At the end of July I offered another free workshop in San Francisco, again following up with all of the people who had responded to the article in San Francisco magazine. I was particularly tickled by the story of a woman who before attending the workshop told her husband that there wasn’t going to be any sales pitch. Her husband assured her that she was most definitely going to hear at least some sort of disguised sales message. I was amused to hear that the woman told her surprised husband afterwards that in fact the entire presentation had been educational, along with some consumer advocacy. I then realized that if my wife had told me she was going to attend a free three-hour investment workshop I too would have assured her that it could only be some sort of effort to get clients to sign up for a product or service. 

Unfortunately for consumers, the husband’s skepticism was well-founded, as the financial services industry has justifiably earned a reputation for being less than forthcoming with honest information about the products and services it offers. An interesting challenge to getting a pro-consumer message out is that it so easily gets lost amid the deluge of marketing hype. The problem facing consumers remains how to get the investment advice and services truly needed without signing on for the useless and overpriced.

In addition to the challenge of whom to believe, the material itself can be overwhelming to a beginner. After the second workshop a number of people approached me who had also attended the first one in February. They all echoed the same sentiment, namely that they had really understood the simple approach of a collection of index funds only after hearing it a second time. I think part of the challenge comes from the messiness of the existing landscape in terms the buried fees and the difference between asset allocation (the broad picture) and choosing securities (the best way to deliver an asset class). If you’re a beginner and you find the Full Story section of the web site intimidating, you’re not alone.

Another challenge lies in just how major a shift in belief system is required to embrace indexing. If you’ve been living in a world where the assumption is that you should pay a professional to pick managers that will perform better than the market, then it’s quite jarring to shift to a world where the smartest approach is no longer to pay high fees either to wealth advisors or the stock pickers they hire in order to beat the market. While indexing sounds too much like settling for average, in fact the costs are so much lower that you end up settling for the 80^th or 90^th percentile of stock performance, and that’s even before you add in the extra cost of a wealth advisor.

Just to clarify and repeat a point from the web site, I’m not saying that it’s a bad idea as a consumer to hire a wealth advisor. I am saying that it’s a bad idea to assume you need to hire a wealth advisor to beat the stock market. There are lots of good reasons to hire an investment professional. I’m just saying that consumers should understand clearly what they’re buying and how much they’re paying, which in many other parts of our commercial lives, say grocery stores, wouldn’t be as radical and threatening a concept as it is for the financial services industry.

If you have any feedback on the site or requests for particular topics or clarification of any points, please feel free to post a comment.