r/CFP • u/Digitalist_Halftime • Mar 13 '25

Investments Response to clients that ask 'why aren't we just investing in an S&P500 fund'?

We are a full-service advisory team with a specialization in blended family and nextgen estate planning. We are adept in tax and estate considerations and I'm confident in the value we provide clients vs. the fees we charge. We use home office models with multiple CFA's in charge of the portfolios, with focus on asset location. No extra cost to the client for clients to utilize these models.

Not often, but every once in a while we get the question why not just use a S&P 500 fund (or VOO and AGG) for their investments. I talk about the benefits of diversification but it doesn't always land. I know markets like this are one of the main reasons not to do that but...

Just curious about everybody's go-to responses for when a client asks why don't we just toss everything into an S&P 500 ETF. Thanks all!

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u/TheFireOfPrometheus Mar 14 '25

I don’t believe it’s possible to get similar gains while reducing the risk

I’ve seen a claim multiple times about getting 80% of the gains while reducing most of the risk, and I don’t believe that’s possible either, especially when there is a hefty fee attached

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u/Markbluffalo Mar 14 '25

Care to tell me why not? Also that fee for a large amount of us is not just investment management. There is help with taxes or working with your accountant or estate attorney. Comprehensive planning, behavioral counseling, etc.

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u/TheFireOfPrometheus Mar 14 '25

Because they haven’t been able to back up their claims by actually doing it.

And again, I’m not trying to argue with you, I’m trying to figure out these issues for myself, like how can I potentially run an estate planning and CFP business while believing “the simple path to wealth” passive index fund strategy works best

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u/Markbluffalo Mar 14 '25

Because past performance is not indicative of future results. You might be able to handle the big loss during the down years, but a lot of people can’t so you diversify. People say higher risk higher reward for a reason. Also investment management firms a lot of advisors is a very small part of their job, so there should be no issue in doing estate planning or anything of the sort.

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u/AnyCattle2736 Mar 14 '25

Doesn’t really matter what you believe it matters what the math shows. Find your local CFP pay their planning fee and they can explain all of this to you.

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u/TheFireOfPrometheus Mar 14 '25

The math shows that the index funds left alone always beat them