Their asset mix consists of less than 50% equity, whereas self-directed portfolios allocate almost 70% to this asset class.
The results in Panel A of Table III indicate that, although the average aggregated portfolios of advised investors are associated with lower returns than the average self-directed portfolios in terms of raw returns, none of the return differences are significantly different from zero.
Table I already reported that risk in advised portfolios is lower than that in self-directed portfolios. In this section, a more rigorous analysis of this finding provides insight into whether advisers actually have an impact on both total and idiosyncratic risk.
However, this trend is even more evident among self-directed portfolios (Columns 4 and 5, Table VI).
These asset classes represent 87% and 89% of advised and self-directed portfolios, respectively.
In terms of diversification, advised portfolios perform much better than self-directed portfolios, thus reducing avoidable risk.