By: Jack WaymirecloseAuthor: Jack Waymire Name: Jack Waymire
Email: jack@paladinregistry.com
Site: http://paladinregistry.com
About: Jack writes for the InvestorWatchdog website and Worth magazine. He worked in the financial services industry from 1976 to 2004. For twenty of those years he was the president of a Registered Investment Advisory firm and a Broker/Dealer. Jack is the author of Who's Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor and is a co-founder of PaladinRegistry.com.See Authors Posts (87) | May 28, 2009 | Conflicts of Interest

You would like to believe?your advisor’s recommendations are based on what’s best for you and not what’s best for the advisor or the advisor’s company. You believe this because your advisor said it was so.

Don’t be naive. When companies employ advisors or control their licensing they are in a position to influence the advisor’s recommendations to you. This power is an undisclosed?conflict of interest because companies may require advisors to sell inferior products that benefit them?and not you.

Consider one extraordinarily unethical example. An insurance company that owned a broker/dealer required its advisors to sell inferior products that it produced versus higher quality?products from third parties. The reason was simple the company?made more money on its own products.

The company threatened advisors who?refused to market the inferior products with the loss of their disability and health benefits. This a powerful?threat because benefits are expensive and hard to obtain.

Was this conflict of interest disclosed to investors? Of course not. If it was they wouldn’t have bought the product.