Why You Hate Financial Advisors

Scroll through any investing forum like Blossom these days and you will see a recurring sentiment that creates a dangerous divide. Investors are angry, and they have every right to be. Someone posts about how they paid high fees to a bank advisor for two decades only to average a 3% or 5% return.

Then the comments fill up with DIY investors boasting about making 100% returns in just three years by managing their own money. The conclusion seems obvious to them. They believe advisors are useless scams and that their own methods are much better. While the frustration with the banking industry is valid, the conclusion that you can easily outperform professional guidance by speculating on hot stocks is a financial catastrophe waiting to happen.

The root of this disconnect lies in a massive misunderstanding of what a financial advisor actually is. In Canada, the title is largely unregulated in the majority of provinces. This means that the person sitting across the desk from you at the bank branch might be called a financial advisor, but they may have no more formal financial planning education than a few internal sales courses.

A study highlighted that only 13% of Scotiabank advisors held their Certified Financial Planner designation. To mask this lack of expertise, the industry uses title inflation to project authority. Banks also often use "Title Inflation", where they give titles that are more grandiose than the roles they complete. For example, roughly 30% to 40% of Goldman Sach's employees hold the title of Vice President. It is marketing designed to create trust where there is no verified expertise.

This lack of qualification bleeds into how these products are sold. Most Canadian advisors are not held to a fiduciary standard. This is a critical distinction that most clients miss until it is too late. A fiduciary is legally required to act in your best interest. The vast majority of bank and insurance advisors are only held to a suitability standard. This simply means the investment must be suitable for your risk tolerance, even if it is not the best option available. This grey area allows them to sell you a high fee mutual fund that pays their employer a massive commission, rather than a lower cost ETF that would serve you better. You were likely not getting bad advice because all advisors are bad. You were getting bad advice because you were sold a product by a salesperson masquerading as a planner.

However, reacting to a bad bank experience by swinging to the opposite extreme is equally dangerous. Many investors who fired their advisors recently are sitting on massive gains from high flying stocks like $PLTR or $RKLB. It is easy to confuse a bull market with brilliance.
Making 100% in three years is fantastic, but it is statistically unlikely to be repeated over a thirty year timeline. If you concentrate your family's net worth into a few volatile stocks or sectors because they have done well over the last five years, you are taking on an immense amount of risk. History tells us that sectors rotate and winners rotate. A portfolio built on recency bias works perfectly until the market cycle shifts, and then the losses can be devastating.

The solution is not to abandon the financial system entirely. The goal is to learn how to navigate it with skepticism and precision. There are incredible professionals out there who can add massive value to your life, but you have to know how to filter out the salespeople.

You need to ask specific questions before you work with anyone. You must ask how they get paid and if they are restricted to selling only their company's proprietary products. You need to demand a breakdown of the total cost of investing, including the MER and the advisory fee.

Importantly, you must also check for designations. Look for a CFP, RFP, QAFP, or CFA. These acronyms represent years of study and ethical standards that a generic bank title does not.

We need to stop viewing this as a binary choice between getting ripped off by a bank or gambling on individual stocks. Real financial planning is about evidence based construction that balances growth with safety. It is about tax efficiency and estate planning, not just chasing the highest return in the shortest time.

A good planner acts as a barrier between your emotions and your money. If you have been burned by the banks, I empathize with you completely, but do not let that experience blind you to the value of genuine professional advice.

Are you building a plan and a portfolio that can survive a decades, or are you betting your retirement on the hope that the last three years will repeat forever?

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149 Comments

Mr Financial

@mr.financial · 10moEdited

Here's my aggressive take on this 😂

Whenever you go to the bank or even Edwards jones and ask for an advisor, you'll get an 'advisor' aka product sales person with bare minimum training. If they spend 60 minutes with you and mainly talk products... You know what's up.

