Financial planners are like cigarettes: dangerous to a user's well-being and deserving of a warning label.
At least that's what Dilbert creator Scott Adams argues in a blog post saying that much of the risk in investing is due to advisors themselves.
"Every study on the topic shows that the professionals generally don't beat the market average over time. But they do cause a lot of churn that causes a lot of unnecessary taxpaying on gains," writes Adams, whose comic strip has deftly skewered corporate cubicle culture for 25 years.
The cartoonist, who has a degree in economics, has also written about personal finance -- and his past advice has won kudos from former Vanguard CEO John Brennan.
"My suggestion for permanently lifting the value of the stock market ... is to pass a law making it illegal to offer financial services without disclosing the truth -- that [advisors] are mostly a waste of your time," Adams says.
FOOD PYRAMID FOR INVESTMENTS
Instead, he argues, the government should publish a simple investment chart -- much like the old food pyramid -- recommending investments in broad-market ETFs. "Or perhaps the government could develop twenty-or-so example portfolios for different family situations and you just need to pick one that is similar to your situation," he says.
Adams did not immediately respond to a request for an interview, but his post drew a wide range of opinions from advisors.
"Adams raises a point that is worth deliberation," says prominent planner Ric Edelman. "For many advisors, their sole value proposition is that their advice will result in higher investment returns and at lower cost than what other advisors will charge" -- claims that Edelman calls "highly suspect."
The founder of one of the largest RIAs in the country, Edelman does argue that advisors should offer clients much more than stock-picking. And some of the commenters on Adams' post made similar observations.
One who identifies himself as Melvin1 lists a host of services that investment advisors provide -- including "talking you out of doing something stupid."
He adds, "Perhaps you have the time, inclination, knowledge, and discipline to do these things on your own. ... But most investors, left on their own, will forfeit more than the [approximately] 1% potential fee in mistakes or missed opportunities."
SIGN OF TROUBLE?
Adams' blog post may actually indicate market trouble ahead, contends Josh Brown, CEO of Ritholtz Wealth Management in New York.
"This is the type of thing you see toward market peaks," Brown says. "It's just one more form of overconfidence."
"People forget that investment advisers in general do not spend a lot of time these days picking stocks," Brown adds. "There's a lot more to professional investing help than pretending you can beat the market."
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