You may love his hilarious, tongue-in-cheek satire about office antics, but financial advisors now face stinging criticism from Dilbert creator Scott Adams.
Adams, an economics graduate himself, took to his blog Dilbert.com
to voice his concerns claiming that “…in many cases the biggest risk to the personal investor is the individual giving them the advice.” Ouch.
Adams recently set off a debate in the advisory industry, suggesting that financial advisors increase the risk of investments by claiming to have “stock-picking magical powers” and by charging exorbitant fees, which, he claims, can eat up to 25% of a personal investor’s annual gain.
Adams’s post went on to say that independent investors are also affected because their potential gains are suppressed as countless other investors. According to Adams’ historical yields over the entire market would be higher without the fees advisors take out of the market--a radically dubious, no doubt (how many people would NOT be in the market were it not for advisors…ahem).
But rather than just point out the problem, Adams also offered up some kind of solution. According the much-loved cartoonist, personal investors should just stick to basics – paying off credit cards, taking out life insurance and maxing out 401 (k) plans, before investing any more money (a plan that would, presumably, see even less money invested in the market...and so, you know, again, ahem).
Adams’ suggestions are, by his own admission, simple stuff so how do financial advisors feel about the scathing criticism of their profession?
In an open letter to Adams, financial advisor Brendan Walsh agreed that relying on professional advice for personal finances could be risky but disputes Adams’s claim that advisors are to blame for diminishing market returns. An advisor with Quantum Leap Capital, Walsh argues that until society provides sufficient education on financial well-being, there will always be a market for financial advisors. That is, too many know too little about the realities of investment markets for simple notions such as the ones Adams suggests.