Equity investors expected Goldman Sachs to perform well. The venerable investment bank did not disappoint. Meanwhile, Citigroup’s loss was less than expected, but failed to fuel a further DOW Jones rally as equities slipped under the esteemed 10,000 mark.
On Wednesday “JPMorgan set a high bar; a bar that is tough to beat for other banks,” said Tim Ghriskey of Solaris Asset Management. Investors agreed that the 10,000 threshold might be difficult to sustain. Goldman’s stellar earnings are tempered by public opinion polls that question the company’s bonus policies.
In the wake of the fact that Goldman needed $10 billion of taxpayer support and collected another $10 billion from the taxpayer’s bailout of AIG, struggling consumers are not accepting the company’s proposed average $660,000 per employee bonus plan.
Goldman CEO, Lloyd Blankfein, has been under fire to justify the bonus payments. Rolling Stone magazine labeled the company, “the vampire squid wrapped around the face of humanity.” Hundreds of organizations have pushed the company to temper the bonus plan and make substantial charitable donations.
On Thursday, Blankfein announced a $200 million contribution to Goldman’s charitable organization. At the same time, the CEO defended the company’s bonus plans, citing the efforts and successes of the organization. The Goldman Sachs bonus pool is on pace to top $20 billion in 2009. Blankfein’s ability to explain that bonuses consist of a mixture of stock and cash may be key to how then public views Goldman. At best, there is a large amount of skepticism surrounding the lack of transparency in both the Goldman and Citigroup releases.
As Congress appears set to approve regulation, Wall Street compensation policies will take center stage for the next few weeks. A return to pre-recession compensation policies is largely unacceptable.
Unemployment Lower, But…
Applications for new unemployment claims fell by 10,000 for the week ended October 10, 2209. The 514,000 figure marks the lowest number of new claims in the past nine months. The number of persons collecting long-term unemployment benefits was trimmed by 75,000 as the number of recipients fell below the 6 million mark.
Analysts suspect both numbers are somewhat tainted. The long-term benefit shaving could well represent the expiration of term rather than an employment improvement. Analysts also suggest that the lowering of initial claims merely reflects a bottom of the market. Simply, there are not many jobs left to trim.
The 10,000 DOW mark presents a serious psychological threshold. The recovery seems fueled by government and not by production. Companies have trimmed spending, including employment, and been permitted previously non-existent latitudes with mark-to-market accounting that has enabled profits to rise. The real question centers around sustainability.
There is plenty of hype surrounding the economy’s performance, but how real can a recovery be that has consumers reeling, housing tumbling and employment dwindling?
Equifax Check In
While Goldman Sachs contemplates how to disburse $20 billion in bonuses, one of the nation’s largest credit reporting agencies reported how the taxpayers are doing. It is not pretty. The people that were asked to keep Goldman Sachs afloat are in dire straits.
7.65% of American homeowners are 30 days delinquent on their mortgages. 41.36% of those notorious subprime mortgages are delinquent. The shadow inventory of bank-owned residences is overstocked and slowly entering the marketplace pushing prices lower.
Home equity loans and auto loan delinquencies are abnormally high. Credit card delinquencies have stabilized. This oddity is attributed to the high interest rates associated with the cards and with the fact that Americans are preserving their charge cards in case of emergencies.
Student loan applications are at their highest level with demand up 15%. Students are staying in school longer and working part-time to help foot the bills. Student loan delinquencies have not faltered like other credit markets.
According to Equifax, the American consume is now delinquent on multiple credit advances. In the past, the consumer was likely to default on one segment.
This concern was echoed by Citigroup, who was successful in overseas markets, but suffered big losses in American credit markets. The American consumer has trimmed debt by 3.8% or $440 billion in year-over-year comparisons. Meanwhile, the consumer has increased savings to 3.71%, well above the 2008 mark of 1.30%.
Sunday, October 18, 2009
Tuesday, April 14, 2009
Why Mint.com will revolutionize the way you manage your personal finances!
If you're like me, you probably have several bank accounts, credit card accounts, student loans, investment accounts, mortgages, and others that can all be accessed with a user name and password online?
We can't keep up with all them individually, but luckily we have been using MINT.com to consolidate all of these accounts online! Check out the screen shots and decide for yourself if this FREE service is worth your time (I truly believe it is).
Oh and to ensure you are being served with unbiased advice, MINT.com is not affiliated in any way with another financial services powerhouse: www.camtrading.com.
Here's what the homepage looks like:
See why you'd want to use Mint.com:
It even works with your iPhone:
You can even track your investment performance:
Now you can get intimate with your money!
