Investment Advisors 101... ask these questions.

Investment Advisors (IAs) come in all different intellectual,
professional, and alphabetical varieties. They range in
educational qualifications from High School dropout to PhD, and
can be professional Accountants, Insurance Salesmen, Stock
Brokers, Investment Managers, Dentists, Lawyers, TV
personalities, and Gourmet Chefs. Anyone can be an Investment
Advisor! It seems reasonable that your trust should gravitate
toward those who have educational credentials, hands on
experience with their own money, and no direct financial benefit
from the advice provided. Stay safer by finding a fee only
advisor who has just one profession... and the ability to say NO.

Why do people become Investment Advisors? Call me skeptical,
but I don't think it's the ethereal glow they feel after
implementing your new Financial Plan. Actually (once you
appreciate that IAs are the primary delivery system for Wall
Street's huge collection of one-size-fits-all products), you'll
realize that it's the money. No conspiracy here, just a subtle
brainwashing that has convinced you that the Advisor's primary
objective is to protect your family. In reality, the primary
goal of commissioned advisors is to protect their own families,
and they accomplish this by selling Investment Products. The
Investment Advisor label has become a euphemism for product
salesperson just as Financial Planner nearly always means
Insurance salesperson. Stay safer by finding a fee only advisor
who has just one profession... and the ability to say NO.

Serious IAs can be identified by acronyms following their
names (also by dark three piece suits and facial hair), RIA and
CFP being the most common. As professional as this seems,
designations do not create trustworthiness, for several reasons:
IAs must become RIAs to be licensed to sell investment products.
Most practitioners affiliate themselves with major Wall Street
Institutions to defray their start up costs and many are
subsidized in return for pushing their sponsor's products.
Finally, most advisors will remain in bed with one company at a
time throughout their careers, constantly touting the present
firm's products as est. Hmmm. Hundreds of companies,
thousands of IAs, convincing millions of shoppers (investors)
that they have just purchased the one very best product to
achieve their financial goals. From cradle to grave, most IAs
dance to a tune that's not being played by their clients.

Over the past several years, Wall Street has managed to invade
the once respected Insurance Industry by attaching Mutual Funds
to life insurance and annuity products, making them far too
speculative to achieve their once guaranteed objectives. But the
variable products scam dwarfs in potential long-term impact to
the more recent high crime against investors. This is the one
that ignores the (in-your-face-obvious) Conflict of Interest
when Accountants sell investment products! Many professionals
have multiple degrees; few have multiple practices. You deserve
a specialist. If your CPA/Lawyer/Doctor (who's next) can make a
living in his primary practice, why sell investment products?
Greed? Hubris? And why does Wall Street allow these
non-professionals to push investment products? Don't be nave,
the more people out there pushing Investment Products, the
bigger the bonus for the Masters of the Universe. Stay safer by
finding a fee only advisor who has just one profession... and
the ability to say NO.

In spite of the fact that the urn out rate among IAs
compares with that of restaurants and Mutual Fund Managers, and
that the advisory business itself is a cut-throat, competitive
battlefield, the Financial Institutions that employ the majority
of IAs prosper, multiply, and produce more product for your
eyes wide shut consumption... because you, your products, and
the management fees remain! A caring and successful Investment
Advisor makes an excellent income and should; a successful
financial institution buys other financial institutions!

The hierarchy of commissions paid to IAs can exceed 10% on
private deals, limited partnerships, and a litany of
speculative products and services. On the more controlled
substances (sic), Annuity commissions can run above 8% with
10-year lock up provisions common and Mutual Funds provide a
generous 4% to 6% whether you see them or not. New issues, odd
lot Bonds, and other securities that don't show a commission,
include marketing fees and mark ups that can be substantial.
What ever happened to individual Equity portfolios? It's a
combination of in-greed-ients... products are less work and
produce more money. Stay safer by finding a fee only advisor who
has just one profession, the ability to say NO, and who knows
something about individual securities.

Most people need Investment Advisors. Life Insurance protection
is vital; fixed annuities are helpful for people of limited
means; Mutual Funds are the only option (pity) in most
self-directed retirement plans. The vast majority of employed
Americans are Investors, actively or passively, with little time
or expertise to select securities and manage portfolios. (If the
Democrats would accept this, they just might win an election.)
But recent experience confirms that we all have a responsibility
to our own money, a responsibility that we should only delegate
to a professional if we know what the professional is supposed
to know. The fact that he or she is an XYZ Fund representative
just isn't enough. You need an independent advisor that has
ideas rather than products and an understanding of markets, not
marketing. If you are willing to ask the right questions, you
can find an IA who might just be able to help you (and herself)
at the same time. Try these for starters: Do you sell any
products? Do you have a personal portfolio that I can review? Do
you provide a fee only advisory service? How long have you
been in the financial services business, and is it your only
business? (It's not your job to educate ewbies!) Are you
affiliated with any other financial services companies? Do you
have at least five non-family clients who you have been advising
for at least five years... that I can contact directly? Will you
be compensated for referring me to someone? Stay safer by
finding a fee only advisor who has just one profession and the
ability to say NO.

The ability to say NO? An advisor will tell you not to do
something that he feels is inappropriate... a salesman will do
what you tell him to do.