Posted by: winteridge | December 18, 2010

Just Trust Me…

Trust Me!

Having sacrificed a major portion of my retirement funds to the last two George Bush “Market Adjustments”, I was anxious to read the advertised feature in our local paper advising us on how to choose a Financial Advisor.  Finally!  (Though perhaps too late for many of us.)  This is not a decision to take lightly, like choosing a used car salesman.

When the article did appear, it stated that it was aimed at investors with funds of $500000 or more, which eliminates most of us, but it did contain some seemingly good advice.  Those fortunate people should look for a financial advisor they like, one they can trust, one with a good track record.  (See how simple it is?)  Then,  they need to research that prospective advisor’s past investment choices, discuss with him their own retirement needs, and develop a program with him that fits those needs.  Sound advice, but it would seem to me that one would need to know more about the investment market than the advisor, in which case one would not need an advisor at all, right?  Hmmmmmm.

For the rest of us, those with remaining funds of -0- to $500000, let’s look at some requirements for choosing a financial advisor to handle our retirement funds, based on recent history and our own experience.  First, and most important, find an advisor who is not already in jail or under indictment.  Second, do some research and make sure that he has been in business more than 30 days.  Third, when discussing investment goals and retirement plans, make it clear just whose retirement you are planning: yours or his.

My own advisor (with a major “bullish” firm we shall not name, took his retirement funds shortly after 9/11 and fled to Florida.  I’m still not sure where my funds went, but they disappeared at about the same time.  Choose an advisor you can trust?  The above trusted rep was replaced by a fresh-faced recruit recently out of college, complete with a shiny new Apple computer.  My remaining retirement funds suffered, until I removed them from his company.  It also bothered me to see that company’s CEO pay himself multi-million dollar bonuses each year, while my funds dwindled.

The moral here, in my experience, is that choosing a financial advisor is much like picking a car salesman, an ebay seller, or a vacuum cleaner salesman.  The waters are mighty murky out there, especially in recent months, since all rules were removed.  Take your pick, pay your money, and take your chances.  Someone is sure to make money, and it may even be you.  But stay away from your brother-in-law and his advice.  My Daddy, on the other hand, had survived the Great Depression, and he kept his life savings in a locked metal box under his bed.  Never lost a dime.  Sound example?

Interestingly, I just heard a newsclip of President Obama speaking on Wall Street, asking those financial experts to stop stealing their investors’ funds for a while in order to let them recover.  Why not give that a try? Let the investor regain some lost confidence.   Of course they refused.

It also was good to hear recently that the government decided that our recession ended back in 2009.  What great news for those who are still unemployed!  They did not mention, however, that possibly their recession did not end, but morphed into a Depression?

Just My Opinion.

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  1. Sigh. Your advice for choosing an investment advisor wouldn’t have eliminated Bernie Madoff. But it’s good advice anyway. My own investment strategy is “buy and hold” which is roundly panned by all brokers. I have held the same Ariel Investments funds since their inception. Very boring, but the market goes up and down, and eventually I get up out of the downs. I have a friend who, when she and her husband sold their cows and retired, put everything in CDs. Her funds never went up, and never went down, and over the years I’ve known her, the net performance is about the same. So go figure.

  2. As usual, I have to agree with you, Barb. It is tough these days though. Even the CD, while relatively safe, pays little or no interest these days. Not easy when you are trying to live on your investment returns. It is interesting how the banks decided it would be easier for them if they quit paying interest, so they quit.

    I guess I was trying to be sarcastic about picking an advisor you can trust, but you are right, there is no way, and often we are blinded by greed on our part. I recall talking investments with a friend a few years back, and he was trying to convince me to put my IRA money with a local advisor he was dealing with. He said his financial man was dealing with some “wizard” on wall street who was getting returns twice as high as anyone else, and no one could understand how he did it, but they were not questioning his results! Now we know. Madoff went to jail, and the local expert is being sued by a number of local unions who did not question his returns until they lost all their pension monies. My Dad did not even trust banks, and I agree with him more every day. I think you would have liked my Dad.

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