Thanks to everyone for putting up with the lack of posts for the last two weeks. I was filming the next step in the W Network’s Expert Search which airs in June and July – I’ll post the exact schedule when it is finalized. And now back to our regularly scheduled programming…
I received an email from Joe Killoran, the author of Investorism.com, which linked to a sad article about financial advisor suicide. There was one advisor in the New York area who knew personally of four financial advisors who committed suicide within a four month time-span.
There are a few obvious reasons which potentially explain the behaviour, but one that I think needs more attention is taken from the suicide note quoted in the article. The advisor mentioned that he essentially felt betrayed by his firm’s investment recommendations which he then in turn passed to clients.
Financial advisors are perhaps lacking in investment/portfolio management education (in general). It’s enough that investors have a hard time coping with periods of extreme market volatility, but one of the main roles of a financial advisor is to guide investors through tumultuous times. It’s fine that advisors may rely on their firm’s research, but if they cannot interpret and communicate the research/recommendations in a manner that client’s expectations are managed appropriately, or if they just blindly follow it without understanding it, then there is a problem.
In short, while there are many competent financial advisors out there, my feelings are that there are more financial advisors who rely on internal firm research (or third party research) without understanding it fully. I’ve written before that the bare minimum entry requirements to becoming a financial advisor in Canada include a short online course which can be completed in two weeks – and while there are many diligent professionals who take their education into their own hands beyond that, there are many who do not.
Without a doubt there will be increased financial service regulation, and I sure hope that includes raising the entry requirements. The system is partly responsible for these advisor deaths.