RIAs Are Fighting A Rising Tide Of Negative Press By Reporters Who Know Nothing About Wealth Management Hot

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Writing in Quartz, Mims’ post quotes the CEO of Betterment saying that Betterment’s no-minimum investment account starts at 0.35% a year, adding, “According to Betterment, that is one-tenth of what traditional financial advisors charge.”
Anyone who knows anything about the financial advice profession knows that no advisor can charge 3.5% annually and be competitive. Most RIAs charge 1% a year for assets under management (AUM), and many charge less, and they the fee might decline to 35 or 40 basis points when an advisor manages $2 million or $5 million for an individual.

The post accepts Betterment CEO Jon Stein’s assertions without question. Like this one:

According to Stein, Betterment’s algorithms “implement the [financial] advice that almost everyone agrees on,” including having a diverse portfolio with a balance between stocks and bonds, and some exposure to international markets. Betterment’s software regularly rebalance the portfolio and manages automatic deposits from users

Mims’ does not know that most investors, if left to their own devices, will sell their stocks when the market declines and buy when the market is high. He does not know that wealth managers do much more than just advise on investments. He probably does not know about buy-sell agreements, insurance trusts, the 3.8% federal surtax, or other topics professional advisors must help people with every day. And you cannot expect it of him. He’s a tech writer.

But this kind of naïve reporting is now common in the tech press. Tech writers think personal finance is a technology problem when it’s really a people problem. They are covering online advice apps without any skepticism or understanding of the financial advice field.

Financial advisors are facing a rising tide of negative press in the tech press and that’s the reality you need to deal with. The public perception of what a financial planner and wealth manager does is being distorted and that distortion is a reality that advisors must deal with.

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