Is Your Broker’s Research Reliable?

Whenever we hear words such as “research,” “study,” or “science,” our ears tend to perk up. We lean forward, and we start listening. What comes next is likely to be something concrete, something we can hold on to, or something we can depend on. We listen so intently, because we believe there is credibility behind what we’re about to hear. We’re about to be let in on a little secret–we’re about to discover the truth.

Politicians, advertisers, attorneys, and anyone else who routinely uses persuasive messaging relies heavily on our faith in scientific reasoning to sway unsuspecting minds. Don’t get me wrong–I myself am a believer in scientific reasoning. Certainly, the better way to get at the truth of a matter is by measuring it. That being said, not everything that we call science is actually science.

Statistics can be made up or exaggerated. Studies can be misinterpreted and pulled out of context. Whenever you hear the phrase, “science tells us that…,” you should raise the red flag. You should automatically ask which study, research, or text the person using the phrase is referring to. It’s easy to make claims on behalf of science without actually having any science at all behind those claims.

It almost goes without saying that the people using the appeal to science as a persuasive tool are usually the people who have an agenda. They stand to lose something if you don’t believe their claims, or they stand to gain something if you do believe their claims. That is why it is imperative that you always consider the source. Campaign ads are not a reliable source of information about a political candidate–and certainly not a reliable source of information about that candidate’s opponent. In our October blog, we discussed if you can trust people who make commission and how these individuals tend to tell you what they want you to hear.  They will use any weapon in their arsenals–including science–to get you to believe that it’s true.

That brings us to the world of investing. Do you trust the information your broker provides you? Maybe he didn’t just tell you a good story. Perhaps he gave you some hard science. Perhaps he threw in some statistics and repeatedly used the phrase, “studies show…” The more legitimate his claims appeared to be, the more you believed them. And nothing quite legitimizes a claim like the appeal to science. But, is it possible that you forgot about something? Yes, the broker may have backed up his claims with science, but did you consider the source?

The broker has everything to gain if you believe his “research,” and everything to lose if you don’t. The broker has an agenda. He knows what he wants you to believe, so he goes out to find some semblance of science to prove it–or simply makes up statistics if he can’t find anything to use. Next time your broker uses a statistic, ask to see the data on which the statistic is based. I’m betting that he won’t have it and, more than likely, it won’t even exist.

If you want research you can trust, it needs to be independent. The person presenting the research to you mustn’t have anything to gain from your believing it. That is why I think it’s so much more important for investors to hire a coach than it is for them to hire a broker. Coaches guide; brokers persuade. You need someone to help you understand the world of investing but, in the end, how you choose to invest should be your decision–not that of someone trying to sell you something. If you need any help discovering good, quality, unbiased research for your investing activities, feel free to reach out to us for a free consultation. We want to help you come to the knowledge of the truth–no matter what it may be.