A woman called into a talk show where the topic was marital fidelity.Saying she was done with men, the caller ended her commentary by asking “If you can’t trust the person who takes a marriage vow with you, who can you trust?”
I thought about her question as it applies to financial advice. Financial advisors don’t disclose any conflict of interest before taking us on as a client. We can’t check a track record because the names of clients are confidential. We have no way of knowing how well the advisor does in an economic downturn. In an industry rife with conflict of interest abuses, some of which we know, others that we don’t, we would do well to get as much information as we can before we entrust our money to any financial advisor.
When the economy is good, and the market is up, financial advisors can play the hero. When there’s a downturn, they can hold our hand as we rue our losses. The truth is we’re working on trust when we place our money with a firm or individual whose mantra is “past performance is no indication of future results”. The framed certificates on the advisor’s office wall testify to completion of a course of study, not a grade for performance.
Trust is the operating system when we don’t have full knowledge about another person. That certainly is the case when we’re dealing with a financial advisor. However, when it comes to marriage, which requires no study, no training and nothing but a vow, trust is used interchangeably with love. Unfortunately, love is not a course of study and no one gets a diploma.