If there is one phrase or term that riles up most of the financial services industry (perhaps any industry) it is, conflict of interest. The reason for this is quite simple. It is difficult for a person with a conflict of interest to understand what it means!
What is conflict of interest?
It is a situation where a person has vested interests. Such a situation is avoidable since the vested interest may influence the professionals decision-making.
Why would I want to hire such a professional and find out if the ‘may’ becomes a certainty?
There is no such thing as potential conflict of interest.
Potential conflict of interest = conflict of interest.
If my aim is to seek professional advice, I would like to hire someone who works only for me. This means eliminating people who get commissions from product manufacturers.
When they have another source of income, there is every chance that their decision-making is conflicted. I have no interest to find out if it is indeed conflicted when my money is involved. Chances are, I might never find out.
I am sure not everyone in such communities is ‘evil’ (that is statistically impossible), but what do I care? I have no intention to play with my money and find out.
I choose to avoid entire sections of the financial services. These include
1) Financial planners who distribute products either by themselves or via relatives. Many here are ignored SEBI regulations and have not got themselves registered as investmenr advisers.
2) Product distributors who offer financial planning services. Some of whom hide behind SEBIs ‘incidental advice’ clause and do not get registered as investmenr advisers.
3) Online financial plan creation portals which suggest commission-based products.
I don’t want to go and find out how many in these communities are ethical and how many are not. What do I care? I am not an analyst. I am an investor, and the only thing I care about is my fiscal well being. Even if I wanted to find out, there is no way that I could.
Naturally members from the above communities are unhappy with me and have used fiesty adjectives to describe my stand and me. I remain unruffled and see this as good advertisement for freefincal!
Like I said, it is my money and I no intention to play with it. I would prefer to either
- trust myself to learn and invest in a disciplined manner. I dont need to know everything about financial planning to get started. Just the basics will suffice
- or seek advice from a fee-only planner (if I am capable of trusting someone with my money that is). It is hard to find out if a person is a fee-only planner or not. So the simple mantra: Pay for financial advice but insist on direct mutual fund plans.
You will never find mention of these issues in the print and visual media because it is indifferent. Most of the ‘financial experts’ who write or speak in the media are product distributors.
I am fairly confident that as investors, most of you feel the same way as I do.
Use our Robo-advisory Excel Tool for a start-to-finish financial plan! ⇐ More than 1000 investors and advisors use this!
- Follow us on Google News.
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Join our YouTube Community and explore more than 1000 videos!
- Have a question? Subscribe to our newsletter with this form.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Explore the site! Search among our 2000+ articles for information and insight!
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation for promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu gets a superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low volatility stock screeners.
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our Youtube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)