Thanks for the comment, Joel.

I basically agree with your explanation of the ignorance of "investors". In most cases, it is better to think of them as savers who are willing to accept some level of duration risk for higher yield. Most advice to retail "investors" amounts to the same set of arguments used to sell CDs once upon a time - but without the guarantee. The argument is, you need to accept duration risk to get higher returns.

Alas, the best guesses we have for the future performance of securities are past performance of securities, which are no guarantee that those returns can actually be obtained. Because the "investors" cannot understand the menu, they also cannot understand the limitations or the assumptions of the advice they are receiving. It's a giant game of "trust me", which is ok for a dinner (how much downside can there really be... in the end you can always order a pizza), but sort of different when talking about things like retirement.

Many financial advisors, I suspect, are guilty of overselling what they can do or understating the risks. Many of the benefits are intangible, which is what the author of the article was trying to say (he used "utility benefits" which sounds sort of redundant to me) and those are hard to sell, so they promise better returns, since who doesn't want that?

It reminds me of the hedge fund manager who said I have to promise my ("sophisticated") clients 20% or else they won't invest with me.