I — The Question That Changes Everything
In 69 BC, the Roman orator Cicero used the phrase cui bono as a legal principle: to find the guilty party, look for who stood to benefit. It is one of the most timeless and useful thinking tools we have — and in the world of investing, it is absolutely indispensable.
The financial sector is large, complex and lucrative. There are hundreds of thousands of people who make a living daily from your financial decisions: advisors, wealth managers, fund managers, financial journalists, YouTubers, tipsters and influencers. They all earn something from your money — either directly through commission, or indirectly through attention, clicks or subscribers.
That does not mean everyone has bad intentions. But it does mean that every piece of investment advice you receive, consciously or not, is coloured by the interests of the person giving it. The only way to protect yourself is to understand how the system works.
The five major conflicts of interest
There are five structural sources of investment advice where the interests of the advisor and the investor systematically diverge.
05
The tipster and "free" advice
From the neighbour with a hot stock tip to the private WhatsApp group: "free" advice is rarely free. Tipsters may hold positions in what they recommend, be looking for an exit, or simply want the pleasure of being right. They are missing one crucial ingredient: they never need to be accountable when things go wrong.
Revenue model → position exit, status, no liability
II — How It Works in Practice
The business model of the financial industry
The financial sector is collectively one of the most profitable industries in the world. That money has to come from somewhere. The answer is not complicated: it comes from investors, via costs, spreads, commissions and fees that are partly visible and partly hidden.
Take a concrete example. A bank advises its client to buy an active investment fund with a TER of 1.5%. The bank receives from the fund manager a so-called distribution fee — often 0.5% to 0.75% of the invested capital per year. That sounds small. But on a portfolio of €200,000 that is €1,000 to €1,500 per year, every year, regardless of whether the fund performs well or poorly.
An independent passive ETF with a TER of 0.2% would earn the bank nothing. The probability that it gets recommended is therefore structurally lower — not because the advisor is a bad person, but because the system has incentives that point in the wrong direction.
⚠ Note — the hidden cost layer
Distribution fees are formally banned for execution-only brokers under MiFID II, but continue to exist in the form of "research fees", "platform contributions" and other structures in advisory management. Always ask explicitly:
do you receive any compensation from the products you recommend to me?
III — The Media Machine
Why financial news makes you a worse investor
There is extensive academic research into how financial media influence the investment decisions of private investors — and the outcome is consistently negative. Investors who actively follow financial news trade more frequently, make systematically more mistakes and perform worse than investors who do not.
The cause is structural. Financial media compete for attention in a world of infinite stimuli. Attention is generated by urgency, fear and sensation — not by nuance and patience. "Market falls 2% — what should you do now?" generates ten times more clicks than "Do nothing, your plan is working."
The result is a continuous stream of noise that presents itself as signal. Every day there are "reasons" to do something with your portfolio. Fed interest rate decisions. War in the Middle East. Exchange rates. Earnings reports. Presidential elections. Economic data. Each of these events is presented as a reason for action — while the empirical reality is that reacting to this noise structurally performs worse than ignoring it.
"Reading more market news statistically leads to more trading, and more trading leads to lower returns."
Brad Barber & Terrance Odean — Journal of Finance, 2000
IV — The Influencer Problem
Financial content and the algorithm logic
The rise of financial influencers — on YouTube, TikTok, Instagram and Substack — has enormously accelerated the democratisation of investment information. Many creators offer genuinely valuable and accessible content. But the business model of every major platform creates a structural problem.
A creator with 500,000 subscribers who consistently says "buy a broad ETF and otherwise do nothing" lacks the engine for growth. Algorithmic reward goes to engagement: comments, shares, return visitors. Sober content about passive investing scores low on engagement. Exciting content about stock tips, market crashes and "here is my portfolio" scores high.
This creates selection pressure: the creators who survive and grow are those who learn what the algorithm wants. That is rarely the same as what you need as an investor. On top of that there are direct financial incentives: affiliate links to brokers, sponsored segments from crypto platforms, and "this video is sponsored by..." constructions that pay the content creator per registered user.
✓ Rule of Thumb
Ask yourself about every financial creator: how does this person make money? Check the description for affiliate links. See if sponsored content is present. Check whether the creator holds positions in the stocks or products they discuss. Transparency is a positive signal — its absence is a red flag.
V — What Actually Works
The characteristics of trustworthy investment advice
The existence of conflicts of interest does not mean all advice is useless. It means you need a filter. Here are the characteristics of advice that is structurally more reliable.
| Characteristic |
High-risk advice |
Trustworthy advice |
| Revenue model |
Commission on products, affiliate, management fee |
Hourly rate or fixed fee, independent of product |
| Time horizon |
Urgency, short-term, action required |
Long term, "do nothing" is also an option |
| Transparency |
Hidden cost structure, no disclosure |
Explicit disclosure of costs and interests |
| Scientific basis |
Anecdotes, "I experienced this myself" |
Reference to peer-reviewed research |
| Accountability |
None — when it fails, the tip just disappears |
Regulated (FCA/AFM/BaFin), track record |
| Complexity |
The more complex, the more hidden costs |
Simple to understand, low TER, transparent |
VI — The Practical Checklist
Five questions before acting on advice
Keep these questions in your head. They take thirty seconds and can save you tens of thousands of euros over an investing lifetime.
The paradox of good advice
The most reliable investment advice is also the most boring. Buy a broad, low-cost ETF. Invest a fixed amount every month. Rebalance once a year. Keep it up for decades. Listen to financial news as little as possible. Otherwise do nothing.
Nobody makes money from this advice. There is no fund to sell, no commission to collect, no reason to call back tomorrow. That is precisely why it is so rarely given by people who have a financial interest in saying something else.
Cicero asked his question two thousand years ago to find the truth in a court case. The question has not dated since. In the world of investing it is more urgent than ever — because the stakes are higher, the incentives more subtle, and the packaging more professional than in any era before.
Cui bono? Once you know the answer, you also know how much the advice is worth.