All Financial Advisors Should Be Shot October 24, 2016Posted by Peter Varhol in Uncategorized.
That seems a bit extreme, and out of the purview of this blog, but I think is an important message. Tax-deferred Individual Retirement Accounts (IRAs) became legal in my early 20s. Shortly thereafter, I started gingerly putting money into an IRA. At that early time, the only investment options were certificates of deposit (CDs). No mutual funds or stocks.
For the next 30 years, all (literally) personal investment advisors said, both privately and publically, that you didn’t have to invest very much; rather, let the power of compound interest do the heavy lifting for you. Start early, invest a few percent of your income, and let the prevailing interest rates take care of the rest. Sleep easy. This was the case whether you had an IRA, SEP, 401K, 403B, or other investment vehicle (I have had them all).
Circa 2010, the message emanating from all personal investment advisors changed dramatically. The message now became “Save as much as you can. Interest rates aren’t going to do anything for you. You just need to sock away more money. And still more money.”
For those deep into their careers, this change of message came like a kick in the stomach. For those who followed the advice of the last 30 years, all of a sudden, in their years before retirement, that they were doing it wrong.
The fact of the matter is, they lied. Simply, personal financial advisors lied. Granted, the landscape had changed. The interest rates have changed in recent years, putting the economic burden on savers, while spenders get free reign.
But financial advisors, if they were honest and competent, are supposed to think in the long term, for your benefit. They don’t, and they won’t. They think for their own benefit, and don’t give a flying leap about yours. And if they say otherwise, they are either incompetent or lying. Myself, I would bet on lying.
Remember, your personal financial advisor (or investment website) is fundamentally a sales person. They are out to enrich themselves, not you. In fact, if you followed their advice for two or three decades, you have certainly gotten yourself screwed. Certainly, they have to appear as though they care about your financial future, but the drastically changed messages put the lie to that in a hurry.
They can radically change their message; in fact, deliver a very contradictory message, with impunity, because they continue to collect fees from you. They make money whether or not you do.
Okay, it is buyer beware. But if they in any way represented themselves as honest brokers, they are liars, and deserve to be treated as such. They are not honest. They are not on your side. And if your personal financial advisor has abruptly changed his or her message over the last several years, you have good reason, oh, I cannot say shoot them, but perhaps throttle them. Because they lied to you, over a period of years.