> If investment managers are so good at investing why don’t they just make money for themselves instead of trying to get people to invest with them?

The good ones do.

Citadel Securities, Renaissance, Jane Street, HRT, Jump, consistently do 50%+ annual returns over the past 15-20 years. They obviously don’t accept outside investor money.

Now, hedge funds that accept outside money like DE Shaw, Bridgewater and shit, yeah, they barely outperform S&P500 after their fees.

Then at the bottom, you have financial advisors who underperform S&P500 after their fees, but these advisors provide emotional support, so that’s what you’re paying for.

cause they literally do that? they invest their own money, and then they ask people for money to invest for them so they can get a cut out of it too?

The ones who are actually good at investing largely do. The vast majority of investment managers soliciting new accounts are pure sales roles, not investors. Their job is to get as many assets under management as possible; that's how they get paid. They will fluff up the presentation with some nice charts and stuff but the actual "investing" will just be tossing the money into some generic funds.

Leverage.

Because fees as a manager of someone else’s money can be higher than the full amount of the returns if it were just your own money.

Fees on someone else’s capital: 1% of 20% of 1bn = 2m

Returns on your own capital: 20% of 1m = 200k

Investors have a sound economic reason to diversify but your argument works great for pundits.

Some do exactly that?

Well that's actually true though. The very very few investors that are good at investing do invest their own money. The vast majority of investors are no better than index funds.