investor education

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How Is Investment Performance Manipulated In Up And Down Markets?

This article describes one of the more frequent ways financial advisors manipulate track records that are supposed to document their investment performance.

There are two reasons why investors must be very cautious when they select financial advisors based on investment track records. First, advisors know most investors will select the financial advisor with the best track record. Second, unscrupulous advisors will provide fake track records or they will manipulate track record data to make themselves look better than they really are.

Track records are one way investors can evaluate competence. Reviewing advisors’ education, experience, and certifications is the other way. Given a choice, most investors are biased towards track records because advisor comparisons are easy – just select the one with the highest track record. […]

How Can I Increase My Advisor’s Accountability for Investment Performance?

Every investor who relies on financial advisors to help them achieve their financial goals should be asking themselves how they can increase their advisor’s accountability for investment performance. Why ask the question? Most advisors go to great lengths to avoid accountability.

Here is an example. You select an advisor who convinces you to invest your assets in five mutual funds. You buy the recommended investments and you experience very poor performance over the next two years. Who is responsible for the bad performance, the funds or the advisor who recommended the funds? The advisor wants you to blame the funds so he can retain his relationship with you. He says it is not his fault the funds failed to deliver competitive performance. I disagree. The funds and the advisor who recommended them are both accountable. You should sell the funds and terminate your relationship with the advisor who sold you the funds.  […]

Investors Are Still Winning Back Losses From 2008

People use Investor Watchdog’s free Performance Benchmark service to measure the relative results of their advisors and assets.

Investor Watchdog publishes performance data for five Benchmarks that vary by risk exposure ranging from Very High to Very Low.
Watchdog’s Very High Risk (VHR) Benchmark is the source for all performance data in this article.
Younger investors (25 to 40 years of age), who are willing to take substantial risk to achieve higher returns, select the VHR Benchmark.
The VHR Benchmark is allocated 100% to common stocks: Large Capitalization, Mid-Capitalization, Small Capitalization, Domestic, Foreign, and Emerging Markets.
Watchdog publishes Benchmark performance on its home page. Some Benchmark functions require sign-up as a Watchdog User. […]

Wall Street is a Marketing Machine With no Real Boundaries

You have seen the TV advertisements. Wall Street markets competence, trust, and services that help you achieve your financial goals. You have also seen the headlines documenting Wall Street abuses that have cost investors hundreds of billions of dollars. Which one do you believe, the ads or the headlines?

Wall Street is trustworthy or its not. I believe the headlines because regulatory agencies (SEC, FINRA, states) have documented one Wall Street abuse after another. When the most prestigious firms on Wall Street (Goldman Sachs, Citigroup) are ripping off investors you know the industry is not the trustworthy source of advice and information that its advertisements say it is.  […]

Attention Investors: One Page Stops The Most Deceptive Sales Practice On Wall Street!

There is a one-page document that would stop Wall Street’s most deceptive sales practice in its tracks. Investors should ask for this document every time they select a new financial advisor. However, most investors don’t know what they don’t know. In this case they don’t know they can require the one-page document from advisors who want to control the investment of their assets.

What is Wall Street’s most deceptive sales practice? 75% of all so-called advisors are really sales representatives who are paid commissions to sell investment products. However, they are not required to disclose this fact to investors. They claim to be financial planners, financial consultants, and even financial advisors to camouflage their actual role of sales rep. Why hide this role? Investors do not want sales reps investing their assets. Consequently, there would be increased sales resistance if they knew the truth.  […]

5 Reasons Why Sales Pitches From An Advisor Are Dangerous

You are interviewing an investment advisor who can help you achieve your financial goals – in particular, retirement goals that will determine when you retire and your standard of living during retirement. What could be more important than that? You really like an advisor’s personality and communication skills. He understands your needs and says what you want to hear when you select an advisor.

How do you know this advisor is not a skilled sales person who knows how to develop relationships and develop trust so people buy what he is selling? You don’t know and you may not know for several years when you have the benefit of 20/20 hindsight. By then it is always too late. The advisor has earned thousands of dollars of income from your assets and you have a lot less money than you should have.

How real is the problem? More than 50% of investors terminate new advisors within three years when expectations do not match what they were sold. Following are five tips that will reduce your risk of selecting the wrong advisor.  […]