Give a listen to Harry Connick, Jr. playing some fun jazz in the video here and see if you can spot something really tricky and interesting he does about 40 seconds in. Unfortunately, you have to go to YouTube to watch the video as embedding it is not allowed.
I’ll wait. Go ahead. Okay.
I’m guessing that most readers without a lot of musical experience will have missed the import of what happens even with the clue about exactly when it’s coming. So I’ll explain.
Harry Connick, Jr. is cool. Obviously. And clapping on the beat is decidedly not cool. But the audience insists on doing so. So rather than letting that lack of elegance and discernment continue, and rather than risking insulting his (French!) audience by telling them how uncool they are and demanding they change their ways, Harry simply adds a three-beat tag to his improvisation at about the 40 second mark so that the audience is immediately clapping on the off-beats without even realizing they’ve been played. Brilliant! For those of us in the know, it’s a terrific inside joke that allows us to bask in our apparent superiority and taste.
In the financial advice business, we often talk about the need for transparency and full disclosure with and for clients. These are necessary things — very good things even. We should want our clients to understand what they are doing and why. Their consent to what we propose needs to be informed if it is to be meaningful.
But good advisors also recognize that sometimes a full and complete explanation of some strategy or process will increase the likelihood that a client will choose not to do what is in his or her own best interest, perhaps out of excessive risk aversion or a lack of understanding. So the advisor can go with just transparency (Harry’s approach — it’s all right there in the open) or full disclosure (like the prospectus that almost nobody reads — advisors routinely admit that if clients read the risk disclosures in a prospectus carefully, few would invest) without offering a full and complete explanation.
This is an extremely dangerous issue because it’s the approach that less than scrupulous advisors use to scam their clients with poor advice and dreadful purported solutions in order to enrich themselves. For an advisor, it’s much like the crucial moment in every superhero story when the protagonist must decide whether to use his powers for good or for evil.
I am honestly torn by this dilemma. I think people generally should have the right to self-determination with their money and should have the right to screw up their lives when they insist on doing so. But it’s also true that the consequences of leaving clients who insist on making poor decisions to their own devices can be dire and are often readily avoidable. Even so, I hasten to add that offering less than full and complete explanations can be self-serving in the extreme. We want the business.
So how much information is enough? How much is too much? It’s like the prunes (“Is six too many?”) in this classic Fletcher’s Castoria commercial from my youth.
I don’t have a terrific answer here. Transparency? Full disclosure? A full and compete explanation despite the consequences? How much information do you provide and in what measure? How much understanding do you insist your clients acquire?
I’d like to think that a full and complete explanation can be offered in such a way that clients don’t opt-out of what is best for them. It’s what I strive for. Doing so has the further advantage of keeping client expectations more reasonable and manageable. But is that ideal realistic? Most importantly, is it best for clients?
Above the Market 
From one musician to another— that was brilliant.
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No, I believe there is a “simple” solution, though it would be impossible to implement: the client needs to completely understand the subject matter. Would he then not need an adviser? Not at all! The adviser still may understand certain market data better than anyone. But it is a totally different story if someone understands the advantages or disadvantages of a flat concrete roof and a slanted roof with clay tiles before (!) consulting an architect. the architect then will know whether that or the or the other concept is feasible, given the applicable zoning by-laws etc. But knowing nothing at all and then wanting an adviser to make choices as you painfully describe above is not going to work satisfactorily ever. When people told me that Bush jr. might be a bit dim-witted but he had much better seasoned advisers than e.g. Clinton I used to say: to use advisers you need to understand the subject matter deeply enough to quiz them. THIS is the dilemma with “hands-off” investors. It’s their money, they should allot as long a time-span to an investment decision as it took them to earn the sum-to-be-invested. Anything else can be a lottery.