Last Updated on December 29, 2021 at 12:12 pm
I argue why there is no need for financial advisors to be competent because most investors are not worth it and the ones who are worth it do not need advisors! A few years ago, I was engaged in a debate with a colleague. I said, teachers should push themselves to become better and better otherwise they cannot set students standards to excel. She said: If the students do not push teachers, there will be no motivation for them to become better even if them themselves wanted to.
While there is truth or justification to both arguments, with age I feel she was right and this especially true of most investors. Most of them know nothing about portfolio management rely on luck when they assume things will turn our all right over the long term. They know nothing about risk management, nothing about conflict of interest (else they would know not to listen to a bank RM). All they want is piece-meal advice on best products, best stocks and best funds. There is no motivation to understand money management holistically. I could go on an on or you can just read a few posts here to know more. If there is one thing I have learned from nearly 7 years of blogging, it is most investor do not want to know or understand portfolio management. Ignorance is not a crime. Staying ignorant is.
Given all this, there is no motivation for an advisor to push themselves beyond what they read in their certifications (which to begin with is not much). When you serve someone who cannot tell between good advice and bad, even a B-grade effort from the advisor is an overkill
What is the point here?
1: We must be responsible towards our money and keep learning. Not information, but knowledge
2: If we need to outsource money management then choose a conflict of interest free advisor who will not only help us invest and manage money, but also teach us along the way so we learn and can push them to advice better.
3 Here is a list of questions to ask a fee-only planner before signing up.
Unless investors push advisors by asking the right questions, there is no need for them to be competent. In every class there will only be a few bright students. That is enough. Their push is enough for any self-respecting teacher to dig deeper and teach better. Similarly, only a few clients would understand and appreciate the holistic financial planning process. They are enough to push any self-respecting advisor to learn more and serve better. All we can do is to ask, are we one such DIY investor, one such client or one such advisor?
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Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
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