That is not correct.
Yes, if Fred can meet the requirements then he’s allowed to. So? If Fred has the desire and the ability he can also be a doctor. Or a lawyer. Or an auto mechanic. Or whatever it is you do for a living. Really.
On your trip to the library to check out investment books, see if they have Series 7 and Series 66 exam prep books (it’s the 7 and the 66 we need to pass, not the 63). Flip through them and see what the minimum level of knowledge is. If you can pass (the national pass rate for the 7 is roughly 70% so I hear, no cite), then you get to join the club. Once you’re in… only 1 in 6 are still in the business after 6 years (according to my firm, which I won’t cite as so not to advertise). 70% get the chance, only 17% of those make a career of it. This is not an easy profession, we do have a level of knowledge many (many) do not, and it’s no walk in the park to get here.
No. I don’t pretend to have a level of knowledge I don’t, the key is knowing more than the client. Not everyone needs a financial advisor. It’s not rocket science. But speaking from experience, you’d be amazed what the general public doesn’t know. I’m not saying Fred the Garbage Man can’t learn what I have, I’m saying in many cases he simply hasn’t yet.
If you think the doctor/lawyer comparison is a stretch, how about financial advisor vs. an auto mechanic? The requirements to join that profession are lower than mine, but that fact doesn’t measure the relative value of the profession/service/advice. A good (and honest) mechanic is worth their weight in gold, and a long-term customer relationship with one is worth even more. (Conversely, a bad doctor is a quack no matter what credentials they hold.)
I don’t believe my mechanic knows everything there is to know about my car, all I know is she (yes, she) knows more than I do. No, I don’t know all there is to know about everything financial-related, but I do know more than most of my clients (which is why they need me).
And like I said - individual investing (especially starting out) isn’t rocket science. Some people won’t need the services of an advisor (just like some people can replace their own brake pads).
(Trade secret, shhhh!!) Yes, new advisors are trained to sell. One misconception is that they are only trained to sell. Not so.
Margins are getting squeezed so thin (ROA (to grid) was 2%+ 20 years ago, now it’s <0.5%) that I can’t make a living selling a one-time product or service. I need to build long-term relationships with my clients and serve their financial needs for years. I do that by doing right by my clients. Sure, I could push a product on them they don’t need, but how many would I retain with that approach? Zippo.
Yes, we provide a service to people who need us. No, not everybody needs us. Yes, we get paid for what we do.
Sorry for the hijack.
**Catalyst **- yes, be suspicious of every doctor, mechanic, and broker you ever talk to. Some might try to sell you things you don’t need. Others really do care about doing the right thing. It’s up to you to figure out the difference, or even if you need their services in the first place. But before you make that first investment, or change your oil for the very first time, or take out your own appendix, I suggest you read something about it and talk to someone who’s already done it. Perhaps even someone who does it for a living.