24 June 2010
This article continues from the initial Things Your Financial Advisor Won't Tell You (Part 1).
6. “Be careful with annuities. They pay me big commissions, but they’re not a good fit for many clients.” Again, I am a fee-only advisor and don’t sell annuities, nor do I even have an insurance license. However, I disagree with this number six. I think annuities pay low commission (especially the Fixed Annuities) and have found them to be very useful for my clients in the past. I do agree that many of the Variable Annuities and certain Equity Indexed Annuities pay high commissions.
7. “Stay away from investments that have a fee to get back out. If you get married, get divorced, change jobs, or move, it can come back to bite you.” Because I’m a fee-only advisor and don’t sell any products for a commission, rarely is there a fee to get back out of the investments that I recommend to you, my clients. There may be a penalty by the mutual fund company for not staying in a mutual fund for 90 days. It may also be detrimental to sell a bond before it matures but that is not a fee to back out. There are trading fees to some of the investments I recommend to you as my clients. The ETF and stock trading fees at Schwab range from $9 to $20 depending on whether or not you, my client, have registered for eDelivery.
8. “There have been 10 recessions since 1953. I have no clue where the market is going and neither does anyone else. So if someone promises a certain amount of growth, walk away.” I agree 100% with this statement and have nothing to add to it.
9. “You’re spending way too much money. But I’m not going to be the one to tell you to give up your cleaning lady or your fancy car...” Often times in doing financial planning with many of you, I have recommended that you do cut your spending levels down.
10. “Some of us can give discounts, but may not get one if you don’t ask.” I can’t give discounts. Any time I’m able to help you reduce your trading fees with Schwab, I quickly send you out an email or talk to you on the phone about how you can do it. Most recently I was able to advise that you get signed up for eDelivery to lower your trading costs with Schwab Institutional. Other than that, I have no discounts available.
11. “Haven’t heard from me in a while? Not a good sign. I don’t like to be the bearer of bad news.” It has been one of my biggest efforts in business to stay in constant contact with you through my blog, through my newsletter, and through my phone calls and emails directly to you.
12. “Everyone wants no fees, no risk, and double digit returns. I want a pot of gold at the end of the rainbow.” Forgive my ignorance but I don’t know what this means. Call me up and explain to me what this means and I will give you my genuine thoughts.
13. “If it sounds too good to be true, it probably is.” I will give this one a quadruple “Amen!” This is one of the reasons and tenants of how I’ve run my entire business because of things that I saw happen, in the business world, before I started Golden Rule Financial. In the 10 years that I have been serving clients, I have never made a guarantee to a client. I have never recommended a product that was too good to be true or turned out to be fraudulent or even defaulted. Hopefully I will be able to continue with this practice in being able to offer my clients prudent opportunities while properly explaining the risk to each and every single type of investment or strategy I advise.
Investment Update
May was a big down month for stocks. In fact, it was the worst May percentage decline, for US stocks (the S&P 500) , in 48 years:
S&P 500 = -7.95%
NASDAQ = -7.39%
Foreign Stocks = -11.19%
Other asset classes performed as follows during May of 2010:
US Dollar = 5.76%
US Long Term Treasury = 3.87%
Gold = 1.86%
Silver = -.96%
Real Estate Stocks = -5.33%
Natural Gas = -8.3%
Commodities = -10.15%
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