I'm not sure why everyone thinks that doing it yourself is the best way. Why do you assume that dentists/doctors/ect would be any good at managing there own money? I would assume they would have the same success as most dentists/doctors/ect have in trading. Not very good. There are lots of problems with the financial advising profession, but just because someone can make that money, doesn't mean they have any idea what to do with it.
The underlying question wasnt really if people should search professional financial advice in stead of doing it themselves. You can get financial advice even if you own 50K and to each his own. What I was wondering was why from a certain amount of wealth conventional wisdom dictates one to search for professional financial advice. Obviously the financial industry benefits greatly from this and I was wondering if they deserve this mechanism and if there could be any circumstances in which this trend could find itself in reverse.
There isn't one answer as to why people don't manage their own money. There are some truths in what everyone is saying. Some people got (and stay rich) by means that have nothing to do with financial management. They also understand that to succeed in something you need to know about that something first - and thus may trust a money manager that spends his life/profession managing money. Other people like excitement of participating in financial "ventures" That's the same reason why people invest into Movies (which most bomb), Mining expeditions, art investing, coins etc. It gives us something to talk about at parties. There are others which are very skilled at managing money but would have relationship with others to participate in deals that are brought it - and cherry pick stuff that they know. For example, a friend of mine was actively involved in business in Asia in late 90s (and early). During the Asian crisis, his bank (big one, commercial) offered him a deal that they were working on with a south-asian currency. They offered the deal to all their HNW accounts. He took it - why - he know the business and situation in the country inside out. Some others, would like their money to be diversified into many pools. So what if they invest 1% of NW into a manager at bank - they know they will get sub-par index return, but not too far off - so they dont have to do the work themselves. on another note - i have friends all the time that come for advise of where to invest - the general feeling is that grass is always greener on another side - its a function of greed and everyone is a part of it. I always tell them - do what you know - you know the medical business - invest more into that. Do not want a hands on approach (tired) - invest into VC funds that specialize in the field YOU specialize in. But this advice falls on deaf ears sometimes.