I knew from your previous posts that you are a financial advisor. Have to admire your intellectual honesty and your sending out of Boglehead books to your clients. It gets back to the question of why someone would need your services and what value added you provide your clients. You are on the one hand telling people that they can do this themselves and on the other hand offering your services.
Yes, I think I have intellectual honesty too, but of course everyone believes they are intellectually honest, no? However, no one is immune from conflicts, including me. But I benefit from the fact that I have other skills which currently are far more lucrative than hourly financial planning. The more financial planning I do, the lower my income. It also helps that I have all the business I need. My website essentially says I'm going to put them in a three-fund portfolio, so why can't they do that themselves? Maybe things would be different if I depended on this job to "feed my family". Maybe I'd join a firm and charge 1% AUM and sell whole-life.
But I'll give one example of what people do indeed need. I got a call yesterday from a physician who has been in practice for almost 9 years and has not contributed a single dollar to his 401k. The reason was "because I could not figure out how to decide whether to choose TIAA or Vanguard". Some people are simply paralyzed by the tiniest of decisions.
In my financial talks I have a catch-phrase I like a lot: "If you don't know enough to know whether a Target Date fund is right for you, it's right for you". And I follow with something like "if for some reason it is NOT right for you, it remains right for you until you learn/understand what is better for you". Now they don't need an advisor for investment management.
The answer would be that a lot of your services are investor education and good old handholding when the markets look tough. I suppose that you look at the bigger picture of your clients' finances and thus your services are more than portfolio management.
Sometime I tell people that they are paying me for financial planning, and I'm throwing in portfolio management for free. Which is the opposite of a typical AUM advisor, who is getting paid continuously to do something easy once the portfolio is set up, while (likely) reluctantly providing financial planning.
I have rarely (yet) had the need to handhold. I do get occasional emails like "should I wait to make my Roth contribution, the market seems to be too high?", or "last month was great, should I take some off the table?". But I remind them that we had addressed these questions at the outset. That the plan anticipated all these questions and the answers. So I actually don't "reassure" them, other than to say the long term plan was designed with these uncertainties in mind and I have zero insights into the market's direction and neither does anyone else. But I don't hold their assets, and I can't stop them from logging into their accounts and making changes. Maybe they do it anyway.
When do I start taking Social Security? What is a sustainable withdrawal rate? How do I make provision for long term care? Should I annuitize a portion of my nest egg? Stuff like that. A third reason is that we all have blind spots and an advisor can see things in an instant that we have missed. A fourth reason is that we just cannot know everything. An advisor who does this full-time should be more knowledgeable than us part-timers.
Yes, but how does one know whether the advisor is any good at answering these questions? Look at how much debate there is here on BH about withdrawal rates, for example. And questions like annuitizing a portfolio can be exceedingly complex. I've been fortunate that my clients tend to either be people in the accumulation phase, for which annuitizing or similar considerations is not relevant, or older folks approaching retirement with many many millions of dollars who clearly have no need to do so. I think I would decline to take a client who had that kind of pending decision. I like to stick to areas which are well within my comfort zone.
Anyway, I've gone far afield from your original point, which is how I reconcile the fact that I tell people they don't need me, but then offer services. I guess the point is that people HAVE to figure out for themselves what it is they actually need and why. If someone wants to work with me (or any other advisor (me or otherwise) after being told I'm a charlatan and a crook, then perhaps they do have "issues" and that I can probably help them. Or they just can come to Bogleheads and ask their questions, and I'll bet 90% of the they'll get enough good advice not to need an advisor. But no one had done so. E.g during times I'm not accepting new clients, I'll occasionally tell folks to get a head start on their educations by coming here to post their initial sets of questions, and maybe realize they can go it alone. But if they were inclined to do that, they would have done it prior to contacting me I guess.
Ned, I have read many of your posts regarding your thoughts on the benefit of advisors. And I don't necessarily disagree. But I'm wondering if you overestimate the "calming" effect an advisor might have in any major downturn. Because during such a time, there will be plenty OTHER advisors advertising their "success" at having avoided such a thing for their clients, or being better able to take advantage of this new "crash" or whatever, which would then cause the client to reconsider their original choice of advisor?
-- Real name: Sotirios Keros. If you have to ask "Is a Target Retirement fund right for me?", the answer is yes.