Is the Era of the Financial Advisor Coming to an End?

Is financial advising dead? Are investors ready to plan for their retirements and other life goals on their own? I believe we're entering a new post-advisor era. DIY investors have several things going for them:

• The creation of so many legal tax shelters for small-time investors. These include 401(k)s,IRAs, Roths, SIMPLE accounts, SEP Accounts, Health Savings Accounts, and 529 Plans. For many people it is possible to do all of their saving beyond the reach of the tax man. Most people don't appreciate what a wonderful opportunity this is.
• The shrinking expense fees on index mutual funds and the introduction of ETFs. These give the small-time investor access to the lower costs created by huge economies of scale.
• The internet and computer technology, which make it possible to track your portfolio and run the models that financial advisors used to do for you.

The demise of the financial advisor profession couldn't come soon enough. Commission-based financial advisors have a huge incentive to push their clients into investments that earn the advisor the biggest commissions. Those commissions are paid out of high fees, which are paid by the investor. Even if you ignore the fees, those investments are usually bad choices. Financial advisors have been known to tell their clients to open tax-deferred annuities inside their IRAs or purchase cash-value life insurance policies. This disastrous advice is given out quite frequently. Those products pay high commissions to financial advisors, but they are rarely in the client's best interest.*

Even fee-based financial advisors aren't worth the money. The problem is they are almost always going to offer you conventional advice. Since the advice is conventional, you can easily get it on your own just by doing a little research. Having a fee-based advisor is like having one-too-many cooks in the kitchen. Why be compelled to explain yourself to this person when you don't take his advice? You can do it on your own!

A new Golden Age of investing is here! Take charge of your financial future, now!

*Incidentally, this problem is similar to the situation that created the sub-prime mortgage crisis. Mortgage brokers are supposed to put their client's needs first, but they generally end up pushing products that pay the highest commissions. Today we are seeing the pain this causes as a lot of people are going to lose their homes and/or declare bankruptcy. The financial planning industry is also having a calamitous affect on people, but the result of this won't be clear until they are forced to delay retirement or reduce their standard of living.

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