John Oliver’s Comedic Exposé On Financial Advisors

By John Miller

As a financial advisor, I was intrigued to hear that John Oliver—a comedian and host of the HBO television show Last Week Tonight—devoted an entire episode to exposing the sorry state of the financial services industry and the self-serving way that most financial advisors are compensated for their advice. In his own (sometimes vulgar) way, John Oliver made three points:

1. Most financial advisors do not have legitimate professional credentials.  The terms “financial advisor,” “financial planner,” “investment manager,” and “wealth manager” are all generic terms that do not mean any specific credential.
2. Most financial advisors (even well-credentialed advisors) put their own interests ahead of their clients. It is currently legal for financial advisors to put their own interests ahead of clients’ unless they are what’s called a fiduciary. One thing that John Oliver should have mentioned is that only fee-only advisors are fiduciaries.
3. The commissions, underlying fees, and fund expenses of most advisors are HUGELY expensive over time.  Oliver cited the following example from PBS' Frontline:The Retirement Gamble: Assuming that your investments gross 7% return but net only 5% after the 2% commissions/expenses of your investment funds and advisor fees, you would have lost 63% of what you could have earned due to the fees over a 50 year time horizon! Furthermore, most advisors recommend actively managed funds that not only cost more but underperform the market.

Unfortunately for investors, John Oliver’s criticisms about financial advisors are true. In fact, one could argue that he didn’t go far enough in exposing the problems with the financial services industry. Take, for example, the brokerage community’s development of the term “fee-based” (which basically means “fees AND commissions”) to counteract the success of the “fee-only” classification by intentionally confusing and misleading investors. Or consider the fact that even if a financial advisor does have credentials, those credentials may or may not mean much. According to the Wall Street Journal, there were 48 financial services designations in 2005 and by 2013 there were over 200. It is up to the investor to sort through this Alphabet Soup of Financial Certifications.

I am delighted to say that John Oliver’s three critiques of financial advisors do not apply to Longview Advisors because:

1. As CFP® professionals, we hold the recognized standard of excellence for competence and ethics in personal financial planning.
2. As fee-only advisors, we are fiduciaries and truly act in the best interests of our clients
3. By recommending low-cost index funds, we save our clients thousands of dollars in underlying fund expenses while outperforming the vast majority of actively managed funds over time.   

Click below to watch the full episode of Last Week Tonight. The video contains explicit language.