Wednesday, February 24, 2010

Jason Zweig on Protecting your Wealth

Advisor Perspectives interviews Jason Zweig (author of Intelligent Investor: A Book of Practical Counsel, The Little Book of Safe Money: How to Conquer Killer Markets, Con Artists, and Yourself, and, Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich).

Here is a brief excerpt:
It seems that mutual funds, insurance companies, banks, and other “manufacturers” of financial products do not have incentives that align with those of investors. Even so called “fiduciary” financial advisors are rewarded by growing their clients’ assets, which may motivate them to take on more risk than is appropriate. For the average investor, is there anyone that he or she can truly trust?
Well, sure. Most advisors really do have their clients’ interests at heart, certainly all good advisors.
Advisors really do need to ask themselves, “Am I eating my own cooking?” Would I put my money at risk the same way I’m recommending that my clients do? Instead of just throwing 10 percent of every client’s money into commodities, maybe advisors should ask themselves whether they would put all of their own money into commodities.

Framing the question that way might help them investigate the empirical evidence a little more closely. Reasonable minds can differ, but I personally don’t see it.
Read the Entire Interview.

In the interview, Zweig recommends reading our other blog Farnam Street -- we couldn't agree more.