By: Jack WaymirecloseAuthor: Jack Waymire Name: Jack Waymire
Email: jack@InvestorWatchdog.com
Site: http://www.investorwatchdog.com
About: Jack entered the financial services industry as an institutional consultant and later as vice president at Warburg, Paribas, Becker in 1976. From 1983 to 2003 he was the President of Lexington Capital Management and related companies. In December, 2003 John Wiley published his book "Who's Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor". In 2004, he founded PaladinRegistry.com, a website that educated investors about financial advisors. A national Registry of pre-screened, five star rated advisors was added to the website later in 2004. In 2009, he founded InvestorWatchdog.com, a website that provides tools and information to investors who use the services of financial planners and financial advisors. Since 2004, Jack has been frequently quoted in the media on topics about financial advisors, Wall Street firms, investment scams, and the financial services industry (BusinessWeek, Forbes, Kiplinger, Washington Post, etc.).See Authors Posts (59) | February 2, 2012

The big money management firms seem to be getting bigger so I don’t think so.

The big firms have two major advantages that they exploit with their marketing. They have revenues that permit them to spend a lot of money are marketing. It takes more than $100 million to build a brand name in America.

Their marketing prowess enables them to become brand names. A certain percentage of investors believe they are safer when a brand name firm invests their assets.

These investors are making two major mistakes. First, size is not a good indicator of investment acumen. Chances are the company is better at marketing financial services than producing exceptional returns.

Second, investors who believe they are safer must have missed the headlines that documented billions of dollars of fines that big companies have paid for cheating investors. It is fairly well known that company executives are paid huge bonuses for short-term earnings. They are not paid to help investors achieve their financial goals.

By: Jack WaymirecloseAuthor: Jack Waymire Name: Jack Waymire
Email: jack@InvestorWatchdog.com
Site: http://www.investorwatchdog.com
About: Jack entered the financial services industry as an institutional consultant and later as vice president at Warburg, Paribas, Becker in 1976. From 1983 to 2003 he was the President of Lexington Capital Management and related companies. In December, 2003 John Wiley published his book "Who's Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor". In 2004, he founded PaladinRegistry.com, a website that educated investors about financial advisors. A national Registry of pre-screened, five star rated advisors was added to the website later in 2004. In 2009, he founded InvestorWatchdog.com, a website that provides tools and information to investors who use the services of financial planners and financial advisors. Since 2004, Jack has been frequently quoted in the media on topics about financial advisors, Wall Street firms, investment scams, and the financial services industry (BusinessWeek, Forbes, Kiplinger, Washington Post, etc.).See Authors Posts (59) | February 1, 2012

I’m fascinated with the advertising messages of money managers who want people to believe they produce exceptional results for their clients.

Unfortunately, no money management firm can make that claim so they resort to marketing messages that convey exceptional results without saying they actually produce those results.

One of my favorites is Franklin Templeton’s message that it has been able to “achieve great heights”. If heights are results then they must be doing a great job for their clients. Why don’t they come out and say that then document the claim with GIPS compliant, audited track records?

By: Jack WaymirecloseAuthor: Jack Waymire Name: Jack Waymire
Email: jack@InvestorWatchdog.com
Site: http://www.investorwatchdog.com
About: Jack entered the financial services industry as an institutional consultant and later as vice president at Warburg, Paribas, Becker in 1976. From 1983 to 2003 he was the President of Lexington Capital Management and related companies. In December, 2003 John Wiley published his book "Who's Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor". In 2004, he founded PaladinRegistry.com, a website that educated investors about financial advisors. A national Registry of pre-screened, five star rated advisors was added to the website later in 2004. In 2009, he founded InvestorWatchdog.com, a website that provides tools and information to investors who use the services of financial planners and financial advisors. Since 2004, Jack has been frequently quoted in the media on topics about financial advisors, Wall Street firms, investment scams, and the financial services industry (BusinessWeek, Forbes, Kiplinger, Washington Post, etc.).See Authors Posts (59) | January 31, 2012

Several money managers, most notably T. Rowe Price, market their funds as beating their Lipper averages. But, what does than mean and should it influence your decision when you select money managers to invest your assets?

First you have to understand how the Averages are constructed. They are the average performance of the 30 largest actively managed funds in an asset class (for example, large capitalization growth stocks). By excluding the small funds, that may outperform their larger counterparts, Lipper benefits the largest funds in the asset class.

Second, the funds are all “actively” managed. Lipper excludes funds that are passively managed. A high percentage of actively managed funds under-perform their passive counterparts. Once again, Lipper’s methodology benefits particular types of funds.

