Is the Investment Advice Industry a Scam?
Great analysis from one of my favorite thinkers and writers.
As with many of his great ideas, this one will never happen, but you can at least take from it two questions:
Is investment advice a scam?
If it is, should the government do something about it?
For question #1, I’m not convinced it is. There are many people who have money and no idea how to invest. And I think that what investment advice provides could be better than what those people could get without any assistance.
I think the question is simply whether they would be better served by a government service that explains the basics in a free 4-hour class, and perhaps gives some safe suggestions.
That’s what most people need: a basic education on investing followed by some advice on how to grow your money in the safest way.
Then, the investment experts (if there are any) could provide the services that the government recommends (all backed by solid performance metrics) that aren’t diluted by the overhead of interacting (deceiving?) people through direct conversation.
That’s worth considering, but it’s still virtually impossible given the strength and resources of that industry. Meaning, they have good lobbyists.