On June 19, the Wall Street Journal published a piece by Jason Zweig titled, "Why You’re Paying Too Much in Advisory Fees." I was taken aback when I read the article. With all due respect to Mr. Zweig, I strongly believe that the opinions he expressed in this article are biased and give too little credit to both the financial advisor community and the investing public.  

The week after it was published, I attended the Morningstar Investment Conference in Chicago, where I had the opportunity to spend time with many of my colleagues in the industry and meet with some financial advisors who have been long-time clients. The article came up in many conversations and the general consensus was the same as my initial reaction.  

The underlying assumption of Zweig’s argument is that financial advisors are inherently dishonest and have little regard for their clients’ financial well-being. I object to this over generalization and to the presumption that the investing public is foolish enough to be taken advantage of by their advisors. I would like to directly respond to some of the points made by Zweig:

Investment management fees are too high on the basis that investors can essentially "do it themselves" with robo advisors and portfolios that consist entirely of ETFs.  

This inaccurately discounts the valuable investment knowledge, resources and advice that quality financial advisors offer their clients. Managing a client’s wealth is complex. Many individual factors and potential investment strategies must be considered—both passive and active.

A fee structure based on a % of assets is too confusing for clients and causes a conflict of interest because it is in an advisors’ best interests for clients to improperly direct all of their assets to their advisors.

Asset-based fees were developed to create an alignment of interests with clients. Zweig mentions this in the article, but minimizes its importance. The main reason that clients agree to asset-based fees is that their advisors make more money as their accounts grow in value through good performance. To suggest that clients are regularly being duped by questionable asset growth tactics is giving clients an insultingly small amount of credit.  

Advisors should not be paid for holding cash in an account.

Holding cash is often an important part of an investment strategy. At times, market valuations can be stretched, and it’s the advisor’s role to contain a client’s greed.  There are also times when life events require cash to be available in a client’s portfolio.  The adviser should be compensated for advice and strategic planning—this is part of a comprehensive plan.   

Although it should not necessarily be a relative argument, it is important to note that on average, advisor fees in other countries (i.e., Switzerland, France, Canada) are higher than fees in the U.S. This is in large part because of the competitive landscape in the U.S. advisor industry. There are thousands of advisors vying for business, bringing fees down and arguably bringing the level of expertise and service up.  

I have had the pleasure to work with many fine advisors throughout this country—men and women who day in and day out do the right thing for their clients, acting as stewards of capital. Of course, the goal is to continue improving this landscape. It is possible that today’s low-return world may result in lower fees, more transparency and more value-added services.  

Charles de Vaulx is partner and CIO at International Value Advisers and portfolio manager of IVA Funds.