Not all financial planning is created equal. The relationship between the planner/adviser and the client is based on years of experience, trust and continuity. “The Intelligent Investor: The Better Way to Pay for Financial Advice” (Exchange, April 6) doesn’t place enough emphasis on the human component of investing. When the market is volatile, and people see their money going down in value, many people are fearful and reactive to these circumstances. Jason Zweig is correct that if people were able to eliminate their emotions completely from the picture, invest in a diversified portfolio of index funds, and adjust the riskiness of the portfolio over time, it would likely produce a satisfactory result. However, theory is not reality. People are emotional. A mistake at the wrong time circa 2008 or the hype of the dot-com bubble would have been far more costly than the 1% a year a good adviser charges.
The Schwab offering mentioned in the article is no doubt a positive development. Providing access to financial planning for people who otherwise wouldn’t have it is a great thing. However, it is important to recognize that the personal and human nature of financial planning at scale such as this can miss many of the important nuances in an individual’s financial picture, and those misses can be the difference between a comfortable retirement and a stressful one.
Josh Goulding CFA, CFP