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March 2009 - Posts
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When your advisor leaves their employment to go to work for a competitor, it’s generally because they’ve been offered a lot of money. If your advisor leaves his current employer and goes to a competitor who can offer you better service, you should stay with him. But far too often, it has nothing to do with the client, and more to do with the advisor’s wallet. At one point in my career I was offered $300,000 to leave my position and go to work for a competitor. I know advisors who have been paid $1,000,000.00 to go to a competitor, and it can go higher than that.
It’s called “buying business”. Investment firms buy a financial advisor who is producing a lot of revenue, who then brings his clients to the new firm, which generates revenue. It is an injustice to the investor when an advisor changes his employer three or four times in his career. This does nothing for the client except create a headache for cost basis, potential tax consequences, and an unsettling feeling of- Did I make the right decision?
If your advisor leaves his firm for another, you need to make a few decisions. After reading the article about how a ‘Client/Advisor Relationship” should be on the financialjoe blog, ask yourself if you have a good relationship with your advisor. If you do, then I recommend that you move with him. If not, try to find another good advisor at the firm currently holding your account. This will save you the headache and potential tax consequences associated with moving to another firm.
Remember that in the end it’s what’s best for you and your account. The relationship you have with your advisor comes second.
Thanks for reading our blog, and please share us with others. It only makes the site more powerful for you!
Cheers,
Shawn Tierney
financialjoe
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You should view your relationship with your financial advisor as the most important relationship you have, outside the circle of your family and friends. It’s hard to name any other professional that has the responsibility of handling your assets on a daily basis. You see your doctor when you’re sick; your attorney when you need legal advice, your CPA for tax issues, but none of them has the responsibility of protecting your nest egg every day.
Who else knows (or should know) more about you and your personal financial life than your financial advisor? Now ask yourself these questions: Has my advisor taken the time to know me? Am I one of those investors who have not heard from my advisor in over a year? Has it been even longer? Here is a test for your advisor. Make an appointment and meet face to face, so they cannot try to cheat and look in your file. If you can’t make an appointment, call your advisor and ask them these questions: Does my advisor know?
- Where I grew up
- About my life’s work
- My best and worst financial experience
- Any investments I want to avoid out of principle or fear
- How I want my money to work for me
- How I want to leave my financial legacy to my children and grandchildren
- Who will assume financial decisions in the event of incapacitation or death
- What I expect from my advisor (contacts per year, notifications, etc)
- The plan of action set up for my family in the event of my premature death
If your advisor has not taken the time to know the answers to these questions, you have to wonder if your advisor is truly concerned with you and your assets. More than 50% of you are unhappy with your current advisor. A well known investment firm conducted a survey of 100 prospective clients with a net worth of more than one million dollars. The prospective clients met with the firm’s financial advisors to discuss transferring their money. Of the 100 prospective clients surveyed, NOT ONE transferred their account to this firm. When the investment firm asked why they chose not to transfer, they found that:
- 4% did not conduct business with the firm because they did not understand the investments recommended to them
- Over 80% of the prospective clients understood the investment recommended by the advisor, but felt the advisor did not take the time to understand them
I cannot express how important it is to find an advisor who will take the time to know you in the areas covered by the questions above. The economy is going to do whatever the economy is going to do. The stock market is going to react to the economy, and there is nothing you can do to change it. Therefore, it is critical to make sure that your portfolio is diversified based on your goals, risk tolerance, and objectives. These will change over time due to life events and other issues which you have no control over. Can this all be applied to your portfolio if your advisor has not contacted you in years?
It’s important to understand that most advisors spend the majority of their time providing quality service to 20% of their clients. The other 80% receive minimal contact, but are kept on the books because of the trails that are paid to the advisor. Your advisor is paid a trail by mutual fund companies to maintain a relationship with you. The percentage paid to them is based on the class of mutual fund, which ranges from .25% to 1.00% annual trail on the amount of your investment. Example: $100,000 in a class “C share” mutual fund pays a 1% trail, which equals $1,000 paid to the advisor each year. You are paying this trail. It comes out of the annual expense the mutual fund company charges you. Are you willing to give your attorney, doctor, or CPA $1,000 a year for doing absolutely nothing? Would you pay them even though they hadn’t spoken with you since you met? Why are you paying your financial advisor for ignoring you? The industry follows the 80/20 rule. 80% of an advisor’s revenue is generated by 20% of his clients. The amount of contact you have with your advisor might give you a clue as to which category you fall into. If you have not had contact with your advisor in years are you one of the more than 50% of investors who are unhappy with their advisor?
