You have seen the TV advertisements. Wall Street markets competence, trust, and services that help you achieve your financial goals. You have also seen the headlines documenting Wall Street abuses that have cost investors hundreds of billions of dollars. Which one do you believe, the ads or the headlines?
Wall Street is trustworthy or its not. I believe the headlines because regulatory agencies (SEC, FINRA, states) have documented one Wall Street abuse after another. When the most prestigious firms on Wall Street (Goldman Sachs, Citigroup) are ripping off investors you know the industry is not the trustworthy source of advice and information that its advertisements say it is. Continue reading →
What if you could have gone through school without taking any tests. Would you have worked as hard? No tests mean no accountability for learning the material. Unmonitored advisors are less accountable for the results they produce.
What if an advisor has two clients. One monitors the advisor and one does not. Which client is going to get more attention? The client that monitors is going to have information that may cause him to terminate an under-performing advisor. The advisor knows this. So the client that monitors and increases accountability gets more attention.
Will increased accountability improve your investment results? There is no guarantee, but increased attention certainly can’t hurt. You would hope that the more time an advisor spends on your portfolio the better your results will be.
Monitoring also provides an additional benefit. It will be easy to spot advisors who sell you products, but provide no ongoing services or advice. This gives you the opportunity to change advisors which can also improve future results.
Watchdog is launching a new quarterly monitoring service for advisors in February 2012.