“I think index funds are broken,” Juge says. “When the market goes down, they’re more seriously impacted, there’s no downside protection. A well-managed mutual fund where the expense ratio is less than 1% seems like a better solution. There’s always an investment du jour, but if the index funds were so wonderful and absolutely perfect, every single person would be invested in them and there wouldn’t be anything else left."
Juge believes in a three-tiered retirement planning approach. At the age of 55, clients enter the preservation phase of their careers, where they should find advisors who actively manage portfolios and plan for the distribution phase after retirement.
Until then, people should focus on accumulation, which takes time and effort.
“This is an economic planet,” Juge says. “There is power in time and compound interest."
During that accumulation phase, millennials and their Generation X counterparts won’t have enough investable assets to need financial advice.
“Everything they need is already online,” Juge says. “They don’t need to pay fees or commissions for a lecture on how things work. Roth IRA rules are online. They can access the investments online. If they want to have $1 million or more for retirement, all they need to do is put $150 a month in a mutual fund account and let it grow.”
However, depending on their career and their success level, financial advice might be appropriate for some younger Americans.
“Sure, at some point when they have amassed hundreds of thousands of dollars, young people might want to find an advisor,” Juge says. “For most young people, though, that money gets spent. They need a house. A new car. They get married. They have a family. They’re not holding onto enough non-retirement assets to justify the cost of advice.”