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Varchild2008 (84.54)

FIRE your worthless Financial Advisor...they all stink



April 12, 2009 – Comments (5)

So, I hired a Financial Advisor for the purposes of:

A)  Learning about investment strategies in the equities market such as Options trading.

B)  Learning about other asset classes and best times to buy, hold, sell them.

C)  ROTH IRAs versus Traditional IRAs and what they recommended I invest in to diversify my portfolio.

D)  Other various topics.

Instead... What I get is

A) A recommendation to change my Car Insurance company to "Citizens Insurance."  ????  I never heard of Citizen's insurance and the company I have (AAA) is far more reputable.  I went and did the homework before agreeing to switch and discovered Citizen's to be an absolute RIP OFF!!!

AAA was charging me at such a low, low, amounted to a savings of more than $300 versus Citizen's Car Insurance.

B)  The investment guy said he does investment advice....but I've yet to get any real advice out of him or anyone for that matter even after handing in my list of topics I was eager to learn something about.

C)  I'm given some mutual funds out of 1 Fund Family and told "This is the Newest, Greatest, Thing, Since Sliced Bread."  Didn't take long before discovering how much of an abject disaster putting my money into those Mutual Funds would cause me....  They  were all invested in various percentages of Everything.

And I voiced my concerns that the mutual funds have absolutely no real focus.  No real strategy.  The Percentages never fluctuate during times when any of the asset classes are over inflated or under inflated.  Instead you are stuck....

What do I get?  Some quick, slick, lecture about Harry Markowitz.....

So? I go and do some quick research on this Harry R. Markowitz fella and it basically confirms my fears are justified with these mutual funds.

Harry is a Nobel Prize Winning Mathematician / Scientist who discovered that there is a  point at which one's portfolio can not be any more efficient.....  This point is where if you increase your diversification, you do not lower your risk/reward ratio.... If you decrease your diversification, you are increasing your risk.

The idea was to find that healthy balance.... And you can't find that healthy balance in a Mutual Fund that invests in chunks Everything.

In Short.... Financial Advisory Companys are absolute Waste of Money and I am definitely NOT renewing my contract. 

I'd pay TWICE the price easily that I paid for the service if I actually had a Financial Advisory company that actually advised.  But, apparently.... They don't exist.  So....Don't bother looking!

The Moral of the story.. is the best Financial Advisor you can find around... is yourself!

5 Comments – Post Your Own

#1) On April 12, 2009 at 10:21 PM, russiangambit (28.89) wrote:

Markowitz is the market efficiency guy I think. Gone through all that in business school , all forgotten now as it doesn't apply in the real world.

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#2) On April 12, 2009 at 10:28 PM, Varchild2008 (84.54) wrote:

Yea no kidding... The real world works in extremes.... Some things are extremely disliked and yield low percentage returns... and then later on the pendulum swings and the low yielding asset class begins to yield rates way above its average.

Given the wild swings in just Precious Metals.. It is silly to not have the ability to self-direct my exposure to 1 asset class versus another....

I'd want to lower my percentage from Gold when I see it is at $1,000 an once.  And increase it as it goes to $850 an once.

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#3) On April 12, 2009 at 11:38 PM, checklist34 (98.73) wrote:

My advisor is in Mensa, and I call him 3 times a day to discuss some stock or what he thinks the direction of the market is going to be. 

In very early march he strongly advocated the probability of "one hell of a rally before St. Patty's day", which encouraged me to add to long positions and not sell anything. 

Sometimes he's wrong, sometimes he's right, he's usually good for playing devils advocate when I get excited about something and declare that I'm going all in. 

Good advice is good, and the key to recognizing (just my opinion born of experience) good advisors is that they don't claim to KNOW whats coming, they offer thoughts, opinions, and qualify them as such.  Nobody knows, and its a good filter for honesty to look for people who realize they don't know.

good luck varchild!

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#4) On April 12, 2009 at 11:52 PM, arboretum (28.07) wrote:

There may be good advisors out there, but not convinced MENSA membership is good or even desirable. My highly paid advisor (at newly-unfashionable Wall St. two-name firm) was fine in the uptimes but had no idea how to deal with the last year. He TALKED ME OUT of going to cash in July. And I TOOK HIS ADVICE. Never again.

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#5) On April 13, 2009 at 10:10 AM, Bupp (28.00) wrote:


 Did the advisor have you fill out any Know Your Client forms?  Seems like he is a shitty salesman if you wanted high risk exciting bet the farm type advice and he was giving you boring old index funds.


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