You need to seriously consider taking your business elsewhere. If you don’t, your financial assets could seriously suffer. If you are lucky enough to have an advisor who knows who you are and is taking exceptional care of your financial needs, please share your advisor’s name with others. Such advisors should be rewarded, and other investors should experience the same benefits and service. When you find the right advisor, don’t let a few miles of travel prevent a good relationship. It’s not as if you have to make that drive every day.
Thanks for reading our blog, and please share us with others. It only makes the site more powerful for you!
Cheers,
Shawn Tierney
financialjoe
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Everyday in life people win and people lose. But when economic times are tuff stories like this just don’t make sense.
We see two different scenarios with the same end results. The first is a video of an autoworker that’s losing his job. The second is a story company closing one of its locations because it can’t find enough workers. The closing will affect 200 more jobs. We have to ask ourselves how this can ever happen.
What we don’t see is the negative tax implications on the city when the company closes its location. Less tax dollars equals even fewer jobs.
http://www.youtube.com/watch?v=rF2tXl5-TcQ
http://news.yahoo.com/s/afp/20090316/ts_alt_afp/useconomyjobscompany
There is no doubt investors need to be conservative. But on that same token they don’t need to be over conservative. Those who are in stable jobs making great money need to take advantage of the current discounts offered by today’s economy. Go buy that new car with 0% financing. Go on the family vacation. Up grade like you have always wanted and buy the new house. There are tons of great deals out there.
And for those that have been laid off and think their to good for any job other than the one they want, suck it up and get to work. There are so many jobs out there, but aren’t filled because of pride. In the 1930’s people would flood the docks and warehouses to get anything they could. Today people don’t want to get a little dirt under their fingernails, or a sliver in the hand. They would rather drive around in their sports cars and collect unemployment and sit at Starbucks while they complain about not having the 100k a year job anymore.
So take the job, any job! It doesn't mean you have to stay there forever.
On a brighter note, financialjoe is seeing some great growth without any advertising, or heavy publicity. So thank you to those who have joined us, and double thanks for sharing us with other.
Cheers,
Shawn Tierney
financialjoe
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THE BIG PRINT GIVETH, THE SMALL PRINT TAKETH AWAY!
Because investments firms are out to protect themselves, any paperwork you sign is not for your benefit, it is to protect the firm in all legal matters that may be brought against them.
The paperwork is always changing. Generally, the language changes when the firm has faced a legal challenge and the complainant's attorney found holes in what the client signed. They will also use the outcome of an arbitration case in which other firms have been involved.
The paperwork you are signing is legal specific and you need to read everything you sign. If you have a question about anything you read, ask your advisor to explain it to you. If the advisor does not understand it, how can he ask you to sign on the dotted line? It's the advisor's responsibility to provide you with a full explanation.
If you ever take legal action against the advisor or firm, what you signed will be used against you. An attorney will ask if you read the paperwork you signed, and if you did not read it, or did not understand what you read, the attorney will then ask you if you have a habit of signing paperwork which you do not read or understand. This will be embarrassing for you and could ultimately damage your case.
Anytime you make a change in your portfolio involving a mutual fund, annuity, or any other packaged product, you will be required to sign a Switch Letter. This document is to protect the firm. It also discloses the reason for the change, sales charges, or surrender periods you may be subject too.
Advisors are required to keep detailed notes on any conversations they have with you, or any changes made to your portfolio. Depending on the advisor, they may have the discipline to do so, but most do not. You should keep your own detailed notes on any conversation you have with an advisor. Put a file together and keep a notebook. Every time you speak with your advisor, their assistant, or a customer service representative, record the date, their name and title, the subject matter, and the details of the conversation. It is important to keep this up to date and organized. It could ultimately become a legal court document.
If the firms are going to this extent to protect themselves, shouldn't you do the same?
Cheers
Shawn Tierney financialjoe
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About six months ago I shared this video with people and got a great response. If you have ever wondered how money is created you need to watch this video, it’s not what most think- it will open your eyes.
Given the current financial crisis I felt it was appropriate to send out again. I really encourage you to take the time and watch it… you will increase your knowledge!
http://video.google.com/videoplay?docid=-9050474362583451279&hl=en
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I just read a post on Techcrunch.com and I cannot understand how some people manage to become leaders. This is about one of the most idiotic things I have ever read.
