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To the editor:
On behalf of the Investment Adviser Association, we always appreciate Advisor Perspectives’ content, but we were disappointed by Dan Solin’s views in his piece, A Massive Missed Opportunity, published on January 9th. We understand Mr. Solin is a guest contributor and his viewpoints do not reflect those of the editorial staff at Advisor Perspectives. However, his criticism of active management is off base and does both investors and advisers a disservice. Here is our point of view.
Much of the debate over active versus passive investing has been misplaced. The decision to invest, using active or passive investment strategies is unique to each client. Passive investing has rightly been recognized over the last decade for the value it offers investors, but that has also led to a misleading narrative that pits active against passive in a false dichotomy. Both active and passive (and variations in between) have important roles to play in investment management.
Indeed, index funds work well when combined with active management, and vice versa. Active management enables investors to navigate complexity, customize portfolios, capitalize on specific skills or profit from market inefficiencies. Passive management helps to reduce costs, especially in more efficient market segments. Contrary to Mr. Solin’s implication, many of our members – and all are fiduciaries – use a combination of strategies, including active strategies, to effectively manage risk and help investors meet their specific financial goals.
