A recently widowed loved one, familiar with my interest in finance, forwarded me a newsletter from her advisor that was written on the pretext of honoring the late Jack Bogle's innovations at Vanguard.
It was an odd tribute coming from this particular advisor. This loved one once asked me to look over the investments her advisor had placed her in, and I pointed out an alarming number of high load, actively managed funds.
He also charged under an Assets Under Management model, which was an extremely high price to pay for financial advice at this level of assets. Despite the multiple red flags I pointed out, decades of loyalty prevailed and my loved one declined to part ways with her advisor.
I read the newsletter as requested, and was disappointed (if not in the least surprised) by what it contained. He began with praise of Jack Bogle's insight in recognizing that passively managed, low cost index funds that achieve market returns beat 85% of actively managed funds over the long-term.
He then proceeded to mansplain how this particular advisory firm used proprietary strategies to identify only those active managers who were truly exceptional and could beat the index, and how the fees paid to those managers were worth every penny.
It reminded me of an oncologist I formerly knew who earned 30% of his income from pharmaceutical speaking and promotional engagements, but insisted that while of course such inducements might lead other doctors to develop conflicts of interest in their prescribing recommendations, his exceptional integrity remained pure and unaffected. It reflected a combined epidemic lack of insight, the inflated sense of skill typical of the Dunning-Kruger effect, and financial self-interest.
I am a vigorous proponent of Do-It-Yourself investing via low cost, passive index funds, and I believe most typical high-income professionals possess the faculties (if not the interest) to manage a simple and low-maintenance portfolio.
This can erroneously strike some as my being anti-advisor, which is not the case. I am opposed to advisors placing personal financial interests before those of their clients. Not all advisory models are created equally, as The Physician Philosopher has eloquently explored in a prior post.
So why do I not categorize this advisor as one more exploiter enriching himself at the cost of my unsuspecting loved one?
Because when she became a widow, and was completely distraught and numb, this advisor's partner came and executed the plan they had put in place decades earlier.
The partner accompanied my loved one to the bank to ensure all assets were transferred appropriately.
The partner counseled my loved one on the number of certified copies of the death certificate that needed to be made and specified where such copies were to be sent.
The advisor and partner attended the funeral, and comforted her in her time of need.
No doubt these services were obtained at a far higher price than I feel was reasonable, but at this enormous life transition, the services provided by this financial advisor were extremely valuable and welcome.