Does the whole Madoff scandal reveal something about ourselves

I felt compelled to write this blog not based on any article I had read (See I don't spend my life reading newspapers) but on a recent seminar I had attended regarding the psychology of investing. Most of the people on the panel make a living coaching people to invest or make business decisions based on their heads not their hearts. Basically, don't let emotions get the best of you. There was also a lawyer and a wealth advisor on the panel as well. The discussion focused on how to control your emotions while investing and to not live and die on every utterance from some television or radio pundit. If you can't control yourself, the consensus of the panel seemed to be that you should hire some professional help ie. wealth advisor, financial planner etc. Thereafter,most of the night's conversation seemed to focus on that aspect. No great surprise in my mind since it was the wealth advisor's firm that was sponsoring the seminar to begin with. In the discussion of hiring such a professional, the word "Trust" kept coming up. People kept asking questions like "How do I know if the advisor is a good fit for me," and "What can I do to check the advisor's background." Finally, one of the panelists said that there has to be element of trust whenever you choose a professional that provides a service to the public. It doesn't matter if it is a doctor, lawyer, accountant, wealth advisor or for that matter a car mechanic, carpenter or plumber. I can check all the professional associations, Better Business Bureaus, client references I want but at the end of the day I am placing my trust in them to perform a service that benefits my interests. If I knew as much as they did about the service they were going to perform, then I wouldn't need to hire them unless I was required by Law to do so. I admit that when it comes to inside the hood of my car or pretty much anything to do with maintenance of my house, I am a moron. When it comes to my car or my house, I pretty much blindly listen to whoever is fixing the problem. If some suggestion seemed innately wrong to me I would certainly question it or perhaps seek another opinion but at the end of the day you have to have some trust in the person your hiring and believe in THEIR judgment not yours. They are considered the expert not you. The medical profession is a perfect example. You are relying on the doctor's skill and judgment. The reliance shouldn't be blind but it is not equal either. So the discussion inevitably turned to good old Bernie. Why did so many people drink the Kool-Aid. There are many reasons. Everyone knows the expression, "If something is too good to be true, then it probably is." Yet, many people whom I would consider to be very smart business people lost their shirts and in some cases were completely wiped out. Someone said that success in business doesn't equal success in investing. I agree with that statement to a point but successful people have certain personal characteristics that can crossover to different fields of endeavor. However, there is an X factor as well called "Ego." Some people believe that success in one field means they are an expert in every field. They know it all. I also believe that Madoff's appeal was the sense of exclusivity. I was being allowed to invest in a fund that was not open to everyone, even people as wealthy if not wealthier than me. Madoff preyed on the snob appeal. And of course the greed appeal as well. You can make money no matter what the market does. It was almost pitched like municipal security. No risk involved, as good as gold. What did P.T. Barnum say years ago. Oh, how it still rings true today.