http://www.startribune.com/business/130561873.html?page=all&prepage=1&c=y#continue

401(k) Study: Workers who sought help improved annual performance by an average of 3 percent

DES MOINES, Iowa – Sometimes it pays to get help. A new study of 401(k) accounts provides further evidence that workers who get help pocket higher returns than those handling their own investment choices.

The study by human resources consultant Aon Hewitt and investment adviser Financial Engines shows that workers who received some form of help experienced annual returns on average of 3 percent better than workers who handled their own accounts.

But it’s important to clarify what’s meant by “help.” Workers who used target-date mutual funds, professionally managed accounts or accessed online advice were all deemed to have used help for purposes of this study. Their behavior from 2006 through 2010, and how it affected account risks and returns, was studied.

Well worth reading.  Things to note: (a) “help” could be as simple as employees using target-date funds – it doesn’t have to mean comprehensive planning, full-scale active portfolio management or anything more expensive or complicated; (b) they list, in this article, some of the reasons for the outperformance which include (i) people reacting to markets; (ii) too much or too little risk; (iii) too much company stock; (iiii) failure to rebalance

Folks may need some help, but they really don’t necessarily need a whole lot in order to overcome those main causes of underperformance.

Very few advisors will recommend target-date funds to their clients.  If it’s as easy as a target date fund, what are folks paying the advisors for?  But the truth is that most advisors and active managers don’t add much value beyond getting asset allocations right and helping folks stay the course.  Don’t underestimate the value of those things – that’s what the article verifies – but don’t make portfolio management out to be anything bigger, either.  Managing your portfolio doesn’t have to be difficult or complex.  But it has to be done smartly and systematically.  And educating their clients about that is where a good advisor can add a lot of value.