We can't keep up with all them individually, but luckily we have been using MINT.com to consolidate all of these accounts online! Check out the screen shots and decide for yourself if this FREE service is worth your time (I truly believe it is).
Oh and to ensure you are being served with unbiased advice, MINT.com is not affiliated in any way with another financial services powerhouse: www.camtrading.com.
Here's what the homepage looks like:
See why you'd want to use Mint.com:
It even works with your iPhone:
You can even track your investment performance:
Now you can get intimate with your money!
Friday, March 6, 2009
The effects of this recession on your hard earned money!
The recession is real. The recession is national. The recession is global. The effects of the recession are confronting investors, homeowners, employers and employees throughout the country and around the world. When January household income and consumer spending performed better than expected, the markets hardly blinked because big layoffs continue as banks teeter and insurance giant AIG reported the biggest quarterly loss in American economic history.
Custodio Asset Management understands investor concerns. As major indices fluctuate, the national and global markets seem unable to stabilize. The reality is that protecting and growing wealth in these difficult times is serious work, not suited for the feint of heart and truly an endeavor for professional money managers. CAM addresses these market conditions with steadfast discipline, complete transparency and with a proven track record of success.
CAM’s goal is to use every available resource and our proprietary hands-on investment strategy to continue to build our wealth management services. We understand that investors are skeptical about the markets. We understand that market conditions are volatile. However, CAM is committed to applying the same strategy that saw our portfolio gain +179.988% between October 2005 and December 2008.
Prospective clients are now calling every day. These clients are shaken and searching for answers. Most have seen their investment funds decrease by 40% or more. The lingering questions are “what has happened to my hard earned money” and “how much will this recession cost me in the long run?”
Perhaps this unedited summary says it best:
***
By: E.W., USA
Thu Oct 09, 2008 at 01:45:27 PM PST
“I receive a 401k from my employer and have consistently been putting money into it for several years. I knew the 401k would be hit hard, but I chose to ‘ignore’ it because I was a little scared. Anyway, I just wanted to share this with everyone because I don’t think people really understand how much this financial crisis is hurting normal people.
Me and my wife are still relatively young, so we’re not as hard hit as most people are. We still have plenty of time before I retire, so I’m not too concerned about myself. What surprises me is that I chose all of the recommended mutual funds, just like most people probably did.
Here is what my Fidelity 401k looked like today when I finally decided to take a peek. “Personal Rate of Return from 01/01/2008 to 10/08/2008 is -39.7%.”
All I can say is… WOW. 40% of my hard earned savings for retirement down the drain. It’s really hard for me to put the 5% aside from every paycheck and I’m just shocked at how badly I’ve done.
The worst thing is the companies that pick my stocks made tons of money while I’m out so much.
Anyway, just thought some would be interested in an average person’s retirement account. Talk about a shock! I just feel badly for the 60-70 year olds that were looking to retire.”
***
Since E.W wrote this in October 2008, the market has faltered even lower. The sad reality to this common story is that most investors are experiencing financial paralysis.
This bear market still provide opportunities to build wealth, but conditions dictate experience and prudence and a willingness to have an open mind. In today’s marketplace, traditional buy and hold strategies have proven to be ineffective and laden with extremely high risk.
During the time (01-01-08 - 10-08-08) that E.W. lost -39.7% of his portfolio, CAM investors actually gained +5.435%. By 12-31-08, CAM had used the market turbulence to record a +23.986% annual gain.
Through February this year, CAM has produced a positive +1.452% YTD while the S&P has lost -16.653% and the Dow runs negative for the 6th straight month at -18.166% and has dipped to twelve-year lows. CAM investors actually gained +0.032% in the month of February as the Dow shaved -10.993% of its value.
This is a time for investor action. This is a time for change and proactive investment strategy. The prudent investor will grow while the conventional investor will falter and spend decades trying to recoup losses. At CAM, we stand ready to help.
Tuesday, November 4, 2008
Year-to-date performance results for my Investment Managment Company
Custodio Asset Management reports promising gains in today’s turbulent marketplace. As of October 31, 2008, CAM stakes a 45.21% lead against the S&P 500 benchmark. In October, the S&P 500 lost another 16.83% lowering the year-to-date to -34.03%. CAM’s year-to-date gains stand at +11.188% through October.
At the company’s three year anniversary, CAM investors have realized gains amounting to +151.087%. During the same period the S&P 500 stands at -21.164%.
CEO, Ace Custodio, states that this marketplace is providing investment possibilities for the experienced and disciplined investor. CAM’s proprietary strategy “protects client money from the dips and grows the investment over the long term. Today’s investors must have a sustainable strategy to cope with the fluctuating market.”
