Clueless About the Bad Money Advice you’re Getting? Know What Could it Cost You Afterwards
At the zenith of economic crisis, a study was conducted by an investment advisory firm confirmed that
81% of investors with over a million insinuated of taking money away from their financial advisor.
This findings show that a huge amount of wealth was lost during recession and it also revealed that
investors sometimes get no-brainer advices from their financial advisor and thus prompts other clever
investors to take their wealth else or entrust it to a more capable financial advisor.
Years after the recession, investors can help but wonder if they are really getting some good-wealth
building advice or they are just being sold like products.
Ed Butowsky of Chapwood Investments gives his non-nonsense tips and help investors see the tell-tale
signs that an investor is not getting the advice and knowledge he deserves from his financial advisor:
Never initiate to examine your tax return
Tax rates tend to increase in months’ time. Do you still remember that last time your financial
advisor asked to examine it? If your advisor cares enough to take advantage of the existing tax
laws then monitoring your tax return yearly should be one of his priorities. Carefully tended tax
returns will reveal if there are missed out Roth conversion and deductions and just plainly too
much tax with no valid reason at all. Tax return is the heartbeat of your financial life and if it is
not checked on a regular basis then it’s a red flag indication.
Portfolio with only one type investment
In reality there is no investment that caters “one-fits-all” formula. This means that your
portfolio should not be designed for just one type of investment, think about mutual funds
Lack of IRAs distribution plan
For years you’ve been planning to invest money into 401(k)s and IRAs. But the real challenge is
the next action to be taken once the taxable amount comes out. Did you or your financial
adviser develop an investment plan for your pre-tax accounts? It takes a seasoned one to ensure
a distribution strategy had been made to cushion government’s take.
Generalist vs. Specialist
Is your financial adviser fond of working different people with varying age and backgrounds? In
the world of economy there is no such thing as one size fits all and excels in all of them. On
medical world, specialists are paid more than a family doctor. The same holds true for financial
advisers, a specialist’s service will costs more than a generalist’s.
Hearing the same old familiar tune
Some advices seem familiar to you, like you heard it back in 2008, “Just let it flow and wait, for
sure the situation will be better”. A seasoned proactive financial advisor will not utter such
words. You might need to overhaul your current wealth management soon.
Using “hope” as an income plan
Following the Wall Street way of taking out almost 4% yearly in retirement might not be a huge
help in ensuring a fruitful retirement years ahead. Typical financial advisers will boast Monte
Carlo mockups to prove that you should not run short of money in retirement. If you are keen
observer you will notice that word “should not”. This phrase connotes hope, and sad to say
hope is not a strong basis to be considered as plan. Economics is all about Math, choose an
advisor that uses quantifiable mathematics.
Weak inflation protection
Interest rates hit at the lowest record, joined with huge debt, inflation is inevitable. Those who
are nearing retirement are the ones most affected. If the hired financial adviser did not do
something to protect your wealth from impending inflation, then it is a sign you must not be