There was, in other words, a less than 30 percent chance that an advisor could have chosen a better fund. Those aren't good odds. To add value, the gain would have to exceed the advisors fees. If you took all the funds that were equal or better, their average annual 15 year return was 15.98 percent, 1.46 percent better than the 14.52 percent of the index fund. The most you could have paid an advisor to select a fund and have an even chance of recovering the fee is 44 basis points a year.
Common stocks are the most volatile investment.
They also tend to produce the highest long term returns. Among balanced funds, for instance, Vanguard Balanced Index ranked at the 32nd percentile over the last 3 years with an average annual return of 11.37 percent. Funds that did the same or better provided an average return of 12.66 percent, an improvement of 1.29 percent. The MOST you could have paid an advisor to select a balanced fund and have an even chance that your gain would recoup the fee would have been 41 basis points a year. There are advisors who can demonstrate superior manager selection and superior return for the amount of risk taken.