When we are looking for financial information we turn to those who are considered to be knowledgeable in the field. Most of us must rely on the so called experts because we don’t have the time or the inclination to educate ourselves on the ins and outs of the financial world. The investment world is a bewildering place to those of us who don’t fully understand it so we place our trust in those who claim can take care of our financial health to enable us to protect wealth or, even better to grow our wealth as the years go by.
When the world economy is charging full steam ahead this system seems to work pretty well, the financial adviser pick stocks which make money for the clients, the financial institution all make plenty of money and everyone in the city gets their huge bonuses.
Its when the markets start to turn sour that the whole house of cards comes tumbling down, and that is what we are seeing now. People who took the advise of the experts have seen their life savings decimated because of bad information.
The latest example of this is the Barclay’s debacle in the UK where many people nearing retirement age have lost half of their live savings. Given that this money was essential to the future financial health of these people you would think that Barclay’s would have been able to provide a nice safe haven to ensure that the cash was available for these people when they finished their working lives.
What actually happened was that Barclay’s advised their customers to move their money from a nice low-risk investment to a high-risk fund. Of course if the stock markets had continued to rise the customers would have been over the moon with Barclay’s valuable advice so in a way Barclay’s have been unlucky.
But the point is that anyone with an ounce of common sense is aware that if you are going to need you money in the near future then putting into the stock market is a bad idea. Barclay’s bank know this of course so why did they convince their customers to transfer their money to this fund. I’m sure you already know the answer, Barclay’s was being paid by the fund owner, Aviva, to sell the fund to their clients.
Barclay’s knew they were taking a risk but they also thought it was a risk worth taking considering the buoyant state of the world’s stock markets at the time. The markets have since tumbled dramatically and it has now become obvious that Barclay’s are in the business of knowingly handing out financially irresponsible advise which can have a devastating effect on their “valued customers”.
The bottom line is that anyone who is handing out Financial Planning tips should be treated with a healthy degree of skepticism. Wherever there is money to be made, you can be sure that the other person is not in it for your own good no matter what they tell you or how trustworthy they may seem.
If you have a meaningful amount of money to invest but don’t have the required knowledge to make intelligent decisions, I suggest you grab a few books and start educating yourself. We work hard for our money and it is our own responsibility to ensure our future financial health.