jump to navigation

Retirement Planning and the Financial Professional July 24, 2008

Posted by retirementwithaplan in Uncategorized.
Tags: , , , , , , , , ,
trackback

This blog post originally appeared on another blog server on 06.11.08

The Financial Professional on the Hot Seat

What do you do when, according to a recent post by Harriet Brackey of the Sun-Sentinel Tribune, professional advisers gather and one “thinks he can pick outstanding companies and beat the market” while another, “uses many studies to show that no one beats the market for long and so he favors index investments” and another offers an, “in the middle, putting the bulk of his clients’ money into an index-like investment, yet playing around the edges with active stock or bond picking, hoping to goose up the overall return of the portfolio”?

Why does this confusion seem shocking yet at the same time, not so much?

It seems that this group of professionals does not have a unified game plan for their clients for three good reasons.

Chaos creates Confusion and that creates Profit

There is money to made in confusion. If you can keep the theories shifting, the folks who pay for these services believe that they are doing better than their peers – and that brings me to my second point.

We spend far too much time creating benchmarks based on another person’s idea of successful investing and retirement planning. Financial planners know this and try to “tailor” your investments accordingly, making them seem so personal.

The guy who suggests his client index should do exactly that. Perhaps a growth index (mid-cap or small-cap) a value index (large-cap) and emerging market and an international index would suit just about every investor’s needs. Which makes the financial planner obsolete. Not only will that client save money in fees for the financial planner, they will also be paying less for the funds.

Advertisements

Comments»

No comments yet — be the first.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s

%d bloggers like this: