As most individual investors now understand, oil and gas securities, including common stock, bonds and master limited partnerships (MLPs), can be extremely volatile, high-risk and lead to substantial losses. Over the last few years, certain financial advisors and stockbrokers, and the financial institutions for whom they worked, fell in love with oil and gas securities, particularly for their high-yield dividends in an otherwise low-to-no yield market environment.
As a result of this reckless infatuation by some trusted financial advisors, throes of conservative individual investors, many retired and elderly, sustained major financial losses in their nest-egg portfolios when the oil and gas markets nosedived. Given their advanced age and life-stage, this class of elderly, conservative investors simply does not have the ability to replace these losses. The effect has been devastating — ruined retirements, a down-size in quality of life, and a theft of a sense of financial security that took decades of hard work to achieve. Unfortunately, we are seeing this far too often these days.
The truth is that this should never have occurred in the first place. Had financial advisors, and the securities brokerage firms obligated to supervise them, ensured that such conservative investors were never over-exposed to, or over-concentrated in, such unsuitable and inappropriate oil and gas investments, these life-changing losses would not have been realized.