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Yes, financial planners will be one of the first industries to totally revamp itself because of AI. $2,000 for some SoA which is 99% boiler-plate? No thanks. I

Yes, financial planners will be one of the first industries to totally revamp itself because of AI. $2,000 for some SoA which is 99% boiler-plate? No thanks. I spent years in this industry, and the advice from these 'experts' is demonstrably poor.

ofjcihen 2mo ago
What’s the one piece of advice everyone sells but you think should be free?
- SOLAR_FIELDS 2mo ago
  If you’re a layman investor just dump all of your shit in index funds. Even if you’re smart and sophisticated, you’re still competing against the massive amount of fraudulent insider trading happening right now with zero enforcement and are trading at a disadvantage as a result
  - mfro 2mo ago
    Not to mention huge quant firms that paid more than 4x your salary just to get a trading latency advantage
    - weitendorf 2mo ago
      If you understand finance and aren’t specifically attempting to arb on that timescale, you actually want to participate in markets with those participants, because their presence gives you less variance/better price discovery on the scales that don’t factor into your decisions to buy and sell things. So basically if you’re larping as a trader you will consistently get your ass handed to you unless you are genuinely better than all the pros, but if you’re investing or optimizing for a specific risk profile/exposure/timeline you’re playing a different game. Anyway the fact that it’s so hard to explain this stuff to individuals does strengthen the argument that most individuals are better off following the herd.
    - zuzululu 2mo ago
      thats one of the areas where quants squeeze edge the other is more boring where they are essentially "market neutral" and they try to figure out how to make a few cents everyday knowing the downside is a global financial crisis. their edge is basically political so that they get a bail out and thats what the quants will never see in their models. not to get cynical further, just do what the GP says, buy index or figure out what the biggest movers are and buy those for more exposure
  - llamara 2mo ago
    I think you're missing the point why younger people do that. Real wages have been deteriorating over the years. It's much more difficult to afford a house today than it was 50 years ago. People are perfectly aware that investing into index funds is the "correct" approach, however it does not solve anything for them. They're desperate and for them _to gamble_ seems like the only way to become decently rich allowing to escape the rats race, otherwise there is not much to live for, just slaving their days away. That's exactly what led to the recent situation of en masse margin calls in Korea. Here in Europe I too have been working for years and I just don't feel like I'm earning actual money. Most of my income is eaten away by taxes and very basic living expenses. ETFs won't compound for me much if there is not a lot invested into them in the first place. This is exactly what led me to despite high electricity costs to buy 2x open source bitcoin lottery miners (NerdQaxe++) and just hope for the best.
    - inigyou 2mo ago
      Yes. You used to start at -1000 points and earn 5000 over your life. With investment and luck you could make that 10000 and end up at +9000. Now you start at -9000 and earn 3000. With investment and luck you could make that 6000 and end up at -3000 so that's still a guaranteed loss. To have any hope of hitting the positives at all, you need to excessively gamble. Sure you could end up at -999999 (which is no worse than 0) but also +999999.
      - llamara 2mo ago
        Yep, that's a nice illustration. Basically, if to continue steady leads to an inevitable loss, then _to gamble_ is actually a rational decision. You can see that in chess a lot: if someone is down a pawn, they have to take more risks if they need to win
    - ls612 2mo ago
      Real wages are higher today than they ever have been. The whole story about median real wages falling is entirely a result of Simpson’s paradox as applied to women entering the workforce from 1970-2000. This sort of axe grinding is just excusing people’s bad decisions it isn’t grounded in reality.
- nunez 2mo ago
  Which stocks to pick The answer is almost always index funds
lotsofpulp 2mo ago
99% of it would just be a search of Bogleheads wiki.
weitendorf 2mo ago
This already happened 10-20 years ago when personal finance got big on the Internet, it’s just taking a long time to play out. It was never about ROI anyway, just preservation of capital and peace of mind - makes a lot of sense in the analog/less automated financial world of yore when non-professionals were writing checks or wiring money to people over the phone, and checking stock prices in the paper. There will also never be a way to pay $10/mo for Gecko+ and trade your way to a lambo with it, because whatever advantage an amateur investor might have is purely from their niche knowledge/information/heterodox beliefs, though I give it about 6-18 months until we’re hearing all about it because it’s a timeless siren song.
DonsDiscountGas 2mo ago
Lol. You don't even need AI for that 99% boiler plate. Save 6-12 months of expenses in cash, DCA the rest into total market stock index funds. But people still pay expensive advisors to get worse results.
- singpolyma3 2mo ago
  I mean, never DCA anything that's terrible advice. But still better than what most people do.
  - orsorna 2mo ago
    If you only have a fixed amount of money to put aside every month, DCA makes sense. That applies to 99% of people. Not terrible at all.
    - lotsofpulp 2mo ago
      That's not really choosing to "DCA", that's just not having enough money to not be able to "DCA". Which is what's so funny about 99% of people that talk about DCA...they don't have any other option.
    - zrail 2mo ago
      That's not really DCA, at least how I understand it. DCA is something like "I have $520,000 in cash right now today sitting in checking, I'm going to buy $10,000 a week of VTSAX for the next 52 weeks" which on average is a bad strategy. What you're describing is better analyzed as a continuing series of lump sum investments. You're investing as soon as you have cash available, not unnecessarily holding onto cash.
      - BeetleB 2mo ago
        This is the original definition of DCA, but by this point most people view DCA as what everyone else in the thread is talking about. Not a hill worth dying on.
      - 2mo ago
ingvay7 2mo ago
This is spot on and has been my experience. The tax-efficiency and lot-selection work it can provide is easily more valuable than a human advisor charging $2,000 for boilerplate. However, I know my P&L best and it has to ride shotgun while I am making the final decisions and I should know the overall strategy — should i be 80/20, have this much tech concentration, will 8% hold, tax implications in my state etc.
deadbabe 2mo ago
Financial planning is mostly a solved problem. For whatever goal and situation a person is looking for, there's already an optimal path that has been long proven. The only times you need very custom advice is at very high levels of networth or ownership, as in "you want to sell stock but you have to physically find the buyers and negotiate deals because you can't just sell on the open market without disrupting the price"
deleted 2mo ago
[deleted]

