Do Studies Explain Why Your Financial Advisor Might Lie?


Owen Smith knows that breaking up is hard to do. 

But it’s time to dump his financial advisor. I’ll call him Peter. Three years ago, Peter said he could build a portfolio of actively managed mutual funds that would beat their benchmark indexes. 

It’s a silly claim to make.

Finding funds that have done well in the past is easy.  It’s like looking up which golfers have won the last ten U.S. Opens.  To pick future winners, you need a working crystal ball.  But Peter could do it.  At least, that’s what he said.

In his valiant quest, he stuffed Owen’s portfolio with yesterday’s winners.

Image Courtesy of Pixabay

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Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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3 Responses

  1. Jorge says:

    Hi Andrew,

    A friend of mine was telling me to look at the peaks of these bear stocks during the last financial crisis:

    For S&P 500

    For nasdaq

    He is suggesting that it’s a good idea to transfer some of my TFSAs into these stocks, but it seems like market timing to me. On the other hand we do know that the markets crash from time to time and the time may be getting ripe for a new crash.

    Would appreciate any thoughts you have!

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