Elliot S. Weissbluth explains the critical difference (widely ignored) between those who sell and those who advise. To add further danger to one’s financial health, now realize that the butchers (brokers) and even most of the dietitians today (advisors) in the financial world are paid most when people are perpetually weighted in equity based products. This fact is in breach of a fiduciary duty to put the client’s best interests first and to disclose any conflicts of interest. And yet this unspoken conflict is endemic to the entire equity culture upon which “investment advice” now rests. This is why it is essential to completely sever the sales side from the advising side (banks and underwriters cannot own advising arms who use their trusting clients as “distribution channels” for the products they underwrite), and to have a fee based system for fiduciaries which has no incentive to weight more in any one asset class over another.
As soon as a fiduciary advisor sells their “assets” (which actually is their clients’ trust and capital) to a publicly traded financial firm or a firm that also has an underwriting or corporate advisory side, the contamination is complete, and the clients are no longer getting unbiased advice or risk management.
Over the past 30 years, reduced regulation and increased amalgamation and scaling among financial services have reduced most advice to one incestuous, harmful common denominator: a bias toward equity risk at every price, every age and through every market cycle. Peeling off the complex layers of conflict is key if financial advice is ever going to become a trust-worthy and valuable profession for its clients. In the meantime, good advice–that truly serves the clients’ best interests above all else–will continue to be extraordinarily rare. Here is the direct link.