Our Investment Methodology

1. Index Investing

History has shown that most professional mutual fund managers charge excessive fees and underperform index funds in the long-term: the average fund underperforms the S&P 500 Index by 3% per year [3]. Yet less than 1/5th of investors' portfolios are in index funds [4] , we're here to help. If you agree luminaries such as Jack Bogle, founder of Vanguard, or David Swensen, head of the Yale Endowment, that low-cost index investing is the key, then FutureAdvisor is for you.

2. Deep Personalization

Everyone's financial situation is different. Everything from a client's risk tolerance and time horizon, to home ownership and tax situation affect the financial plan. FutureAdvisor brings the best-available research to bear on each client's unique situation and existing portfolio.

3. Research-Based

Our advice is based on financial research both from academia and work from our own research team. With team members that include PhDs in Math and Finance as well as Chartered Financial Analysts, research-backed thinking is in our DNA. We won't ever ask you to take our word for it - every piece of advice has detailed explanations on where it came from and our methodology.

4. Education

We believe that understanding your financial plan is a big step to a successful financial future. We bring just-in-time background information to your portfolio review and financial plan, and explain every suggestion we make and every term we use. And, if you ever have any questions feel free to just ask - reply to any email we send, because we hate those "do not reply, this address unmonitored" robo-emails too.

References and Citations

1. Warren Buffet, CEO, Berkshire Hathaway: See his 2004 letter to shareholders, pages 2 & 3, for a succinct discussion of the effect of fees, market timing, and asset allocation on investor returns.
2. David Swensen, Chief Investment Officer, Yale Endowment: see his seminal book Unconventional Success: A Fundamental Approach to Personal Investment (2005) ISBN 0-7432-2838-3, Free Press for a comprehensive discussion of these 5 rules.
3. Robert Arnott, Visiting Professor of Finance at UCLA: see his research showing that 92% of mutual funds underperformed index funds when taxes are taken into account. "Arnott, Robert. Berkin, Andrew L. Ye, Jia. "The Management and Mismanagement of Taxable Assets." Investment Management Reflections No. 2" (PDF). 2000.
4. Investment Company Institute research, figure 2.11 on page 33 of the 2010 Factbook.
5. John Freeman, University of South Carolina and Stewart Brown, Florida State wrote in a paper in the Oklahoma Law Review in 2008 detailing unfair fund fees charged to ordinary investors.
6. Jeff Sommer wrote in the New York Times in May 2010 about the recent Supreme Court decision on mutual fund fees.
7. John Bogle, founder of The Vanguard Group: see his article in the Wall Street Journal and his speech at Columbia University for a fundamental discussion of index investing, the investment philosophy behind FutureAdvisor.