ofjcihen 2mo ago

What’s the one piece of advice everyone sells but you think should be free?

SOLAR_FIELDS 2mo ago
If you’re a layman investor just dump all of your shit in index funds. Even if you’re smart and sophisticated, you’re still competing against the massive amount of fraudulent insider trading happening right now with zero enforcement and are trading at a disadvantage as a result
- mfro 2mo ago
  Not to mention huge quant firms that paid more than 4x your salary just to get a trading latency advantage
  - weitendorf 2mo ago
    If you understand finance and aren’t specifically attempting to arb on that timescale, you actually want to participate in markets with those participants, because their presence gives you less variance/better price discovery on the scales that don’t factor into your decisions to buy and sell things. So basically if you’re larping as a trader you will consistently get your ass handed to you unless you are genuinely better than all the pros, but if you’re investing or optimizing for a specific risk profile/exposure/timeline you’re playing a different game. Anyway the fact that it’s so hard to explain this stuff to individuals does strengthen the argument that most individuals are better off following the herd.
  - zuzululu 2mo ago
    thats one of the areas where quants squeeze edge the other is more boring where they are essentially "market neutral" and they try to figure out how to make a few cents everyday knowing the downside is a global financial crisis. their edge is basically political so that they get a bail out and thats what the quants will never see in their models. not to get cynical further, just do what the GP says, buy index or figure out what the biggest movers are and buy those for more exposure
- llamara 2mo ago
  I think you're missing the point why younger people do that. Real wages have been deteriorating over the years. It's much more difficult to afford a house today than it was 50 years ago. People are perfectly aware that investing into index funds is the "correct" approach, however it does not solve anything for them. They're desperate and for them _to gamble_ seems like the only way to become decently rich allowing to escape the rats race, otherwise there is not much to live for, just slaving their days away. That's exactly what led to the recent situation of en masse margin calls in Korea. Here in Europe I too have been working for years and I just don't feel like I'm earning actual money. Most of my income is eaten away by taxes and very basic living expenses. ETFs won't compound for me much if there is not a lot invested into them in the first place. This is exactly what led me to despite high electricity costs to buy 2x open source bitcoin lottery miners (NerdQaxe++) and just hope for the best.
  - inigyou 2mo ago
    Yes. You used to start at -1000 points and earn 5000 over your life. With investment and luck you could make that 10000 and end up at +9000. Now you start at -9000 and earn 3000. With investment and luck you could make that 6000 and end up at -3000 so that's still a guaranteed loss. To have any hope of hitting the positives at all, you need to excessively gamble. Sure you could end up at -999999 (which is no worse than 0) but also +999999.
    - llamara 2mo ago
      Yep, that's a nice illustration. Basically, if to continue steady leads to an inevitable loss, then _to gamble_ is actually a rational decision. You can see that in chess a lot: if someone is down a pawn, they have to take more risks if they need to win
  - ls612 2mo ago
    Real wages are higher today than they ever have been. The whole story about median real wages falling is entirely a result of Simpson’s paradox as applied to women entering the workforce from 1970-2000. This sort of axe grinding is just excusing people’s bad decisions it isn’t grounded in reality.
nunez 2mo ago
Which stocks to pick The answer is almost always index funds

