So is financial advice like selling CDs? Or is it, in fact, about relationships and confidence more than anything else?
I firmly believe that wealthy people will always prefer to get financial advice from living, breathing, thinking people rather than software. They are happy to pay so as to have real relationships with their estate planners, financial advisors, CPAs and private bankers. This seems obvious to me and probably to you. But it is not obvious to many others.
I don't know Nick Shalek but he seems really smart and well-intentioned in what he's trying to say here:
Thankfully, Software Is Eating The Personal Investing World (TechCrunch)
The gist of his article, which is very good, is that software is better than 99% of humans who attempt to invest money. His post has spread around my industry like wildfire and the reactions to it are all over the map.
I've been asked three times about what I think of his spiel, so I'll give you some bullet points of my reaction to this argument in its entirety, not just Shalek's rendition:
1. I agree with him that simple is better, all new investors should begin with low cost index funds and set up their accounts to automatically add the same dollar amount to them on a regular schedule - regardless of price or market conditions. They should certainly not begin by following stock picks from gurus or rodeo clowns on TV.
2. I agree with him that machines remove the fear-and-greed cognitive foibles from the equation - but what Shalek doesn't get is that investors actually have to learn these foibles firsthand by