This is an extract from the introduction of the recent book by Vern Gowdie, How Much Bull Can Investors Bear?
‘There are a number of inherent conflicts of interest in the financial advice business model…and the major conflict is that over 80% of financial planners have direct or indirect ties to institutions.
‘Financial planners rely on economic and market information that comes primarily from two sources: investment institutions and research firms. These commentaries are largely predictable.
Rule No 1 - never scare the client
‘They’re always wise after the event, but rarely ever before it. In my opinion, institutional economists are professional marketers. They’re always going to stick to the script and promote the institutional line — ensuring money continues to flow into their employers’ funds.
‘The institutional economists are the media’s go-to people whenever a market or economic commentary is required. In spite of their pretty average (disappointing) track records, they project credibility. The public is constantly fed the same old spin — “things will keep going up”, or, if they are down, “they will soon go up”. Any economic downturn is destined to be a “soft landing”.
‘The name of the game is to not do, or say, anything that spooks investors or potential investors.