Should financial advisors be banned from collecting commissions on mutual funds? That’s been hotly debated for years, and in December the Canadian Securities Administrators (CSA) issued a discussion paper that considered the idea of imposing such a ban. Australia already did so in 2012, and the U.K. followed suit this January. But if it ever comes to pass in Canada, it would happen despite a strong lobby by Advocis, the Financial Advisors Association of Canada. And that’s a shame.
This week the chair of Advocis sent an email to advisors that started like this:
Every day your clients rely on you to help them achieve their financial goals. If you’re like me you depend on commissions to make your advice possible. How would you survive if there were no commissions? As strange as it may seem, that is the intent behind the recent consultations by the CSA regarding fees — including a ban on embedded commissions.
While this is currently limited to mutual fund trailers and DSC fees, there is no structural difference with life insurance commissions.
The way we do business is under unprecedented threat. Your clients’ access to financial advice is under threat.
Meanwhile, the president and CEO of Advocis penned an op-ed in the Financial Post that elaborated on the idea. It’s deeply disappointing that an organization purporting to advocate higher professional standards is blurring the line between advice and product sales.
A fundamentally different relationship
Advocis is wrong to lump together mutual fund trailers, deferred sales charges (DSCs) and life insurance commissions. Doing so ignores the distinction between a fee for a professional service and a commission on a sale. I’m not making a value judgement here: it’s just that fees and commissions apply to different types of transactions.
While life insurance brokers are responsible for servicing clients after a policy is sold, the reality is few people need ongoing advice after they purchase the product. I bought a term life policy 10 years ago and haven’t spoken to the broker since. He doesn’t call me every few months to make sure I’m eating healthy, exercising vigorously, and doing all I can to keep death at bay (and that’s a good thing, or he’d be disappointed). He doesn’t remind my wife that her windfall will be tax-free—and I’m grateful for that, too, because that might sound tempting. Sure, I’ll call him again when it’s time to renew the policy, or when my kids need insurance, so there’s some ongoing contact. But the same is true with my real estate agent, and I don’t pay him an annual fee for advice about home ownership. In both cases the relationship is based on sales, and commissions are appropriate.
With an investment advisor, the situation is completely different. Selecting appropriate funds for the client is (or should be) a fraction of the overall service. An advisor’s time is spent primarily on goal planning, risk assessment, tax planning, portfolio maintenance, behaviour management and a host of other ongoing services. None of that has anything to do with financial products. So why should a professional advisor be compensated primarily by mutual fund commissions?
That’s why it’s so distressing to hear the chair of a professional organization say, “If you’re like me you depend on commissions to make your advice possible.” The statement is just dripping with conflict of interest.
It’s about advisor self-interest
In his op-ed piece, the president and CEO of Advocis writes: “At the crux of the compensation debate in Canada is the desire to see the consumer properly advised and properly protected.” That’s disingenuous. Advocis’s lobbying effort has more to do with its fear that “removing this form of advisor compensation … would also drive advisors out of the industry.” The article goes on to point out that “already the U.K. has lost 25% of its advisor distribution network. And one industry observer has stated that as much as 80% of U.K. consumers will no longer be able to access financial advice.”
I have no idea where that 25% figure came from, and the opinion of the unnamed “industry observer” is rank speculation: it’s way too early to assess the effect of the ban on commissions in the U.K.
In any event, the advisor community in Canada would be more professional if it were culled by 25%, especially if all those losses were people who “depend on commissions to make their advice possible.” And unlike Advocis, I don’t buy the argument that a ban on commissions will “make financial advice inaccessible for the average Canadian.” It will simply force the average Canadian to look for a professional who charges directly and transparently for advice, rather than a salesperson whose focus is on peddling products.
If a really good advisor were to charge 1-1.5% of a portfolios value/year and he does a bang up job I am TOTALLY ok with that. If on the other hand I were to run into an “advisor” flogging mutual funds I would run in the other direction.
I’m not sure that I understand the war on mutual funds and advisor commissions. Why are they so bad and yet closed end funds fly along under the radar? Why is a mutual fund worse than say a PPN? What’s the difference between an advisor receiving a trailer of 1% per year (which they don’t actually receive a full 1% but that’s another story), as opposed to a fee for service account where they charge 1.5% or more? I suppose the obvious answer is transparency, but then advisors ought to disclose this to clients anyway.
