Weekly Thoughts 29 November 2013

A few different reasons over the past couple of months brings me to write about this today.

In my opinion, it is not a good thing if, in my industry advice and product comes from the same place. By this I mean if the person or brokerage or company giving you advice on what to do with your money for investing or what insurance to get, also sells or has their own product or investment funds to place you in. I believe it to be better to have these two spaces separated, implying that your source of advice does not own or have their own products that they could put you into. When you phone an asset manager or life insurance company, such as phoning Allan Gray or Marriott or Altrisk, you usually hear a polite, pre-recorded lady or man telling you that this company will not give you advice. They’ll give you information yes, but no advice.

I just think that it is impossible for the issue of a conflict of interest not to be kept under control in these spaces if this is not the case. Meaning a brokerage or financial services company that is able to provide both advice and product, knows that they can collect the initial comm or assets under management advice fee plus they’ll be collecting a product or fund fee if they use their own product. If your source of advice owns no product, this is not even a remote possibility.