The Worst Investment Advice I’ve Ever Heard Everywhere


Recently, I had the opportunity to write a guest post for the White Coat Investor website.  In the post, I was critical of the personal finance industry and encouraged readers to educate themselves.  There were a number of comments that agreed that I had “set up a bit of a straw man that makes advisors look particularly bad.”

I had never actually heard this “straw man” expression before and so I Googled it.  Here is how Wiki defines it:

“A straw man is a common reference argument and is an informal fallacy based on false representation of an opponent’s argument.  To be successful, a straw man argument requires that the audience be ignorant or uninformed of the original argument.”

Ouch.  That criticism hurt.  It didn’t hurt because people criticized my writing or ability to build an argument.  That goes with the turf when you put your ideas and beliefs out on public display.

Here is what hurt.  These commenters were basically saying that the example I gave was so extreme that no one could actually be so stupid to follow that worst case scenario advice.  Anyone who would is a moron!

This “hypothetical” example was built to reflect the exact advice that we received from our advisor and followed for almost 10 years.  Here is our full story if you would like the gory details.

Are we stupid?

If you believe that our argument represents a “straw man” worst possible case scenario, then we must be fools.  We weren’t taken by a quick sales pitch.  We bought in for a decade.

Our actions here were not smart; however, we are not stupid.  We are highly educated.  We each have earned 3 college degrees.  We each have graduated college with honors.  We each are competent enough that we’ve never spent one day of our lives unemployed, and we’ve each more than doubled our salaries since beginning our careers.  We’re not complete morons!

OK, so we’re not stupid, but we must know nothing about money and finance.  Well not so fast again.  Despite living this worst possible case “straw man” scenario for a decade, our net worth is about 20X greater than average for our age.  We must know at least a little bit about how to build wealth.  We pay a bit of attention to our finances.

We’re not mentally incompetent and we’re not completely financially illiterate.  So how did we manage to be in this “straw man” scenario for this long and not even know it?  Plain and simple, we found our advisor by following the worst advice I’ve ever taken.  If this advice is so bad, why did we not realize?  Because it is advice that is repeated everywhere.

When looking to find a financial advisor, seek a referral from someone you trust.

I would challenge anyone to find an article anywhere on the internet about finding an advisor that does not contain this advice.  Here is why it is so bad.

We as a nation are financially illiterate.  Very few people have an understanding of the most basic personal finance information.  Even people like us who do have a basic understanding of personal finance often are overwhelmed by the complexity of investing.  This is why we seek the help of advisors.

Unfortunately, people don’t know what they don’t know.  With good intentions, people love to try to help out.  You will have many friends, colleagues, and family who are happy to refer you to “their guy”.  This is how we found “our guy”.  We in turn referred others to him before we finally got wise to just how bad his advice was.

Going into an advisor with our guard down led us to blindly follow his advice.  We failed to ask appropriate questions.  We did no due diligence.  Instead we relied on trust.  We signed off on things that in retrospect were obviously not in our best interests.  We never ever even considered that our advisor wasn’t putting our interests first.  We believed many of the half-truths that were part of his sales pitch.  Even as we started to suspect that we were not receiving the best advice, we were very slow to investigate further and take control.  Our trust ran that deep.

The reality is we never really wanted to become DIY investors.  However, every attempt to find a better advisor lead us back to the worst advice we’ve ever heard.  Unfortunately, saying or writing the same thing many times does not make it any more true.

We realized we needed to do something different.  We had to educate ourselves and take control.  I would recommend you do the same.

Are we unfair to the personal finance industry?  Have you found a way to find a good advisor to help you to better your financial situation?  Do you agree that seeking referral to an advisor is horrible advice?  Share your thoughts in the comments below.

*Image courtesy of iosphere at


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9 comments on The Worst Investment Advice I’ve Ever Heard Everywhere

  1. Nice follow up from your WCI post. I have to admit that I did not read your WCI post all that thorough as the title seemed interesting and when I found out it was about the finance industry and how advisors for the most part just suck money of your pockets I stopped reading..

    I Fully believe that to be the case and so I have avoided the Finance industry when it comes to “advisors” that want to “help me” I’m self taught and learn quickly.. If 5 years of using the financial system and learning the ropes I have built a $500K portfolio.. Not huge. but I’m finally at the cross over point where it is going to start to pick up momentum.

    I have in my quest met with 4 very different financial advisors and talked specifics and details on my goals and objectives and my approaches to getting there and asked questions on how they would help me get there ? how they would benefit me? how they would provide “New advice” that I wasn’t already currently implementing in my plans..

    I could not see where there “helping me” was doing anything for me that I wasn’t already doing and it was going to cost me money to pay them to do what I already wanted to do??

    Made no sense to me… listened to their sales pitch and thanked them for their time.. I stayed my course and my path….

    I’ll admit I’ve made a few mistakes along the way but it was the learning experience I wanted…

    I have a 3 year plan to close in on a portfolio of $1M but that is heavily dependent on the market staying its current course and I have my reservations about that also… but none the less I will stick to it and 3, 4, or 5, years I’ll be there before age 35!!


    Only you will be watching out for your interests!!!

    I simply laugh at people that tell me they have “a guy” I try to steer them in other directions and to open them up to learning more about finance but they push back… Only to constantly be challenged and feel like they are “not getting ahead”

    It’s to time learn the “game of life” and “Be Your Own Guy”

    Cheers to all!!

  2. There is a famous investing book by the title “Where are the Customer’s Yachts?” by Fred Schwed Jr. (I believe this was written BEFORE the Great Depression and remains true today!) Plenty of Wall Street types are making big bucks. Where is the evidence they do it by providing value?

    1. The more things change, the more they stay the same.

      I’ve never heard of that book, but we reviewed John Bogle’s Little Book of Common Sense Investing b/c we felt it showed very clearly all of the ways that Wall St. manages to take away from investor returns while adding no net value. If you don’t understand these concepts, it is a must read.

  3. I’m lucky in that a very good friend is a financial adviser. And he told me to DIY my retirement accounts at Vanguard in the Total Stock Market Index fund. He may be the only honest adviser in the country though…

    1. Ha, Ha! I’m pretty sure there are a few honest people in the industry.

      Unfortunately, the problem is that there is just no good, proven business model for advisors to work with people with low net worth that is mutually beneficial to client and adviser. I encourage people to do their own research and see if you agree.

      Once you have built a large net worth, an advisor can skim a very small portion of proceeds to allow for both parties to gain benefit from the relationship. However, this leaves the majority of people who most need the services of a good adviser out in the cold.


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