I'd Rather Sleep Well

Barron's says that too many wealthy individuals rely on their CPA for investment advice that the CPA is unqualified to give: [bold added]

Many high-net-worth individuals pick financial advisors that don’t have the expertise to back up their portfolio calls, claims AIG’s director of customer insights, Julio Franco.

Point taken. Your humble observer is a CPA who is not a Certified Financial Planner. I would never dream of picking stocks or recommending an asset allocation for a client (if the client insisted on a recommendation, I may suggest a large index fund).

But clients are not as stupid as Barron's makes them out to be. Trust and integrity are rare commodities. Clients, especially those who have been burned by slick financial salesmen, often value integrity more than a few extra basis points.

The article again quotes from Julio Franco:

The biggest culprit responsible for bad advice to affluent folks, according to Franco, are trusted CPAs who give the illusion they know more than they do. “We see a lot of [investment] advice coming from CPAs, when it’s not their strong suit,” he says. Clients often “have a guy,” who gives advice on everything including investment strategies, estate planning, wealth transfers, and college and retirement savings—when these accountants in fact lack the knowledge-base to provide the best input.

Mr. Franco is from AIG, yes that AIG, which nearly caused the collapse of the world's financial system through widespread sales of credit default swaps and collateralized debt obligations.

So if you're a high net-worth individual, who would you trust, your CPA of 20 years or the fast-talking kid from AIG armed with computer printouts that prove judicious use of derivatives could make you 8% with no risk? In finance the choice is often between sleeping well and eating well. If you're of a certain age, you may place a higher value on a good night's sleep.