The Paradox of Financial Advice
In a recent blog post, Jon Chevreau argued that even smart do-it-yourself investors can benefit from good financial advice. While I agree that good financial advice may well be worth paying for, those who might benefit the most from even basic financial advice are faced with a problem. The average financial advisor is nothing more than a glorified mutual fund salesperson who rarely provides the following services that The Investment Funds Institute of Canada trumpets in its report titled The Value of Advice:
- Setting and achieving planning targets
- Choosing the right vehicles and plans
- Setting the right investment mix
Clients who own a potpourri of mutual funds in their investment accounts are ideal candidates for getting some quality advice. But these clients have to be reasonably knowledgeable about financial matters to (a) hire a competent professional and (b) be assured that the advisor is doing the job. But if they have the knowledge in the first place, they might as well go the extra distance and become do-it-yourselfers.