My husband and I would like to share with you a conversation he recently had with our financial adviser.
Husband: “My wife and I have been looking into our shared finances. We think we are paying too much for financial advice on your managed super fund. We will be switching to a Hostplus Indexed Balanced Fund.”
Adviser: “Sounds like your wife has been reading the Barefoot Investor.”
Husband: “I bet that’s the bane of your life.”
Adviser: “Yes. Hmf. Well, our fund is better because …”
You can guess the rest. We are so thankful to you, Barefoot!
Just for kicks, let me visualise the rest of the conversation:
Adviser: “You’ll get better returns from our actively managed fund, which employs some of the finest fund managers in the world and has a history of outperforming the market.”
Meg: “Go on.”
Adviser: “Fees are important, but they’re not the only consideration. You need to consider long-term performance.”
Meg: “Do you have access to exclusive hedge funds?”
Adviser (panting): “We most certainly do!”
Meg: “Well, did you read about the million-dollar bet Warren Buffett made in 2007? He bet that a basic no-brainer index fund that simply tracks the market would outperform the most elite hedge funds over 10 years. Guess what happened? The $1 million invested in the expensive hedge funds gained $220,000 … the ultra-low cost index fund gained $854,000.”
Adviser (closing his folder): “I’m late for my next appointment.”