Last year, my friend Bob and I strolled across a soccer field during one of his lunch breaks. We were talking about his wife–and her relationship with their financial advisor.

No, they weren’t having an affair. But she had been asking the same question a lot. “Why do we have to pay this guy so much money?” Last year, they gave their advisor $4,500. That’s one percent of their portfolio’s value. That didn’t include their mutual fund fees. “I told my wife that the fees were worth it,” says Bob. “The advisor offers us tax advice. He coaches us on ways to keep our household costs down. We meet every quarter to re-evaluate our goals and see how we’re doing. He also calms my nerves when markets go crazy.”

Fortunately, their advisor is one of the good guys. He doesn’t stuff the couple’s portfolio with actively managed funds. According to the SPIVA U.S. Scorecard, just 16.82 percent of U.S. actively managed funds beat their benchmark indexes over the ten-year period ending December 31, 2015. Some advisors try to chase those winning funds. Chasing rainbows would be easier.

The SPIVA Persistence Scorecard shows that top performing funds rarely keep winning. That’s why Bob’s financial advisor uses index funds instead.

It’s tough to measure the value of the couple’s quarterly meetings. If the advisor shows them how to save money on taxes, and if he coaches them to save more, he could be worth the money. Cynics, however, might smirk. If the couple didn’t pay an extra one percent each year, they could make a lot more money. That might be true–if Bob had the ability to harness his emotions.

In 2014, I wrote Are Index Fund Investors Simply Smarter. I showed that index fund investors behave better than those who invest in actively managed funds. They appear to be better at not buying high and selling low. The Wall Street Journal’s Jonathan Clement published the same conclusion, a few months later.

But the typical index fund investor is far from perfect. Morningstar tracks fund performances. They also track how the average investor in each fund performed. The firm has thorough data for Vanguard’s Investor Shares funds. I checked eleven of Vanguard’s Investor Shares equity index funds for the ten years that ended May 31, 2016. Results were schizophrenic.

Vanguard’s Total Stock Market Index averaged a compound annual return of 7.42 percent per year. The typical investor in that fund averaged a compound annual return of 8.23 percent. That might be the result of dollar cost averaging. Investors who added equal sums to their index every month would have bought fewer units when fund prices were high, and more units when prices were low.

According to portfoliovisualizercom, anyone who started to invest in the index on May 31, 2006 would have averaged a compound annual return of 10.27 percent over the following ten years if they invested an equal dollar amount every month.

No advisor needed? Wait, there’s more.

Dr. Jekyll and Mr. Hyde live. Vanguard’s European Stock Market Index, for example, averaged a ten-year compound annual return of 2.21 percent. But its average investor lost 4.93 percent per year. Investors underperformed the returns of the eleven index funds by an average of 2.22 percent per year.

Who Behaves Better?

Institutional Investors versus Retail Investors

10 Years Ending May 31, 2016

Index Fund Symbol Institutional Class Return Institutional Investors’ Return Behavioral +/- Fund Symbol Investors Shares Class Return Investors’ Return Behavioral +/-
U.S. Total Stock VITSX +7.55% +9.99% +2.44% VTSMX +7.42% +8.23% +0.81%
S&P 500 VINIX +7.41% +8.13% +0.72% VFINX +7.29% +5.04% -2.25%
U.S. Growth VIGIX +8.73% +9.36% +0.63% VIGRX +8.55% +6.57% -1.98%
U.S. Value VIVIX +6.37% +7.23% +0.86% VIVAX +6.21% +3.42% -2.79%
Extended Market VIEIX +7.57% +8.76% +1.19% VEXMX +7.38% +6.29% -1.09%
Mid-Cap VMCIX +7.81% +7.72% -0.09% VIMSX +7.65% +5.89% -1.76%
Small Cap Growth VSGIX +7.91% +9.27% +1.36% VISGX +7.73% 7.55% -0.18%
Small Cap Value VSIIX +7.35% +8.03% +0.68% VISVX +7.18% +4.98% -2.2%
European Stock VESIX +2.37% -4.25% -6.62% VEURX +2.21% -4.93% -7.14%
Emerging Markets VEMIX +3.06% +1.1% -1.96% VEIEX +2.86% +4.2%** +1.34%
Pacific Stock Index VPKIX 1.66% -3.24% -4.9% VPACX +1.5% -5.7% -7.2%
Average Annual Percentage Of Over Or Under-Performance By Insttional Investors Average Annual Percentage Of Over Or Under-Performance By Retail Index Investors
-0.51% -2.22%

Vanguard also offers an Institutional Class of index funds. Each fund requires a minimum investment of $5 million. I wanted to see if institutional investors had more self-control. It turns out, they did.

It was the Cleveland Cavaliers crushing a high school team. The institutional investors underperformed their funds by just 0.51 percent per year. The typical retail index fund investors underperformed their funds by 2.22 percent per year. Behaviorally, the institutional investors had a 1.71 percent annual advantage, versus the typical Vanguard retail fund investor.

My friend, Bob, pays his advisor one percent per year. The advisor convinces Bob to save more. He helps with Bob’s taxes. He keeps Bob grounded when markets go haywire. If this guy also has the discipline of an institutional investor, Bob could be working with his own LeBron James.