While long-term gains have exceeded expectations, CAM’s clients express gratitude for the personalized oversight administered by the wealth management company. Institutions have also committed to CAM’s proprietary strategy. Recently, Blue Point Financial Alliance retained CAM as its appointed benefits provider and investment adviser for all of Blue Point Financial employees, the membership database and prospects.
CAM has recently received numerous calls from discouraged owners of 401(k) plans. CAM’s transparent and consistent growth record has inspired many new 401(k) account holders to rollover the remaining balance to an IRA for the company’s management. CAM welcomes all inquiries at info@camtrading.com.
At the company’s three year anniversary, CAM investors have realized gains amounting to +151.087%. During the same period the S&P 500 stands at -21.164%.
CEO, Ace Custodio, states that this marketplace is providing investment possibilities for the experienced and disciplined investor. CAM’s proprietary strategy “protects client money from the dips and grows the investment over the long term. Today’s investors must have a sustainable strategy to cope with the fluctuating market.”
While long-term gains have exceeded expectations, CAM’s clients express gratitude for the personalized oversight administered by the wealth management company. Institutions have also committed to CAM’s proprietary strategy. Recently, Blue Point Financial Alliance retained CAM as its appointed benefits provider and investment adviser for all of Blue Point Financial employees, the membership database and prospects.
CAM has recently received numerous calls from discouraged owners of 401(k) plans. CAM’s transparent and consistent growth record has inspired many new 401(k) account holders to rollover the remaining balance to an IRA for the company’s management. CAM welcomes all inquiries at info@camtrading.com.
Saturday, August 30, 2008
What frustrates you most about financial advisers or financial planners?
This is a very thought provoking question posted by Chris Miles through LinkedIn.
I know I'm asking a lot of questions, but I would like many perspectives on this. These are questions I am looking to answer on my new website"
Member answers are as follows:
--
"What frustrates me most is the feeling that all they want is your money and not really to help you. They should deliver proof of the things they preach by showing the effects in their own lives. They give out all this 'great' advice, but their lives or income never show the effects of this 'great' advice." - Jennie Jones, Owner, Business Sculpting.
--
"That they get paid regardless of investment results." - Jerry Edwards
--
"Chris,
My main frustration with some financial planners has to do with the fact that manay of them are that in title alone. I remember several years ago as an investment broker these guys handed out business cards, had the nice suits, nice car and never too a finance course, but made money selling products and services.
I think a few gives the many a very bad name. Even though I am of the conviction that the majority are professionals, in Los Angeles, there are a lot of posers." - James Adams, MBA Candidate - International Business
--
"It frustrates me that Financial Advisers and Financial Planners are paid on commission, so the conversations are generally focused on a product or products. I looked very seriously at a career as a financial adviser, but (as has already been stated), the compensation and the corporate culture are generally structured so that the incentive is to find prospects and sell as much as possible.
I think there is a definite need for financial advisers who actually look at a client's entire situation and provide full-spectrum advice, including tax planning, student loans, investment advice or management, etc. Specialized jobs exist for many of these roles (i.e. accountant, financial analyst), but it's inefficient from a corporate standpoint to find someone who can be a good generalist in all of them, and the necessary education and certifications would be cost-prohibitive.
Bottom line, the industry goes where the profit is, and there is more profit in selling financial products (insurance or investment services) on a commission basis than there is in providing good, cost-saving financial advice and compensating really qualified employees well enough to keep them on board." - Adam Endelman, Financial Analyst
--
"Many folks I've met who describe themselves as planners are often focused on whatever spreadsheet they can deliver that proves you need to buy what they have a quota for. Whether a " planner" or "financial advisor" many have access to a very limited number of ideas and as a result their clients often don't get the level of advice they thought they asked for. Even though many actually mean well and believe what they are saying, there is a universe of what they don't know that they don't know, because of the business model they operate under. Therefore their clients miss opportunities to grow their wealth and/or avoid incurring unecessary taxes.
Finding an advisor with the freedom and credentials to offer competent advice that does not require or result in the sale of a product is hard to do. Ultimately most have to hit certain sales volumes either to keep their job or meet their own family obligations.
This is the primary reason why when I built my practice I chose to affiliate with a firm that would allow me to run a fee based practice accepting only a limited number of clients and not having a sales quota for anything. To be fair though it also helped that I don't have the kind of personal financial pressures others do as I already completed one successful career and this is my second.
