What is it in some that decides the rules when it comes to presenting oneself as a savior of the investor? First of all show me an advisor that isn't an investor and I’ll show you a poor advisor, or for that matter a source of poor advice. The lies that are perpetuated in the name of sound thinking are beyond the pale of sociopathic babble. With all the guidance offered by technology each of us is empowered to a level that poses as academic while it skirts the edge of celebrity.
So what do we think compels the outcome, conflict of interest? Just as it inhabits the thin soul of the casual advisor conflict of interest can manifest itself in experienced advisors as well. And that’s where I draw the line. The countless blogs that fill the internet offering advice in the name of nothing more than experience at noting more than giving advice (Whew!) I’m not just talking about classic conflicts of interest exclusively, I’m throwing in the oversight failures of the entire regulatory industry that has allowed the mutual fund companies to charge obscured fees, present unrealistic results for comparisons that are only available to the largest investors and generally provide marketing support to advisors while throwing them to the wolves in exchange for leniency from the financial reformists.
In short people are seeking out advice with more deliberate intent than at any other time in my career. But should that advice come at a price and is that price a conflict of interest if it is in the best interests of the consumer. It all depends on the responsibility of the buy and sell side institutions. Is the fee only advisor the best solution? Not if the one/two punch of overwhelming evidence (empirical and mathematical) is that the long term outcome is skewed negatively. Is the independent advisor the best solution. Not if one forgets that the independent advisor has moved in such a direction because of the potential for higher payouts. And while I’m on the subject of payouts can someone tell me the difference between a fee and a commission. If you pay a bill over time isn’t it often MORE EXPENSIVE than if you pay it at the beginning. Anyone who own life insurance will tell you the annual program is better than the monthly program. There is only one entity that the monthly program works best for and that’s the institutions. I’m ranting about the consumer!
Past performance is not indicative of future performance (I didn’t make it up) Isn’t it worth noting therefore that while talent is only recognized in an individual if that individual has accomplished something out of the ordinary first. The financial industry says that talent is assumed by external achievements such as lofty academic credentials. Many of the largest finance companies have profited, and recently stumbled, from the efforts of this lively and intelligent group. A simple rule for success 101, cost should never be a hired at the expense of talent and talent should never be bought at the expense of experience.