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Weekend reading: Another tale of a woeful financial adviser

Money articles

A busy week on Monevator covered everything from banker bashing to, well, financial adviser bashing. But it wasn’t all wanton violence, with posts on how to start investing, UK home buying, and DIY hedge funds, too.

Still need to work on making one or two of those articles shorter, though!

My post of the week is from The Simple Dollar, the huge US blog, and it continues the ‘financial adviser – friend or foe?’ theme.

Trent writes:

It never hurts to know your stuff. Because my wife and I have been intimately involved in our personal finances for years, we knew what kinds of questions to ask and what to look for. We knew our stuff – and it revealed that our “advisor” did not.

After that meeting, my wife felt more competent and ready than ever before to take control of her own retirement savings and manage them herself through Vanguard. In the end, our disastrous meeting actually ended up being a confidence-builder.

It’s great that Trent’s wife felt empowered when she realised how informed she already was. You have to feel sorry for the next person who walked in through that adviser’s door though.

It’s hard to think of another profession where seeking advice is quite so dangerous if you don’t already know your stuff. Serial killer interviewer? Voodoo practitioner? Certainly you don’t expect to have to joust with your doctor or your architect.

I initially learned about investing because I wanted to grow my wealth, but the happy side effect is I can’t be railroaded by these creeps. I hope you reach the same place, too.

Some good reads from the money blogs

Financial and money articles from the UK papers

  • Pick of the emerging markets – FT
  • Mortgage costs hit five year low – FT
  • China’s economy – not just another fake – The Economist
  • What you should know about banker’s bonuses – The Motley Fool
  • One in five chance of a second financial crisis – The Telegraph

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{ 5 comments… add one }
  • 1 RetirementInvestingToday January 16, 2010, 8:30 pm

    I personally became disullisioned with the finance sector in 2007 and decided to go it alone. I’m personally very happy with the decision and haven’t looked back. Sure I’ve made some mistakes but I’ll never make the same ones again.

    What made me go it alone:
    – I went looking for a Financial Adviser and what became clear is that I would devote a lot more time and effort to my portfolio than they would. My fees at 0% were a lot less than theirs helping compound interest work it’s magic. I run a couple of compound interest examples of this on my blog.
    – A great book title ‘Where are the Customers Yachts’ by Schwed really made me think.
    .-= RetirementInvestingToday on: Further Reasons Why I Use the Shiller PE10 =-.

  • 2 George January 16, 2010, 11:40 pm

    True Dat. In our culture, it is so easy to outsource our finances, health or other critical aspects of our lives. But neither of those is too complicated for anyone to understand. We don’t need an MBA to manage our finances successfully. We don’t need a PhD to create a health plan that actually works for us.

    I like the Financial Samurai’s post. It helps remind us how incredibly lucky we are, no matter what other people say!
    .-= George on: Dan Pink’s Motivation and DRiVE =-.

  • 3 The Investor January 18, 2010, 1:02 pm

    Yes, Where are the Customers Yachts isn’t the greatest book on investing ever, but it’s the greatest title. (Second best – “The Snowball” for 2008’s Buffett biography).

  • 4 T January 30, 2010, 6:12 pm

    Just when you think the FSA are starting to crack down on commission paid to “Independent” financial advisers (don’t know why we have to wait until 2013), there’s plenty who want to milk the system whilst they can…

    If an adviser recommends that a client transfers an existing pension or ISA to Aviva, then the adviser can choose to take up to 10% of the transfer value in commission, leaving the remaining 90% to be invested. I’m sure most professional advisers won’t be influenced by self-interest….


    If anyone reads the comments, it’s interesting to see advisers defend the practice by saying “it’s not commission, it’s customer agreed remuneration” – so that’s OK then!

    p.s. Aviva seem to be the worst, but the other insurers aren’t far behind: Standard Life pays 8% commission.

    I’m not against seeking professional advice, whether from a financial adviser, accountant, solicitor etc, nor should the advice be “free”. I just think financial advisers should charge a fee like everyone else, particularly if they want the title “Independent” (and they should stop flogging funds and include ETFs etc).


  • 5 The Investor January 30, 2010, 8:26 pm

    @T – Thanks for your comments. 8% commission! They must roost by night hanging from their feet in a cave.

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