We all face situations where we’re confronted with choices. In my experience, most people are honest and decent. When given the opportunity, they demonstrate the best of the human spirit. They are kind, considerate and generous.

The best of the human spirit

This is clearly the case with the government policy towards refugees being followed in Canada. It’s stated goal is to resettle “ refugees to save lives and to provide stability to those fleeing persecution who have no hope of relief.” To that end, it has welcomed over 40,000 Syrian refugees since November 2015.

These are not just high sounding statements on a government web page. A moving story in The New York Times discussed how ordinary Canadian families have volunteered to adopt thousands of Syrian refugees for a one-year period to help them acclimate to their new life. These families donate their own money and thousands of hours of time to assist complete strangers, with whom they have immense difficulty simply communicating.

It was heartening to read this inspiring story. It was also a welcome relief from my daily grist.

A world of deception, greed and self-interest

My days are spent responding to e-mails from readers of my books and newsletter who inquire about the quality of advice they received from brokers. I’ve responded to hundreds of these queries (if not more). Here’s a remarkable fact: Not once have I found the advice given to be in the best interest of the investor.

Brokers typically recommend expensive, actively managed mutual funds, despite overwhelming evidence investors would likely be better off in comparable, low-management fee, index funds. They also select individual stocks, without any evidence supporting their ability to reliably and consistently pick stocks that will outperform the index to which those stocks belong. They are fond of encouraging investments in high commission and complex investment products like structured notes and non-traded REITS.

They also falsely convey the impression they have the ability to tell investors when to get in and when to get out of the market, without revealing the dismal track record of tactical asset fund managers, who also profess that ability and are handsomely paid to do so.

The recipients of this advice are often the weak and vulnerable. I’ve responded to inquiries from widows and trustees for special needs children, among many others.

I previously discussed the ethical bankruptcy of the securities industry in this blog and others. You can find an imposing list of enforcement actions by the Securities and Exchange Commission addressing misconduct that led to or arose from the financial crisis here. Almost every major securities firm is included.

An explanation

I wonder what makes the Canadian volunteers so different from these brokers. How can they justify spending their day ripping off their clients?

Perhaps an explanation can be found in an article in The Independent. It referenced a study by Lisa Marshall, a psychologist at Glasgow’s Caledonian University. Ms. Marshall spent 3 years interviewing long-term offenders in Scottish provisions to determine why some of them became psychopaths.

She found, in order to be considered a psychopath, you would have to display a number of 20 core characteristics. She observed that, “Successful psychopaths included people with careers such as stockbrokers, where a lot of action was happening and where they had a lot of power. They have to be quite cold and callous. You could say a politician. [They] might be in control and have power. They are risk-takers.They have the characteristics of psychopaths but without the criminal intent.”

Of course, I’m not suggesting all (or even many) brokers are psychopaths. I’m just noting that it takes a special kind of personality to victimize those who trust you to give them sound, objective advice.

Whatever the qualities that permit brokers to engage in this activity without apparent remorse, there’s one thing we know for sure. Those traits are clearly missing from the Canadian volunteers guiding the Syrian refugees entrusted to their care.

The views of the author are his alone. He is not affiliated with any broker, fund manager or advisory firm.

 

Inexplicable Behavior Explained blog was originally posted on The Huffington Post website.

Dan Solin is a New York Times bestselling author of the Smartest series of books, including The Smartest Investment Book You’ll Ever ReadThe Smartest Retirement Book You’ll Ever ReadThe Smartest 401(k) Book You’ll Ever Readand his latest, The Smartest Sales Book You’ll Ever Read. He is a wealth advisor with Buckingham and Director of Investor Advocacy for The BAM ALLIANCE.

The views of the author are his alone and may not represent the views of his affiliated firms. Any data, information and content on this blog is for information purposes only and should not be construed as an offer of advisory services.