Website For Do It Yourselfers Throws Down The Gauntlet, Declares "Financial Advisors Are Bad For Your Wealth"

Tuesday, April 17, 2012 16:01
Website For Do It Yourselfers Throws Down The Gauntlet, Declares
The battle between advisors and apps for di-it-yourselfers escalated, with Betterment, an app for investors, declaring in a headline that "Financial Advisors Are Bad For Your Wealth."
The Betterment post cites a study by the National Bureau of Economic Research, saying it  found that many advisors reinforce harmful behavior because it’s in their best interest to do so. Motivated by larger commissions, the advisor/brokers encouraged bad investing behavior like frequent trades and higher-fee funds.  

This Website Is For Financial Professionals Only


Betterment is not doing itself any favors. Instead of helping investors, it's scaring them. Perhaps the company is desperate for clients.


While some investors may be okay with a simple DIY service like Betterment, people with real wealth issues -- estate planning, tax issues, and portfolios diversified across private deals and business ventures as well as securities portfolios -- need professional advice. And many others simply don't want the burden of doing it themselves.
Moreover, tarring an entire profession for taking excessive fees is just plain dumb. Betterment acts as if all advisors are evil, which is about as silly as saying all DIY apps for investors steer them into bad portfolio decisions.
However, advisors need to take note of the marketing spin, which is why it is worth mentioning.

Comments (1)

Until advisors are willing to provide transparency at the portfolio level, this assault cannot be overcome. Advisors are unwilling to be evaluated and as such cannot overcome issues like Stephen posts on fee-based and marketing like this.

The reality is from studies showing the use of financial planning software by vendor, the assertion may be correct. The calculations in many are not mathematically valid and are not beneficial to investors.

Good for them, make the financial services industry finally prove the rhetoric.

brentb843 , April 18, 2012

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