One of my favourite financial authors, William Bernstein, used to recommend that investors ditch their financial advisor and handle their portfolios themselves. But in his 2010 book, The Investor’s Manifesto, Bernstein recanted that advice: “I was wrong. Having emailed and spoken to thousands of investors over the years, I have come to the sad conclusion that only a tiny minority will ever succeed in managing their money even tolerably well.”
I’m not quite as pessimistic as Bernstein, but I agree that most people would benefit from professional financial help, even if they use an indexing strategy. The problem is that too many advisors focus on products rather than process, and their compensation models often create conflicts of interest. I discussed these ideas last week in a guest column for the Toronto Star about what you should expect from a financial advisor.
Many of my views on this issue were shaped by Warren Mackenzie of Weigh House Investor Services. I first met Warren three years ago, when he was part of MoneySense’s 7-Day Financial Makeover. The magazine invited three couples and one single woman — all self-confessed financial messes — to Toronto,