Most Investors Ask the Wrong Question

Most investors focus on the recommendation. It is equally important to understand what may influence that advice.

Advisors want to do right by their clients. Compensation simply creates incentives worth understanding.

Consider two advisors recommending the same investment strategy:

One is compensated only by the client, while the other receives additional compensation when certain products are used. Both may believe they are acting in the client's best interest, and both may be sincere. However, only one operates within a structure where compensation remains truly independent of a recommendation.

The late Charlie Munger said it best: “Show me the incentive, and I’ll show you the outcome”

The question is not just what is being recommended. It is also why.