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There’s a quiet crisis happening in wealth management — not a market crash or fraud scandal, but something much more subtle: the erosion of independent thinking. In too many firms, career preservation trumps portfolio construction. Investment decisions aren’t made because they’re right — they’re made because they’re safe.
For many advisors, the biggest risk isn’t market volatility. It’s standing alone.
Especially in emerging asset classes like crypto, career risk is often treated as more dangerous than market risk — or at least as dangerous. Rather than mitigating risk by sizing an allocation appropriately, the default posture is inaction: Don’t be the first to move, and definitely don’t be wrong alone. There’s an old Keynesian quote that still rings true today: It’s better to fail conventionally than to succeed unconventionally.
That mindset might protect reputations, but it shortchanges clients. Entire portfolios drift toward the same set of “safe,” crowded ideas — often long after the best returns have passed.
The illusion of safety in the herd
It’s human nature to feel safer in a crowd. In wealth and investment management, that crowd behavior often takes the form of waiting for a signal — a major pension fund’s move, a blue-chip manager’s entry, a regulator’s green light. If “everyone else is doing it,” it feels defensible.
But for clients, this isn’t safety. It’s often missed opportunity. When bitcoin tripled in price in 2020, many firms were still sitting on the sidelines. As the price surged again in 2021, investors reacted with FOMO (fear of missing out) by rushing in at or near local all-time highs. They certainly weren’t early. They were chasing.
And sometimes, it’s not just missed upside — it’s compounded downside. The herd isn’t just late to risk; it can be dangerously wrong about what is “safe.” During the Great Financial Crisis, bank stocks and mortgage bonds — once considered rock-solid — collapsed. After COVID, soaring interest rates crushed long-duration Treasuries. These weren't fringe bets; they were core holdings in many conservative portfolios. When both “safe” and “risky” assets fall together, the result is disorientation, not just loss. In those moments, independent thinking isn't a luxury — it is a lifeline.
This widespread herd behavioral phenomenon might feel safe — but at the end of the day, that safety is often an illusion. Following the crowd might limit reputational risk, but it also usually ensures mediocrity. The biggest gains tend to accrue to those who move before the consensus forms — not after it’s obvious. And certainly, the best way to protect against losses is by moving out of crowded positions that the herd says are “safe” before the herd actually realizes they are risky.
Big platforms, blunt tools
Part of the problem is structural. Large wealth management platforms often impose constraints that make independent thinking difficult. When a firm needs to serve thousands of advisors or clients, it can only approve investment products that scale. That means the only strategies that survive the vetting process are those that can “drink from a firehose.” Anything niche, complex, or capacity-constrained gets filtered out — not because it’s unsound, but because it doesn’t serve the machine.
In this system, the process determines the product. Scale becomes the enemy of selectivity. Over time, that scale bias calcifies: Advisors stop exploring alternatives altogether. Not because they disagree with them, but because the platform won't support them.
This is how promising opportunities get excluded from portfolios by default, not design.
Paralysis isn’t protection
Yes, investors face legitimate constraints. Regulatory scrutiny, compliance oversight, legal reviews — these are real. Investment committees and boards must be educated and persuaded. Reputational risk is an ongoing concern.
But these pressures should not become excuses for doing nothing.
Some of the world’s most conservative institutions have used these obstacles to justify indefinite inaction. That might protect optics, but it raises a harder question: Are they avoiding risk, or avoiding responsibility?
Investors aren’t paid to eliminate risk. They’re paid to manage it. That includes the responsibility to explore misunderstood or emerging areas thoughtfully, incrementally, and early — not just after the crowd has blessed them.
Forward-thinking allocators have found practical ways to navigate these challenges, including starting with pilot allocations to build familiarity, partnering with specialists for diligence, and reporting and using side pockets or separate sleeves to isolate perceived complexity.
The point is that they act — not recklessly, but deliberately, within the constraints. Inaction isn’t the default. It’s a choice, and not a defensible one.
Independent ≠ reckless
This isn’t a blanket call to defy the crowd. Sometimes the herd is right. Sometimes it's not. What matters is that investment decisions are made based on logic, research, and client needs — not correlation.
Good allocators aren’t positively or negatively correlated to the herd. They’re zero-correlated. They don’t move with the group, or in opposition to it — they move on their own terms, guided by conviction.
And conviction is in short supply.
True fiduciary duty isn’t fulfilled by following the crowd. It’s fulfilled by doing the harder thing: making the right call even when it’s the unpopular one. Sometimes that means saying “yes” to something ahead of consensus. Other times it means saying “no” to something the rest of the market is frothing over.
The best allocators in history weren’t conventional. They were early. They were independent. They were often misunderstood. But they had the courage to think for themselves — and their clients reaped the benefits.
That’s the model we need more of. The world doesn’t need more advisors playing not to lose. It needs more who are willing to lead — even if they walk alone.
Jeremy Boynton is the founder of Laureate Wealth Management.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