@Victor: The problem is that embedded compensation puts advisors in a conflict of interest. Instead of choosing products that are in the client’s best interest, they have an incentive to choose the ones that pay them the most generous commissions. When you separate the advice fee from the product, the advisor has no such incentive. PPNs are an excellent example. I have never met a fee-based adviser who uses these products, because they are never in a client’s best interest. The only reason an advisor would recommend such a product is because it pays him a commission.
@Canadian Couch Potato
Thank you for your excellent blog. I am a regular reader.
If your concern is that an advisor may sell a client a particular mutual fund because it pays more commission (rather than because it is appropriate for the client), why not regulate the commissions so that mutual funds all pay the same trailer?
I should also note that you should be able to ban trailer fees without any problems with accessibility. You would just have to create a facility at the retail level for an advisor to attach their own annual fee, paid through automatic redemption of units. You would basically just be opening up the current F-series structure (which is now normally restricted to accounts over $500,000) to the general public. The difference is that, now that the advisor fee is exposed, people could decide whether the service they are getting is worth what they are paying. Any advisor who was living on trailers could continue to do so, as long as they are providing enough value to the client. If they aren’t providing the value, then why should they be entitled to the 1% trailer?
The only part of the article from the Advocis CEO that might hold water is a ban on DSC commissions. Setting up a new client takes a lot of work up-front, and for clients without a lot of money to invest, the cost of paying for it directly could be prohibitive. On the other hand, having to live off of an annual fee based on a very small amount of invested assets could be unmanageable for an advisor. I am a Financial Planner and we run across this problem frequently. (Please note, I deliberately use the word “Planner”. We spend a lot of time with our clients developing a full, written financial and they turn to us continually for ongoing advice. We do manage assets, and where possible use the asset base to collect our fee for the whole planning process, but it is certainly not the only service we provide.) We never sell DSCs unless constrained by existing DSCs in a portfolio we inherited (ie the funds are inappropriate and need to be changed, but they are locked away in DSCs with prohibitive back end charges). We also make it a practice of using an annual account fee wherever possible (which is probably about 80-90% of the time – again we are often constrained by existing holdings in portfolios we inherit). We do a lot of work for our clients, and therefore clients without a lot of money cannot afford our services.
We have struggled with the question of how to find a way to service these smaller clients in a way that is valuable for them, and still profitable for us. (We have even considered charging a flat fee for opening certain account types such as RESPs for instance, which will never have a lot of assets). As we haven’t yet found a good model, smaller investors cannot access services at our office. As much as we all hate DSCs, I think that some thought does need to be given to how smaller clients will access financial advice absent of commissions.
By the way, if anyone here has suggestions on how to profitably service this segment, I’d love to hear them. Our business model brings a lot of these smaller customers, and we are forced to either turn them away or service them at a loss in order to maintain a more profitable relationship.
What is a commissions on mutual funds?
I’ve never paid one or ever had an advisor.
However, I do dislike the full trailer fees that are collected by my discount brokerage who offers no advise.
I think Qtrade is the only one that charges $29.95 / month and will rebate the trailer fees.
$100,000 in a mutual fund with 1% trailer = $1,000 – $359.40 = $640.60 refund.
Killer post, thank you for this. An absolute conflict of interest, a lack of transparency, and a dissapointing move by the lobbying/pseudo-professional body (itself a distrubing combination).
@MS: Thank you for the insightful viewpoint from “the other side”. In answer to your question, I guess I wonder whether we ought to question the fundemental assertion you are making, which essentially suggests that you have to make money off all clients at all times. The term “loss leader” comes to mind. A car company will sell you an A- or B-segment small car, and I guarantee you virtually all of them make next to no money on them. So why do they do it? They do it because they want to create the relationship. They hope that customer will love the car and say great things to a friend, maybe one who has $40k to spend on a luxury car. They hope maybe they’ll come back later themselves, when they have $40k, and buy that car. Etc. It’s an investment. Ditto McDonalds, which will give you a free cup of coffee to get you in the door. And on and on. A customer is a relationship, and you want to keep that relationship, even if it doesn’t necessarily pay huge dollars today. I think you must agree with me, otherwise you wouldn’t service the clients you do today – but I just think it’s important to keep that in perspective.
