Over the last 50 years we have been indoctrinated to hold professional people in high esteem, a job in banking was respected and working as an Financial Investment Adviser meant you understood how to invest money on behalf of your clients. But over the last two years we have seen this stripped away to reveal the truth, they are only human and humans have flaws, plenty of them!

Bankers once renowned and respected for being conservative with other people’s money were no longer conservative. They nearly lost it all. Money in the bank was supposed to be a safe haven, yet it had been completely risked. Searching for ever increasing profits they took risks with our money and never told us. Now they are too conservative, being too scared to lend money to the very businesses that keep our whole economy going. All this whilst having their profits bolstered by an extremely low cost of money (Fed Funds Rate, Bank of England base rate). They are getting the money at practically no cost while lending it out at still pre-crisis rates. You try getting a loan under 4%.  All this while they are starting to pay themselves big bonuses again.

Financial advisers who talked about risk management squarely to not understand risk.  Just before the Financial Crisis struck, record numbers of Newsletter writers, Hot Stock Tipsters, TV Pundits were all still bullish. Even when the crisis struck, if you had called your adviser he would have told you to “stay with your funds”, “do not do anything”, or if you really insisted you wanted to move to safety it is then you find out that you cannot as you are stuck in a fund for a “minimum period” and if you moved out there would be a “penalty”.   How is that managing risk?  Managing risk also should mean you have the ability to move funds quickly with no cost to avoid demolition to your retirement fund.

This exactly happened to my father, he was injured in a horrific workplace accident and had to retire handicapped early. He received a small award from the courts to compensate him for the pain (just enough to live on) .  I took him to see the most respected Financial Advisers in his area. With their fancy offices and rows of Audi’s in the car park, my father was quickly convinced these people would conservatively invest his money, to enable him to live out the rest of his life with less money worries.  He needed to focus on assisting my mother who also has health issues. Read More→