To understand the roots of the wealth conspiracy, we must first understand that financial firms are not charitable organizations. They do not exist to benefit society at large. They exist to make a profit. They are essentially sales organizations with financial advisors as salespersons. Their concern for you is not always pure, nor does it come from positive motives.
Financial firms are experts at producing an image of providing safe, prudent, and unbiased advice. They advertise extensively to promote themselves and what should be important to you. Through multiple generations of their advertising, they have significantly implanted their agenda and concepts into what I refer to as our financial belief system. It leaves us predisposed to believe and accept their sales pitches without even realizing we are being influenced.
Yes, advisors and their firms understand they will lose you as a client if you realize they are not properly considering clients best interests. This causes a game to be played where the firms maximize their profits while satisfying their clients’ perceived needs. Unfortunately, satisfying their clients’ perceptions can be quite different from optimizing their clients’ portfolio performance or protecting them from losses.
The financial firms provide persuasive information to their advisors regarding what is best for the client, hoping the advisors will then parrot this information to their clients and prospects. These firms are too smart to make false statements. Instead, they cherry-pick true statements and facts, leading their clients to unwise conclusions, without the firm needing to state the desired erroneous conclusions. The focus is on the company’s bottom line, not on optimizing investors’ results.
They do this for two reasons. First, it is a more effective selling tool to let clients come to their own conclusions. Second, not communicating the false conclusion provides legal protection from stating a falsehood.
You may ask, how could citing a fact lead to a falsehood? It’s simple. A half-truth—something short of all the information—can lead to a completely wrong conclusion. Presenting convincing absolutely true arguments, statements, and facts without the counterbalancing arguments, statements, and facts, is stating a lie with truths. They don’t need to lie if they can convince you with half-truths to believe the false concepts that generate more profits for them. This is the essence of what I call “The Wealth Conspiracy”.
In addition to cherry-picking the truth, firms can provide immaterial, irrelevant or misleading information that causes clients to come to false conclusions. This approach is much more effective than directly stating the false conclusion.
And the conspiracy is multi-generational. Today’s co-conspirators (financial advisors) likely have no clue that they are part of it. They just repeat what they truly believe. The misrepresentations and falsehoods have become part of their core financial belief system—beliefs that are ingrained in their understanding of how the world works. Through their repetitive, marketing and advertising, you probably believe these falsehoods too. The point of this website is to point out these false beliefs you likely have about investing.
It is important to note that your advisor is not intentionally misrepresenting the facts. Advisors truly believe their advice is best for you. After all, they are only regurgitating ideas that are now considered common and accepted as best business practices. But because wisdom is common and accepted does not mean it is correct. It was once common and accepted to believe the Earth was flat.
There is evidence that the firms (if not the advisors) are aware they are not telling the whole truth. This is why they stay away from stating conclusions and instead, rely on the advisor or client to come to the desired erroneous conclusion. Discovering the conspiracy will rock your financial beliefs.