Here's an all-too-common complaint about the medical profession:
You're feeling under the weather. You visit a doctor listed as a general practitioner. But the doctor regards herself as a heart specialist.
Chances are good that no matter what's wrong with you, you'll be told it has something to do with your heart.
Investors find themselves in the same quandary. The collapse of the stock market a few years ago convinced many investors that they can't do it themselves.
From exotic hedge funds to plain vanilla "balanced" mutual funds, investors are delegating decisions to professionals.
You want expertise, but you want the expertise you want. That may not be the expertise Wall Street is selling.
The difference is huge, because you'll probably end up paying for services you don't require to meet your goals.
There's nothing wrong with delegating investment decisions to professionals. But in this age of specialization, investors should take a more holistic approach to the problem.
Here are three potential pitfalls in investing that require you to think for yourself:
Benchmarks may not apply
Our fascination with scorekeeping costs investors time and money in achieving long-term objectives.
Richard W. Roll, a professor at the Anderson School of Management at the University of California at Los Angeles, says most money managers earn their living by meeting or beating market benchmarks, such as the return on the Standard & Poor's 500 index of major stocks.
Investors, on the other hand, have different goals - such as establishing a base of wealth to produce retirement income with minimum risk.
"Even for retail investors, the agent [the fund manager] is motivated to outperform some index," Roll said. "If they attempt to do that, they will pick a portfolio that is distinctly different from a portfolio a person would pick for themselves."
In the late 1990s, for example, exuberance about large-cap technology stocks pushed returns on the S&P; 500 index to the moon.
Managers who didn't own those risky stocks posted subpar results but may have served clients better through steady investment gains over many years.
In weak markets, managers who beat their benchmarks may not strive for better results that an investor needs to meet his or her goals.
"A talented manager is underutilized," Roll said. "Nobody really needs a benchmark. It's just a convenience." Put another way, you need to develop your own benchmarks.
Having enough assets
Many investors believe their goal should be to amass as much wealth as possible as quickly as possible. In the process, they take greater risks of loss.
A holistic approach to investing says your goal is different: Gather sufficient financial assets to meet your future financial liabilities, including retirement income.
The current low interest-rate environment may be great for homebuyers, but it's bad news for investors seeking inflation-adjusted retirement income.
Keith P. Ambachtsheer, president of Toronto-based K.P.A. Advisory Services, a consultant to institutional investors, says it costs you twice as much to buy a dollar of future income than it did five years ago.
You can see this in the yield on 30-year TIPS (Treasury inflation-protected securities). At the beginning of 2000, the TIPS yield was more than 4 percent. Today the yield is 1.75 percent.
"Five years ago, you could spend $100 and buy $4 of inflation-indexed income per year," Ambachtsheer said.
"If you spend the same $100 today, you can only buy less than $2 of inflation-indexed income. So the price has doubled." This is the crisis facing small investors as well as giant corporate pension funds.
"We need a benchmark that measures our ability to buy a future lifestyle, and we need to measure future investment results against that benchmark," Ambachtsheer said.
Watch those fees
Wall Street made $350 billion from investors in 2004, according to John C. Bogle, founder of mutual fund giant Vanguard Group and a leading critic of the mutual fund industry.
Mutual funds collect fees levied against assets under management. As fund managers gather more assets, they make more money, whether you receive any benefit or not.
"Fees are always up," Bogle said "Costs [to investors] permeate the industry."
A typical S&P; 500 index fund generated annual returns of 13 percent from 1983 through 2003.
But the typical investor in such a fund earned just 6.3 percent because of fees and faulty market timing, Bogle calculates.
The good news is the awareness of fees has increased, especially among financial advisers and investors in stock index funds, money market funds and bond funds - funds where fees have the greatest impact on results, Bogle said.
Unfortunately, he said, the costs of trading securities in mutual funds are not properly disclosed. "In any fund, it's a big thing."
One way to control costs is to hire a fee-based financial adviser to search for low-cost mutual funds.
If the adviser's fee, plus the fees charged by the funds, are less than the average mutual fund fee, you're winning the fee game, Bogle said.
The Chicago Tribune is a Tribune Publishing newspaper.