Jack entered the financial services industry as a financial consultant in 1976 for Warburg, Paribas Becker. He provided financial advice to companies, public entities, Taft-Hartley funds, endowments, and foundations with assets exceeding $7 billion.
In 2004, Jack co-founded PaladinRegistry.com, a website that took selected content from his book and made it available to investors over the Internet. Later in 2004, a Registry of pre-screened, five star rated financial planners and financial advisors was added to the website. Paladin became the first online firm that vetted financial professionals for investors and provided comprehensive documentation for their credentials, ethics, business practices, and services. In 2008, Jack was instrumental in the development of this blog site (InvestorWatchdog.com) that reports on investment risks that result from ethical conflicts in the financial services industry.
Jack has appeared on CNNfn and over 100 national, regional, and local radio shows to talk about the subject matter of his book, the risks and consequences of bad advice, and Paladin’s free online solutions. He is also widely quoted in the print media including Forbes, BusinessWeek, Worth, and Kiplinger and is a columnist for Worth Magazine. Jack can be reached at Jack@InvestorWatchdog.com.
You need to know there are real financial planners and there are bogus financial planners. The fake planners use the title to reduce sales resistance when they sell investment and insurance products. For example, a plan may recommend a substantial purchase of insurance products. You are more likely to buy if it is recommended by the plan and not by the financial planner. What is the difference? There is no difference when the plan represents the financial interests of the planner.
There are no industry regulations that limit who can call themselves financial planners. A brand new sales rep may adopt the title to facilitate the sales of financial products. There are no tests to make this claim more valid and there are no licenses for financial planners. If you are asking why, it is because Wall Street firms also benefit from this deceptive sales tactic. The firms make more money when they make it easy for their reps to sell investment products and services. And make no mistake. Wall Street has tremendous influence over the regulations that govern the industry. Continue reading →
Paladin began providing services to investors in 2003 when its book, “Who’s Watching Your Money?” was published for the first time. This book set the standard for vetting financial advisors to determine if they are using deceptive sales tactics to gain control of investor assets. Any financial advisor who uses deceptive sales practices cannot be trusted to provide competent, ethical financial advice. In fact, investors should avoid these advisors because they represent hidden risks that could be catastrophic. Continue reading →
As long as there is no mandatory disclosure for financial advisors, Wall Street is free to determine what is communicated to you and how it is communicated (verbal versus documented). And, it would be naïve on your part to assume Wall Street will volunteer any information that damages its revenue and profitability.
A great New Year’s resolution for Wall Street would be to come clean with you and the millions of other investors who depend on its competence and ethics. For the first time, financial advisors and their firms would voluntarily provide the facts you need to make informed decisions. But, don’t hold you breath. Wall Street, like the tobacco and pharmaceutical industries, cannot afford to adopt business practices that include full disclosure. Continue reading →
Prior to 1975 stockbrokers were called Customers’ Men. Their role was to help clients achieve their financial goals. They did this by performing duties that in modern times are provided by money managers. For example, they helped clients develop strategies and build portfolios. They recommended investments based on company research. And, they bought and sold securities for their clients.
This hundred year-old relationship changed when trading commissions were deregulated. The new regulation created discount brokers and severe price competition between established firms. Stockbrokers could no longer make the money they were used to so they had to change their role. They became salesmen whose primary role was to sell investment and insurance products (mutual funds, annuities) to their clients. They were and still are compensated with commissions that are based on the amount of products they sell. Continue reading →
You have seen the headlines. Wall Street firms have paid billions of dollars of fines for cheating or defrauding investors. You may have disregarded the headlines because they did not impact you. But, the headlines are not the only risks that are created by Wall Street. There are other risks and there is a 75% probability one of them is impacting you.
These risks are created by deceptive sales practices that lower quality advisors use to sell investment and insurance products. Continue reading →
Morgan Stanley CEO James Gorman had the partial fortitude to admit his firm belongs in the doghouse. Unfortunately, he also used two forms of standard Wall Street spin to dilute the impact of his comment when Bloomberg News quoted him saying, “Wall Street’s reputation will remain “in the doghouse” as long as trading scandals continue to plague the industry.” He went on to blame UBS for the latest scandal when he said, “The good works of the industry are ignored when some trader does some stupid thing like this guy at UBS did and goes to jail”.
Gorman is right about the doghouse. According to a Gallup poll last Summer, Americans’ confidence in U.S. banks fell to a record low of 21 percent; about half of what it was in 2007 before the Wall Street initiated crash in 2008. This was supported by Edelman Public Relations survey in January of this year that showed Financial Services & Banking were the least-trusted industries in America. Continue reading →
From Wall Street’s point of view, the ideal assets are the ones it can retain the longest and the ones that produce the largest amounts of new fees and commissions.
Investors may spend 30 years accumulating assets for their retirement years. Then they may spend 30 years in retirement. If a Wall Street advisor created a relationship with this type of investor on day one he could generate fees and commissions for the next 60 years.
In year one, the investor opens an account with an initial contribution of money – let’s say $5,000. And, the investor contributes that amount for the next 30 years. Simple math, with no compounding, says the investor will have $150,000 at the end of the 30-year period. Continue reading →
Would you believe there are seven layers of investment fees that can be deducted from your investment accounts? It would be rare to pay all seven, but four or five are fairly common. The more you know about investment fees the less likely excessive expenses will impact you.
Every dollar of investment fees is one less dollar you have for reinvestment and your future use. Long-term goals, like secure retirements, can be severely impacted by excessive expenses. Continue reading →
By now you probably have a pretty good understanding of the Fiscal Cliff and how it may impact you. In essence, it is a combination of expiring tax cuts and proposed budget cuts that if implemented as is, could tip the U.S. economy back into recession. The Fiscal Cliff also has a lot of implications for investors who are impacted by increased taxes on dividends, interest, capital gains, and estates. Virtually every personal tax reduction since 2001 will be rolled back to previous, higher rates.
Can you afford to wait for politicians to legislate some type of compromise or should you be taking a more proactive approach? Continue reading →
There is a large number of investors who believe anything their advisors tell them because they have personal relationships. They like their advisors and they inherently trust people they like. And, investors do not question the advice of people they trust. This is a license to steal for unscrupulous advisors who take advantage of investors who trust them to maximize their own incomes.
It is unfortunate, but a lot of investors have trouble believing people they like will take advantage of them to make more money. Ask yourself this question. Do you really believe your current advisor would voluntarily provide information that would get him fired – for example, bad performance, high expenses, excessive risk, or conflicts of interest? The answer is absolutely not! His income would stop and you might file a complaint with one of the regulatory agencies. If the abuse was bad enough, it could cost the advisor his job. It is much safer and rewarding for the advisor to withhold this information from you. Continue reading →