The third annual TIAA-CREFF Money Matters survey was published earlier this week. I was not surprised by the results as described in the Executive Summary. About 65% of Americans are not at all interested in financial advice.
It is easy to understand the real reasons behind these numbers. I blame the investment advice industry and investment professionals for these dismal survey results.
The investment advisory industry promotes a “buy-and-hold” investment management strategy. Once an individual investor buys an investment product, the investment management firms promote a set-it-and-forget-it investment management strategy.
Where else in life does that work? Have you had more than one job in your career? Have you changed your health care strategy as you get older? Why on earth would your investments remain the same?
The economy, stock, and bond markets go through cycles. Just like careers and health. Changes need to always be made along the way.
Investment professionals can also be blamed for individual investor attitudes on financial advice. Pie charts and PowerPoint presentations should be banned forever. And so should glossy brochures.
Instead, individual investors need a reminder of the basic math involved in how much money and investment returns it costs them to diversify and asset allocate every year.
The investment advice industry and investment professionals owe American investors a better reason to pay for investment advice. Another buy-and-hold investment management strategy wrapped in a pie chart has turned individual investors off in a big way. Who can blame them?
Americans buy new cells phone and automobiles every few years. They want to get excited about something new. They also want to feel like they are getting their money’s worth in what they are paying big money to own.
This survey clearly states that Americans don’t feel that same way about paying for investment advice. They are not excited about it. And they certainly don’t think that they are getting what they are paying for.
For most individual investors a relationship with a investment advice professional is a good investment.
Ric Lager
Lager & Company, Inc.
