My title is a play on Gordo Byrn’s piece from this morning. Perhaps like him, my career in finance is built on the collective resistance of individuals to do what they should, instead of what they want to.  If you have not seen his article, it’s worth your time.  It’s all true.

It’s the truth, but it is not the whole truth.  The whole truth is worse than he describes.

In sum, investors do not receive what their investments earn.  As John Bogle has repeated thousands of times in the past four decades, they receive what their investments earn minus their costs.  For living, breathing individuals these costs are usually divided among transactional costs, taxes, and management fees.  Institutions now exist to deliver investment returns at the lowest possible cost, most famously among them Vanguard.  Others have followed with slightly different takes on the same idea, such as i-Shares, and a company I have favored for the past 16 years, Dimensional Fund Advisors.  (Disclosure: I use all three for client portfolios, and have financial interests in none of them).  My firm believes that in the 21st century investment return is a commodity obtainable by anyone and should be priced as such.

As Gordo documented, the above costs constitute significant drag on portfolio returns, one that compounds over time.  I’m not even going to comment on the two-and-twenty fee structure beyond saying it makes the vig charged by the Bank of Broken Legs appear reasonable and transparent.

So what, you might reasonably ask, is worse than all of the costs dragging down investor returns?  The answer lies in human nature, our inability simply to get out of our own way, and then remain there.

Case in point: the organization Dalbar has done repeated studies comparing market returns to those actually achieved by investors.  The conclusion of those studies, time and again, is that collectively human beings suck at investing.  In their latest study, the average equity investor earned 5.02% annually for the 20 years ending December 31, 2013.  In the same period, the S&P 500 index returned 9.22% annually.   Yes, one can split hairs about indexes living in cost-free and tax-free environments, but that is trivial compared to investors giving up 45% of the gross returns that were just sitting there to be had.

When an investment (such as a mutual fund) exceeds market norms, new money floods into it after the fact.  If an investment underperforms market norms, funds leave after the fact.  As Carl Richards has made a nice living saying, it means “buy high, sell low, repeat until broke.”

So what is an individual to do?  All of the following exercises are simple, if not necessarily easy.  Indulge me in the following experiment. Please answer the following questions in regards to your own circumstances:

1.  How large of a pool of assets do my significant other and I require in order to live in the manner which we desire for the rest of our lives?
2. What should be the composition of that pool of assets, and how should they relate to each other in terms of risk and expected returns?
3. What are the other things in life that are critically important to me, and for which I will be financially responsible?
4. What are the risks in the universe which may prevent me from fulfilling my responsibilities to myself and to others, and how might I defend against them or at least mitigate their impact?
5. If I have accumulated wealth that exceeds all of the above requirements, how might I best utilize that wealth to derive the most personal satisfaction available from life?

If you have answered all five of those questions above to your total satisfaction, then move along now: nothing more here for you to see or do.  If you cannot answer all five, or worse, you are now overcome by a sense of dread or foreboding, perhaps you should consider talking to a financial advisor: a real financial advisor, not someone yelling on cable television about what the NASDAQ did today.

Everything I do as a financial advisor revolves around each of my clients answering those five questions to their total satisfaction.  None of them have anything to do with whether small cap value stocks will or will not outperform REITs this year.  (By the way: I have no idea.  No one else does either if they are being honest with themselves and with you).

To be certain, each question generates a host of sub-topics.  For example, under #4 I would have to address the question of how I want my remaining assets handled after my death.  What if I die before my wife does?  What if she dies first?  What if I am alive but for whatever reason incapable of managing my own affairs?

For the millions of hours and time and energy utilized on receiving the best investment returns, precious little energy is spent on deriving the best investment experience.

Gordo Byrn, whose work and writing I greatly admire, is among the foremost coaches of multisport athletes.  Athletes turn to him and his colleagues not just to obtain their expertise, but to help them apply it to their particular goals in the most effective manner possible.  Obtaining the best multisport experience has many costs, and among those is money.  Gordo and company must charge enough to meet their own economic expectation, but that cost must be less than the value they deliver.  My sense is from their legions of devoted clients is that the value is in fact a multiple of its cost.

Financial advice worth paying for must deliver a value that is a multiple of its cost.  The costs should be clearly disclosed and easily calculated.   Some of this value is economic: getting our clients to stick to their plans through the collapse of 2008-09 earned millions that otherwise would have been lost forever.  A penny saved really is a penny earned.

Beyond that, the value is more often measured in non-economic, psychic benefits. Financial understanding allows us to do as Thoreau admonished: to “move confidently in the direction of our dreams, to live the life we’ve imagined.  As we simplify our lives, the laws of the universe will be simpler.”

If that is not worth paying for, I cannot possibly imagine what is.