what options are available to the financial planner?
My belief is that most planners would like to give accurate and realistic and effective guidance. The fear that each one has is that, if he does so, the guy down the street will be selling the Get-Rich-Quick Passive Investing stuff and he will lose business. It’s a case where bad money drives out good.
What if a large number of big-name experts got together and made a joint statement that was covered by the big newspapers in which they all agreed that the Passive Investing model has been discredited by the research done in recent decades and that we need to begin work on developing a new and more realistic model? If clients were aware that the Passive model had been widely recognized as nonsense, no one would feel any pressure to argue in favor of Passive Investing. The competitive pressure would be removed.
I see this as a case of that old story where all the mice agree that it would be great if the cat had a bell around his neck so that they would know when he was coming but no one wants to volunteer to be the one to put the bell on him. What if we had 10 or 20 of the biggest names in the field all step forward to put the bell on the cat on the same day? From that day forward, no one would dare to argue that Passive Investing makes sense and the problem would be solved.
It wouldn’t even be necessary to put forward a new model. All that we really need is for those who argue that Passive Investing is “science” to drop the nonsense. If the experts even said the words “we are not sure” that would be enough to open all of the most important investing questions to debate, and once there is open debate, Passive Investing is going down. We have seen hundreds of people in the Retire Early and Indexing communities who have explored other models and who can do the work needed for us to build a new model together.
The key is getting the idea that Passive Investing is “science” taken off the table. Once that is done, the rest is downhill sledding.
Rob