Many people are naively trusting and you may be so with your retirement advisor. It's essential to have trust for an economy to work, but it does not mean that trust must be blind and rely on your retirement advisor's spoken word. Yet everyday we see results of this type of blind trust in the news, most commonly, all of the people who took real estate loans without reading the documents. And then they think they are victims when the lender enforces the terms of the loan, when the lender expects the borrower to do exactly as they agreed to do. Let's just substitute the word moron for victim.
Of course they did not go to law school. But when someone is handed a document that obligates them financially, any person with half a wit will read it and
a. ask questions about what they don't understand and insist on clear and understandable explanations or
b. if they simply don't have the mental capacity, the educational background to understand what they read, then take the document a lawyer THEY hire and
c. if they cannot afford a lawyer to explain their obligations, then they have no business making the transactions because it is beyond their financial means
There you have the "abc" of not getting fleeced and let's see how it applies to your retirement advisor, stockbroker or financial advisor.
Unless your advisor is a registered investment adviser (only about 10% of the investment professionals hold such a certificate), then your retirement consultant is NOT obligated to act in your interest and watch out for you. In fact, you signed an agreement with your financial advisor that contained this language:
'Your account is a brokerage account and not an advisory account.
Our interests may not always be the same as yours.
Please ask us questions to make sure you understand your rights and our
obligations to you, including the extent of our obligations to disclose conflicts |
of interest and to act in your best interest. We are paid both by you and, sometimes,
by people who compensate us based on what you buy. Therefore, our profits, and
our salespersons' compensation, may vary by product and over time.'
In plain English, the above agreement says:
a. your broker is not obligated to look out for your best interest
b. the broker is a salesperson and makes commissions by selling you stuff
c. he is not bligated to tell you about a better deal than the one his firm offers
d. he is not obligated in any way to tell you that the securities his firm pushes, he feels are crap
e. your broker is NOT your advisor and is not oobligated to give you "good advice"
f. there are conflicts of interest between what is good for the brokerage firm and what is good for you
g. the broker is not giving you independent advice and earns different amounts by selling different products
I know your retirement advisor, the nice young man at the brokerage firm who speaks nicely, seems kind, wears nice suits, takes your calls and is very polite seems like he has nothing but your best interest at heart. Hopefully, you are dealing with such an individual who has superior integrity. BUT the agreement you signed with your retirement advisor and his firm says he has no duty other than to sell you whatever he can to make as much money for he and his firm within FINRA's requirements of suitability.
Be responsible. Don't sign what you don't understand and if you do, shame on you. You're responsible for the consequences and you don't get to blame others later when you lent your trust irresponsibly without proper understanding.
You might also like:
Thanks for the great info, It would be great if share some of the real instruments of retirement planing for youngsters
Really its is great information, who want to plan his retirement's day of joy...
Excellent advice. The priority of the unscrupulous broker/"advisor" is his retirement plan not yours.
The problem seems to be that over the years people in this industry have evolved confusing titles.
Although you definitely should not blindly trust anyone, and I agree with this article, my most recent mistake was not trusting my advisor enough.
I actually had an honest advisor warning me about the impending crash of the markets which took place in 2008, but I thought I knew better than her and went ahead and dropped all my money into funds anyhow....stupid me.
This is a good article, everyone must read the fine print on everything they sign and be very careful what they do with their money, because everyone in the world wants a piece of it.
Generally any financial advisers, in spite of the fact that they call themselves advisers, are salespeople. They make money on commissions and so they're always going to be more inclined to pitch you a high-commission product than truly have your best interests at heart.
I agree
there is need to be careful with retirement advisors
They not hold always our best interest
Great post. Thank you very much for this very useful retirement info.
Really its is great information, who want to plan his retirement’s day of joy
Thanks for the great info, It would be great if share some of the real instruments of retirement planing for youngsters
I cant believe people take advantage of seniors this way, its repulsive, but they do!!
I can relate to this article.
I mean, i know somebody who made a mistake in investing their investment move.
They, my landlords, invested their retirement money on stocks which were explained to them to be a very good opportunity by their Financial Adviser. The FA said, why not make the retirement money work for them?. Convinced enough without further research, they jumped in. They bought shares at price of $1.25 per share.
That was 8 months ago. The current price is $0.19 only! OMG!
And they said they have been trying to chase the FA for their money.
What a joke! The just plunged in without digging some info on the company they had invested in.
So... before you invest into something, research! research! research!
