Wednesday April 27, 2011
My client met with another advisor who blatantly lied to her.
First, he told her he was fee-only. He is not. I went to his website, and he and his firm are securities licensed. A securities license or insurance license means you can collect commissions. (See What is a Fee-Only Financial Advisor for more details.)
Next, he told her that some of the mutual funds we use, DFA Funds (Dimensional Fund Advisors) were proprietary and that we received kickbacks or compensation from the fund family for using them. This makes me laugh.
We cannot receive kickbacks because we really are fee-only. Second, DFA is known throughout the industry for having some of the lowest possible fund fees. One of the reasons their fees are so low is because they do not pay what are called 12b1 fees (marketing and kickbacks) to anyone. (See 5 Fund Fees to Ask About for more details on mutual fund fees.)
Third, he told her that our firm was structured like Bernie Madoff's and that we could just make up the stuff on her statements!!! We are an RIA (registered investment advisor) like Bernie Madoff's firm. But unlike Madoff, we use large third party custodians to custody our client's assets. Madoff had direct custody of his client's assets so, yes, he could and did make up stuff and there was no third party institution in place to provide the checks and balances. (See 4 Ways a Third Party Custodian Protects You From Investment Fraud to learn how this protects you.)
There are slimy snakes out there after your money people. Watch out.
Wednesday April 27, 2011
I liked this article Ask the Actuary: Should I Buy an Annuity? The author's first piece of advice? "Go shopping, don't be sold." I love it.
Want to see how to shop for an annuity? Read my multi-page series titled Should You Buy an Annuity? Ask These 5 Questions First and you'll know what to do.
Wednesday April 20, 2011
The hard part about working with retirees is, well, they die on you. I may say that tongue-in-cheek, but let me tell you, there was nothing tongue-in-cheek about today. I feel heartbroken.
She and her husband are in their early 80's. She called about 11 and asked what I was doing. I knew instantly. She didn't need to say anymore, but she told me the story...
He had fallen twice. The first time at the grocery store, alone. He managed to get himself up and get home. The second time was in the bathroom, where he hit his head and knocked himself out. She called for help and they got him to the hospital, but he has blood on the brain. Two of the children are already in town; the next two on the way. As soon as they are all here they're going to pull life support. It is what he would want.
I asked her what I could do for her. She said she just wanted to know she could bring her children in while they were all here to go through everything with them. "Of course," I replied, "I'll rearrange whatever I need to, you just let me know when."
She sounded so courageous.
I got off the phone and walked into our small conference room and started bawling. I cried for quite awhile. I've had several close clients pass away; it's been hard to figure out why this one got to me so much.
Maybe because they were still so in love. After 40 or 50 years of marriage, they still sparkled together. Maybe because over the last year he had been so diligent about stopping in to make sure all their affairs were in order, and to look me in the eye and ask me to reassure him that I would be there for her.
That is love. Love is so effortless when it is real.
Getting your affairs in order is not fun. It is, however, an act of love.
Who do you love? Would they know it if you were gone?
Learn how to get your stuff in order:
Sunday April 17, 2011
Don't ask me why, but I was reading about zebras tonight. The zebra's main predators are lions. There the zebras are, going about their business, eating grass. Along comes a lion... running away is the best course of action for the zebra.
It got me to thinking about my blog last week, Are You Getting Quality Advice or A Quality Sales Pitch. At least, I thought, a zebra knows the lion is its enemy. What if you are a zebra and a lion approaches and you have no idea it is a lion? Then what? You get eaten.
Unfortunately that is often the state of the financial services business. The lions are out there promoting their products and making it look as if they are offering you pastures full of fresh grass to graze on. In reality, they just want to lure you in to buy their product, so they can make their commission and eat, and then they are going off to find more zebras to prey upon.
Now, I am not saying everyone who earns a living by selling a commissioned product is a lion. Definitely not. I am saying it is really hard to recognize a lion in this business.
You should know someone is a lion when they are unwilling to answer questions open and honestly about how they get paid.
You should know they are a lion when they don't take a lot of time to thoroughly understand your family and financial situation before they start making recommendations.
You should know they are a lion if they don't explain both the pros AND the cons of what they are recommending, and if they seem in a hurry and don't want to let you do your own research too.
When you encounter a lion, your best course of action is running away.
Here are some additional things to know that can help you recognize lions:
