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DIY Financial Advisor: A Simple Solution to Build and Protect Your Wealth

Book Description

DIY Financial Advisor: A Simple Solution to Build and Protect Your Wealth

DIY Financial Advisor is a synopsis of our research findings developed while serving as a consultant and asset manager for family offices. By way of background, a family office is a company, or group of people, who manage the wealth a family has gained over generations. The term 'family office' has an element of cachet, and even mystique, because it is usually associated with the mega-wealthy. However, practically speaking, virtually any family that manages its investments—independent of the size of the investment pool—could be considered a family office. The difference is mainly semantic.

DIY Financial Advisor outlines a step-by-step process through which investors can take control of their hard-earned wealth and manage their own family office. Our research indicates that what matters in investing are minimizing psychology traps and managing fees and taxes. These simple concepts apply to all families, not just the ultra-wealthy.

But can—or should—we be managing our own wealth?

Our natural inclination is to succumb to the challenge of portfolio management and let an 'expert' deal with the problem. For a variety of reasons we discuss in this book, we should resist the gut reaction to hire experts. We suggest that investors maintain direct control, or at least a thorough understanding, of how their hard-earned wealth is managed. Our book is meant to be an educational journey that slowly builds confidence in one's own ability to manage a portfolio. We end our book with a potential solution that could be applicable to a wide-variety of investors, from the ultra-high net worth to middle class individuals, all of whom are focused on similar goals of preserving and growing their capital over time.

DIY Financial Advisor is a unique resource. This book is the only comprehensive guide to implementing simple quantitative models that can beat the experts. And it comes at the perfect time, as the investment industry is undergoing a significant shift due in part to the use of automated investment strategies that do not require a financial advisor's involvement. DIY Financial Advisor is an essential text that guides you in making your money work for you—not for someone else!

Table of Contents

  1. Title Page
  2. Copyright
  3. Dedication
  4. Preface
  5. Acknowledgments
  6. Part One: Why You Can Beat the Experts
    1. Chapter 1: Are Experts Trying Too Hard?
      1. Why Do We Rely on Experts?
      2. What Are the Experts' Incentives?
      3. Are Experts Worthless?
      4. The Expert's Hypothesis
      5. Summary
      6. Notes
    2. Chapter 2: Simple Models Typically Beat the Experts
      1. The Evidence Shows…
      2. A Study of All the Studies
      3. What if Experts Have the Model?
      4. But Investing Is Different, Right?
      5. Why Experts Fail to Beat Models
      6. Summary
      7. Notes
    3. Chapter 3: Experts Are Biased and Overconfident
      1. The Biased Brain
      2. Summary
      3. Notes
    4. Chapter 4: Experts Tell Us Stories, Not Facts
      1. Story-Based Investing
      2. Evidence-Based Investing
      3. The Recap: Why Experts Fail
      4. Why Not Use Models?
      5. Summary
      6. Notes
  7. Part Two: How You Can Beat the Experts
    1. Chapter 5: A Framework for Investment Decisions
      1. Assessing an Advisor Is Difficult
      2. The FACTS Framework
      3. We've Got the FACTS: Now What?
      4. Summary
      5. Notes
    2. Chapter 6: A Simple Asset Allocation Model That Works
      1. Asset Allocation
      2. A Simple Asset Allocation Model That Works
      3. But Which Assets Do We Choose?
      4. Summary
      5. Notes
    3. Chapter 7: A Simple Risk Management Model That Works
      1. A Simple Risk Management Model That Works
      2. How Does ROBUST Work?
      3. Summary
      4. Risk Management Research (For Geeks Only)
      5. Notes
    4. Chapter 8: Simple Security Selection Models That Work
      1. Value Investing
      2. Momentum Investing
      3. A Simple Momentum Model That Works
      4. Combining Value and Momentum
      5. International Stocks
      6. Get ‘Er Done
      7. Summary
      8. Notes
    5. Chapter 9: The Do-It-Yourself (DIY) Solution
      1. Exploring a Simple Equal-Weight Five Asset Class Model
      2. Enhancing the Ivy 5 Concept
      3. Finish Strong: The Ultimate DIY Solution
      4. Get ‘Er Done
      5. Notes
    6. Chapter 10: Some Practical Advice
      1. Three Reasons We Will Not Be a DIY Investor
      2. Three Reasons You Might Fail
      3. But Don't Lose Hope!
      4. Is DIY the Only Solution?
      5. Notes
  8. Appendix : Analysis Legend
  9. About the Companion Website
  10. About the Authors
    1. Index
  11. End User License Agreement