Thread by @passivefool

This 👇

This might seem like another "we need financial literacy" tweet. But to me, it's not, here's my theory:

This speaks volumes about the existing system. It's clearly not working for a whole lot of people, particularly the non English folks and young people.

https://twitter.com/aditipar/status/1348965653206630402

The product sellers are partially to blame. The nonsense they spew in the name of "financial education" is an insult. All those god awful videos and nonsensical garbage masquerading as "content" is enough to make you wanna gouge your eyes out.

This is even worse in the insurance industry where selling trumps everything. And given that banks are the only source of financial advice most people have access to, the problem has reached nightmarish proportions.

Banks can get volumes and that means insurance companies don't have an incentive to do anything to curtail mis selling. Why kill the goose that lays golden eggs? Which is why the number of people who understand insurance are far fewer than those that understand MFs.

In case of investment products, the entire architecture is built with the explicit goal of shoving a product down someone's throat without bothering about the 2nd and 3rd order effects of that. Why educate when you can sell?

It's easier to get a new investors than to convince a disillusioned investor who has had a terrible experience. But these stupid AMCs and intermediaries could care less. When a sale trumps retention, that shit is WRONG!

And then add to this toxic pungent mix, the platforms etc, the end result is investors either stay away or have bad experiences and never come back.

nakedbeta.com/musings-rants/…

What makes this worse is that we don't nearly have enough financial advisors. For every RIA, we have 3000 tipsters, that ratio is scary. And given this shit, you get scams like this.

https://twitter.com/passivefool/status/1349329464715431941?s=20

A few 100 RIAs, and at most some 20K MF distributors are not nearly enough.

And then the easy suggestion everyone seems to think of as a silver bullet is that we need "financial education" or "financial literacy" initiatives. But there's growing evidence that these things don't work.

psyfitec.com/2009/10/financ…

Coming back to my theory? Do we need a new way of talking to young and first time investors about finance? I'm not talking about short content etc, that's just one part. Or is my theory bullshit and investors are lazy and the existing info works and they are just lazy bums?