Key Takeaway

• Your financial advisor is unlikely to encourage physical precious metals.
• Precious metals offer protection and diversification
• A financial advisor can't sell you physical precious metal but they can sell you a Gold ETF or Mining stocks.
• We have many clients that are financial advisors who buy physical gold and silver.

The Traditional Financial Advisor Mindset

It’s easy to assume that financial advisors would accept the traditional attitudes towards gold and silver that have permeated human society since ancient times. Precious metals have a long history of helping people build wealth. Even in early civilizations, the wealthy sought gold and silver. Rulers used it to adorn their palaces and stored an abundance of it, to maintain and expand their kingdoms. In their minds, gold and silver were a symbol of affluence and stability. In fact, many gold and silver investors have the same thought process today.

However, financial advisors have their own traditions. They find themselves trapped in a box by the expectations of their industry. Modern financial advisors are accustomed to managing paper assets, from currency to stock and bond certificates. When they think of diversification, they tend to think of alternative types of paper or digital investments. For example, they might diversify mutual funds with bonds. Because gold and silver investments have not typically been a part of their work, they usually stick to the types of investments they always have, and those rarely include precious metals. It’s what they’ve always done before, and it’s what most of their fellow advisors do, too. 

A good financial advisor can help you get or stay out of excessive debt, plan your retirement, and yes, help you with investing decisions. But they probably won’t advise you to invest in gold and silver, even when it makes perfect sense. Why? The three main reasons are habit of mind, conflict of interest, and lack of expertise.

Conflict of Interest

Recommending you invest in gold and silver would create a conflict of interest for most financial advisors. They want to make as much as they reasonably can, choosing investments that will benefit them as much as they benefit you. They may also have direct orders to avoid helping clients with gold and silver investments. So, to thrive financially and keep their jobs, they point you to investments that are more helpful to their company and their own pocketbook.

How Are Financial Advisors Paid?

Financial advisors are paid based on the value of the assets they’re managing. In other words, Assets Under Management (AUM) is the basis of their paycheck. The more assets they handle for you, the higher their pay. 

They typically don’t manage gold and silver investments themselves. So, if you were to buy precious metals with part of your money, they would have a lower AUM which would reflect on their earnings. They would get nothing from advising you to invest in gold and silver, but it’s worse for them than that. If you invested in gold and silver, it would reduce the amount of assets you have available to invest in what they do manage.

You don't ask your barber if you need a haircut. This applies to financial advisors and their recommendations for investments that they can control.

Profit Margin

Some investments have a higher profit margin for the financial advising company. For instance, some advisors recommend annuities because they have a higher margin. The financial services company gains more from these investments, so the advisors push them. 

Since they don’t manage your precious metals for you, there is no profit in it at all. So, they focus on the investments that put money into the financial advising company’s accounts.

Orders from the Top

Beyond their own personal interest in guiding you towards investments that benefit them directly, financial advisors have to do what their company wants them to do to keep their jobs. Most financial advisors are not independent. Instead, they work for a CEO, CFO, or manager who may set rules about what types of investments to recommend. Since the company doesn’t benefit from gold and silver investments, they typically warn their advisors not to mention or engage with customers on topics surrounding gold and silver. Your financial advisor may have little choice but to avoid the subject.

Expertise in Precious Metals

Another reason financial advisors might not suggest you buy gold and silver is that they simply don’t know enough about it to advise you. They may never have learned about the advantages of buying gold and silver. They may not have enough knowledge to help you with managing your precious metals investments. While they may be trying to be honorable by not mentioning a subject they know so little about, this lack of insight may prevent you from understanding how, when, and why to buy gold and silver.

Financial advisors typically adhere to a singular perspective on the economy.

Consider this: Were you alerted to the impending Great Financial Crisis in a timely manner, giving you an opportunity to take action? Likely not. This is because it is in the best interest of financial advisors to project a positive economic outlook, regardless of the actual circumstances, in order to promote products aligned with their perpetually optimistic worldview.

At True Gold Republic, we specialize in Precious Metals IRAs. That means we have expert level insight into the benefits and methods for buying gold and silver. We not only sell gold and silver for IRAs, but we can also help you understand more about the precious metals markets. While your financial advisor might not even want to discuss gold and silver, we can help you gain more knowledge so that you can make the decision that is right for you!