'Very Few Asset Managers Can Outperform The S&P 500 Index' – Suze Orman's Warning Against Hiring Investment Professionals

When it comes to managing your retirement savings, personal finance expert Suze Orman has a clear message: be cautious about hiring investment professionals, especially if you’re already seeing strong returns with index funds.

Orman recently addressed this topic on her “Women & Money” podcast after a listener named Chad asked whether he should turn over his retirement savings to an asset manager.

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A Listener’s Dilemma: Should I Hire an Investment Professional?

Chad, 59, said he’s been consistently investing in S&P 500 mutual funds and wondered if it might be time to hire a professional. He had already interviewed four advisors, with fees ranging from 1.1% to 1.5% of total assets. He liked a couple of them and wanted to know if their rates were reasonable — and if hiring one would be worth it.

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The S&P 500’s Performance Speaks Volumes

Orman praised Chad’s investing strategy, pointing out how well the S&P 500 has performed over the past 15 years. She gave an example:

• A $10,000 investment in the S&P 500 starting in 2009 would have grown at an average annual rate of 17.1%.
• Even starting in 2010, the average return would still be around 12.1%.

In both cases, the growth is considered excellent by long-term investment standards.

Fees Can Eat Into Your Returns

The concern, according to Orman, isn’t whether an advisor is likeable — it’s whether they can consistently deliver returns high enough to make up for the fees they charge.

“Very few asset managers truthfully can outperform the Standard and Poor’s 500 index,” she said.

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Orman encouraged investors to ask potential advisors for proof of their performance — ideally over a 10- to 15-year period. If their average return doesn’t beat the S&P 500 by at least 5%, the advisor’s fee could end up costing you more than it’s worth.

To illustrate this, she broke down the numbers:

• Over 15 years, a 1.5% annual fee could cost an investor about $14,000 more per $10,000 invested compared to sticking with the index.
• Even a lower 1.1% fee could result in around $8,000 less in returns.

When a Financial Advisor Might Make Sense

Orman isn’t completely against hiring professionals. In some cases, an advisor can be valuable — especially for those who need help with broader financial planning, tax strategies, or managing large or complex portfolios.

However, for someone like Chad, who’s been doing well with index funds and understands the importance of consistency and long-term investing, Orman suggested staying the course.

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The Bottom Line

If your current strategy is working — especially if you’re in a low-cost, diversified fund like the S&P 500 — paying a hefty management fee may not add value.

Orman’s advice is simple: don’t hand over your retirement savings unless the advisor can prove they consistently beat the market after fees. Otherwise, she says, “It is a waste of your money.”

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