I had a brief conversation the other day with an investment advisor from my bank here in the UK. As soon as he found out that I knew what an index fund was and owned shares directly, he told me bluntly he didn't think he could help me. There were no juicy commissions for him, or his employer, in any of that. (I had been passed on to the wrong person, I actually just wanted to try and find a cash account with a better interest rate.)
A few years ago I saw the detailed investment advice a friend got from a financial planner from a leading Australian bank. This suggested putting 25% in a "growth" fund, 25% in a "value" fund, 25% in some kind of index fund, and 25% in assorted small cap and international funds. All these funds were, of course, affiliated with the bank in question. They were also quite conservative funds which stuck (for the first three) to ASX 200 companies and didn't deviate from that index in any serious way, so collectively they couldn't conceivably have outperformed the index by more than a percent or so, even if all went well. But the average management fee across the funds was well over 2%! (And Investors in the UK pay twice as much in fund management fees as in the US.)
A slightly mixed index fund, something like the Vanguard Australia High Growth Fund, would give pretty much the same result, probably with slightly lower volatility, but with management costs of only 0.6%, dropping to 0.35% on amounts over $100,000. In the UK, the Fidelity Moneybuilder UK Index fund has a total expense ratio of 0.3% and the Vanguard UK Equity Index Fund (PDF) has a TER of only 0.15%.
There are an extraordinary number of share funds that do no more than tweak their weightings from an index — overweight BHP and CBA, maybe, and underweight RIO and NAB, or one of a million variants on this — and take a big chunk of the assets under management in exchange. Every major bank has a full set of such funds, just for starters. It boggles the mind that so much money — many of these funds are quite large — can be invested so badly, but that's what happens when people trust "free" advice provided by their banks.
Fortunately, starting in July this year, Australia at least is clamping down on commissions and other conflicts of interest by financial planners. If this sees all those gouging funds closed down and the finance sector shrunk a little, that would be great.
Usual disclaimer: this is completely generic commentary, not intended as advice to anyone.