On the subject of “questioning the underlying assumption”, while I wholeheartedly agree with the article that commissions create a conflict of interest, to me I wonder if this isn’t a bit like “supply side” regulation (which in my mind is not always successful). In other words, the reason fee structures like this can still exist is because there is apathy/lack of education to refuse them among consumers on the demand side. If all consumers were appalled and refused business with advisors who used commissions, they wouldn’t exist. Clearly the vast majority of consumers are not off-put by these, and most don’t even know what they are! Don’t get me wrong, I’m not saying better regulations can’t and shouldn’t help, but I firmly believe that “supply side” efforts to regulate, when demand exists or is apathetic, ultimately only go a very limited distance. It’s much harder/more complex to try to change the demand side, but way more successful when it works.
Many salespeople rely on a commission to pay for their advice so there’s nothing wrong with that. Of course the advice is timed like the commission (it only happens around the time of purchase) and they make it clear that they only give advice on the thing they are paid to sell.
I don’t think small investors have a lot of good options. Many of them will not end up with a $1M account managed by their advisor, especially if they have a separate investment plan at their workplace. They also won’t refer their friend who has a $1M account. The biggest promise there would be that they can consolidate accounts in retirement if they do build up a big workplace pension, but few advisors will make a 30-year bet when they’re just hoping they find a buyer for their business in 10 years and retire.
An investor with $25,000 who pays a 2.5% MER may be getting a great deal in absolute terms.
A low-cost, reliable investment plan for the many small investors can’t be based on much if any personal advice.
Good post CCP.
Additionally it would be nice if only those in the industry with a fiduciary duty could even call themselves financial advisors. If someone only hold themselves to a “suitability” standard then they should be called what they are, salespeople.
If one does not have the obligation to act in the best interest of their client, one is not an advisor.
It seems to be me transparency is the big issue here.
I can see the argument for maybe a low income client having the option to have mutual fund fees somewhat similar to now, but it does also rather stink of lower income people always get stuck with the higher prices (re: they try to get a credit card, they pay the higher interest rates, they are more likely to be forced to take out a short term loan with exhorbitant interest rate) – I know these people are bigger credit risks, but it seems unfair that also when they try to actually put something aside, they will also be preyed upon.
With respect to mutual fund fees, I’ve always felt they should be based on the performance of the mutual fund – not just a fee to put money in and/or pull out and/or an annual fee. If the mutual fund makes 5% per year, and charges 2% MER, then I feel it can charge the customer 2% and the advisor can take their cut of the comission. But if the fund makes 1% in a year, then the maximum MER that can be charged to the customer should be either 1% or less (and what that ratio is should be disclosed!). One would imagine that that would also influence those advisors getting commissions as they probably won’t recommend mutual funds that continue to underperform.
Of course… I guess that also creates a conflict of interest because there is less incentive for an adviser to create a portfolio that is balanced for any client, and also creates more ‘work’ in that they may wish to surf their client to the best performing funds which may also not be in the clients best interests (plenty of stories out there about retirees loosing all their money because of that behavior by the unscrupulous!)
Ok.. So at the end of the day,the mutual fund fee structure as it stands sucks. They should be an option for people… But transparency is absolutely key. And investor awareness a close second (but a distant dream).
Having now been on both sides of this fence, I have to agree with almost everything MS says in his comment—except the part about DSCs. In theory, DSCs could be justified if they were used to spread out the cost of genuinely useful financial planning over the first few years of a client relationship. In practice, clients don’t understand this, and advisers don’t always use them for that reason. I just worked with a client who has been at a certain large financial institution for 20+ years and still has DSC funds. This is unforgivable.
Danno, it’s just unreasonable to ask advisers to serve small clients for free or as a loss leader. They may choose to do that if they think it will benefit them in the long run, but I don’t think anyone should expect that. Certainly that’s not what I’m advocating when I call for the end of commissions. Advisers and financial planners need to be paid like anyone else in business. But they should be paid directly, not via product sales that can seriously bias their advice.
MS, I sympathize with you when you say you that serving small clients is so challenging. We are finding the same thing with our DIY Investor Service. Our upfront fee is just too high for people with $50,000 to invest, but there’s no way we can offer it for a few hundred dollars. We spend a ton of time answering questions for free because we’re passionate about the subject and we genuinely want to help, but that’s not a business model.
