Have you ever heard someone sarcastically and somewhat self-deprecating say, "The best thing you can do is take my advice and then do the opposite". When it comes to making smart financial decisions, this may in fact be the best advice you can take. Most of us follow conventional wisdom which ironically is seldom wise. It tells you to get out and stay out of stocks after their prices have already tumbled, invest in gold after it has already made it's run up, put your money in bonds when interest rates have nowhere to go but up or put it all in Treasuries where the likely real returns will be at a negative over time. Yet, people are more comfortable following the crowd using yesterdays news as guidance as if they're like the proverbial lemmings jumping off the cliff. Smart investing is more about controlling your behavior than it is your investments...keeping you from yourself...and from conventional wisdom.
I was recently a speaker at an industry conference and Sarano Kelley was also making a presentation about financial literacy. One factoid he stated hit this point home. Of all professions, the two that are ranked lowest in financial literacy are teachers and the media. Now think about where most Americans get their financial education and guidance from?...yup, teachers and the media. And if not, then from Uncle Bob or Sister in Law Jane...who got their guidance from teachers and the media. The system and our human nature are wired to make bad financial decisions.
We live in an era where there is more information available than ever before to help us make our own financial decisions and again, conventional wisdom tells us that we could and should do it all ourselves. And once more, conventional wisdom is wrong mistaking more information for quality information. Never before has there been a greater need for professional financial advisors and planners. And this is not to develop fancy spreadsheets and Monte Carlo forecasting that are almost always inaccurate. It's to keep you from yourself...from listening to the teachers and media. While the value of the trusted financial advisor has always been true, I can't think of a point in time where the need and demand for true professional financial advisors has ever been greater than today. Driven by demographics , that demand for advice from a real live qualified advisor (not a computer program) will steadily increase over the next two decades.
While the demand for financial professionals is reaching all time highs and on the increase, unfortunately the supply of qualified advisors is coming down and gaining momentum in the wrong direction. The average age for practitioners in the business is approaching 60 while the on boarding of new young talent, the next generation, has slowed to a trickle. Add to this the pending financial re-regulation which will likely force even more out of the business and the disparity in supply and demand gets all the greater.
So, is this bad news?...it depends. Out of the post recession rubble of new regulation, tax law change, and new economic realities, I truly believe a new model for delivering financial advice will emerge bigger and better than before. But until then, without enough access to good professional advice, the best most can do is take what conventional wisdom tells us...and do the opposite!