After a thoroughly enjoyable discussion with the National Capital Financial Bloggers (and some honoured added guests), I feel reinvigorated. The discussions around the table were about many topics, and my guess is I will be writing about a few of them over the next few days. Still, one excellent topic came up from a representative from Horizen ETFs who was visiting with our highly regarded group (why I was included in this group is again a mystery). The question arose, “Should there be warnings on financial products ?”.
The observation made was that some investment and savings vehicles might need to have better warnings, and in fact Rob Carrick (an honoured special guest) pointed out that if you put a strong warning on financial products, some folks might just buy it because of the warning (I believe you would call that the “Cigarette warning syndrome”).
With this in mind, let me give you a possible scenario:
If you were on your standard On Line Broker website and you started a new BUY transaction, and you selected, say BCMETF.XXX (hopefully a fictitious ID for the Big Cajun Man Exchange Traded Fund (the Nitroglycerin and Blasting Caps version of the fund)), and the following warning icon came up on your screen when you attempted to finalize your transaction:
My question would be, if you saw this kind of warning on financial products come up on your screen (hopefully with a loud klaxon noise in the background), what would you do?
- Would you turn off your computer and run and hide in your bed with the covers over your head? (which I think is the correct answer)
- Get all macho and say, “I can handle it!”, and plow on ahead? (the wrong answer IMHO)
- Go back and read the prospectus on the savings vehicle one more time to be sure? (an OK way to deal with it, because at least you go in with your eyes open)
Please reply in the comments, I am very curious since I might try to start a side business publishing financial warning signs.