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) | June 8, 2009 | Bad Financial Advice, Financial Advisors, Financial Planners

Did you know financial advisors want investors to like them for two primary reasons?

First, when people like advisors they also trust them and let their guards down. If that person happens to be a less than ethical financial advisor, a door opens that makes it easier for them to sell bad advice and products that maximize their incomes.

Second, investors are more tolerant of bad results when they like their advisors. Don’t think for minute that advisors don’t know this. Friendly relationships help them retain clients even when they produce bad results.

Advisors benefit when investors are friends – they make more money. Investors increase their financial risk. That’s because their objectivity is reduced and they are more prone to buying what their friends are selling. Bad investment decisions undermine the achievement of financial goals.

Investors have trouble believing friends will take advantage of them for money. That is a naive belief. Thousands of investors thought Bernie Madoff was their friend and they lost $65 billion.

If investors need friends, they should select people who don’t make their livings selling them investment products and services.