California is suffering from a 66 billion dollar deficit and this is what they’re spending their time on ‘Not allowing citizens to purchase black cars”. And economists think the bottom is near? Take some time away from your hectic life and enjoy the read.
http://www.techcrunch.com/2009/03/26/california-may-ban-black-cars/#comment-2672133
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When it recovers! No one can predict it! I’m sick of hearing opinions based on a feeling. If anyone truly knew when the market was going to recover they could be a billionaire.
The market is driven by us. When people don’t spend it affects everything. Businesses can’t survive and shut down, which means employees get laid off and now more aren’t spending.
I look at the amount of people who are unemployed in my home state “Washington” and its mind boggling to think that the numbers would equal everyone who lives in the cities of Kirkland, Bellevue, Issaquah, Redmond, Woodinville, Renton, Bothell, and most of Kent is not working. Then you look at all of the businesses in those cities and think if no one is working whose spending? It’s easy to get caught up in that if you don’t look at the big picture.
I was sitting at a local coffee shop in Kirkland working, yes working. With financialjoe’s budget, office space is considered anywhere that offers free WIFI. Anyway I was talking to one of the Kirkland Firefighters and he made a very interesting comment. He said “The scary thing about right now is if people like me who have very secure jobs, still get cost of living raises, have the opportunity to make overtime without question, and don’t think twice about losing our jobs get conservative with our money, how bad does the economy really have to be”.
I asked him if he was married and if his wife worked and he told me that he was, and she had a job that was just as secure as his. I’m pretty knowledgeable on incomes in the area and I can assure you together as a couple they’re at least making minimum 125K a year. I asked if he would share with me how his family is being conservative with their money. He told me they wanted to replace one of their vehicles that's 9yrs old and take advantage of the manufactures offer of 0% interest. He also told me they decided to delay their family vacation to Disney till 2010.
I asked him why he thinks the economy is so bad, or where he gets his information from. He replied “it’s all over the news”. I said the news? And he replied “Yeah, the news. People are losing their homes, cars, jobs, and everything else”. I asked him if he was close to losing any of that and he said “No, not a bit worried about losing my job”. I asked him if he uses a financial advisor and he said “I have one, but we really don’t talk that much”. I asked him why and he replied “I don’t know, it would be nice to have an idea of what our investments are doing, or if we should sell them or make some changes”.
He asked me what I thought of the market, economy, and the local businesses that have shut down. I bluntly told him that if people like him, or in his financial position, are afraid to spend money when the economy offers them some of the greatest deals they’ll see once or twice in their life time, then we truly are in trouble. I told him that I would be out there replacing my old car and take advantage of paying principle only with no interest; especially where vehicle prices are. I told him that I just got back from taking the family to Disneyland and got the best prices we ever have in the four times we’ve gone. Not to mention the fact that Disney traffic is down by more than a third and we rarely stood in line for more than ten minutes. We also were able to check into our hotel at 8am because the hotel was only half full. We also never had an issue finding a taxi if we wanted go anywhere because there was always ten of them parked on the street desperately waiting for a fare.
So I told him he was crazy for not taking advantage of economic times that offer people in his position some of the best opportunities they will ever see.
I asked him one more question. I said look around right now and tell me how many people are in this coffee shop paying more for the cup of coffee they’re drinking than if they would have made it at home. He counted and said 18. I told him to look out the window across the street to another coffee shop and tell me if it was empty. He replied “No it’s pretty full”. I said then how bad are things really out there? Or, is it just the media focusing on the small percentage that are affected when most are not, yet they choose not to spend like him. He smiled and said “I think I’ll re-talk the Disney trip and car with my wife”.
My question is this? Why is it that a guy like that has to sit with a stranger to have an insightful conversation when he has a financial advisor?
What a disservice!
Cheers,
Shawn Tierney
financialjoe.com
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You
know, there’s a lot of “entertainment” written about the financial
markets and most of it I just chuckle at, but this type of stuff really
brings me back to the movie “Boiler Room” -which you should rent if you
haven’t seen it. The following links are clips
from the movie. Watch them and don’t think its Hollywood; I’ve seen it,
and have known people that worked for them.
http://www.youtube.com/watch?v=TbIRedOqDwE
http://www.youtube.com/watch?v=zvICN8DNMpY (WANRING this one has offensive language)
I
get a lot of emails from financial services and media outlets but
nothing makes me feel like this movie more than the emails I get from a
well publicized financial consumer media company. Below are some of the
quotes I get from the emails they send me.
