… your advisor works for a vampire squid or is paid on commission. Click here to see the article from Time/Moneyland
For extra credit see: Why Wall Street Hates the Lazy Portfolios Strategy
“America’s investors have been ripped off as massively as a bank being held up by a guy with a gun and a mask,” former Securities and Exchange Commission Chairman Arthur Levitt warned in an article in Fortune magazine a decade ago. That same year in his classic “Take On The Street,” Levitt lambasted the fund industry as “a culture that thrives on hype … withholds important information,” a “cutthroat business” that “misleads investors.” Today, it’s worse.
In “The Market for Financial Advice: An Audit Study” The authors share their findings that financial advisors who are paid on commission may color their recommendations to increase their compensation to the detriment of their clients. This is something that lead to the creation of the field of financial planning, that I played a small part of back in the eighties.
The original idea was that financial planners would be represent the client’s interests in executing a financial plan designed to achieve the client’s goals such as retirement, educating children, reducing taxes and preserving their estate for heirs and charitable beneficiaries. This was in opposition to the typical situation where a person seeking to secure their financial future was subjected to Continue reading Kind of a No Duh, but study shows that commissioned ‘advisors’ may give self-interested ‘advice’.