Nevertheless, I meet hundreds of "advisors" each year at national events from all sorts of small, medium and gigantic firms. Most believe their firm has all the best answers. Kind of a silly position if you think about it. How could all the smartest people in the world end up at the same firm. But if they aren't allowed to engage the smart people from other firms to help their clients, what choice do they have but to believe their in-house folks are the best." -Russell Lowry, CFP
--
"The thing that frustrates me the most about financial advisers is when they recommend a product for you without knowing anything about you. I had an Edward Jones guy try to sell me an IRA without knowing a single thing about me. Suze Orman is a perfect example of this as well.
Whether an adviser is fee or commission based doesn't matter to me. If they are commission based it is in their best interests to help me earn a return on my investment.
My current adviser took the time to talk to my wife and I about what was important to us, what are goals were now and in the future. He didn't try to sell us anything at the first appointment. He was already a friend of mine but he earned my wife's trust that day.
What I think is funny is when an adviser does a lot of work and comes up with a big binder that is your financial plan. What happens to that plan when your life changes? That plan does no good if you buy a new car or home or get a new job or lose your job, etc. My current adviser works for a company called Consolidated Planning. They have a program called the Living Balance Sheet. It is essentially the old binder plans only online and can always be updated to reflect the changes in your life." -Paul Kemer, Insurance Producer
--
"I believe your question is geareed towards getting the negative side of financial advisers and planners. You will find a lot wanting in any professional who is incompetent. But, the majority are not.
I would put the responsibility of getting the best service on the client. He/she must do due diligence before hiring a person, set goals and benchmarks of achievement, and then constantly monitor performance against these goals. If there is any deviation, the client must bring it up and correct the situation. If it cannot be corrected, and the consultant is the cause, he/she must be fired." -Akhtar Khan, CEO
--
"What frustrates me most of the financial planner(FP) is .....they do all other things except a good financial planning for you.
These so called FP will always creat a rosy picture ..but ..will not even mention the risk and the cost attached to it. e.g in India if you take the example of an Insurence agent, one insurance agent can only promote one brand in life insurance and another in General Insurance. De facto, this limits the scope of an insurance agent who has to work under such constraints. Customer can't expect a better advice under such a scenario...
The above illustration...is again the half truth...... such constraints does not bar them to render better advice to their clients more suited to them as per their need in future. Saving or investment are essentially made to combat the risk which may occur in future.
Really this is appalling that most of the financial planner are planning more for their own comm/return rather that the benefits or returns of their clients. This is an ethical issue which must be addressed by the FP." -Gyanendra Niraj, Manager
--
"Chris - As a former planner myself (I'm still appointed as an IAR), I have also had many of the same frustrations that you point out in your question. The lack of ethics and morals that other planner, advisers, etc..etc..took place in, the harder my job was to accomplish. I have made it a point in my career as a planner to actually differentiate myself from the others and their greed filled objectives.
From an "inside" view, I see the entire Financial Industry as the culprit. We can blame the players within the game, but the rules are unwritten and the object is to just "bring in the money".
At the company that I am appointed with (..I still manage my clients money but I don't actively seek out new clients...) I see the culture where the rules are placed down, but if you are a larger producer, well then the rules are optional and the personnel with a 24 behind their name, look the other way. These larger producers are put in the spot light and shown to the newer brokers, advisers as the example to follow.
How self defeating is that?? This is the prime example of "penny wise and dollar foolish."
As you well know, there is no "cookie-cutter" solution for every client. The ethical adviser must be able to take the goals of the client, the taxation, estate, protection aspect, wealth accumulation strategy, withdrawal strategy and see the larger picture. This is rarely done and most advisers will put them into what ever is the larger commission paying product because that is what's taught to them and they know not what they do in the long run. I could go on for hours and pages about this. This is my hot button.
After reading additional answers after I posted, I must say that I disagree. There is a possibility for flat fee advisers or planners to do better work. But there is also a distinct chance of them adopting a "not caring" attitude as they have already been paid. Whether it's paid in commission, fee-based or a combination of both, look at the individual and the course of action that they are recommending, not the fee structure. If it doesn't make sense, ask them to clarify. Don't be afraid to ask questions that you may seem to feel are less than intelligent. Few people who do not work in the industry know the terminology or the impact of the action being taken.
Finally, just on a personal note; this is why I struggle with my peers who are still active planners. Everyone thinks that we are out to take the client for a "ride". Not all of us. I'd rather put the interest of the client first instead of my wallet. I'd rather do the quality work and then be referred to others. The minute you do work that is reflecting what is in your (IAR's), then you might as well hang it up. You'll be short lived and soon, someone will be writing a blog about you and your name will spread like wild fire. Just the opinion of one IAR." -Anthony Preman, Numerologist
--
"Chris, I have to agree with most of the other answers. It's a natural phenomenon in any large industry. Most advisers are good people who try their best, but fall short. They may earn a good living and help a few people.
