What separates outstanding financial advisors from the mediocre? In my experience, one answer is the ability to learn from past mistakes and make adjustments. For many advisors, it is now possible to look back at the past decade and see a mistake that was costly to many clients.

The mistake was to buy into a story created by the mutual fund industry that went like this: "Most investors with long-term objectives should not try to time the markets. They should buy and hold an asset allocation program implemented with actively managed mutual funds that are automatically rebalanced periodically."

The mutual fund industry profits to the extent that it can capture and keep stable long-term assets, and this story served that purpose. But it hasn't helped millions of investors make much progress with assets held outside tax-qualified retirement plans, when all costs (including taxes) are considered.