On Monday, I sat in on a value investing talk given by hedge fund manager Joel Greenblatt, best-selling author of The Little Book That Beats the Market. He's started a money-management firm based on the "Magic Formula" outlined in the book, and the talk was attended by a smattering of reporters, financial advisers, and academics.

If you haven't read the book, it's a good primer on value investing, though the conclusion it boils down to — that to beat the market, you just have to invest in stocks with low P/Es and high returns on capital — would raise the ire of plenty of his value manager peers. I'm oversimplifying, and there are other places where you can read more about Greenblatt's strategy, but what interested me at this talk were the questions fired at Greenblatt after he finished. More

This is sure to make financial advisers cringe, or at least send me a few angry emails. German researchers have found that on the whole, investors who use a financial adviser tend to underperform do-it-yourselfers.

Professors from Goethe University Frankfurt gathered data from a large German brokerage firm that allowed its clients to either run their portfolios themselves or use an independent financial adviser. On the whole, the adviser-led clients did better. But the researchers found that clients with advisers tended to be older and wealthier than average. Once the professors controlled for age and wealth, they found that the clients with advisers did worse.
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Question: Karen, my otherwise good financial adviser, often e-mails me articles on Obama's handling of the economy. These pieces are politically one-sided, and it's not my side. Should I complain?

Answer: Very irritating, these folks with an ax to grind who relentlessly forward "interesting" e-mails to everyone they know. More

One of the central “value adds” a trusted advisor brings to the table is a calm perspective during periods of market turmoil. That can mean not getting carried away and doubling down on stocks during a bull market, nor abandoning stocks in a down market. In a sense, a crucial role for an advisor is to be our better selves; making sure we don’t sabotage ourselves with emotional reactions to market volatility.

But it turns out even financial advisors are finding it hard to stick to their long-term strategies in the wake of the severe bear market. A recent survey conducted by GDC Research and Practical Perspectives found that 36 percent of financial advisor are less confident about how they are managing retirees’assets compared to a year ago. And 77 percent have altered their asset allocation strategy in reaction to the market sell-off.

In an interview with Investment News, Howard Schneider, president of Practical Perspectives, said advisors are “…changing their asset allocation. They're shifting their clients' assets to more conservative accounts, and they're raising the use of cash and raising fixed-income securities.”

That sounds like a lot more than tactical rebalancing. And I can’t help thinking that getting more conservative after a huge bear sell off wasn’t exactly great timing.

Schneider also told Investment News that the advisors surveyed are responding to the need to make sure their clients are able to “meet basic living expenses, such as shelter, food, energy and healthcare, [and this] has never been more of a challenge for advisers.”

Okay, but if folks were retired and needed preservation of principal, how come their advisors didn’t have them properly allocated long before the bear hit? And that raises the more important question: For those of you who work with an advisor, how would you rate their strategy now that you and your portfolio have lived through this big market sell-off?

– Carla Fried