Beachside Resident #10 Fees and Other Random Rants

To make a good impression, an advisor takes his potential customer down to the local marina. He points to a yacht and says “This one’s mine”. He gestures further down at a bigger boat and then a monster on the end and proudly announces “There’s my managers boat and our directors power yacht”. Clearly impressed, the potential customer asks “Where are your clients boats?”.

Some jokes are funny because they’re true. This one is sad because it’s based on truth. Advisors who work through banks, insurance companies and big brokerage firms do not build wealth. They feed off it. If they’re telling you what to buy and you really don’t understand, that should be a huge warning flag. There’s nothing wrong with asking questions to understand your financial security.

One last thing on sales, avoid annuities, loaded mutual funds, reverse mortgages and precious metals from TV ads. If you already have one or more of these don’t rush to sell. It might cost you even more to get out. Get independent help. I’ll leave more information and specifics on my website. ’nuff said.

This months column marks a turning point in our discussion. We have covered the markets and various investment types then built a typical portfolio using the asset allocation model. In short…the way it should be done.

In future issues, we’ll dive into the way it shouldn’t be done. I’m specifically referring to day trading, charting and options. Better you learn about it here than from someone trying to sell you something.

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