All of the studies show that you are statistically better off going in an indexed fund, v. a managed account with a financial advisor. The answer to the titular question is "duh." Even without the conflict of interest.
Also, there are different kind of indexing strategies, e.g. one that is based on revenue and similar stuff..
I think advisers and index funds sit on two ends of a see-saw. If "everyone" ran to one side, the other would start to look more attractive.
We need investors who actively invest, by evaluating the companies, so that more money goes to good companies and less money goes to bad companies. The index represents the current batch of the top 500 good companies in recent times as decided by the active investors. The index is re-balanced as the preferences of the active investors change.
So, if there were no active investing, then investing would be completely pointless.
As an increasing number of low-intensity investors broadly invest in the entire market space, it overinflates asset prices and diminishes the efficiency of this market space, to a degree. It's hard for news to knock on VW stock prices, for example, if the index funds keep buying it like clockwork anyway. Of course, it's possible that this system increases information arbitrage, but the overall effect is that index funds become less efficient as more investors rely on them.
I'm not sure where the irony is in that; sure, it would be bad if every dollar invested in the markets was invested that way, but no one that I've seen has ever suggested that every investment in the market should be done that way; the closest argument I've seen is that individuals whose primary focus isn't personally, actively managing investments that just want good returns for, e.g., retirement and financial security should prefer index funds.
2) I have been having good returns (for over a year now) with 2 vehicles: lendingclub.com (P2P lending) and futureadvisor.com (which is in a space I suppose is called "computer-assisted wealth management"; competitors include Wealthfront, etc.) It's basically a financial advisor without the advisor, and thus, extremely low-fee. You get a person if you need a person, and they lean heavily on quantitative analysis to reduce their own investment-decision workload.