If you want medical advise, ask a doctor–right? If you want legal advise, ask a lawyer–right? If you want investment advice, ask someone in the financial services industry (i.e., broker, banker, consultant, accountant, insurance agent, financial adviser, etc)–right? Wrong! Here’s what William Bernstein, Ph.D., MD has to say about it (from The Investor’s Manifesto p xxi):
Whether investors know it or not, they are engaged in an ongoing zero-sum, life-and-death struggle with piranhas, and if rigorous precautions are not taken, the financial services industry will strip investors of their wealth faster than they can say “Bernie Madoff.”
There are two reasons not to pay for advice from an investment adviser, broker, financial pundit or an investment newsletter:
(1) They’re not any better at predicting the future than rumpology (if you don’t know or can’t guess, do a google search) or able to predict which stocks to buy then a monkey throwing darts at a financial page and
(2) The money you pay in management fees, performance fees, sales charges, transaction fees, purchase fees, redemption fees, exchange fees, advisory fees, load fees, distribution fees, commissions, expense ratios, subscription fees, ad nauseam will compound over time and have a devastating affect on your portfolio. (See chart above and/or watch the video below.)
For an entertaining example of this greed in action, watch the seasoned broker Matthew McConaughey (manager of a New York brokerage firm) give advice to the new guy DiCaprio in this trailer from The Wolf of Wall Street.
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