18 March 2012

Don't be a Muppet when dealing with financial advice

The revelation claiming that some employees of Goldman Sachs occasionally referred to customers as 'muppets' should be a reminder that the old adage 'Buyer Beware' should always be foremost in investor's minds when confronted with financial advice. In nearly all situations the vendors have a financial interest at stake and the inherent conflicts of interest can only be neutralised by a careful analysis of the service on offer. Most investors are at a disadvantage as they do not have the same level of information about the intricacies of the financial markets that is available to finance professionals. Taking unbiased advice is recommended in order not to become just another muppet. For more on the subject read here. The distinction between a client and a counterparty should be of particular interest to private investors.