By Daniel Goodwin
This week on the radio I listened to two different “Christian” financial advisors. One of them a pastor spouting off stock tips, trading strategies, and market forecasts while quoting scriptures and offering multiple references to the bible. As a believer myself, I am very skeptical of people that “lead” with their faith in an effort to gain trust from others. In fact, my own experience with others in business that want to convince me of how religious they are when we first meet has not been good at all. I recall once trusting a home improvement company with a big fish painted right on his van and bible verses printed on his business card. This person attempted to steal both money and personal property from me. If I had not been diligent in verifying certain matters, I was headed for a financial loss with this person whom had held himself out in business to be a man of God.
So, why does this bug me so much? Let me get right to it. One day a husband and wife came into my office at the insistence of the wife. The husband had frittered away over half of the couple’s 1.5 million dollar savings. It had gone from 1.5 million to just under 750K in less than one year. It turned out the husband’s job was teaching stock trading strategies in hotel salons across the country for an outfit that ran essentially a traveling seminar business, all advertised as free and also as "spiritual". The wife, in an effort to bring the husband to his senses... made him come in and see me. I told them that he was speculating and gambling with all of his trading techniques and unless he was ready to turn from his ways then there was no way that I could help them. This sort of “snake oil” is all around us, but when I hear a devious attempt to pave the way for speculating and gambling using scripture to build trust with unsuspecting consumers, well, I have a big problem with that.....Never mind for a moment that his stock trading strategy was flawed. Some are selling it to believers with the notion that the advice must be trustworthy because the seller is quoting scripture all the way to sell his wares.
Another very well know Christian radio personality that I heard was offering advice and forecasts on certain stocks, market timing, and asset categories. This radio show is nationally syndicated and is very well known. They regularly ask for charitable gift annuities to support the “ministry” and they also sell a newsletter to thousands of paid subscribers.
If I could get in front of these two "Christian advisors here is what I would ask them: Why do you need to profess your faith to sell your products? Why should you be trusted more than anyone else? How do you account for 50 years of Nobel Prize winning investment theory and numerous empirical studies from leading universities that say in so many words that your market forecasts are worthless because in the short term the markets are random and unpredictable? Random and unpredictable markets also render your stock picks useless, because the markets are efficient. Do you care and are you held accountable in any way if people get hurt that take your advice? Can you offer GIPS audited returns for your recommendations? (Global Investment Performance Standards) How do you address the fact that the best of the best Wall Street money managers fail to meet even a simple benchmark return, 80% of the time over any 20 year period (Yale school of management study)? Would clients not be better served by ignoring your advice and focusing rather on the basics like asset allocation, diversification, discipline, re-balancing, and dollar cost averaging with risk adjusted portfolios? Did the great Vince Lombardi win his football championships on razzle- dazzle-fancy-pants plays, or rather on mastering the basics of blocking and tackling? My football folks know the answer to that one.
My wife and I are committed believers, but you would have to get to know us on a personal level to find that out and we never try to promote our business with our faith. Our faith is not to be used as a marketing advantage or ploy, it’s far too serious for that. I strongly caution anyone on this topic. Your financial future is at stake.
In all fairness, I should add that not all people who hold their faith out in business are to be distrusted. It's never a good idea to lump all people into any certain group. I can only tell you in my own personal experiences that I am more skeptical than less when a new acquaintance in business wants to project up front how “spiritual” they are.