Swallow Your Pride

Financial advisers took a hit from the 2008 meltdown of the markets.  Many investors, finding fault with their advisers’ lack of prescience or actual handling of their investments during the crisis, decided they could do just as well managing their own investments––and they ditched their advisory firms.
 
So far their results probably haven’t been bad.  For the past two years stocks have been making steady gains, so these new independents have no reason to second-guess their decisions. But a recent blog on CNBC.com put out the strong opinion that it’s probably time for the investors who cut their advisers loose to swallow their pride and kiss and make up. 
 
The basic rationale behind this opinion goes something like this: in an environment with increasingly complex markets and rapid trading automated by neural networks, the everyday investor does not have the necessary skills in financial risk analysis or access to the essential risk analysis solutions to survive.  In addition, new increases in market volatility make it difficult for the amateur, without benefit of Monte Carlo software, to keep pace.  And furthermore, this free spirit most likely will not have the time or discipline to absorb and process the deluge of information the markets pour out. 
 
Overall, it’s a pretty good argument, but I find this last bit––the requirement of time and discipline–-the most convincing.  If most readers are as lazy as I am, financial advisers should see a big uptick in their stock.

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