- Jack -
Self-interest always comes in first, which is why we have to be careful with the people we deal with, and that includes retirement advisers . Excellent advice.
The problem with people is their way of gaining money is through working for other people. Then thinking of the retirement benefits that they could get after many years of service. Why work so hard for others and gain only little if you could start your own business? Be your own business and gain more money.
This is definitely good advice. Always know what you're getting into and read the fine print. A financial "adviser" whose advice isn't in your best interest won't be as careful with your money.
I'm truly scarred of retirement. There will be no money left for us!
I certainly wish I had used a financial adviser. If I had, I might not be trying to rebuild my retirement fund.
Another thing you want to do is ask about the advisor’s background. A chief question to ask is how much of his job is directly related to retirement planning. You also want to know how many years’ experience he or she has. The more experience they have in retirement planning and as a advisor, the better. This ensures that they’ll likely know the ins and outs better than someone just starting out.
Good advice. Priority shameless broker / "consultants" is his retirement plan is not you. The problem lies, such many years, the industry of people have evolved a confusing title.
I think that is what we have to think about when we are dealing with a retirement advisor.
When you say they don't have a obligation to be in your best interest your not kidding. We end up losing thousands because our broker could of cared less, now we just keep our investments in the bank, until this has happened to you-do it on your own.
For me this article is serves as a reminder for everyone. Everyone must choose a reliable and trustworthy Retirement Advisor, we must check its background and credibility. We should review and read thoroughly the contract and be sure we understand its content before signing.
In this world of crisis we must understand that there are many people taking advantage to cheat his fellow men. So must be aware of many SCAMS everywhere.
The article is good warning to all of us.
allied moving / allied movers
What about your company 401k? It seems like my plan is filled with mediocre funds from the company that runs the 401k.
http://www.teleco4.com
who want to plan his retirement’s day of joy…It is a real problem.
Yes, it is well said. One must be practical and should analyse market condition before investing. Insurance advisor has his own monthly targets and there is lots of pressure on him. So trusting anyone is good but blind trust is risky. Use your own brain while listening retirement advisor's device. This post has really got the spirit of practicality. It teaches of market awareness.
Thanks for the info, you got to be care full nowadays with retirement investment.
I liked your article. Too many seniors are victimized by scoundrals who prey on the elderly. Your information on just what a financial planner must do to be certified, etc. is good to know. I read an article on the difficulties many seniors are having in selling their homes in order to move into senior care centers. The way I address the situation is by continuing to make money. At sixty five I’m fortunate to have my faculties running on all eight cylinders and can use the computer. It addresses the financial situation we all are faced with in a declining economy. Keep up the good work.
http://commodityconsultant.com
It is important when getting advice from any kind of adviser who has to put a disclaimer up before offering you that advice. If they can't stand behind it without fear of lawsuit, perhaps you should do your own due diligence and not defer to them completely.
No one has your back then yourself, everyone is trying to make a dollar on your back. The best thing is to learn to do it yourself and automate your finances with a simple and successful strategy
You are right, many people are stupidly trusting! And worst of all - if they make money without having understood the risks, they will of course happily take the money. But if they lose it, they will come crying for government intervention and regulations.
Any advisor that is also a commissioned salesperson should be carefully watched. They may have great advice for you but always be aware that they are getting paid for all the products they are pushing
A good solution (though not the ONLY solution) is to ask your advisor if he/she will sign a fiduciary oath requiring him/her to put a client's interests before their own.
Here's a sample fiduciary oath from NAPFA:
Interesting and eye opening. It would be best to find a retirement advisor who charges for his expertise and advice but has nothing to gain personally from your investment decisions.
Always read the fine print. Also be sure to ask any and all questions of your adviser. It should not be a problem if you want to take a few days to do some research. If there is any pressure to sign any agreements that should be a red flag. Nice article.
It is sad that many good people are unaware of the real conditions to the agreement, when they get involved with retirement advisors. Although there is a responsibility of the individual to understand what they are signing, it should be more clearly stated and not sugar coated in fine print. Thanks for the article!
Downsizing is very important when it comes to retirement. A lot of people have these great retirement fantasies, which are too high-priced. Some people might need to retire to another state where the price of living is cheaper. While money is important, planning for retirement isn't all about money. I personally think is a great idea to get a certified retirement financial advisor if you need help planning for your future. Life after retirement should be very enjoyable. No one should spend time worrying about finances, but rather do things that they enjoy and now have time to do. These certified advisors will help to prevent stressful retirements.