It is only recently that I start to realize that it is of utmost importance to determine if a person, who is offering some form of service to you, has a vested interest in the service that he is providing. I never really thought much of it in the past but it is when I need to seek advice regarding some investment and financial issues, I want to be absolutely sure that the advice I am receiving is really helpful and beneficial.
Consider some of the situations below in which a person or an entity who is offering advice or rather giving you some information ? Would you believe in it ?
A CEO of a listed company telling you about the excellent growth prospects of his company. He owns a lot of shares in this company and if investors believe in him, share price will rocket and the value of his shareholdings will increase.
An online website telling you that the unit trusts and funds offered on its site has been outperforming the benchmark index for the past 5 years and will continue to do so. The revenue of this website is partly derived from the sales of these unit trusts and funds.
A financial adviser telling you that maybe you should consider some of the policies that he is recommending. His commissions is derived from these policies and some policies may pay much more than other types of policies.
A trader telling you that he can make you a millionaire within a short period of time by attending his course which cost thousands of dollars. He stands to gain a lot of profits by conducting courses.
Ever had any bad experience in dealing with the above situations or any other similiar situations ? Feel free to share by posting comments on this.
4 comments
I guess Adam Smith did a pretty neat and understandable summary of vested interest. He said that it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest Why would anyone waste his/her time when he/she stands no chance to gain something out of it anyway?
Well, I guess vested interest arises when a person's welfare is tied certain outcomes based on his action. My MLM and salesperson friends have certainly taught me a lesson or two.
Hi KF,
I agree with what you said. Vested interest is not such a bad thing after all if you can make it a win-win situation for yourself and the other party. Otherwise, the one who is on the receiving end may suffers.
The hawker selling hokkien mee in Bedok has a vested interest when he sell the yellow noodle.
MM Lee also has a vested interest when he visit China to sell the small little red dot.
Most of us have a vested interest in our profession but it is the integrity of the person to do his best in creating a win-win situation.
Hi Adrian,
I agree with you. The integrity of the person matters a lot. But it's not always easy to choose and find someone who has integrity. Meanwhile, it will be good to stay prudent and think about whether any advice being offered comes with any strings being attached.
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