If you’re a remotely normal person, you’re not qualified to pick stocks and neither do you have the self-confidence to even try. So instead you outsource your stock-picking and buy mutual funds. But this just shunts the problem down the road: if you’re not qualified to pick stocks, what qualifies you to pick mutual funds? After all, there are just as many funds to choose from as there are stocks. So you punt again and outsource your fund-picking to a financial advisor. And all the while you know you’re still not much better off: however many stocks and mutual funds there are, the number of financial advisors is greater still. If you can’t pick a stock or pick a mutual fund, what makes you think you can pick a financial advisor?
If you look at the 14-figure sums being managed by financial advisors, it’s easy to see how incompetence and rampant emotion and waste and fraud and messiness can easily result in billions of dollars flowing from dumb investors to the smart Wall Street crowd every year.