If you're looking for a financial advisor, what should you look for in the trades, if this is someone who you should be calling you in the middle of the night, when you're having a dispute or when you're wrestling with the financial challenge in the household? How do you even, you know, qualify someone for it to take you up, for taking on such a task? Well, that's a good question. I think one thing is you have to talk to other people who have financial advice and get referrals, references from them. Because I think a lot of it is a sense that you have when dealing with someone, whether they really have your interests at heart or not. There are also organizations that certify advisors like National Association of Personal Financial Advisers. Not a perfect organization. They got in to some financial scandal a couple of years ago, but I think that they're a good organization overall and one can work through these means as well. There's been a trend of more automated advisory services. And you talk a lot about client relations and also just, kind of, the quirks of social behaviors, how do you see this trend evolving and do you think that more computerized mechanisms could really replace that personal connection that financial advisors are able to carry? See, this gets back to the same question we were just talking about, about machines replacing jobs. Then you might think that financial advisor would be one of the last jobs that a machine would replace. But it is happening. And the machines, you know, I guess an adviser always asked similar questions: what's your risk tolerance? What are your goals in life? How old are you? Things like that. Well, a machine can answer them and give stock answers as well. This is a big trend in our society and it's replacing a lot of jobs. The question is, is financial advice high on the list of jobs that will be replaced? And I'm thinking it's actually relatively low on the list in the sense that these programs will be helpful, but I think that at some point in making important decisions about your future life, you do want to have a real person. It's like the same question, here we are on MOOC, on Coursera, we're on a course that, kind of, replaces direct human contact with something recorded. But I think that still teachers will not decline in our society, precisely, because of a basic human trait that you don't want to be just listening to a machine. You want to have some kind of relation with your teacher. And I think it's the same with financial advisors. They can motivate you better. They're part of your world. And I think that's probably where we're headed. So, I'm thinking that financial advice is not going to be completely mechanized, but I think it's maybe a good idea to look at some of these websites as to get some insights. What do you think about some of other things like robo advisors and she hinted at algorithmic trading and dark pools and shadow banking, things that are also financial tool-based, where do you think that that's taking the industry in a good place or a not so great place? Well, I'm all for a progress and automation, seems to me, involve some of those things. And a one problem with financial advice is that it's expensive. The kind of people who can give good advice are also well-positioned to make money doing something else. So, you have to pay them for it. So, to hire a financial adviser on a fee-only basis might cost you $300 an hour, and for lower income people, that sounds just impossible to pay for that. So, another thing I've been advocating is government subsidy that operates at lower income levels for financial advice. The current tax deduction that's available for financial advice applies only to high income people who deduct, what we have in the high tax brackets. But I'd like to see some payment for financial advice to lower income people. Now, we already have some of that through philanthropist. These were a philanthropist come in. We have legal advice clinics that don't charge for low income people. But if you talk to someone who works at a legal advice clinic, you will quickly find out that they're swamped. And they can't go to bat for these people. A lot of the issues like relate to marital problems and the husband and wife are disputing something, you can't go to bat for one or the other. You can't pay for this. It's just not enough. So anyway, I think that government support of advice services or philanthropic support is something that would be helpful in the future. The Dodd-Frank Act in the United States created things that sounded like it but they're not really funded. You know. We have like the consumer financial products. Did I say it right? Consumer Financial Protection Bureau. Protection Bureau. Yeah. You can give complaints there and you can get help sometimes, but it's not the same as having your own lawyer representing your interests. But I think yeah. So, this is something that as computers replace normal human labor, one thing that I think that we'll end up with more people in the advice business are we'll have more psychotherapies too. We need more of the, my wife's a psychotherapist. But, lots of people would benefit from having someone to talk to regularly about their problems. Do you think, I mean in your view, is financial advice needed for people that have below a certain amount of savings or are they really just better off indexing? It seems like a lot of a data lately. Right. Yeah. I think that the financial crisis hit people of low income particularly hard, because they weren't getting elementary financial advice. They were hearing in the news that I should own a house, and then they would be encouraged to take out a mortgage for a home that they, maybe, they left it to the bank to decide if they could afford the house. The banks should have experience in knowing who might default. But the banks were selling mortgages off to it. They didn't care. The investors were willing to buy these mortgages. There's a bit of a problem here. The rating agencies weren't really raising alarms, so something was amiss. Often, they were selling adjustable rate mortgages that whose rate might go up. After all, it didn't go up because we have zero interest rates now but. It could've gone up. And so, these people would be in trouble. I think that if they had gone to a financial adviser, in say 2005-2006 just before this crisis, some advisers wouldn't help them. It was a nebulous issue about whether you should buy a home. I'm sure some advisers would mess up. But I took a quick look at some advice books from around then that were published by Suze Orman and people like that, and I had the impression that they weren't gung-ho about taking out a big mortgage and buying a big house that you can barely afford. I think it would've been better, if they had advice about something simple like that. And yet, it's not so much that they need portfolio management and picking stocks. But they need also, I think they need, it's almost like a therapist. They need someone to coach them to save a little bit and tell them that, you know, you could lose your job or something could happen, and then, where would you come up with money? And a lot of people have never thought about that. They could tell you as an expert realistically, and not a Wall Street expert, a personal finance expert could tell you realistically. So you know, there are private charities that have done things like this in, notably, in the United Kingdom. There's a big movement to what they were called Citizens Advice Bureaus, which are staffed for low income people or it could be anyone. Mostly, customers are lower income. And you can ask about anything. Because often people questions blur into different areas, should I buy a house? I might get a divorce or child might be handicapped. All sorts of issues. And so the Citizens Advice Bureau brings the right expertise that you need and for free. We actually have a few of them in the U.S. It's not big here.