But the lion's share of business goes to those few individuals who really listen, match the solutions to the needs, and lead people towards their own goals. It's a long, tough, and emotional journey. It requires special individuals to deliver over the long haul.
I know it's frustrating to sift through many people to find "the one" for you. But when you find the right fit, it's worth it." -Brian Beasley, CPWA
--
"Most of the issues mentioned thus far could potentially be solved if people sought out the proper type of financial advisor. The issue, from my perspective (as a comprehensive financial planner), is that the term "financial planner" and "financial advisor" is used indiscriminately by a number of different types of people. You have commission based stock brokers calling themselves financial advisors, you have insurance salesmen calling themselves financial advisors and financial planners. Heck, I even know mortgage brokers that call themselves financial advisors.
So I cannot blame anyone for becoming confused and suffering at the hands of some of these people. Most commission based salespeople do not have a fiduciary duty to the client to act in their best interest. They are bound by a something called a "suitability" standard which says they must make an attempt to sell you something suitable to your situation but that is not the same as having a fiduciary "duty".
There are all types of compensation arrangements for true comprehensive financial planners. Some do indeed work by selling commission based products (up to the client to know this). Some work by charging a percentage of investment assets under management and this fee includes comprehensive planning. Still others offer their services on a retainer basis or on an hourly basis. There are ethical and unethical people in each and every segment thus far mentioned in my response, however, there seems to be more "pressure" on commission based salespeople.
Comprehensive financial planners who manage people's investments, provide them with a life plan, and help them change that plan throughout the transitions of their lives have very loyal clients who are great sources of referrals. They need not be pressured into selling anything because the relationship is such that it provides returns far into the future.
It seems that the primary concern in most of your responses is the lack of concern for you as a person by an advisor who has something to sell. My advice to those of you with that problem is to find a "fee-only" financial planner, or someone who charges hourly for planning, or someone you can hire on a retainer basis. You can find advisors like this by going to napfa.org (a group of financial planners who have agreed to only charge fees and not commissions), or by simply typing "fee-only financial planner" in your area into Google. Be sure and ask potential advisors how they are compensated if the commission thing is something that irks you.
I, for one, have several different types of arrangements with my clients. Some of them have uncomplicated financial lives and simply need someone intelligent to manage their investments. For those people I charge a very low percentage of assets under management for investment management and then any additional planning is done on an as needed hourly basis. For clients with more complicated financial situations who need ongoing planning in addition to investment management I charge them a percentage of assets under management which is a bit higher than the first situation above but the planning is covered with this fee and there are no additional hourly charges. I find that this situation works well for most clients and choosing a compensation package allows them to get the most for their money.
One final response to Jerry about getting paid regardless of investment results. That is an understandable complaint but one which might be a bit off target. Investment managers who charge a percentage of assets under management have every incentive to manage your money as best they can. Otherwise, if the markets drop their compensation likewise drops. Yes, they still get paid if the portfolio decreases in value but they get paid less. You also have to factor in the value of their service in this regard.
Study after study has shown that individual investors often sell out at low points and buy in at high points. "If" (and I realize this is a big if) your advisor manages your portfolio in a manner that saves you from some of these behavioral biases then should he not be compensated for that? Also, remember his compensation includes financial planning in many instances so this must be factored in as well." -Jeff Howard, CFP
--
"They're too often looking at enriching themselves first by pedelling "products." I studied business finance, and worked in the field, in college through my senior year, so I know something about it. Show me a Financial Planner who truly places his client's interests first by providing sound guidance, counceling and - yes - instruction, and I'll show you an FP well on his way to fame and fortune!" -John Mackin, Marketing
--
"Lack of knowledge about the actual investments they are recommending (portfolio manager philosophy, statistics of the fund, cash flows of the firms in the fund, etc). I also don't like feeling like they have any sort of conflict of interest. In other words, I want them to be working hard for my best interests, not their own. That may mean sending me to someone else who can help me better, but if they do so, I will know I can trust them to come back to them for whatever product or service I need that they offer." -Mike Berry, Owner Real Estate Services
What frustrates you most about financial advisers or planners?
"What things do you feel they should have delivered on? What questions never get answered? What teachings or advice seem the most fishy to you?I know I'm asking a lot of questions, but I would like many perspectives on this. These are questions I am looking to answer on my new website"
Member answers are as follows:
--
"What frustrates me most is the feeling that all they want is your money and not really to help you. They should deliver proof of the things they preach by showing the effects in their own lives. They give out all this 'great' advice, but their lives or income never show the effects of this 'great' advice." - Jennie Jones, Owner, Business Sculpting.
