It is very difficult to find a good money manager. 90 percent, maybe 95 percent, of the advice that the average investor gets from "professionals" is mediocre or bad advice. However, I think that there are some important "ifs" to the suggestion that anyone can manage their own money. Further, many of the problems you experience are at least partially structural and have very little to do with the education or intelligence of the people involved. I think that it is important to understand those structural problems, this is a basic element of successful money management and of successfully picking someone else to manage money for you.

I would be the last person to try to discourage someone from trying to manage his own money. As I said above, it is a lot easier and more common to get bad advice than it is to get good advice. On the other hand, anything you learn in the process of investing is important, even if it just helps you to understand the difference between good advice and bad advice. And finally, in this business, there is no way to learn anything important without getting your feet wet.

But not everyone can be a good money manager. Warren Buffett said at one of the Berkshire Hathaway Annual Meetings that I attended in the mid-nineties that he reads between 1,200 and 2,000 annual reports and other financial statements a year. Most of my clients, and I suspect most investors, do not have time to read 2000 annual reports a year. While they clearly have the intelligence to read and understand a financial statement, most of them find this activity boring and have no desire to make this a full-time job.

So my first "if" would be, you can manage your own money if you have the ability to understand financial statements, and if you are willing to devote considerable time to this activity.

The second big "if" is more difficult. It has to do temperament. If you have the temperament to buy what no one else is interested in, the patience to ignore bubbles, and the courage not to panic when crowd is running for the exit, then you can manage money. These are qualities that I rarely see in human beings and find mostly in investors who have had a great deal of experience with the market.

This is a much more complicated subject, so I will only attempt to touch on the surface here and there. Much of the bad advice people receive is the result of structural problems in the way advice is delivered to customers.

In the stock market there are only two grades, an "O" for out performing the market and a "U" for underperformance. The market is a zero sum game, for every winner thee is a loser. By definition this means that at least fifty percent of the people have to underperforms. Add in the impact of frictional costs, and a little addition and subtraction will tell you that most players will end up with a "U."

The good news (for small investors) is that in this game, size is very important. Unlike any other business, in money management bigger is not better. Most of the money under "professional management" today is in the hands of people that are too big to outperform the market.

The largest frictional cost for a large institution whether a mutual fund,  hedge fund or any large  manager of private accounts is the cost of trading—and I do not mean commissions. I mean how much you move the stock up when you buy, and how much it goes down as you try to get out. There is no attempt in the industry to keep track of this expense and so investors ignore it, but my guess is that it is a lot more important in explaining under-performance than commissions or management fees. Indeed read estimates that run as high as 7% from a large mutual fund. When it comes to performance size is a hug anchor. Warren Buffett has sad that it was easy for him to beat the market when he was managing $10 million but that with $100 billion out performance is nearly impossible.

In this regard the individual investor (assuming he has the time to do his homework, the temperament to remain patient, and some experience with markets) has a big advantage. He does not have to buy 300 companies and trades will not move the market.

There are of coarse exceptions, but generally the managers that are good are not going to come find you. They are too busy doing stock research to spend a lot of time pursuing new business. Also, sales and money management are very different skills, and a good manager is not necessarily a good salesman.

If a money manager is managing over 100 million and they have a long term record of beating the S& P by 5% or more they may not be looking for new accounts. First because their management income is increasing rapidly from internal growth, and also because this internal growth will eventually get them to the point where their size will become an anchor for the performance of the accounts of their existing customers. Good Managers with less than $100 million may still be looking for new customers, but these are small operations with very little time or money to spend on looking for new business, so are hard to find.

They buy too many companies, they have too much money, and the money is always flowing the wrong way ("in" when stocks are going up and therefore expensive, "out" when stocks are going down). The short-term nature of most media attention encourages the movement of money and gives managers an incentive to gamble with their customers' money.

There are a lot of people running money that do not work for mutual funds. Yet any time someone does a study on money managers, all they look at is mutual funds.

Much of the financial advice people get comes from someone earning his living from a commission. There is a conflict of interest here that means the advice you get has no value, or less. (Sometimes it will bite you in the ___.) If your stockbroker has a nice car or a big boat, ask his advice about buying a car or a boat, but never, never buy stock that he recommends. As a registered rep in the seventies I learned that one rule was universal to all wire houses. The higher the commission offered to sell a product, the worse the product.