Like a lot of people commenting today you have a lot of things wrong here and a lot of things right. By way of background I have been a financial advisor for 45 years and I have seen the best and the worst of the industry.
You are right in saying that this is a big pool, but like any pool there are different levels of water and difficulty. I can make it easy for you- do not do business with anyone who will not sign a fiduciary pledge with you. You can get a copy of the pledge from the FPA ( financial planning association). If they won’t sign it ditch them. By the way those who work for banks are not fiduciaries.
Can you do this yourself. Certainly, but the real question is should you? Investing and financial advice ( which goes far beyond investment) is hard work and it requires a lot of time, effort, knowledge, skill, fortitude and patience to be done correctly. There are not a lot of people with that combination of skills. In your piece you state that you love finance, and that gives you a head start. One of the first things you learn in this business is that not everyone can or will take time and effort to manage their own affairs. The current answer to all problems in the investment world is to index everything and go to sleep and wake up years later rich. It is not that easy, there are now more indices than stocks so for example which is the one you need, second funds that invest in those indices use different methods, so you need a way or someone to work through those issues. By the way remember that on Wall Street when everyone is doing one thing it is likely to be the wrong thing, everyone is rushing to index funds right now >>>
So let’s get to some of your dangerously misstated comments. You focus on Wolf of Wall Street and Maddoff as examples of the worst of finance and they are bad actors to be sure. In focusing on those two spectacular issues you of course give no credence to the thousands of advisors who go through life without any legal issues and who are totally dedicated to the well being of their clients. Those guys make the headlines but those of us who labor in the trench are the guys who get tarred with your brush unfairly.
Let’s go to one of the most prevalent and pernicious concepts in the markets today “you can’t beat the market”. You right most people can’t and won’t but also most people don’t need to and shouldn’t try. If you try to match or beat the SP 500 you have to accept that you will live through a 2008 but to beat the market you have to stay invested through that drawdown so you don’t miss the upswing. Any idea that most investors without a financial advisor will do so bears no connection to reality.
Most people if they sit down with an advisor and go through a goal setting and data collection session will find that given what they currently have, and are likely to get over a lifetime do not need to beat the market to accomplish their goals. Elemental truth- if you try to beat or match the market you have to accept market or more risk. Most people can’t even answer the question of ‘how much risk can you take and more importantly tolerate?”
If your targeted return is lower you have more chance of achieving it year after year- not as exiting and it’s tough to brag about it at parties but it will have a higher probability of reaching your goal.
As far as fees goes this is also a false argument- fees are what they have to be and it is always the investors right to seek appropriate fees, but remember Oscar Wilde’s definition of a cynic ‘ person who knows the price of everything but the value of nothing’.
Advisors can and do make measurable and meaningful contributions to people’s financial and personal futures. We do it everyday and the chance to do that is why we are in this business and continue to tolerate the slings and arrows of partially informed.