1073: [Part 2] The Perfect Storm - Demonstrating Conflicts of Interest With Investment Advice by Chris Mamula

Optimal Finance Daily - Financial Independence and Money Advice

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🗓️ 16 February 2020

⏱️ 10 minutes

🔗️ Recording | iTunes | RSS

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Summary

Chris Mamula of Can I Retire Yet shares his thoughts on conflicts of interest with investment advice. This is part 2 of 2. Episode 1073: [Part 2] The Perfect Storm - Demonstrating Conflicts of Interest With Investment Advice by Chris Mamula Darrow Kirkpatrick is the founder of CanIRetireYet.com. He began serious investing in his mid-30s and retired at age 50. He's not a dot com millionaire and didn't become financially independent by flipping real estate or trading hot stocks. He did it the traditional way: hard work, frugality, prudent investing, and patience. When it comes to personal finance, his top priorities are simplicity, reliability, and safety. Now his mission is to help others become financially independent as he did. More recently, Chris Mamula has been managing the blog and he's a frequent writer on the site. Chris used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. Now he draws on his experience to write about wealth building, DIY investing, financial planning, early retirement, and lifestyle design. The original post is located here: https://www.caniretireyet.com/conflicts-interest-investing-advice/ Please Rate & Review the Show! Visit Me Online at OLDPodcast.com and in The O.L.D. Facebook Group Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	This is optimal Finance Daily, episode 1073, the perfect storm, demonstrating conflicts of interest with investment advice, part two, by Chris Mamula of Can I Retire Yet.com.
0:12.0	And I'm your host and narrator of the show.
0:14.0	My name is Dan, and I am here every day of the week reading to you from some of the best
0:18.4	personal finance blogs on the planet.
0:20.3	Now today's post is actually a continuation from yesterday so if you're new here it would be best to listen to that episode first that's episode 1072 from Saturday
0:29.8	But if you're all caught up let's hear part two as we continue optimizing your life.
0:35.0	The Perfect Storm, demonstrating conflicts of interest with investment advice, part 2 by Chris Mamula of Can I Retire Yet.com.
0:47.0	An advisor is paid to accumulate assets under management, not to give the best advice.
0:52.0	There are many instances when an investor's money would be better used elsewhere.
0:56.0	What if a client is debating using extra funds to pay off a mortgage early versus investing more?
1:01.3	There are legitimate arguments either way, but only investing more. There are legitimate arguments either way but only
1:03.9	investing more money benefits the advisor. How about a person
1:07.4	contemplating withdrawing from investment accounts to invest in a personal business?
1:11.1	Either decision could be correct for the investor, but only one would benefit the advisor.
1:16.0	Risk is another issue. An advisor could add value by coaching a client to take an appropriate amount of risk.
1:22.0	A conservative investor may need to take more risk to reach their
1:25.2	goals, but what if the move backfired and the investor lost money? On the flip side, an overly
1:30.8	aggressive investor may benefit by dialing the risk down.
1:34.0	But what if they lost performance?
1:36.0	In either case, the investor could get upset and fire the advisor.
1:40.0	There is incentive for the advisor not to rock the boat.
1:43.0	Remember, they get paid for having assets under management, not for giving good advice.
	...

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