Financial Advisor Suicide

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.

You can read the short article by clicking here.

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.

Preet Banerjee
Preet Banerjee
...is an independent consultant to the financial services industry and a personal finance commentator. You can learn more about Preet at his personal website and you can click here to follow him on Twitter.
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Showing 6 comments
  • TStrump

    What a sad story, especially if advisers trusted the recommendations of their firms and didn’t fully understand them.
    It begs the question – what were the recommendations based on … quality of investment or other factors?

  • tom

    Wow that is fortunate but I remember working for a network company and they classified you as a financial advisor but really when you look at it you look at it it was just sales, if someone asked me something technical i would choke.

    It might be the whole idea of basically everyone jumping on the bandwagon because everything is going up and people are making a killer on the stock market, so you will see the girl at the grocery store cashier giving you her business card so she can do your investments.

  • Mark Wolfinger

    Certainly a sad story.

    As to why one might blindly follow the company’s investment ideas: It’s much less work to trust and sell the company recommendations.

  • Canadian Money

    The stock market is – from a practical point of view – a random walk for most people. This I suspect includes the vast majority of financial advisors. Its the blind leading the blind and the investors are being told “what they want to hear”. By a random walk I mean something that most people can’t predict. Its not that it can’t be predicted it is just that the majority are unable to do it.

    In short…if its not done intentionally, with knowledge that it is a scam, then its not your fault. So don’t kill yourself over it.

    CM

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