Good morning!
We could probably all use a little help when it comes to our finances. Especially these days. If you are living in the Bay Area, the Office of the Treasurer and Tax Collector are having a free financial planning day that you might want to take advantage of:
SUBJECT: FREE “Financial Planning Day” October 16, 2010 – Register Today!
I am writing to invite you to participate in a great opportunity to receive free financial advice from a trained and certified professional. On Saturday, October 16th from 10am to 4pm, Mayor Gavin Newsom and I will be hosting “Financial Planning Day” at UC Hastings. All San Franciscans will have an opportunity to receive free private consultation from one of 60 professional Certified Financial Planners in attendance. You can ask your most pressing questions around retirement savings, savings for homeownership, debt, student loans, children’s college savings, and more.
The need for free, trustworthy financial advice has never been greater. The average American household has over $8,000 in credit card debt, the average college student has over $21,000 in student loans, and one out of seven adults aged 41 to 54 has NO savings for retirement. “Financial Planning Day” provides an opportunity to take control and obtain free financial advice from a Certified Financial Planner.
You can connect to “Financial Planning Day” by:
Viewing the flier-1 and flier-2 (please forward to your friends and networks)
Visiting us online at: www.financialplanningdays.org/SanFrancisco (don’t forget to register online)
I hope to see you Saturday, October 16th. Please contact Marco Chavarin if you have any questions at 415-554-7444 or marco.chavarin@sfgov.org.
And if you don’t live in the Bay Area and are seeking out a financial planner here are a few things to watch out for as well as some good questions to ask:
10 Warning Signs And 10 Questions To Ask When Seeking A Financial Advisor
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When it comes to managing their financial well being, many people, especially seniors, turn to the services of a financial advisor.
It seems to make sense, since they’re the experts with your well being in mind, aren’t they?
But here are a few startling facts:
* A study by securities officials of “free meal” financial investment seminars, found that half of them exaggerated or made misleading claims about their services. More than 10% were actually fraudulent, selling non-existent products or promising unrealistic returns.
(See this Scambusters report for more about these seminars.)
http://clicks.aweber.com/y/ct/?l=8JUKO&m=1ZcjxFP0tmtWfo&b=.LrIOMkDGwv7O7kJ7jZWGQ
* Anyone can set up shop and call themselves a financial advisor or planner, without either experience or
qualification. You don’t even need a high school diploma!
The terms are considered to be generic (in general use) and usage is not controlled by federal or state governments, or by the financial regulatory bodies.
(The term “investment advisor” is somewhat different; people using this term should be registered with the Securities and Exchange Commission, the SEC.)
* According to money experts at MSN, the Microsoft Network website, of the quarter-million people using the title ”financial planner,” only about 22% were holders of the industry standard designation — the Certified Financial Planner mark.
In some cases, a financial advisor may actually claim to have professional qualifications, when in reality these are invented or based on a home study course that took as little as two hours to complete.
They may actually be honest business people but simply lack the training and experience to help guide your financial strategy.
Others may operate inside the law but either provide a poor service or be less than honest about how much money — in the form of fees — they’re making off of you.
But in a worst case scenario, they could be operating financial advisor scams that transfer your money straight into their pockets.
Naturally, we’re not suggesting that all financial advisors are scammers. Mostly, they’re not and many undoubtedly provide a valued service to their clients.
The trouble is that it can be difficult to tell the difference between the good and the bad.
Warning signs
However, there are some warning signs that should put you on alert about the qualifications or integrity of a supposed financial advisor you’re thinking of dealing with.
For example:
1. They suggest liquidating all or a substantial part of your portfolio and putting the proceeds into a single product (often an annuity, on which they receive a generous commission).
2. Following on from the above, they push a single type of investment and don’t seem to be interested in exploring your needs and personal risk preferences.
3. They tell you the investment is only available through them. Even if this were true, you can’t realistically place a true value on this type of investment and it almost certainly would make it difficult to cash out.
4. They offer a contract that includes taking a share of any financial gains you make (but, of course, they don’t share in any losses!).
5. They seem to be focused on one area of finance, do not seem widely experienced in different types of investments and are unable to compare them intelligently.
6. They refuse to detail their fees or tell you how they earn their money (i.e., whether they get bonuses or commissions for selling specific products to you).
7. They ask you to pay in advance for their services or to make a check out to them rather than an organization or institution in which you want to invest.
8. They invite you to make a loan to them or to sign a loan guarantee.
And finally, the old chestnuts:
9. They promise unrealistic returns on an investment while claiming it is perfectly safe.
10. They urge you to act quickly.
And, if you’re attending or following up on a “free” event, even though there’s a 50% chance it’s not a scam, remember that it is a sales pitch — either for the services of the organizer or for a particular product.