Some of the statements made in them would get a financial advisor investigated by FINRA, and fired by his firm. They also make me want to puke to think there are vulnerable investors out there to fall for it.
“It
reveals three rock-solid investments identified by XXXX co-founders
XXXXX and XXXXX - as offering the best potential to triple your
investment over the next five years”.
My
friend and colleague XXXXX told me to buy this new
"Brand-Inside-a-Brand" stock in September 2006. It's already shot up
54% since then.
XXXXX
and XXXXX new report, "3 Stocks to TRIPLE Our Money in 5 Years" --
revealing the "Brand-Inside-a-Brand" company XXXXX compares to the next
Intel -- is yours to keep
Each Stock XXXXX issue
reveals not one but two TOP stocks -- handpicked and thoroughly
researched by Motley Fool co-founders XXXXX and XXXXX -- that are
poised to CRUSH the S&P 500 over the next three years.
I'll also rush you instant access to the new report, "4 Proven Options Strategies for 2009" -- absolutely FREE. Again, there is no credit-card required and no strings attached.”
The 2-Minute Secret to Retiring Rich...
How To Go From What You've Got To
What You Need To Live Very, Very Well...
in Just a Few Short Years!
Think again. Because even if you haven't yet saved a single dime toward retirement, we can show you how to pump up your portfolio by an extra $661,556.
Or fill your portfolio with over $240,000 in extra cash
even after you're retired!
In just two minutes, you can begin revving up your portfolio and making up for lost time. You'll discover:
Even if you're 55 or older, we'll show you how to make a simple change that turns $1,000 into $54,250! Or a losing stock into a cool $750!
Try us for 30 Days RISK-FREE and in just minutes you'll discover how to:
· Grab an extra $41,719 to spend in retirement - it's surprisingly simple!
· Or why not add in nearly $100,000? (And typically, the older you are, the bigger the amount!)
· Two things you can do at work to net you out with an astounding $230,000 starting today!
· An incredible way to double your investment just by filling out a form.
· The secret to adding years and thousands of dollars to your nest egg without plunking in an extra dime.
· Three BIG money-making reasons to hold onto losing stocks.
· And so much more.
To
get this kind of advice from your broker (if you're lucky enough to get
this advice from your broker) you'd have to give up as much as 2%-3% of
your hard-earned cash.
By following just one idea from XXXXX Rule Your Retirement, you'll be an astounding $283,000 ahead of the average Joe!
It's
not fair. Your broker ends up getting rich off your retirement fund,
and you could end up scraping by on Social Security. With life
expectancies rising and increasing numbers of Americans living to 100,
even a 65-year-old retiree has to think in terms of investing for
decades!
Think three times before act!
Shawn Tierney
Financailjoe.com
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Right now investor’s minds are exhausted. The market is a yoyo that keeps going down and they hear nothing but negative media coverage. Hundreds of billions lost in retirement accounts, layoffs, pay reductions, and life’s everyday frustrations.
Recently I spent time with numerous city government employees. The discussion was what to do with their deferred comp investment. I sat and listened to them for about an hour and was amazed at what I heard, or I should say didn’t hear.
First, not one person really understood how the plan worked. One person tried to explain that the investments were mutual funds, but more than half didn’t even know what a mutual fund was. Second, almost all were in agreeance that they were throwing their money away, and it would be best if they stopped contributing and got the money in their paychecks. I patiently sat there and endured the pain, “their” pain with them until I could not take it.
I asked one of the employees who had a folder with her if it contained her statements. She told me that it did. I asked her if I could see them and she obliged. Inside contained a three year history on her account.
At this point I had everyone’s attention and asked her to look at the oldest statement and tell me what the value of the portfolio was and she said $79, 838.16. I Then asked her to tell me the current value of the portfolio which she said $56, 112.64. I asked her to look at the first mutual fund on the statement and tell me how many shares were in it. She didn’t know what a share was so I showed her and most everyone else what I was talking about. I looked at her most recent statement and showed her how many shares she now owned and what she paid for them on January 2006.
I asked everyone the question “What price would you rather buy shares of this mutual fund at, $22.67 or $12.09?” Everyone responded $12.09 of course. I asked them if they had $250 a month to buy shares what price would purchase more shares and they answered $12.09. I explained to them they were currently buying the shares at the price they said would buy them the most and that when the market recovered and the
I now asked them if they thought the stock market was going to go out of business and everyone said no. I asked when they thought the market would recover and the response varied from 1yr to 5yrs. I asked if they thought the price would ever get back to the $22.67 and they all agreed that it would. I told them to do the math in their heads and realize how much more the fund will be worth because they will have so many more shares that they bought at a discount. The light bulb went off!
