Why Investors Use Financial Planners

Do you have a financial planner? Does one of
your friends have a financial planner? Maybe you
take your advice from your broker. As I have
said countless times before a broker will make
you broker. And a financial planner won’t do any
better. I know. You thought they would.

Let’s look at the real reason investors choose
to take advice from these so called “experts”.
Once they get you into their office or sitting
with you at the dining room table or kitchen
table you are doomed. Mr. F.P. has come prepared
with beautiful slick color brochures and will
have a presentation that will utterly confuse,
bedazzle and befuddle. You will sit there and be
afraid to ask a question because you know it is
so dumb. You can’t say ‘no’ or you will be
admitting how dumb you are. And he knows that.

It is not that he is a liar. (I hope.) It is
that all financial planners and brokers are
taught the Wall Street method of “making money”.
Unfortunately it doesn’t work.

The basic things that have been pounded into
their heads are false. Let’s look at the big
three: Do Research, Dollar Cost Average and Buy
and Hold. There are others, but these you will
hear from every broker and financial planner
because that is what the big brokerage companies
and mutual fund families want. They want your
money and they want to keep it even when the
stocks or funds you own go down. In fact, buy
some more.

Research is like blowing in the wind. You will
be inundated with green sheets, blue sheets, red
sheets, slick full color glossies, videos, etc.,
etc. Think about this. If you can obtain this
information then so can everyone else.
Everything that is known about a particular
stock is reflected in the last price.
Morningstar will sell you a beautiful package
about a company, but it is worthless. What you
really want to know is will it go up after I buy
it?

Of course, if it goes down you will be
encouraged to buy more to average out your price
so that when it heads up again you will make a
fortune. Yes, and pigs can fly.

If it does go down your advisor may say to hold
on as the market always comes back. He doesn’t
tell you it may take 20 years or that the
company might go out of business. Buy and Hold
is the greatest myth of Wall Street. No one ever
tells you to sell. Have you been told you don’t
have a loss until you take it? Please!

You got that advisor because you have not
admitted to your self that you cannot pull the
trigger. When you have a stock or fund that is
falling you don’t want to sell. You have to take
charge of your money. Just you.

When you look back at the performance of most
financial planners from 2000 to 2003 you know
you can do a better job. Always ask to see what
they did then. If they lost money you don’t want
them. Don’t let them compare their performance
to the S&P500. That’s smoke and mirrors.

You can do better. Just do it.