tibbitts wrote: ↑Wed Sep 16, 2020 8:14 am
Bogleheads really tend to underestimate the difficulty of learning about investing, but through skill or luck they've arrived at what they perceive to be the correct conclusions. Other people can put in some effort to learn, but by reading the "wrong" books or listening to the "wrong" experts, arrive at a completely different place.
It's actually worse than this. Most clients (and by "most", I mean 95%) have no freaking clue what they're doing. And even with an advisor's help, they still make stupid mistakes. Let me tell you a true story:
I am a CPA, and I am also assistant treasurer at my church. As such, I know who gives how much money to church. I have a client, (let's call him Jake), who is 75 years old and gives around $25,000 a year to church. Coincidentally, Jake also takes an IRA distribution of $25,000 a year.
Year 1 - I give a class on "how to give to charity more efficiently" to our Wednesday night bible class. And when I talked about the QCD (if you don't know what it is, then look it up), I LOOKED DIRECTLY AT JAKE AND MADE EYE CONTACT WITH HIM. Do you think he took my advice? No.
Year 2 - I prepare Jake's tax return, and when he comes in, I tell him about the QCD. He says, "I didn't know you could do that." (Can't blame him--I mean, I looked right at him when I explained it last year.) I explain it to him again, and he says, "I'll have to tell my advisor at Merrill Lynch about that. Can you explain it to him?" (Remember--this is a 100% true story. And I didn't really know what to say. "You want to pick my brain and have me do all the heavy lifting and save you thousands in tax so you can go line Merrill's pockets?")
Year 3 - Guess who didn't do a QCD. I told him about it again. This time, I literally prepared two tax returns--one with a QCD and one without it. The difference was $6,000 in tax. Jake says to me, "You know--my advisor at Merrill Lynch has heard about this before. But we still haven't done anything about it." (What? Are you telling me you can't be bothered to take 30 minutes out of your day to go down a fill out a piece of paper that will save you $6,000 per year? That's only $12,000 per hour. Or is the advisor dragging his feet because there's no benefit to him?)
Year 4 - Haven't done his 2020 taxes yet. But I know he's still writing checks to the church.
4 years. $24,000 down the drain UNNECESSARILY. And this client knows what to do. He just won't do it. (Even worse--he's paying a salesman who has no interest in doing the right thing. But that's beside the point. I don't compare myself to wirehouse guys.)
If a client can't be bothered to save $24,000 in taxes, imagine how much worse off he would be if he DIDN'T have an advisor. You people keep saying "advisors are thieves and crooks who steal old ladies' pensions. Old ladies would be better off reading a book by Jack Bogle and following his advice." No--they wouldn't. They cannot comprehend it.
Even when their CPA literally writes down instructions for them. (Three times!!! I told the dude three times!!!) And this, my friends, is why I have absolutely no problem charging 1.5% (all-in) for my services. Because you're better off paying me than doing it on your own.
In fact--I'm even willing to bet that the majority of posters here have made serious mistakes trying to DIY that they don't even know they're making
. There's no way to ever prove that. But I'd be willing to bet my next greedy/evil/unscrupulous/crooked 1% fee on it.