On The Wisdom of the Cynic

By: Esmat Hanano, Spring 2019 Intern

The prevalence of social media in our everyday lives has led to a new type of financial services representative. For ease of reference, I’ve dubbed this new breed of financial services representative the “seize-your-moment representative,” or SYMR. Interesting name, right? Well that’s one of the main characteristics of these representatives: they pique your interest and arouse your natural sense of curiosity with an opportunity that begs you to “seize the moment!” Once they have your attention, it’s a full-court press to get you to sign up with them. Some other identifying features of SYMRs are a heavy reliance on social media to sell financial services and products, excessive use of inspirational quotes and memes, and dubious testimonials that claim to demonstrate the success awaiting anyone who joins their “downline.”

Now at this point, you might be thinking that this sounds like a multi-level marketing company or a pyramid scheme. And, you’d be right! SYMRs are usually involved with multi-level marketing financial services companies. Typically, they are more adept at creating social media posts fitting for your Instagram fitness model than for the complex world of financial products. Words and phrases like “self-starter,” “amazing opportunity,” “create WEALTH” and “passive residual income” dominate their social media posts as descriptors of the products and services that they sell. But, if you try to discern what they are actually selling or what services they might be able to provide, then good luck. Often, details about the exact nature of the services and products they offer are scant. So, how should retail investors deal with SYMRs? This is where the wisdom of the cynic is a useful example.

The popular notion of cynicism is far removed from its origins as a Hellenistic philosophy. Although there were a number of characteristics of cynicism, the one that is important for our purposes is the cynics’ focus on a rejection of all convention. Today, this characteristic is understood as realistic criticism or a hyper-pragmatic outlook on ideas. It is this aspect of cynicism that is useful when dealing with SYMRs. The best way to understand the nature of what a SYMR is selling is to be cynical. Retail investors should ask questions, voice concerns, probe hypothetical situations, and push a SYMR to provide enough details that can be verified independently afterwards. Retail investors should not worry about whether they are being too pushy or even coming off as rude—the value of your time and money is more important than defying normal social conventions. Unfortunately, the rise in social media allows SYMRs to circumvent more traditional vetting of their products by potential investors. That is why it is important for retail investors to be particularly careful when dealing with sales pitches. To be clear, not all multi-level marketing companies are out to defraud their customers. However, retail investors must bring a healthy dose of cynicism to interactions with anyone offering an investment.