An oil terminal fire in Misurata, Libya, in May.

Potential investors often wonder is better to go with a big-name company. Shouldn’t bigger investment firms give better advice? After all, they are big, powerful, and knowledgeable – the best of the best, right? But what is the outcome of their work?

Baltimore-based investment giant Legg Mason managed $300 million for a Libyan investment fund (New York Times article). From January 2009 through September 2010, Legg Mason charged their big client $27 million in fees. But Legg Mason did a lousy job losing 40% during this time period! This is yet another example of Wall Street making tons of money regardless of how they perform.  People were paid millions of dollars in fees and delivered sub-par returns.

How did the little guys do for comparison? At NorthStar Capital Advisors, our relatively conservative portfolio of 50% stocks and 50% bonds gained 16% from January 2009 through September 2010.

Instead of being swayed by the slick marketing and unrealistic expectations often created by large well-known firms, most investors would be better off with a balanced portfolio of stocks and bonds with reasonable rates of returns.

NorthStar Capital Advisors is not a big, famous firm.  We offer simple advice and don’t require huge fees.  We help individual investors invest relatively small amounts (no $300M accounts here!).  We believe we’re doing better work for our clients than those bigger firms.

Bigger is not necessarily better when it comes to investing.  In fact, it’s often just the opposite.