Retail Finance is a Scam; Part 1: Financial Advisors

“Wealth Managers” and “Financial Services” aren’t safe either from those of us at No Safe Bets. We expect our readers to be wise to the fact that everything is a scam but it seems like this article needs to be made.
To better understand Finance and it’s magic, plus a possible career change I spent the better part of a year and a half studying for the licenses that allow one to be a “registered representative”. I passed the exams, chose a company to join and worked a few months before quitting. I feel obliged to give you dear reader, this important message for you to act on that is totally not financial advice:

Fire your financial advisor.

(If you have one)


You, dear reader, likely being a ‘dumb money’ retail investor that wants some affirmation, assurance and information might go to consult a ‘financial professional’ about where and how to invest. As discussed elsewhere on this blog, more damage has been done in the name of ‘protecting the little guy‘ than anywhere else in finance. Depending on your views, there are two ways more or less to invest:

  1. Being passively into gigantic index/sector/security type funds and
  2. The other going out and picking specific securities to funnel money into and out of.

No financial professional is going to tell you to do the second option for many reasons, first off being that regulations, reporting and red tape will smother most any trading via an ‘advisor’ or ‘representative’ and they are terrified of liability, namely underperforming and getting sued.

The big joke here is that your investments will inherently underperform in their hands. This is due to the fee structures that don’t even necessarily benefit the advisor but the companies they “work” for. I took the liberty to download many of the compensation and illustration documents from the company I left and will try to make a decently structured case in this article with a sense of humor.

Advisory/Financial Service Companies are built like MLMs

As of 2021, a certain virus has certainly disrupted our social lives but let’s be honest no one answers cold calls nor soliciting, either, in the first place. New agents are forced to plunder their friends, friends of friends and family for sales. This image is from the Primerica Annual Report of 2020, a ‘Financial Services’ company. I did not work for Primerica but this structure is common to every retail ‘financial services’ position you will find, whether it be a national name like New York Life, Edward Jones, Country Financial or some local schmuck with a contract through one of the many life insurance companies.

Life Insurance is absolutely crucial to this arrangement and will have to be discussed more thoroughly in another article:

Life Insurance is a Scam (and a topic for part 2)

Gaining less than five thousand consistent agents from nearly a million recruits? That’s a failure rate that almost makes the lottery look appealing.

Where did all the “new recruits” go? The number of representatives increased by a few mere thousand despite nearly a million recruits filing through their offices and programs in 3 years. The formula is simple:

1. Disguise the hiring process as a serious and intense vetting process when you really will take anyone with a pulse. The more acronyms and college degrees the better.
2. Tell them that “this business isn’t for everyone but there’s something special about (you)“, put on fancy appearances with expensive clothes, promises of high earnings potential, dinners and exotic rewards should they meet production standards.
3. Drill into the new recruits’ brains the power of life insurance and how its return totally beats out all competitors. Misleading diagrams aplenty here but the goal is to get the recruit to (totally not) misrepresent the product to customers via fancy wording and partial truths.
4. Get the recruits to hand over contact information of and solicit to all of their family and friends, pair them with a senior agent and split commissions as part of ‘training’.
5. Fire the recruit when they underperform or keep them (and the racket going) should the recruit somehow meet the production targets.
6. Hand off the failed recruits’ business to existing agents or sell it as a book of business.
7. Rake in money from pointless/excessive life insurance premiums and account fees.

You might have a different opinion on life insurance but the most egregious of them are the variants with ‘cash value’. Term insurance sort-of has a place for a specific band of society but that’s a different topic for a different day. The savings component of ‘permanent’ life insurance products have hilariously low rates of return or downright misrepresentations especially when agents market them as a sort of alternative investment, which while against the rules is done anyways.

There is a lot of pressure to sell these policies as they are the only real way a new agent could possibly afford living expenses being that most of these companies only pay based on commission, renewals and AUM. Most of these companies don’t even bother giving the appearance of a salary option over ‘commission only’, but the salaries are attached to generally even more severe production requirements or are paid as “stipends” for setting so many appointments or selling so many policies.

If it looks like a pyramid scheme,
smells like a pyramid scheme and talks like a pyramid scheme,
it’s a pretty safe bet it’s a pyramid scheme.

What about Wealth Management?

So maybe it’s just insurance that is a scummy business, right?

Asset management is a highly sought after and esteemed position right?

What will the advisor recommend that seriously changes the outcome?

Asset allocation models are bullshit.

You’re not reducing risk by adding 30%, 20% or whatever of bonds and however much in cash and REITs, you’re either loading deadweight onto their goals or genuinely clueless. Our society rewards infinite percent risk-on . . . anyways, who cares? At the very least you shouldn’t be paying someone rent to setup a simple selection of total market funds.

All financial assets are correlated and in the midst of the fiat endgame they move in lockstep upwards or careen downwards. Global capitalism’s seemingly endless expansion has shuddered to simply treading water as global populations’ growth slow and even reverses.

“Emerging markets” (whatever trendy name of the decade the institutions use) have started to realize they will never become a ‘developed’ economy as carry trades blow up in their hands every decade or so (refer to the tumultuous history of the Turkish Lira).

Even if there was the same number of borrowers that would mean less money to pay the ever-present interest that was created along with the money they use. Interest rates must go down indefinitely or growth must truly be perpetual and parabolic if a fiat currency is to survive (this is the simple fact of debt based money creation) and lower interest rates lead equity returns lower and lower.

There are certainly standout winners in the 0% real rate clown world while the rest of the world (not-so) quietly suffers inflation, deflation and price expansion simultaneously. Escape and dreams still sell like hotcakes to this day, and the business winners of this age don’t need fundamentals, they need cult-like adherence to consumption of their product (this is usually just a story, ala Nikola Motors), preferably boosted by heavily manipulated social trends.


A lot of good that bond portion that ‘saved’ you from some volatility in ’07-09 did for your future. (S&P 500 on top, BND on bottom)

Fun with Fees

Your (possible/former/current) advisor has to eat right? How will they do this without charging money for the sage-like advise and cheerleading required to get you into a blend of index funds? The fees go down right?! They’re a smaller percentage as the account value goes up! In practice this just means you are being wrung for a little less per dollar of value in the system. The actual amount you pay only goes up.

‘To the moon’

Wealth/asset management is elaborate rent seeking, with layers of pretense and business-man-ship plastered over them to convince the actually productive people of the world to pay for someone’s existence, usually someone masturbating in the ‘home office’ with a title like “Senior Practice Development Supervisor” or “Vice President of Sales”. What does ‘investments reviewed by committee” mean besides awful ‘design by committee’ efforts where every choice is a half-step, status quo preservation or compromise?

Market volatility is amplified by the system’s high level of leverage (debt) and the fact that over half the market is ‘passive investors’ and the other half is hedge funds and institutions who will try to sell or (over) hedge the moment things drop 5%; a 5% leg down turns into 30+% over several days and circuit breakers as sky high values for mediocre cash flows comes back to bite. It’s not the retail side that has to liquidate and meet margin call, but they simply don’t have the option of losing even modest amounts of money with current and future rates of return. No one wants to be stuck holding a bag of depressed equities for seven years or more like the poor bastards that bought the top or near it in 00′ or ’07.

Now imagine paying rent “management fees” for someone else to hold those “financial assets” that is supposed to help you and in reality it just stays in place, paying some other chump’s utility bills. As an anonymous stranger said;

“How about these financial advisors financial advise themselves to some money?”


That’s all for this segment, I’ll try to crank out a few sequels about the scammy world of retail finance.

*Not Valid Financial, Legal, Life, or Any Advice

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