There is a very old aviation joke about airplanes that can fly themselves. Such planes will have a crew of two. A pilot, because the government requires one on every plane, and a large dog. The purpose of the dog is to bite the pilot if he tries to touch any of the controls and the purpose of the pilot is to feed the dog.
In financial planning and investment, the highest and best use of the planner is roughly equivalent to that of the dog. To prevent the human from causing problems by adjusting a system that works. In short, to be the conscience or discipline for the plan.
Humans get bored. It becomes easy to look for more interesting things to do when bored. It becomes easy to change things that are working just for the experience. The advisor’s primary role, once the initial flight plan has been developed and agreed upon, is to make sure the plan is implemented and to monitor it for correctable flaws. People have difficulty doing either if left to their own devices.
Only a few changes can take a boring plan into terrifying territory. Once there, a whole torrent of weak decisions follow.
People who have too little perspective of the plan, its purpose, its likely outcomes, and its reasonable limits, make decisions based on emotion. Emotion and its cousin excitement are not the purpose of the plan. The plan exists to make the client’s life easy and as the result boring. If the plan becomes a day to day thing that needs attention, it is likely not working. Ars est celare artem. Simplicity wins.
Any advisor that prevents the destruction of a workable plan because of boredom, greed, hot tips or other forms of excitement is worth the money they receive. When examining fees, be sure to include all the benefits that you receive. Many public discussion of fees compare the entire fee to a limited number of benefits.
There is nothing wrong with paying less as long as you get the components of the product that you believe you are getting. Cheap is often expensive and too late discovered.
Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. Contact: firstname.lastname@example.org