I wonder if large funds buy services from Lipper? If they do, Lipper may manipulate its averages to minimize the impact on its larger client

By: Jack WaymirecloseAuthor: Jack Waymire Name: Jack Waymire
Email: jack@InvestorWatchdog.com
Site: http://www.investorwatchdog.com
About: Jack entered the financial services industry as an institutional consultant and later as vice president at Warburg, Paribas, Becker in 1976. From 1983 to 2003 he was the President of Lexington Capital Management and related companies. In December, 2003 John Wiley published his book "Who's Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor". In 2004, he founded PaladinRegistry.com, a website that educated investors about financial advisors. A national Registry of pre-screened, five star rated advisors was added to the website later in 2004. In 2009, he founded InvestorWatchdog.com, a website that provides tools and information to investors who use the services of financial planners and financial advisors. Since 2004, Jack has been frequently quoted in the media on topics about financial advisors, Wall Street firms, investment scams, and the financial services industry (BusinessWeek, Forbes, Kiplinger, Washington Post, etc.).See Authors Posts (59) | January 30, 2012

Yes, if your investments are limited to large capitalization U.S. stocks. You can compare your financial advisor’s performance to the S&P 500. Advisors who outperform the S&P 500 are frequently referred to as beating the market.

The answer is No if you own a diversified portfolio of small, mid, and large cap stocks, plus bonds, international stocks, REITs, and other asset classes. In this case the S&P 500 is not an effective proxy for the performance of all of your assets.

You need a diversified Benchmark that represents the performance of all of the asset classes in your portfolio. In a few weeks InvestorWatchdog.com will launch five free Benchmarks with performance data back to 2008. You select the Benchmark that fits your current situation and tolerance for risk.

By: Jack WaymirecloseAuthor: Jack Waymire Name: Jack Waymire
Email: jack@InvestorWatchdog.com
Site: http://www.investorwatchdog.com
About: Jack entered the financial services industry as an institutional consultant and later as vice president at Warburg, Paribas, Becker in 1976. From 1983 to 2003 he was the President of Lexington Capital Management and related companies. In December, 2003 John Wiley published his book "Who's Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor". In 2004, he founded PaladinRegistry.com, a website that educated investors about financial advisors. A national Registry of pre-screened, five star rated advisors was added to the website later in 2004. In 2009, he founded InvestorWatchdog.com, a website that provides tools and information to investors who use the services of financial planners and financial advisors. Since 2004, Jack has been frequently quoted in the media on topics about financial advisors, Wall Street firms, investment scams, and the financial services industry (BusinessWeek, Forbes, Kiplinger, Washington Post, etc.).See Authors Posts (59) | January 26, 2012

In a recent study conducted by PaladinRegistry.com and ByAllAccounts.com, a disturbingly high percentage of investors said they relied on financial advisor references to validate their ethics and performance.

This is disturbing at two levels. No advisor will deliberately give a prospective client a bad reference. In fact, references are carefully chosen to make sure they only make positive statements about the advisor.

The next level is even more disturbing. Unethical advisors may use friends, not clients, as references. Or, advisors act as references for other professionals in return for positive comments about themselves. None of this is disclosed to investors.

References are too easy to manipulate and are subjective (think Bernie Madoff). Investors need a new objective way to evaluate ethics and performance.

By: Jack WaymirecloseAuthor: Jack Waymire Name: Jack Waymire
Email: jack@InvestorWatchdog.com
Site: http://www.investorwatchdog.com
About: Jack entered the financial services industry as an institutional consultant and later as vice president at Warburg, Paribas, Becker in 1976. From 1983 to 2003 he was the President of Lexington Capital Management and related companies. In December, 2003 John Wiley published his book "Who's Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor". In 2004, he founded PaladinRegistry.com, a website that educated investors about financial advisors. A national Registry of pre-screened, five star rated advisors was added to the website later in 2004. In 2009, he founded InvestorWatchdog.com, a website that provides tools and information to investors who use the services of financial planners and financial advisors. Since 2004, Jack has been frequently quoted in the media on topics about financial advisors, Wall Street firms, investment scams, and the financial services industry (BusinessWeek, Forbes, Kiplinger, Washington Post, etc.).See Authors Posts (59) | January 25, 2012

Financial planners, financial advisors, investment advisors, and money managers are financial fiduciaries. That’s because they are Registered Investment Advisors (RIAs) or Investment Advisor Representatives (IARs) who work for RIAs. What does this mean to you, the investor?

Fiduciaries are held to the highest ethical standards in the financial services industry. They are required to put their clients’ financial interests ahead of their own. In other words, your financial interests come first.

Non-fiduciaries are held to a lower ethical standard called suitability. In a nutshell, a suitable investment means that an investment is appropriate for an investor’s willingness and ability to take on some level of risk. Here’s a good article that explains suitability in more detail.

If you’re looking for a new financial advisor or your first financial advisor, make sure you select an RIA or IAR and require them to acknowledge their fiduciary responsibilities in writing. Remember: it’s your money so the financial professional you hire should have the highest level of accountability back to you, the client!