Lesson 46 Selecting an Advisor

Avoiding Advisor Risk

Market risk and behavior risk are well-known and frequently discussed. However, there is another type of risk that is often overlooked: advisor risk.

Investors who recognize that they don’t have the time, knowledge, or inclination to deal with market risk, or the discipline to deal with their own behavior risk, might seek advice and unwittingly run into a third level of risk: the risk that their advisors are either not working in their best interest or are incompetent. This risk is little discussed or appreciated. But, advisor risk is not trivial. Countless investors who delegated their investment decisions to so-called professionals have been devastated during the recent bear market. ...

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