If your answer is yes, you may be in serious financial trouble and not know it. Read on if your answer is no. You are about to learn some nasty tricks of the trade that have been engineered by Wall Street.
A high percentage of investors believe financial advisors have to tell the truth because they work in a regulated industry. It’s true, they are supposed to tell the truth, but there is no way the regulatory agencies (FINRA, SEC, State Securities and Insurance Commissioners) can protect you from unscrupulous advisors. Continue reading →
Did you know there are financial advisors who read the obituary columns every day and call on recently widowed women? Or, how about the advisors who call on hospice care workers to get the names of women whose husbands have suffered catastrophic illnesses. And lastly, there are the advisors who call on attorneys to obtain the names of recently divorced women.
These sales practices win the prize for sleaze. You have to wonder how these advisors sleep at night? Or, they may sleep really well because they have control of your assets. So what is really going on here and what can you do about it? Continue reading →
Investment performance measurement is a service that has been used by institutional investors since the 1960’s. It refers to the process of measuring the investment performance of institutional assets. Since the 1970’s this data has helped the trustees of pension plans meet their post ERISA obligations for monitoring the performance of their plans’ investments.
However, trustees did not manage institutional assets. They hired money managers to invest the assets for them. This brought another fiduciary requirement into play. Trustees were responsible for monitoring the performance of the managers they selected. This made sense. It would have been imprudent to select managers and ignore their investment performance. Continue reading →
The media calls them “alphabet soup”. Investor Watchdog’s record is reviewing the credentials of an advisor who had 28 letters after his name. The soup I am referring to is the letters that represent certifications, designations, and accreditations that appear after advisors’ names.
We are all familiar with the well-known CPA® (Certified Public Accountant™) designation. Less well known is CFP® (Certified Financial Planner™) designation. And, even lesser known is CFA® (Chartered Financial Analyst™), a very highly regarded designation that can take three years to obtain. Continue reading →
One of the most frequent sales tactics that is used by financial advisors is convincing you they are financial experts. This is a critical step in the sales process because advisors know you do not question the advice of experts. You will buy what they are selling because they are experts.
What if the advisors were not financial experts? How do they convince you they are experts? Another popular tactic is to use words they believe you won’t understand. After all, one definition of an expert is a person who knows more than you do on a particular topic. The use of confusing terms helps advisors convince you they are financial experts. Continue reading →
Finding a financial advisor is easy. That’s because they find you. The problem is, the advisors who market this way are usually sales representatives (reps). If you are like most investors, you do not want sales reps telling you how to plan your future and invest your assets.
Finding higher quality advisors can still be easy. You just need a process that puts you in control of your choices. You determine whom you talk to, not advisors who purchased your name, email address, and telephone number from a direct mail house.
One solution is the “Find Advisors” service that resides on the Investor Watchdog (www.InvestorWatchdog.com) website. You choose the search method that works best for you. One popular method is to input your zip code and view listings for advisors in your community. A more advanced search method is to tell the system the types of financial services you need and the distance you are willing to travel to meet a prospective advisor. You also choose the method of initial contact, telephone or email. Continue reading →
If you are working, you are saving and investing assets for your future use. The most important use is retirement years when your assets produce income that supplements payments from Social Security and company pension plans.
The more assets you accumulate during working years, the higher your standard of living during retirement years. Increased assets also enhance financial security late in life when you need it the most. You cannot have too many assets. Continue reading →
There are several regulators (SEC, FINRA, State Securities Commissioners) that audit financial advisory firms on a regular basis; for example every four or five years. The purpose of the audit is to make sure the firms and their representatives are following the rules. A second goal is to identify problems before they damage investors.
In addition to periodic audits, the regulatory agencies receive thousands of complaints per year from investors who believe they have been damaged by investment firms and their representatives. Many of the complaints are frivolous – that is, investors lost money in down markets and the representative did nothing wrong. But, at the other end of the spectrum is criminal wrongdoing. Continue reading →
Some investors say they trust their advisors so there is no reason to monitor them. Or, they believe the advisors are their friends and friends don’t take advantage of friends for money.
There is also the issue of time. Very few investors will commit the time it would take to to develop their own monitoring system. And, some investors may not know the right questions to ask.
Consequently, most investors let advisors monitor themselves. What’s wrong with this picture? No advisor will volunteer information that may cause the investor to terminate the relationship. They don’t volunteer information and they hope investors don’t ask the right questions and require responses in writing. This works for the advisor, but is very dangerous for investors.
Investors have to learn to protect their financial interests better.
Investor Watchdog can help. We are launching a quarterly monitoring service for advisors in February 2012. The service is free for investors.
What if you could have gone through school without taking any tests. Would you have worked as hard? No tests mean no accountability for learning the material. Unmonitored advisors are less accountable for the results they produce.
What if an advisor has two clients. One monitors the advisor and one does not. Which client is going to get more attention? The client that monitors is going to have information that may cause him to terminate an under-performing advisor. The advisor knows this. So the client that monitors and increases accountability gets more attention.
Will increased accountability improve your investment results? There is no guarantee, but increased attention certainly can’t hurt. You would hope that the more time an advisor spends on your portfolio the better your results will be.
Monitoring also provides an additional benefit. It will be easy to spot advisors who sell you products, but provide no ongoing services or advice. This gives you the opportunity to change advisors which can also improve future results.
Watchdog is launching a new quarterly monitoring service for advisors in February 2012.