In my opinion, the solution for small investors is to try to do it yourself with an extremely simple portfolio. If you’re young and simply making monthly contributions to registered accounts, an investment adviser is not likely to add any value. So just use something like the ING Streetwise Portfolios, e-Series funds, or some other low-cost balanced fund and focus on debt repayment and regular savings. Once you get to $100,000 you should have little problem finding a fee-based adviser if you need one.
Thanks for drawing attention to this. I have been waiting for this level of transparency for 20 years since I worked for a mutual fund company. Fees are still far too high in Canada.
Perhaps the answer for smaller accounts lies in automation through such services as https://www.betterment.com which uses algorithms and remote person to person contact to manage investment accounts. Betterment charges 0.15 to 0.35% of account size.
@Andrew: I love the Betterment model and I think it’s an excellent solution for many people who don’t need or want an advisor but also have no inclination to be totally DIY. It would require pretty huge scale to be successful, however, and I just don’t know if you could make it fly in Canada. I certainly hope someone gives it a try.
Good post.
Whenever I meet with a finacial advisor, as I am looking for a new one, I always have two questions:
1) What are the costs?
2) What is the value that I am receiving for this money?
Most for fee advisors readily answer the first one, but the second is much harder to answer as it is sometimes subjective and qualitative.
My basic problem is that if the MER of a portfolio is 0.5%, I have a problem justifying anything more than an additional 0.5% for ongoing support.
At the risk of sidelining the discussion, perhaps the real problem, in Canada, is that the industry is acclimated to MERs of 2.4+ % with the advisor living off a fraction of that fee. Perhaps the industry leaders should adjust their profit margins and pay their advisor’s better while keeping competitive with fees in other countries.
The information is getting out there, and as people get educated, there will be a backlash against the existing status quo.
Never though that I would be sounding like a revolutionary…..
I haven’t heard of Betterment before but it looks great. Dan, would there be any regulatory barriers in Canada (similar to the ones that prevent peer to peer lending)?
Active advisors have fees which are too high without any benefit that I can see. If they truly believe that they add value then they should link their fee structures to performance and reduce if they under perform the index. Why not?
I like fee based passive index advisors. However, it is usually one fee for one service which like Dan’s is very reasonable. I’m wondering why not add an ‘a la carte’ fee menu to provide services for DIY investors who only want some specific advise like purchasing just the rebalancing spreadsheet which is often difficult particularly with a discount brokerage with multiple accounts. Specific answers to investor questions likewise could have a fee. I don’t think free advice from a professional such as yourself is reasonable.
The fee structure for life insurance is a bit like DSC mutual funds. The advisor receives a big commission up front and ongoing trailer every year that the policy is renewed. Sure, the advice portion may not match in terms of the servicing and reviews, but the fee structures are certainly similar.
I don’t think the solution is to outright ban embedded trailers, but to offer consumers the choice between having them embedded or negotiated between the client and advisor through F-series funds, like MS mentioned. Not all fund companies require such a large minimum account for F-series. If you look at CI’s simplified prospectus, the F-series is available to all account sizes whereas wealthier clients have access to the E-series starting at $100,000, which offers reduced MER. It’s time for more fund companies to offer these investment options.
Firstly I think DSCs should be banned or at least phased out over the next couple of years and transition to a model where you had an annualized Front End Load fee. You agree with your Advisor on a fee of 1 – 1.5% and that is charged to your account annually or paid separately if you desire.
I also think that consumers need to know in dollars how much they are paying for the accounts they have so they can determine if they are receiving value. 2.00% doesn’t mean much but when you but it in dollars the $1200 on their $50 000 or $2000 on their $100 000 really will make them think if they are receiving fair value and I am sure we would see a significant amount of advisors leave the business because they probably can’t show they add value.
I think the goal to separate the advisor’s pay from the product they sell is a laudable goal however why are we stopping at the advisor? Should the Portfolio Managers and fund companies themselves not have to meet this standard as well?
If a mutual fund charges a 2.00% MER and 1.00 of that is a trailer to the advisor (or at least to the dealer) in the current situation why is the advisor’s portion so contentious? How much more does it cost for a fund company to manage a $250 million fund versus $2.5 Billion fund?
If they were required to be paid in the same format as what is being advocated for advisors I think we would see significant cost reductions as well.
