A lot of people hired professional investment counselors and still got burned.
There are two ways to pay investment advisers: 1. Percentage of assets under management. This is the model that about 99.99% of financial "advisers" use; you invest $X.XX they make a percentage of the total each year (charged monthly or quarterly). 2. Fee-only. They charge an hourly fee to examine your financial situation and make recommendations (which you can then follow or not).
Of the two types, which do you think has inherent conflict of interest problems (assuming that neither is committing outright fraud)? What do you think the advice of such a person will be in a down market? If you answered 'buy', you are correct, because if you sell, the adviser makes less. What is their compulsion to act in your best interests? Zero.
Why don't people wise up and pay the fees? The fee in the fee-only approach is required up front. The assets under management fee is not "out of pocket". Hourly fees ($150 to $1000 an hour can add up quite quickly; assets under management fees are spread out over time. In other words, people are stupid, lazy, and gullible.
Let's add to this. Many to most "financial advisers" work directly for a large brokerage or insurance company which offers its own funds (and incentives to sell their worst garbage). Obviously this compounds their conflicted position.
Let's add a little more. There isn't much to do to be qualified as a financial planner, meaning that most, and I mean the overwhelming majority, have almost no business being in that business. You can be a financial guru with only a few hours of coursework and a few hours of continuing education each year, and a pass qualification of 60%. That means you don't need to be taught much and you only need retain half of that until the license exam, at which point you can forget everything.
Most advisers are young insurance agents who have never been on an actual trading floor, do not have any understanding of basic economics much less markets, have not even bought their first home yet, much less raised a family and seen some of the world, and they are teaching others how to invest their money. It's laughable. Most have no awareness that they are incompetent and that their arrangement with their employers is unethical (because it's legal, they are young, stupid, and indoctrinated by their employers).
This says nothing of the snakes and trolls that abound in the business.
Look at it this way, you are charged with a crime, would you voluntarily hire a lawyer that worked for the State? The same state that is trying to put you in prison. Of course not. When most people invest money in the market, this is analogous to what they are doing.
Take my free advice kids, do not buy ANYTHING of high value (to you) on a commission basis unless you are represented by an expert, and I do not mean the salesman.
