4 ms·
There could be other reasons than them being financially unsophisticated. Could be that people with lower net worths are less comfortable risking what little s
by atom_arranger 6y ago
There could be other reasons than them being financially unsophisticated.
Could be that people with lower net worths are less comfortable risking what little savings they have on investments.
They may also need more liquidity in case of emergencies. Wealthier people can generally afford emergencies without going into their investments.
- icedchai 6y agoI know plenty of smart people with extra cash who are fearful of investing. It is very, very common. Even if they are not completely afraid, they would rather pay a "financial advisor" several percentage points in wrap fees and expenses on poorly performing funds than learn about investing themselves.
- imtringued 6y agoStupid question, why would the adviser not just take a well performing index, invest into a fraction of the companies based on his own judgement and then just capture a larger fee? There is still an active management component but the risk has been minimized by not straying too far from what regular ETFs are doing.
- icedchai 6y agoI worked with some financial advisors earlier in my career, and generally speaking they do not like to invest in individual stocks. Often the company they work for makes them push certain ETFs or mutual funds onto their clients. Often that company even has their own fund family.