Friday, June 3, 2022

Short Takes: Finding a Good Life, DTC for Type 1 Diabetics, and more

I was reminded recently of the paper The Misguided Beliefs of Financial Advisors whose abstract begins “A common view of retail finance is that conflicts of interest contribute to the high cost of advice. Within a large sample of Canadian financial advisors and their clients, however, we show that advisors typically invest personally just as they advise their clients.”

I didn’t find this surprising.  Retail financial advisors are like workers in a burger chain.  I wouldn’t expect these advisors to understand the conflicts of interest in their work any more than I’d expect workers in a burger chain to understand the methods the chains use to draw customers into eating large amounts of unhealthy food.  It’s hardly surprising that so many advisors understand little about investing well, and that they run their own portfolios poorly.

However, this doesn’t mean the conflicts of interest don’t exist.  It is those who run organizations that employ, train, and design pay structures for financial advisors who have the conflicts of interest.  The extra layers between the clients and those who understand the conflicts make the situation worse.  It’s easier to tell someone else to do bad things to people than it is to do bad things to people yourself.  It’s even easier at higher levels to yell at underlings to create more profits and let them tell the clueless advisors at the bottom layer to do bad things to clients.

Of course, not all advisors in this sort of environment are clueless, and many manage to escape to run practices where they are able to treat their clients better.  Unfortunately, this type of advisor usually either only takes clients with a lot of money or charges fixed amounts that are large enough to scare off clients with modest savings.

Here are my posts for the past two weeks:

Taking CPP and OAS Early to Invest

Why Do So Many Financial Advisors Recommend Taking CPP Early?

Measuring Rebalancing Profits and Losses

Here are some short takes and some weekend reading:

Benjamin Felix has an interesting paper called Finding and Funding a Good Life.  He looks at the research on happiness and how to achieve a good life.   One of the reflective questions he poses is one I’ve thought about a lot: “Are there unpleasant tasks in your life that you could outsource?”  I often decide that it’s easier to clean my house myself than to become an employer, but maybe that’s just an excuse for not taking action.  Another interesting point is that “when people are told what to do they are more likely to rebel against the instruction to regain their sense of freedom.”  I think that explains why I lost any desire I used to have for working for a boss, no matter how well I was treated.

Big Cajun Man
reports that Canadians with Type 1 Diabetes should have an easier time getting the Disability Tax Credit (DTC) after recent changes.

Kerry Taylor discusses how to raise your credit score with licensed insolvency trustee Doug Hoyes.  Among the many good points Doug makes, he says that it’s your credit history over time that matters more than a snapshot of your credit score.

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