A CRASH IS COMING!!

I recently heard from a client that a friend's "financial advisor" told them recently that a market crash was coming.

WOW! Scary! How did they know?

I pressed for details, "when is it coming?" "how bad will it be?" "what are going to be the underlying drivers to this great market movement?" "how confident is this advisor in his analysis!?" Unfortunately, I could not get such important details. As such, it would probably be irresponsible for me to act on such flimsy word of mouth. (To be fair, I don't even know what market he was talking about, it could have been the Nairobi Coffee Exchange, for all I know!).

As it turns out, the "financial advisor" was no such thing - he was merely an insurance salesman. (The term "financial advisor" is not a regulated one, whereas "investment advisor" is regulated by Section 202 (11) (a) of the Investment Advisor's Act of 1940 giving me a few responsibilities that do not encumber our fear-mongering friend).

It disgusts me that someone would use such doom and fear to sell his products and discourage someone from a responsible, individually tailored, investment plan. While he may have been offering his products as an "investment" they are no such thing. They are products which involve you giving up a significant amount (or all!) control of your money in return for some minimal guarantee and very high cost. Insurance salespeople have no fiduciary duty (required of Registered Investment Advisors) thus have no duty to consider your best interests. They are free to sell you the product that makes them the most money, with no concern for your unique situation. Registered Investment Advisors are required to speak the truth, prohibiting us from making absolute statements about the future, and always act in the best interest of the client - even when it is to our own disadvantage.

So, the next time someone tells you that the sky is falling - please remember get a few more pertinent details, and let me know! (Next step - ask them what they are selling)