The results were striking: The researchers found no evidence that these financial experts make better investments than peers of similar age, income, and education background—casting doubt on how much value is added by so-called expertise.

Financial experts were not better at picking stocks or diversifying investment risks, and they even suffered from known behavioral biases—such as keeping stocks that have dropped in value and trading too much. In short, the researchers say their study shows that financial expertise does not improve investment decisions.

“The point is you have these very educated people who are supposed to know what they are doing, but they are just not that good, on average,” said Andrei Simonov, an associate professor of finance at Michigan State University and co-author of the study with Andriy Bodnaruk.

Simonov adds that the study implies that average investors might be better off managing their own stock portfolios rather than paying a high-fee mutual-fund managers, because beating the market is rare and very difficult.

“I am not disputing that there is a very small fraction of managers who are extremely talented,” Simonov said. “But there are very, very few of these superstars, and the average investor probably can’t afford to invest with them anyway.”

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