You give me YOUR life’s savings, and you’ll get this from me in return:
1. You will never know exactly what you own in your portfolio.
2. I will only disclose a small part of the fees I am taking from your portfolio.
3. I will take some of your money and give it to big Wall Street firms to convince them to have
their advisors give me more money to manage (this does not help you in any way at all).
4. You will get strange tax reports each year, and sometimes you will have to pay tax on a gain
even though you lost money over the year.
5. Odds are around 80% or better that I will do a poorer job managing your money than the
market averages. (Basically, you are paying me to underperform.)
6. You will not be able to invest or sell with me at a known value. You put your order in to
invest or sell during the day, but your order will not be executed until the end of the day,
and you get whatever the price is then.
7. And oh yeah, I will probably take a lot more risk with your money than you imagine.
Want to give me your money? Hopefully, you are looking at this deal and you are thinking to yourself – YUCK!
Who would ever want to make that deal with a money manager putting their life’s savings on the line? Yet, people do it
every day. In fact, you are very likely taking on this deal yourself. Because I have just described a mutual fund.
If you look at how a mutual fund works, you will discover that the deal I’ve laid out above is exactly the deal you get
whenever you put money into a mutual fund. For example, the issue of hidden costs in mutual funds is a real problem
( www.cen-wealth.com/mf-barrons and www.cen-wealth.com/mf-forbes). This is why we are seeing other alternatives
growing at such a rapid rate. Exchange Traded Funds (ETF’s) and Separately Managed Accounts (SMA’s) are becoming
the staple of top financial advisors throughout the country. In fact, a good test to see if your advisor is any good is to simply
look at how they have invested your money.
If they have you in mutual funds, it is a screaming red flag that you are not dealing with an advisor that is keeping up
with their education. Either that, or they work for a big Wall Street firm that is being paid to put that fund in your
portfolio, whether or not it is the best choice for you. Either way, it might be time to find another advisor.
ABOUT THE AUTHOR | Michael Reese, CFP®, CLU, ChFC is a Certified Financial Planner™ who has
specialized in retirement planning for 20 years. He is a frequent industry platform speaker and has trained
over 1,000 financial advisors throughout the country, focusing on tax and investment planning for
retirement. You can find out more about Michael at
making smart choices
DO YOU HAVE YOUR MONEY IN
THE WORLD’S WORST INVESTMENT?