People often ask me if the stock market is rigged. In a 2010 study by Hearts and Wallets Quantitative Panel, nearly 60% of the 4,000 investors who responded said that getting scammed by a crooked operator is their top fear. These folks are so afraid of being ripped off by their advisers that they have exited the stock market in droves, seeking safer havens in bonds and gold. At ZenInvestor, we think that’s a mistake.
One consequence of this mass distrust of advisers and the market itself, is that more investors are firing their brokers and becoming “self-directed” investors. 54% of respondents identified themselves as self directed, up from 29% in 2008. But surprisingly, investors are not fleeing full-service brokerage firms to take control of their own decisions. Rather, investors are angry and scared about getting fleeced and are simply selling their stocks and equity mutual funds. Many of them are keeping their accounts in place, but looking for alternatives to their current broker or adviser.
For many, one solution to the trust problem would be to hire an investing coach. According to studies published in the independent Journal of Portfolio Management, independent investing coaches score much higher than traditional financial advisers in the areas of trust, competence, and lower overall cost of service. Coaches have the great advantage of impartiality, since they don’t depend on commissions or asset-based fees for their compensation. This objectivity allows them to find solutions and make recommendations to their clients which are outside the range of traditional advisers.
For information about the Advanced Coaching service we offer, what it costs, and whether it could be helpful to you, click here.