lotsofpulp 2mo ago

99% of it would just be a search of Bogleheads wiki.

weitendorf 2mo ago

This already happened 10-20 years ago when personal finance got big on the Internet, it’s just taking a long time to play out. It was never about ROI anyway, just preservation of capital and peace of mind - makes a lot of sense in the analog/less automated financial world of yore when non-professionals were writing checks or wiring money to people over the phone, and checking stock prices in the paper. There will also never be a way to pay $10/mo for Gecko+ and trade your way to a lambo with it, because whatever advantage an amateur investor might have is purely from their niche knowledge/information/heterodox beliefs, though I give it about 6-18 months until we’re hearing all about it because it’s a timeless siren song.

DonsDiscountGas 2mo ago

Lol. You don't even need AI for that 99% boiler plate. Save 6-12 months of expenses in cash, DCA the rest into total market stock index funds. But people still pay expensive advisors to get worse results.

singpolyma3 2mo ago
I mean, never DCA anything that's terrible advice. But still better than what most people do.
- orsorna 2mo ago
  If you only have a fixed amount of money to put aside every month, DCA makes sense. That applies to 99% of people. Not terrible at all.
  - lotsofpulp 2mo ago
    That's not really choosing to "DCA", that's just not having enough money to not be able to "DCA". Which is what's so funny about 99% of people that talk about DCA...they don't have any other option.
  - zrail 2mo ago
    That's not really DCA, at least how I understand it. DCA is something like "I have $520,000 in cash right now today sitting in checking, I'm going to buy $10,000 a week of VTSAX for the next 52 weeks" which on average is a bad strategy. What you're describing is better analyzed as a continuing series of lump sum investments. You're investing as soon as you have cash available, not unnecessarily holding onto cash.
    - BeetleB 2mo ago
      This is the original definition of DCA, but by this point most people view DCA as what everyone else in the thread is talking about. Not a hill worth dying on.
    - 2mo ago

ingvay7 2mo ago

This is spot on and has been my experience. The tax-efficiency and lot-selection work it can provide is easily more valuable than a human advisor charging $2,000 for boilerplate. However, I know my P&L best and it has to ride shotgun while I am making the final decisions and I should know the overall strategy — should i be 80/20, have this much tech concentration, will 8% hold, tax implications in my state etc.

deadbabe 2mo ago

Financial planning is mostly a solved problem. For whatever goal and situation a person is looking for, there's already an optimal path that has been long proven. The only times you need very custom advice is at very high levels of networth or ownership, as in "you want to sell stock but you have to physically find the buyers and negotiate deals because you can't just sell on the open market without disrupting the price"

deleted 2mo ago

[deleted]