Asking for Advice Is Asking for Trouble
Wall Street has a wonderful opportunity to help millions of investors. But it probably won't.
This I believe: In the years ahead, giving financial advice has the potential to be a huge growth business, for three reasons.
First, we have just had a harrowing stock-market collapse, and many folks are unsure what to do next.
Second, thanks to the demise of traditional company pensions and their replacement with 401(k) plans, investors are now more in need of advice than ever before.
Third, that need for advice will almost certainly grow, as the baby boomers quit the work force and grapple with the complexities of managing money in retirement.
But instead of rising to the occasion, I fear Wall Street will once again go for the quick buck, flogging flaky investments and using underhanded sales tactics. Why this pessimism? Unfortunately, many brokerage houses and financial-planning firms just aren't ready for prime time. Here's why:
Guessing Games
Financial advice isn't solely about selecting investments. But try telling that to most investment advisers. Far too many brokers and financial planners hold themselves out as experts who can pick winning stocks and mutual funds.
Yet, in reality, outguessing the market is extraordinarily difficult. Indeed, once you figure in the costs involved, most investors earn returns that lag far behind the market average. That's why the best brokers and financial planners direct their efforts elsewhere.
These savvy advisers focus on helping clients to identify their investment goals, assess their risk tolerance, save diligently, reduce taxes, organize their estate, buy appropriate insurance and purchase the right house.
"Financial planning, done right, is about much more than just investment management," says Richard Van Der Noord , a financial planner in Greenville, S.C. "It's about having a plan that will allow you to meet your core financial goals."
Flunking Out
True, estate planning can be baffling. Yes, some tax questions are particularly thorny. But most aspects of financial planning are fairly straightforward. As I like to tell people, if this stuff was rocket science, I sure wouldn't be writing a column devoted to the topic.
But if personal finance is so simple, why do so many brokerage-firm and financial-planning clients end up with mediocre portfolios and errant financial advice? Part of the problem is a lack of education among brokers and planners.
"Investment management is not a profession in the way that accountancy, medicine or law are a profession," says William Bernstein, author of "The Four Pillars of Investing." "There are no formal qualifications. The certification procedures are extremely lackadaisical. As a result, the level of financial knowledge among brokers and investment advisers is extremely low."
No Bargain
Most brokers and financial planners either charge commissions when you buy and sell investments or they levy a percentage of your portfolio's value, usually 1% a year. And the costs don't stop there: If you purchase mutual funds or some other financial product, you will also incur the fees charged by these products. Add it up, and you could easily lose 2% or more of your portfolio's value to investment costs each year.
Reasonable? I don't think so. With high-quality bonds yielding less than 5% and many experts forecasting annual stock returns of just 7% or 8%, losing two percentage points a year to investment costs is way too much. Think about it: These costs could be snagging 25% or more of your potential gain.
Still, that 2% might almost be acceptable, if an adviser really was helping you with insurance, taxes, college funding, estate planning, car purchases, real estate and other aspects of financial planning. But if all you are getting for your 2% is a motley collection of stocks, bonds and mutual funds, the price tag is far too high.
Tainted Advice
With most investors paying for advice through brokerage commissions or a percentage of their accounts' value, there is almost inevitably a focus on portfolio performance, rather than on broader financial-planning issues.
But these payment arrangements also create dangerous conflicts of interest. Commission-charging brokers and planners have an incentive to get you to trade and to buy those products that generate the highest commissions, even though this may not be in your best interest. For that reason, I would be reluctant to use a commission-charging adviser.
That, however, doesn't mean I wholeheartedly endorse advisers who charge a percentage of assets. Sure, these fee-charging advisers may not have an incentive to churn a client's account.
But there is still a conflict of interest. How so? The bigger your portfolio, the more the adviser makes. That means the adviser may discourage you from sensible strategies, such as funding a 529 college-savings plan, purchasing an immediate annuity or paying down your mortgage, all of which would shrink your portfolio and thus the adviser's fee.
Rich Pickings
If you have a portfolio worth $500,000 or more, you shouldn't have too much trouble locating a top-notch adviser who will help you with the full gamut of financial-planning issues. Moreover, with a little effort, you should be able to keep your total annual investment costs below 1.5% of your portfolio's value and possibly below 1%.
But if you have a smaller portfolio, you will find it much tougher to get good advice at a decent price. Instead of nurturing small investors, advisers often ding them for a quick commission and then leave them to flounder.
What to do? Despite all the problems cited above, many brokers and planners manage to serve their clients well. But it would be even better if the problems didn't exist. What we need is for top Wall Street executives to concede the current system is seriously flawed and to make a concerted effort to educate their advisers, eliminate conflicts of interest and deliver intelligent advice at a reasonable cost. Likely? I'm not holding my breath.
