Practicing as a financial planner for over a quarter of a century, I’ve experienced a number of all-time highs for the Dow. I cannot think of a period of new highs in which the following scenario has not played out. It just happened again to me last week.

Client A calls thinking he is missing out on easy money because his account isn’t up as much as the market. He wants to move more money into U.S. stocks.

Shortly thereafter, Client B calls thinking the market is about to crash and wants to reduce exposure to stocks.

Those conflicting opinions can be exasperating to advisors that continually extol the virtues of prudent long-term investing. The conflict is also very interesting. How is it that with the same set of facts people come to opposite conclusions so dramatically?

It got me thinking about a few other contrasts that I have noticed. Some are client related but many of the ones that come to mind are related to the business of advice.

Commoditization Of Investment Management Versus How People Behave

The costs of investment management have definitely come down over the last couple of decades. I haven’t seen a 3 percent wrap account fee in years. Expense ratios on funds continue to decline. Trading fees are low or non-existent.

Investment management has become less costly but I haven’t seen it become less valuable, at least when done in the context of a sound financial plan. Most people are not good investors. Despite all the information, education and cheap even, free tools available, there is still an enormous number of people that get sub-optimal results.

I haven’t seen any indication that the market for good information put to use wisely and supported by sound personal counsel is shrinking. Quite the contrary. People will pay a fair fee for that and many providing that service have raised fees accordingly.

Financial Planning Versus Investment Advisory Fees

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