27 June 2009 at 4:35 pm Lasse 4 comments
| Lasse Lien |
Here is a pretty remarkable story about four elderly German pensioners who kidnapped and tortured their financial adviser.
Who should we feel sorry for, that’s what I want to know.
Entry filed under: - Lien -.
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Organizations and Markets 
1.
REW | 27 June 2009 at 5:06 pm
I cannot summon compassion, sorrow, or any like emotion for financial advisers, even after torture. Sinking a pensioner’s wealth into Florida land deserves worse than Amburn received, IMHO.
2.
Michael E. Marotta | 27 June 2009 at 11:53 pm
What does sorrow have to do with it? Investment includes risk of loss, including loss of principal. Diversification minimizes risk. That is pretty basic for people smart enough to be medical doctors. Or so you would think.
The framing here may reflect the common compartmentalization of knowledge. In other words, some standards of proof are universal. Just as extraordinary claims demand extraordinary evidence, so, too, do exceptional profits entail exceptional risks.
If the advisor failed in due diligence, that is one thing, but merely to lose money, while embarrassing and hardly an endorsement, is an expectable outcome.
As a numismatist, I see this in the mainstream media of that hobby. When writing about the “wildcat banking” era in American history, many authors express shock that a bank could lose money, go out of business, suffer a run. They don’t feel that way when pharmacists close or dry goods stores fold up. They certainly don’t blame farmers for crop failures.
Kidnapping and torture are crimes. There is no doubt about that.
3.
David Gerard | 28 June 2009 at 9:26 am
If you can’t beat ’em, join ’em.
But if you can beat them…
It’s hard not to find this ridiculous and amusing, perhaps because it is so off the charts terrifying.
4.
Warren Miller | 28 June 2009 at 10:05 am
It sounds to me as if any failure on the advisor’s part to conduct due diligence on the investment is dwarfed by the failure on the investors’ part to conduct due diligence on the advisor. That is very basic. Is the advisor in compliance with the Global Investment Performance Standards promulgated by the CFA Institute? The most important investor guidelines are (a) never park all of one’s investable funds with one advisor, (b) require the advisor prepare an Investment Policy Statement custom-tailored to the investor (be prepared to pay for this), and (c) confirm that the advisor takes no personal custody of any funds (a la Madoff). Also demand to see audited financial statements. If the advisor’s AUM (assets under management) are substantial, then the audit firm should not be a no-name outfit (again, a la Madoff).
In the meantime, check out the wailing and gnashing of teeth at Hahvud Yahd.