An Uneven Playing Field

Playing Field80% or more of the population still rely on brokers rather than advisors for financial advice. Let’s examine some of the reasons and risks. Perhaps the most overwhelming risk investors usually don’t understand is asymmetric information. The broker (or insurance person or banker), has far more knowledge of investing in general, and the products being pushed in specific, than the investor. This creates a space for abuse and an uneven playing field.

 

Rookie vs. Pro

Years ago, I had a physician friend tell me that regardless of how much general medical knowledge I might have, there was really no way to match that with any physician, good or bad. That is so true, yet when it comes to financial planning and investing, many investors think they know enough to understand the pitch from the broker. I wish that were true. Remember, brokers don’t have a fiduciary duty (like we do) and therefore don’t have a duty to protect you (like we do).

 

What’s the True Cost?

One of the reasons well-intentioned investors still go down the “broker road” is they believe it will cost less. Wall Street firms are at their core marketing machines and they understand how to blur the lines such that sales commissions and other costs are opaque. On the other hand, our costs are transparent and easy to discern. “Costs something” versus “costs nothing” seems to be the narrative.

Brokers (regardless of what they title themselves) and others employed by traditional financial services firms spend much of their time training how to push the “benefits” of their products and overcoming objections. A consumer, even a reasonably well informed one, still is at a considerable disadvantage in this scenario. This can easily translate into mistakes and poor financial decisions.

Let’s face it. We live in a world where many investors are essentially “rudderless”, being pushed around from place to place by the tides of misinformation. This often results in a kind of “financial sickness”, a condition that can be fatal to many. Our role is to provide honest, transparent help to those who want to be cured. Ready for a real conversation?

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