--
"That they get paid regardless of investment results." - Jerry Edwards
--
"Chris,
My main frustration with some financial planners has to do with the fact that manay of them are that in title alone. I remember several years ago as an investment broker these guys handed out business cards, had the nice suits, nice car and never too a finance course, but made money selling products and services.
I think a few gives the many a very bad name. Even though I am of the conviction that the majority are professionals, in Los Angeles, there are a lot of posers." - James Adams, MBA Candidate - International Business
--
"It frustrates me that Financial Advisers and Financial Planners are paid on commission, so the conversations are generally focused on a product or products. I looked very seriously at a career as a financial adviser, but (as has already been stated), the compensation and the corporate culture are generally structured so that the incentive is to find prospects and sell as much as possible.
I think there is a definite need for financial advisers who actually look at a client's entire situation and provide full-spectrum advice, including tax planning, student loans, investment advice or management, etc. Specialized jobs exist for many of these roles (i.e. accountant, financial analyst), but it's inefficient from a corporate standpoint to find someone who can be a good generalist in all of them, and the necessary education and certifications would be cost-prohibitive.
Bottom line, the industry goes where the profit is, and there is more profit in selling financial products (insurance or investment services) on a commission basis than there is in providing good, cost-saving financial advice and compensating really qualified employees well enough to keep them on board." - Adam Endelman, Financial Analyst
--
"Many folks I've met who describe themselves as planners are often focused on whatever spreadsheet they can deliver that proves you need to buy what they have a quota for. Whether a " planner" or "financial advisor" many have access to a very limited number of ideas and as a result their clients often don't get the level of advice they thought they asked for. Even though many actually mean well and believe what they are saying, there is a universe of what they don't know that they don't know, because of the business model they operate under. Therefore their clients miss opportunities to grow their wealth and/or avoid incurring unecessary taxes.
Finding an advisor with the freedom and credentials to offer competent advice that does not require or result in the sale of a product is hard to do. Ultimately most have to hit certain sales volumes either to keep their job or meet their own family obligations.
This is the primary reason why when I built my practice I chose to affiliate with a firm that would allow me to run a fee based practice accepting only a limited number of clients and not having a sales quota for anything. To be fair though it also helped that I don't have the kind of personal financial pressures others do as I already completed one successful career and this is my second.
Nevertheless, I meet hundreds of "advisors" each year at national events from all sorts of small, medium and gigantic firms. Most believe their firm has all the best answers. Kind of a silly position if you think about it. How could all the smartest people in the world end up at the same firm. But if they aren't allowed to engage the smart people from other firms to help their clients, what choice do they have but to believe their in-house folks are the best." -Russell Lowry, CFP
--
"The thing that frustrates me the most about financial advisers is when they recommend a product for you without knowing anything about you. I had an Edward Jones guy try to sell me an IRA without knowing a single thing about me. Suze Orman is a perfect example of this as well.
Whether an adviser is fee or commission based doesn't matter to me. If they are commission based it is in their best interests to help me earn a return on my investment.
My current adviser took the time to talk to my wife and I about what was important to us, what are goals were now and in the future. He didn't try to sell us anything at the first appointment. He was already a friend of mine but he earned my wife's trust that day.
What I think is funny is when an adviser does a lot of work and comes up with a big binder that is your financial plan. What happens to that plan when your life changes? That plan does no good if you buy a new car or home or get a new job or lose your job, etc. My current adviser works for a company called Consolidated Planning. They have a program called the Living Balance Sheet. It is essentially the old binder plans only online and can always be updated to reflect the changes in your life." -Paul Kemer, Insurance Producer
--
"I believe your question is geareed towards getting the negative side of financial advisers and planners. You will find a lot wanting in any professional who is incompetent. But, the majority are not.
I would put the responsibility of getting the best service on the client. He/she must do due diligence before hiring a person, set goals and benchmarks of achievement, and then constantly monitor performance against these goals. If there is any deviation, the client must bring it up and correct the situation. If it cannot be corrected, and the consultant is the cause, he/she must be fired." -Akhtar Khan, CEO
--
"What frustrates me most of the financial planner(FP) is .....they do all other things except a good financial planning for you.
These so called FP will always creat a rosy picture ..but ..will not even mention the risk and the cost attached to it. e.g in India if you take the example of an Insurence agent, one insurance agent can only promote one brand in life insurance and another in General Insurance. De facto, this limits the scope of an insurance agent who has to work under such constraints. Customer can't expect a better advice under such a scenario...