@robert_m: I’m curious if you’ve found an adviser willing to accept 0.5%. That level of fee is usually only available to people with $1 million or more.
@Value Indexer: Unfortunately, I think it would be very hard to set up a business like Betterment in Canada. The regulatory requirements would be very difficult to satisfy. My understanding is that when BMO set up its AdviceDirect service (which is a similar idea, bit with stock picking) it was very difficult for them to get the necessary approvals.
@Cory: Mutual fund dealers will soon be required to disclose the dollar amount of fees as well as the percentage: http://bit.ly/17KWC1L
@CCP: I have already seen that type of fee disclosure appearing on statements. I think it’s terrific.
I’ll tell you why I like the Betterment model….most of the financial decisions one makes are algorithm based when it comes down to it. Betterment just organizes theses algorithms for a modest fee and runs the portfolio mechanics and doesn’t pretend to be anything more than this. The problem with the model is that despite the mechanical nature of financial decision making when large amounts of hard earned savings are on the line the human touch may be required for reassurance, particularly during stressed financial conditions.
This means having people answering emails or on the other end of the phone line which gets very expensive. With AI systems some of the lower priority issue resolutions could even be automated however.
For the Betterment model to work here the AUM may need to be at least 100 million as revenues could therefore be as high as 350,000. This means at least 3000 clients at an average 25,000 portfolio size with some larger accounts included.
Betterment had only 165 million AUM as of May with 20 employees. They are making at best half a million in revenue so they must be losing money so far or paying peanuts.
It’s just wishful thinking maybe but I know quite a few people who would benefit from this service in Canada. Perhaps if the idea were linked with the new pension reform measures such as bolstering individual and small business pension plans those scale economies could be realized.
Excellent article Dan. I worked for years as a financial advisor selling mutual funds and insurance and while I felt I did everything possible to put my client’s interest first, being compensated through commissions set up a conflict of interest that was difficult to avoid. It became very clear to me that compensation for financial advice should not be tied investment sales and that the fee-only financial advice model was the way to go. Most clients need financial advice that goes beyond investments – they need help managing their cash flow and debts, they need hand holding through life transitions like divorce, retirement, career change, they need help figuring out why they aren’t getting ahead financially in spite of making good incomes.
There are now 18 other financial professionals across Canada who agree with me and have joined our team. We provide the planning and coaching and we point our clients in the direction of investment solutions where the fees are for investment management only like ETFs, low-MER mutual funds or portfolio managers for high net worth clients.
Karin Mizgala, CFP, CEO Money Coaches Canada
DanB – Not sure if you saw this but perhaps you and your readers would be interested in an article I wrote last year on the issue of DSC. In a departure from the usual format, the article is a summary of a back-and-forth debate on whether DSCs should be killed. Me vs. a broker friend. Enjoy!
http://bit.ly/16nweYz
Whether you’re right or wrong o the difference between fees and commissions, you really need to be asking why the gov’t is involved in banning this. I’d suggest that the gov’t shouldn’t be involved in how advisors get paid. They don’t mingle in how journalists get paid do they?
Consumers already have a choice. They can choose fee only advisors or they can choose commission based advisors. And for some reason (speculate as you will) consumers overwhelmingly choose commission based advisors. As I’ve said before, fee based advising sucks as a business model – consumers might talk big about how they’re OK paying people seperately , and maybe they will individually – but overall the reality is they don’t. What consumers are going to end up with is going to speak to their local bank teller for advice on investments, because no financial advisor in their right mind is going to work under those conditions. All this does is remove choice for consumers, it doesn’t add anything. If consumers want fee-only advise, they can get it already.
The crossover to life insurance – despite your protests – is accurate. The brooha-ha over all of this comes out of the UK where they apparently did ban commissions on life insurance. That’s why advocis has the fear. And I assure you, the same thing happens -if they ban commission on life insurance, I’ll be doing something other than providing advice to consumers. It’s enough of a task to educate consumers on the complexities of insurance without having to throw in the sales job of how much I’m going to get paid. Say what you will, but I’d say that the loss of life insurance advisors like me and many others is not a benefit to consumers.
In the end, it’s not about whether how people get paid is right or wrong (which is the argument you’re making here). It’s about whether the government should be forcing this on the industry -and that doing so removes consumer choice. The end result of this is going to be no advice to consumers, not a better industry. So ignore whether you think people are paid properly, and start worrying about whether you think the gov’t should be dictating to consumers whether they have a choice on how their advisor gets paid.
