Is a Stockbroker Better Than a Dart-throwing Monkey?

Question: I have heard that the actual return on investment (after fees) using a stock broker is usually less than investing in an index fund and about the same as amateur investors or even a monkey throwing a dart. Is this true?

Paul Solman: Yup. As is often pointed out, brokers (and their clients) ARE the market. So if they charge even modest fees, ON AVERAGE they’ll do worse than an index fund, which reflects the market as a whole and has extremely low fees, such as are offered by Vanguard, say.

This is not to say that SOME brokers don’t more than pay for their fees with successful investment strategies. My problem has always been: How could you ever know WHICH brokers those are going to be? As for me, I sure can’t. Which is why all my wife’s and my investments are in index funds at the lowest possible fees.