Somebody pays for the food and you can bet your bottom dollar that, ultimately, it won’t be the organizer.
Many financial advisor scams are particularly targeted at seniors. And you can read more about this type of crime in earlier Scambusters issues.
http://clicks.aweber.com/y/ct/?l=8JUKO&m=1ZcjxFP0tmtWfo&b=LBgKP8qVllW3JN4ZJyB3jQ
http://clicks.aweber.com/y/ct/?l=8JUKO&m=1ZcjxFP0tmtWfo&b=8wkim8nfXa494jAJ2bB9Wg
Key questions
Meanwhile, if you’re planning to work (or are already working) with a financial advisor, here are 10 key questions to ask that will give you clues to their true status:
1. What are your qualifications? They key ones are Certified Financial Planner (Professional or Practitioner), Certified Public Accountant, Personal Financial Specialist, a Chartered Financial Consultant or a Chartered Financial Analyst. Ask to see their certification and, whatever they claim, check it out online. See this interesting article about phony official titles.
http://clicks.aweber.com/y/ct/?l=8JUKO&m=1ZcjxFP0tmtWfo&b=iCdWWfI76oiZc7xwGqR9Vg
2. How do you earn your money? Fee-only is best (usually either an hourly rate or a sum related to the size of the portfolio). Beware of the phrase “fee-based” — this may mean they also get commission. Or if they say “by salary,” ask if they also earn a bonus for selling particular investments. It’s all right for a financial advisor to earn a commission, as long as they tell you that’s what happens.
3. Can you provide references of longstanding clients I can contact, and can I see examples of financial plans you have drawn up for other clients (with their personal information obscured, of course)?
4. How many clients does your organization have and how many do you personally have? Anything above 100 or so for the individual you’re dealing with would suggest he can’t devote the time you need and may be more focused on selling commission-based products.
5. How long have you been doing the job and do you have evidence of this? Just because someone appears older doesn’t mean they’ve been in the biz a long time. Fielding mature-looking front men is one of the financial advisor scam tricks.
6. Are you registered with FINRA (the Financial Industry Regulatory Authority), the SEC or a state licensing body? (Again, check this out with the relevant bodies –
http://clicks.aweber.com/y/ct/?l=8JUKO&m=1ZcjxFP0tmtWfo&b=.zTixCkOv0k9Hu6iu.r7ng and http://clicks.aweber.com/y/ct/?l=8JUKO&m=1ZcjxFP0tmtWfo&b=T2gV7k1AAbBMoDEqXmgwow.)
If they claim to be registered with the SEC, ask to see their ADV form — a requirement of registration in most cases — which tells you more about the firm.
7. Are you a member of any professional trade organizations, like the National Association of Personal Financial Advisors? Can you explain its code of ethics? Again, you can check this with any organizations they name and check the credentials of the particular organization by doing a Google search on the name.
8. Do you have wide general knowledge of the different products and services in the financial sector? If so, please give me a broad overview of the advantages of each. If not, are you only able to advise in a specific area (insurance or tax for example — which is probably not what you’re looking for)?
9. Have you ever been the subject of formal complaints, sued by a client or disciplined by a regulatory body?
10. Do you mind if I think things over and talk to a couple of other financial advisors? (If they object or seem agitated or uncomfortable, take your business elsewhere.)
Some of these questions might seem a bit blunt. But remember, it’s your money and your future prosperity you’re seeking to protect.
As we have previously suggested, it’s often a good idea to get recommendations on a financial advisor from other people you know and trust.
As suggested in Question #10, you may also want to speak to two or three different financial advisors, to compare not just their knowledge and expertise but also to see if the chemistry is right.
And, no matter how much you trust your financial advisor, always keep a close and regular eye on your investments and act swiftly if you suspect things are not right.
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Doug: That was quite the write! Thanks for keeping us informed, for sharing, and for giving us your two.
JClaxton: Hey Jim. I just saw your comment. Great to see you here! Thanks for blogging and saying hello. The reunion was wonderful and I too loved seeing everyone. I wish I had made more of the rounds as you did but I definitely spoke to quite a few people who I rarely see and that was just as fun. I look forward to chatting with you here more often.
Emily: That is too cute.
I’m outta here…Peace out…
Lastly, greed over a great story is surfacing from my “loyal”(?) readers. With all this back and forth about who owns what, that appears on my blog, let me reiterate that all material posted on my blog becomes the sole property of my blog. If you want to reserve any proprietary rights don’t post it to my blog. I will prominently display this caveat on my blog from now on to remind those who may have forgotten this notice.
Gratefully your blog host,
michelle
Aka BABE: We all know what this means by now :)
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