One Online Financial Advisor Directory Stands Out Above the Rest

Posted on January 25, 2013 by Jack Waymire

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 →

Wall Street’s 5 Most Deceptive Sales Practices

Posted on December 6, 2012 by Jack Waymire

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 →

Do You Believe Your Current Financial Advisor Always Tells the Truth?

Posted on November 8, 2012 by Jack Waymire

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 →

Do You Believe Financial Advisors Always Tell the Truth When They Sell Investment Products?

Posted on November 6, 2012 by Jack Waymire

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 →

What Are the Key Differences between Financial Advisors and Money Managers?

Posted on November 2, 2012 by Jack Waymire

How about this for a start? Financial advisors may be money managers, but money managers may not be financial advisors. Or, does this make it even more confusing. The solution is to develop clear definitions of the professionals’ various roles so you select the right advisor based on the services that they provide.

Money managers have two distinguishing characteristics that describe what they do:

They invest your assets in the securities markets. Therefore, Separate Account Managers, mutual funds, and hedge funds are different types of money managers
They provide the same service to multiple clients. Their services have very little variation by client. So when you invest in a mutual fund, you get the same service and results as other people in the fund Continue reading →

Who Are the Real Financial Advisors?

Posted on October 30, 2012 by Jack Waymire

Stockbrokers, who sell investment products for commissions, tell investors they are financial advisors because it reduces sales resistance and improves their odds of making sales. They are breaking an industry regulation when they call themselves advisors, but the claim is verbal in a sales pitch. Investors have no record of what was said to them so the sales reps get away with it.

It is easy to recognize stockbrokers and other types of sales reps. They have two distinguishing characteristics that are difficult to hide. You just have to know the right questions to ask. First, “What licenses and registrations do you hold?” And second, “How are you compensated for your advice and services?” The advisor is a sales rep if the answer to the first question is a Series 6 or 7 license and the answer to the second question is commissions. Continue reading →

How do Investment Expenses Impact the Achievement of My Financial Goals?

Posted on October 29, 2012 by Jack Waymire

Here’s how the Labor Department describes the problem. Assume you have 35 years until retirement and your current 401k account balance is $25,000. If your investment performance averages 7% over the next 35 years and your expenses average 0.5% your 401k account balance will grow to $227,000 in 2047. However, if your expenses averaged 1.5% with no additional contributions to your account your account balance would only grow to $163,000. The 1% difference in expenses reduced your account balance at retirement by 28%. And, that is with a paltry starting balance of just $25,000. Bigger 401k account balances are impacted the same way, the numbers are just bigger.

Every dollar of expense is one less dollar you have available for reinvestment and your future use. Therefore it is critical that you obtain the data you need to create an extremely accurate spreadsheet that documents every penny of expense that is deducted from your accounts or billed direct to you. Your measuring stick is the percentage of your assets that are paid every year in the form of expenses to as many as five service providers. Continue reading →

Why are Investment Surrender Charges so High?

Posted on October 19, 2012 by Jack Waymire

First of all, sales reps say you will never pay the surrender charge or penalty for early withdrawal because you intend to hold the investment for at least seven years. That is true on the day you buy the investment – you have no intention of selling it that day. But, it is not true one year later when you determine the investment product (mutual fund, annuity) is under-performing and charging excessive fees. You determine you could do a lot better elsewhere, but you have to pay a 6% penalty (one year has elapsed) to move your assets.

Why are surrender charges just a big number? As you may know, investment product companies still pay the sales rep a 5% commission even though the assets are not deducted from your account. In effect, the product company is front-ending the commission payment to the advisor. The product company needs time to recover the commission payment. Most of the reputable companies charge early withdrawal penalties for seven years. They have that length of time to recover the commission payment and they are protected by the surrender charge if you decide to leave early. Continue reading →

The Compensation Methods of Financial Advisors Matter a Lot!

Posted on October 18, 2012 by Jack Waymire

Savvy investors do not buy investment products from sales representatives (reps). They select “real” financial advisors who have the specialized expertise and services they need to help them achieve their financial goals. This is a far cry from reps who want to sell mutual fund products that pay 5% commissions. Regardless of what reps say in their sales pitches, astute investors should know reps, who are paid at the time of the sale, have no economic incentive to help them achieve their financial goals.

If you are a savvy investor you should pay fees to a financial advisor for his knowledge, advice, and services. If you become dissatisfied with the advisor’s results you can terminate the relationship and the advisor’s compensation stops. This is a powerful incentive that motivates advisors to help you achieve your goals. Continue reading →

Who Are the Independent Financial Advisors?

Posted on October 17, 2012 by Jack Waymire

There are actually two questions in the heading of this blog post. Who are the financial advisors and what does it mean to be independent?

Just about everyone who sells financial advice, services, and products refers to themselves as advisors. However, from a licensing and registration point of view advisors have some very specific characteristics that distinguish them from other types of professionals.

A financial advisor is registered one of two ways. They may be Registered Investment Advisors (RIAs), which means they own their own firms. Or, they are Investment Advisor Representatives (IARs), which means they are registered with an RIA. This is a critical distinction because only RIAs and IARs are permitted to provide financial advice and ongoing services for fees. So if you believe, the way I do, that fees are the appropriate way to pay for financial advice, then you should select an RIA or an IAR. Continue reading →

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