The above illustration...is again the half truth...... such constraints does not bar them to render better advice to their clients more suited to them as per their need in future. Saving or investment are essentially made to combat the risk which may occur in future.
Really this is appalling that most of the financial planner are planning more for their own comm/return rather that the benefits or returns of their clients. This is an ethical issue which must be addressed by the FP." -Gyanendra Niraj, Manager
--
"Chris - As a former planner myself (I'm still appointed as an IAR), I have also had many of the same frustrations that you point out in your question. The lack of ethics and morals that other planner, advisers, etc..etc..took place in, the harder my job was to accomplish. I have made it a point in my career as a planner to actually differentiate myself from the others and their greed filled objectives.
From an "inside" view, I see the entire Financial Industry as the culprit. We can blame the players within the game, but the rules are unwritten and the object is to just "bring in the money".
At the company that I am appointed with (..I still manage my clients money but I don't actively seek out new clients...) I see the culture where the rules are placed down, but if you are a larger producer, well then the rules are optional and the personnel with a 24 behind their name, look the other way. These larger producers are put in the spot light and shown to the newer brokers, advisers as the example to follow.
How self defeating is that?? This is the prime example of "penny wise and dollar foolish."
As you well know, there is no "cookie-cutter" solution for every client. The ethical adviser must be able to take the goals of the client, the taxation, estate, protection aspect, wealth accumulation strategy, withdrawal strategy and see the larger picture. This is rarely done and most advisers will put them into what ever is the larger commission paying product because that is what's taught to them and they know not what they do in the long run. I could go on for hours and pages about this. This is my hot button.
After reading additional answers after I posted, I must say that I disagree. There is a possibility for flat fee advisers or planners to do better work. But there is also a distinct chance of them adopting a "not caring" attitude as they have already been paid. Whether it's paid in commission, fee-based or a combination of both, look at the individual and the course of action that they are recommending, not the fee structure. If it doesn't make sense, ask them to clarify. Don't be afraid to ask questions that you may seem to feel are less than intelligent. Few people who do not work in the industry know the terminology or the impact of the action being taken.
Finally, just on a personal note; this is why I struggle with my peers who are still active planners. Everyone thinks that we are out to take the client for a "ride". Not all of us. I'd rather put the interest of the client first instead of my wallet. I'd rather do the quality work and then be referred to others. The minute you do work that is reflecting what is in your (IAR's), then you might as well hang it up. You'll be short lived and soon, someone will be writing a blog about you and your name will spread like wild fire. Just the opinion of one IAR." -Anthony Preman, Numerologist
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"Chris, I have to agree with most of the other answers. It's a natural phenomenon in any large industry. Most advisers are good people who try their best, but fall short. They may earn a good living and help a few people.
But the lion's share of business goes to those few individuals who really listen, match the solutions to the needs, and lead people towards their own goals. It's a long, tough, and emotional journey. It requires special individuals to deliver over the long haul.
I know it's frustrating to sift through many people to find "the one" for you. But when you find the right fit, it's worth it." -Brian Beasley, CPWA
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"Most of the issues mentioned thus far could potentially be solved if people sought out the proper type of financial advisor. The issue, from my perspective (as a comprehensive financial planner), is that the term "financial planner" and "financial advisor" is used indiscriminately by a number of different types of people. You have commission based stock brokers calling themselves financial advisors, you have insurance salesmen calling themselves financial advisors and financial planners. Heck, I even know mortgage brokers that call themselves financial advisors.
So I cannot blame anyone for becoming confused and suffering at the hands of some of these people. Most commission based salespeople do not have a fiduciary duty to the client to act in their best interest. They are bound by a something called a "suitability" standard which says they must make an attempt to sell you something suitable to your situation but that is not the same as having a fiduciary "duty".
There are all types of compensation arrangements for true comprehensive financial planners. Some do indeed work by selling commission based products (up to the client to know this). Some work by charging a percentage of investment assets under management and this fee includes comprehensive planning. Still others offer their services on a retainer basis or on an hourly basis. There are ethical and unethical people in each and every segment thus far mentioned in my response, however, there seems to be more "pressure" on commission based salespeople.
Comprehensive financial planners who manage people's investments, provide them with a life plan, and help them change that plan throughout the transitions of their lives have very loyal clients who are great sources of referrals. They need not be pressured into selling anything because the relationship is such that it provides returns far into the future.
