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.
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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