聘请投资顾问等于自找麻烦
华尔街有个帮助数百万投资者的大好机会，但它恐怕不会这么做。
有一点我相信：在今后几年，提供理财谘询服务可能成为增长潜力巨大的行业，原因有以下三点。
首先，我们刚刚经历过一次惨痛的股市崩盘，许多人对于下一步该采取什么行动茫然不知所措。
第二，由于传统的公司养老金制度被401(k)计划取而代之，投资者比过去任何时候都更需要听取建议。
第三，对投资建议需求的增加几乎是肯定的，因为战后生育高峰时期出生的一代人退休后会为管理退休金的复杂性而大伤脑筋。
但我担心华尔街不会充分抓住这一机遇，而是会再一次采取急功近利的手段－－向投资做出轻率的投资建议并采用一些暗地的销售策略。为什么这样悲观呢？因为不幸的是，许多经纪公司和理财顾问公司并未做好迎接这一黄金时间到来的准备，原因如下： 猜谜
理财建议的内容不仅限于选择投资方式，但这一点需要让大多数投资顾问明白。有太多的经纪人和理财顾问以专家自诩，声称自己能够挑选出赚钱的股票和共同基金。
但实际上，猜透市场行情是极其困难的。的确，一旦将花费的成本计算在内，大多数投资者获得的回报就会大大低于市场平均水平。这正是最优秀的经纪人和理财顾问将精力放在其他方面的原因所在。 明智的理财顾问致力于在以下方面为客户提供帮助：确认投资目标、评估风险承受力、积极储蓄、降低缴纳税款、管理财产、购买适当的保险和正确选购住房等。
格林维尔理财顾问Richard Van Der Noord说："出色的理财规划不仅仅是投资管理，这个计划应该会让你实现核心的财务目标。"
专业知识匮乏
的确，理财计划可能令人困惑，一些税收问题尤其棘手，但理财规划的大多数方面内容相当简单易懂。正像我常常对人们说的那样，如果这个内容属于某种尖端技术，我一定不为这样的一个专栏供稿了。
但如果个人理财真的那么简单，为什么有那么多经纪公司和理财规划公司的客户最终得到的只是平庸的投资组合和错误的理财建议？问题的部份原因在于经纪人和理财顾问所受的专业教育不足。
《The Four Pillars of Investing》一书的作者William Bernstein说："投资管理与会计、医药和法律等职业不同，没有正式的任职资格限制，认证程序相当松散。因此，经纪人和投资顾问的金融知识水平是相当低的。"
成本居高不下
大多数经纪人和理财顾问或是在客户买卖时收取佣金，或是按照你投资组合价值的一定比例收费，这个比例通常是每年1%。但花费并未到此为止：如果你买入共同基金或其他金融产品，还要交纳相应的管理费。将这些费用加起来，你每年可能要损失投资组合价值的2%或更多。
这样的收费水平是否合理呢？我以为不然。由于优质债券收益率不足5%，而许多专家预测的股票年回报率也不过7%或8%，每年损失2%的投资成本实在太高了。想想吧，这些成本可能对你的潜在所得造成25%或更多的影响。
其实，如果理财顾问真的在保险、税收、大学教育基金、财产规划、购置汽车、不动产和其他理财方面提供切实有效的帮助，这2%的费用尚可接受。但如果你从这2%中获得的只是杂乱无章的股票、债券和共同基金，这个价位就实在太高了。
误导性的建议 由于大多数投资者以经纪人佣金或自己投资价值一定比例的方式支付谘询费，投资组合的表现备受关注几乎是不可避免的，而一般性的理财规划事宜就退居次要地位了。
但这些支付安排也带来了危险的利益冲突。收取佣金的经纪人和规划顾问有动机引诱你参与投资并买入能让他们获取最高佣金的产品，即使这种投资并不能符合你的最佳利益。因此，我不愿聘请收取佣金的投资顾问。
然而，这并不表明我完全认可按投资组合价值比例收费的顾问。当然，这些顾问可能没有向客户提供错误投资组合的动机。
但利益冲突仍然存在。这是为什么呢？你的投资组合规模越大，顾问赚到的钱越多。这意味著，在你打算采取理性投资策略时可能会受到顾问的阻拦，这些投资包括529大学教育储蓄计划，购买即期年金或偿还抵押贷款，这些项目都会导致你的投资组合规模缩小，对顾问的收费造成影响。
投资金额高才能得到好的服务
如果你有价值50万美元或更高的投资组合，聘请一位能协助你解决全套理财规划问题的顶级投资顾问并不困难。而且不必费很大劲，你就能将投资的年度管理费控制在投资组合总值的1.5%以下，甚至可能低于1%。
但如果你的投资组合规模较小，要以合理价格获得良好服务就困难得多。顾问不对小型投资者进行相关知识的培养教育，而往往是迅速从他们身上赚取佣金，之后把他们留在黑暗中摸索。
怎么办呢？尽管存在上述种种问题，还是有许多经纪人和规划顾问能够为客户提供满意的服务，但如果问题不存在就更好了。我们需要让华尔街高层管理者承认当前制度存在严重缺陷，并让他们共同致力于投资顾问的教育，消除利益冲突，并以合理的价格提供明智的建议。这可能吗？我对此不抱多大希望。
