CHAPTER 7Transparency, or How I Learned to Love Conflicts of Interest
An investor overheard warning a friend: “Airplane salespeople, car salesmen, and the investment industry are to be reviewed very carefully before you get in business with them. Caveat emptor!”
You’re making money on me?
In 2008, New York Times readers were shocked to read about medical tests being ordered by a physician for monetary reasons—the physician was paying off debt on the million‐dollar imaging machine in the office.1
In 2013, the Wall Street Journal reported a startling fact: The rate of spinal surgery at hospitals where surgeons own medical device distributorships is three times higher than at hospitals overall.2 Today, we can no longer assume that our physician is abiding by a code of ethics and earnestly wants to heal us. In 2013, pharmaceutical giant Glaxo announced that they would cease paying incentives to physicians who prescribed their drugs in order to keep “in step with the changing times.”3 Sadly and undeniably, financial incentives can and do influence the medical profession.4
Incentives matter on Wall Street, too
You may not know if an advisor has a financial incentive to sell you one ...
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