It seems that the primary concern in most of your responses is the lack of concern for you as a person by an advisor who has something to sell. My advice to those of you with that problem is to find a "fee-only" financial planner, or someone who charges hourly for planning, or someone you can hire on a retainer basis. You can find advisors like this by going to napfa.org (a group of financial planners who have agreed to only charge fees and not commissions), or by simply typing "fee-only financial planner" in your area into Google. Be sure and ask potential advisors how they are compensated if the commission thing is something that irks you.
I, for one, have several different types of arrangements with my clients. Some of them have uncomplicated financial lives and simply need someone intelligent to manage their investments. For those people I charge a very low percentage of assets under management for investment management and then any additional planning is done on an as needed hourly basis. For clients with more complicated financial situations who need ongoing planning in addition to investment management I charge them a percentage of assets under management which is a bit higher than the first situation above but the planning is covered with this fee and there are no additional hourly charges. I find that this situation works well for most clients and choosing a compensation package allows them to get the most for their money.
One final response to Jerry about getting paid regardless of investment results. That is an understandable complaint but one which might be a bit off target. Investment managers who charge a percentage of assets under management have every incentive to manage your money as best they can. Otherwise, if the markets drop their compensation likewise drops. Yes, they still get paid if the portfolio decreases in value but they get paid less. You also have to factor in the value of their service in this regard.
Study after study has shown that individual investors often sell out at low points and buy in at high points. "If" (and I realize this is a big if) your advisor manages your portfolio in a manner that saves you from some of these behavioral biases then should he not be compensated for that? Also, remember his compensation includes financial planning in many instances so this must be factored in as well." -Jeff Howard, CFP
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"They're too often looking at enriching themselves first by pedelling "products." I studied business finance, and worked in the field, in college through my senior year, so I know something about it. Show me a Financial Planner who truly places his client's interests first by providing sound guidance, counceling and - yes - instruction, and I'll show you an FP well on his way to fame and fortune!" -John Mackin, Marketing
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"Lack of knowledge about the actual investments they are recommending (portfolio manager philosophy, statistics of the fund, cash flows of the firms in the fund, etc). I also don't like feeling like they have any sort of conflict of interest. In other words, I want them to be working hard for my best interests, not their own. That may mean sending me to someone else who can help me better, but if they do so, I will know I can trust them to come back to them for whatever product or service I need that they offer." -Mike Berry, Owner Real Estate Services
Tuesday, August 19, 2008
Falling Market, Rising Profits for Custodio Asset Management's Clients!
Custodio Asset Management's Gains Counter Falling Market
Garnering steady gains despite market loss, CAM is expanding to serve its growing clientèle.
Investors are becoming less bold in times of economic uncertainty, but Custodio Asset Management would like to show investors that your portfolio can make gains in these conditions. Despite the overall market experiencing a double-digit decline, Custodio Asset Management has posted a year-to-date gain of 16.413%, net of fees. CAM's record of success in the current market has gained the attention of several investors and generated a wealth of new clients.
In a market experiencing double-digit loss, the portfolios handled by Custodio Asset Management continue to steadily grow. By providing non-commission investment services, CAM is able to focus on consistent performance and steadily grow wealth through no-load funds offered at Rydex Investments.
Update performance results:
Since Inception (Oct. 7, 2005): +162.887%
Year-to-date (August 18, 2008): +16.413%
Annualized Return: +38.014%
S&P 500 trails by 29.337% YTD
Garnering steady gains despite market loss, CAM is expanding to serve its growing clientèle.
Investors are becoming less bold in times of economic uncertainty, but Custodio Asset Management would like to show investors that your portfolio can make gains in these conditions. Despite the overall market experiencing a double-digit decline, Custodio Asset Management has posted a year-to-date gain of 16.413%, net of fees. CAM's record of success in the current market has gained the attention of several investors and generated a wealth of new clients.
In a market experiencing double-digit loss, the portfolios handled by Custodio Asset Management continue to steadily grow. By providing non-commission investment services, CAM is able to focus on consistent performance and steadily grow wealth through no-load funds offered at Rydex Investments.
Update performance results:
Since Inception (Oct. 7, 2005): +162.887%
Year-to-date (August 18, 2008): +16.413%
Annualized Return: +38.014%
S&P 500 trails by 29.337% YTD
Friday, June 13, 2008
Turbulent Markets
This week we have seen both extreme rallies and extreme selloffs. Fueled by nothing short of more inflation worries, banking write-downs, and rising commodity prices!
Our firm has been going long all week, by the end of the volatile cycle, we might eek a small profit. If not, there's always next week to give it another try. By the close of business today, our positions should be all in money market cash. Anything could happen between now and 4:00. So it's not over until the fat bell rings!
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