We have to ask for a certified ... planner or PM or PA. Then you'll be able to see their credentials, background check, verify their experience. Ask in-depth questions without them feeling attacked because they will be excited to tell you about who they have helped.

My parents are with EJ and their CFP is great and works along with them according to their goals, risk profile, time horizon , etc. no mutual funds or expensive products.... Just really high Edward Jones fees 🤮

I have a little bit of a contrary opinion to most that jump ship and go DIY..

If an investor can't do due diligence on who they turn their money over to, aka someone certified with fiduciary duties vs a salesperson, how does that same investor think they can do even better due diligence on what they do not know, financial planning?

If you are upset that your high fee, ultra conservative mutual fund only returned 2% annually, the problem isn't the advice, it's the one accepting the advice blindly. The same can be said for those that are buying into fund providers making bold statements with fancy products charging 10x the fees.

Jumping into diy investing without knowledge is why DIYers average return is in line with inflation and after accounting for taxes and fees, it is usually less than inflation. Not to mention many do not hold the course for a lifetime and end up disillusioned.

No matter what it is in life, we need a base level of knowledge to make sound decisions. This requires effort and time. There is no shortcut.... Otherwise, we will get eaten alive.

For example, if you go to a random mechanic and know nothing about cars and how they work, you have a higher likelihood of being ripped off or even scammed. Just because some mechanics suck and are poachers, that doesn't mean you NEVER go to one. To attempt to rebuild your engine because you watched a YouTube video without knowing that it was your transmission that was the problem is silly, dare I say foolish.

The same goes for medical professionals and any other certified industry in canada. There are bad actors/ poor performers everywhere and we need to accept that, and find the good ones.

All that to say, there are AMAZING certified individuals out there and some terrible ones. Shop around. Learn the basics. Keep expanding knowledge. And definitely do NOT follow other DIYers learning via mistakes, trial and error, other DIYers, self proclaimed gurus, etc.

In finance, a big mistake can destroy your financial future. A stitch in time, saves $$$$$$

@icallbullshit · 10moEdited

I reside in the United States and I can only presume things are a bit different in Canada when it comes to a lot of different things. I study human history and I have come to the conclusion the only person you can trust most of the time is yourself...

Canadian Investor@canadianinvestor · 10mo

Unfortunately the overwhelming majority of Financial professionals are essentially sales people.

Nicolle

@moneymeetslegacy · 10mo

Firstly, i think you do have a lot of integrity, never change that when you become a CFA 🙂. This is a thoughtful post and I agree with a lot of it, especially the frustration people feel after paying high fees for decades and realizing they weren’t really getting planning, just product sales. Title inflation, lack of fiduciary duty, and the suitability standard are very real problems in Canada, and many investors were genuinely let down by the system.

I also think the reminder about recency bias is important. It is easy to confuse a strong bull market with skill, and concentrating a portfolio in a few hot names because they’ve worked recently can end badly when cycles change.

Where I struggle a bit is with how DIY investors are framed. Not sure if you meant to frame it this way. DIY doesn’t automatically mean gambling on individual stocks. A lot of people who left advisors did so intentionally in order to move to diversified, low-cost ETFs, automating contributions, and following evidence-based strategies specifically to reduce risk and fees. For many, that wasn’t an emotional overreaction, it was a rational response to years of underwhelming outcomes.

I also think it’s worth saying that credentials and titles, while important, don’t guarantee better results. Cost still matters a lot over decades, and even well-intentioned advice can underperform simple, low-fee approaches once fees are accounted for.

To me, the real issue isn’t “advisor vs DIY.” It’s whether someone is investing with discipline, diversification, and a long-term plan or reacting to incentives and emotions, regardless of who’s in charge. There are bad advisors and great ones. There are reckless DIY investors and very thoughtful ones too.

The goal shouldn’t be to swing from one extreme to the other, but to understand what you’re actually paying for, what risks you’re taking, and whether your approach (advised or DIY) can hold up over decades, not just the last few years.

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