My question is where is the financial advisor who is getting paid a fee to educate the employees on this plan! Why is there so much confusion on something that should have been dealt with already? The sad thing is this was a sponsored meeting put on by the city who requested the advisor attend; he never returned their call.
My call is to all advisors to get on the phone or in front of your clients and talk with them. Do the right thing! You’re getting paid for it and I can assure you in the end your clients will look back and be thankful that you were their advisor in these trying times. Or doing nothing and have another advisor gain the trust of your clients and take them away.
To the investors! Demand service and do not take no for an answer. You get your questions answered 100% until you are satisfied. If your advisor won’t give you that time then find a new advisor who will.
It’s just a phone call.
Cheers,
Shawn Tierney
financialjoe
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Over the past month I’ve spoken to numerous investors who are fed up with their financial advisors, but not because of the market. It’s because their advisors are “M.I.A” (Missing-In-Action)
If you’re an advisor this is probably one of the worst times not to be on the phone or in front of your clients. The current economic environment is probably the worst most investors will ever see in their time and advisors are hiding in fear of facing clients who have lost 40-60% of their portfolio values. If that doesn’t increase liability I don’t know what does.
I will admit that having to call someone who has lost so much is not a pleasant task, but it’s an essential part of the job. Yes investors will probably yell at the advisor, but I really don’t think investors are truly blaming the advisor. I think most investors are smart enough to understand the advisor only has control of recommendations and planning, not how the market performs when people and businesses manipulate and commit fraud. And I think most investors understand that very few investors are winning in this market. So if a client yells at an advisor, I think it’s more of an emotional vent that is very much needed.
These are the times that an advisor should be on the phone or in front of his clients making a plan, revisiting current plans, and discussing how their clients is emotionally handling the current crisis.
I can tell you that investors that are not getting that type of attention will seek it from another source, which is bad for both the investor and the advisor. If you’re an advisor and your not calling clients, than frankly you’re and idiot. And when your clients leave you for another advisor- don’t whine you’re the one who pushed them out the door. So not only does the advisor lose assets but your firm does as well.
As for the investor, the next advisor they go to could provide the same level of service, or worse! Not only that, the investor will most likely incur some type of switch or sale that will generate a loss and possible sales charges. When all this could have been avoided by simple, responsible, and expected good old fashion communication.
These are no doubt heavy times, but investors have to take responsibility in the area they have control, and make sure they’re getting great service. All investors are most likely paying fees in some manner whether it’s a managed account, or mutual funds.
So during the times investors aren’t paying for performance there’re paying for service, but are they getting it?
Cheers,
Shawn Tierney
Founder/CEO
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It's High Budget! Cause that's the way we roll!
(I-Newswire) http://www.i-newswire.com/pr265880.html
Financialjoe.com empowers investors with the ability to compare
their portfolios against likeminded investors. Investors can also rate
and monitor their financial advisors services while keeping in contact
with his other clients in a social environment. (I-Newswire) - Shawn Tierney the founder and CEO of financialjoe.com
stated he is very pleased to release financialjoe to investors.
“We
are self-funded, have limited resources, a lot of heart, and limitless
determination. Our goal is to make financialjoe the most recognized
financial services site on the web. I cannot express in words the
sacrifice over the last eight months that was given to make this
happen. I’m surprised were not living in our cars now”.
“Our
goal is to provide investors a benchmark to compare their portfolios
against. If you’re a moderate or conservative investor you can’t
compare your portfolio against an aggressive investors; it just doesn’t
work. You have to compare yourself against likeminded investors with
the same goals and risk tolerance as you. Investors are matched to
each other based on those criteria, and are ranked based on the daily
performance of their portfolio over a 52 week period. Investors can
also rate and monitor their advisors services, not market performance-
the advisor recommended portfolio performance will speak for itself. We
bring investors together in a social atmosphere and provide them great
tools to use on a daily basis to see how they fare against their peers”.
Mr.
Tierney would not elaborate on how many employees work at financialjoe
or the cost of creating the site. Financialjoe is based out of
Kirkland, WA
financialjoe
Kirkland, WA
info@financialjoe.com
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