@LifeInsurance: I respect your insights here, and you certainly know far more about the insurance business than I ever will, so I won’t take issue with your specific points in that respect. For the record, I also think it’s bad idea to ban commissions in the insurance business—and this has not been done in the U.K., so we should be careful of making slippery slope arguments. As I said in the piece, I don’t think insurance brokers and investment advisers should use similar business models, and regulators seem to agree.
Let’s acknowledge that the government enacts all kinds of consumer protection measures that dictate how business operate. (For example, new measures recently brought in for auto dealers.) The issue is information asymmetry. People talk about giving the consumer the choice, but most consumers cannot make good choices when buying complex financial products, especially when fees and commissions are hidden.
Despite this argument being made by industry groups, I think one valid point they’ve made is in the context of other regulatory initiatives. The final stage of the Fund Facts are just materializing now and regulators are already simultaneously proposing a fiduciary standard, commission bans and full disclosure of the commissions they want to ban!
What seems to be missing is a coordinated, integrated effort toward the end goal of evening out this information asymmetry. But shouldn’t we let the ink dry on some new rules and measure the impact of them. Implementing them on domino-like fashion seems a bit counter-productive particularly since two of the aforementioned initiatives are in directly conflict with each other.
@Dan H: Thanks for your thoughts. I’m not ideological about this, and I’m willing to concede that both trailers fees and DSCs can, in theory, be a reasonable way to compensate advisors. As others have pointed out, using A-series funds with a 1% trailer is not fundamentally different from using F-series and adding a 1% fee: indeed, the former may be more convenient. And as you point out in your piece, the problem with DSCs has more to do with how they are applied than their inherent corruptness. But I don’t think any professional advisor will be harmed if these compensation models were banned.
I agree it would make sense to bring in a unified series of reforms rather than trying to change things piecemeal. At least that would give the industry an opportunity to push back against everything all at once. :)
@Andrew: getting people to take the right actions is a marketing and sales issue. That can be automated and scaled to some degree. For example you could have online videos that explain all of this and answer objections. When you only have to do it once and then distribute it to many people, you can spend a lot to make something great. It just depends on whether enough people can trust in that to make a big decision, without actually meeting someone in person. Then again they will buy an over-valued $1m home based on media stories so it may be a viable model.
I don’t know if a call-center would be effective, since a cheap call-center wouldn’t provide any added value and giving really good advice could be expensive. But Steadyhand seems to do fairly well with clients calling them up occasionally for advice.
The one reason I think this could have a place in the market is that Vanguard has grown to be very large in the US. Obviously the low-fee message has some appeal, and if it could be translated here and gain a similar marketshare that might give it enough scale to succeed. I’m not sure what the total investment market is in Canada – I checked yesterday and Investor’s Group has $60B in assets so if someone knows their marketshare that would be a good indication.
Even $1b assets could give a solid start to a business model like this. The fees would probably have to be higher here. I’m not sure if Betterment’s fee includes all MERs, but if you built this on ETFs with an average cost of 0.35% you could have another 0.65% in fees and still be competitive with ING’s offerings (plus offering more guidance and more comprehensive service).
The biggest challenge I see is the marketing cost. IG can obviously afford a lot of TV ads with their margins. Something like this would have to be more low-key. A credit union distribution model comes to mind. Vanguard is essentially a co-operative that works to keep costs low, so something similar would fit well with the credit union mission.
The branch network that credit unions have would give built-in personal contact, although it would require some training expenses or dedicated people (or video-conference to reach a few central advisors). I know a few people in the provincial system and this relates well to their current top priorities such as modernizing technology and reaching out to young people.
If this was designed as a standalone entity that sold through credit unions across the country with a focus on cost reduction, it might be able to pick up some traction. But as CCP said, the regulators may be here to save us from common sense. I don’t know if credit unions have lighter regulation on investments like they do with mortgages.
For another distribution channel, the introduction of PRPPs might be a good time to get this into group plans. Some companies likely buy high-fee plans because of the bonuses that the managers get, but this could be sold as a way for companies to give their employees more with no added cost to the employer.
@Glenn, I’m all for consumer choice but if consumers were capable of understanding all the options there would be a lot less advisors, broke