make a mistake I’ll have to own it. If someone else makes the mistake, and it’s my money, who owns it? And we know it’s bound to happen.
    I trust everyone, until they show they can’t be trusted. But that usually doesn’t involve my investments…

  4. Exercising care in investing in stocks requires more study than for index funds; perhaps this is part of the reason for many investors to choose index funds. We are often told that we have little chance of beating a market average, but I don’t think this is so if we are willing to devote time and use good judgement in selecting stocks to invest in, and are long-term investors. It is possible to identify some of the stocks that are likely to do worse than average, and it is also possible to identify some that are likely to do better.

  5. We used an advisor for several years until I educated myself sufficient to realize that he had put us into load funds with various high fees, the funds did terrible in the 2002 market drop.

    We have contacts at two firms but we do not rely on either to make investment decisions. On the whole the Schwab Select no load no transaction listing has been helpful, the comparable Fidelity listing is less so.

    Since we are very much buy and hold (mutual funds) we don’t need someone to “manage” our investments


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