When you go over the index investing thingy, they will attack you with all anti-index sales talk. When they are inviting you to buy their actively managed funds, they would never say that you will make more money buying index funds.
I really like the part that when the adviser ask why should we accept an average return from index funds and that you can't beat the market with an index fund. The answer is simple: it would be true if and only if there are no 12B1 fee, no expense ratio, no taxable liability, no sales commissions or adviser trailer fees, and no operational costs.
Here's come the funny part.
Even if it ever happen, this would definitely a fantasy world for you to live. Your adviser would have work for free. No trailer fee, no commission for his/her firm. The researchers would work for free. The fund managers doing buying and selling would work for free AND even the fund accompanies could trade stock for free, too. Everything is free..
And the story that he was helping his mom to open an account, the adviser was wrong to advise him to buy actively managed funds. Part of it, It's just what they have to do, it's their job. They have to lure people to buy active funds to make some money out of it. Generally, it's not their fault but you have to be smart to make a right decision.
Photo: Marc Royce
Q: In 1999 I decided to take my money out of mutual funds and invest in the stock market with a financial adviser. Since I started working with him, I've lost $20,000 of my $80,000 initial investment, which was everything I had saved since I was a child. He tells me the market hasn't been good and that I need to make a long-term commitment before seeing any gains. Isn't nine years long enough? I believe my adviser spends his time on side projects instead of making money for me. I would like to withdraw my funds but am holding out hope for a recovery. When do I quit waiting?
A: Fear and hope are obstacles to wealth, and you're paralyzed by both. You have no confidence in your money manager, yet you've been unable to sever ties; it's as if you're putting his needs ahead of yours. Your fear is fueled by a trait I see in so many women, which is the inability to act in your own best interest if you think it might hurt someone's feelings. I want you to appreciate the invaluable lesson here: When it comes to your money, no one will ever care for it, need it, or respect it more than you.
If you feel in your gut that this relationship isn't working, listen to yourself. It's time to take back control of your money and never let go again. That means leaving your adviser and hiring someone else to look after your investments—you. It's my steadfast belief that if you want to find the best financial planner in the world, look in the mirror. As I explain in "Money Management Made Easy" (page 78), every woman can handle trading without help.
This doesn't mean all advisers are bad; I just don't think they're necessary for most people. You might consider one if your investments surpass $50,000 (some won't take on a client with less than $250,000). In that case, hire a consultant who charges an hourly rate, a fixed annual fee, or a percentage of your assets—say, 1 percent. (Never work with someone who operates on commission. It can raise a conflict of interest when he gets paid only if he buys and sells actively in your name.) I'm confident that over time you'll recoup what you've lost and build a strong portfolio.
From the May 2008 issue of O, The Oprah Magazine
Read more: http://www.oprah.com/omagazine/When-Should-I-Stop-Listening-to-My-Financial-Adviser#ixzz2eVVi4twW
Reflect:
I think that the person in this article should take out his/her money since the advisers are not making any more money for him/her. Instead of making some interest out of the money, they lost $20,000 out of $80,000 from his/her initial money after 9 years long. Isn't it really bad that after 9 year, they are not making any interest? Advisers are not bad, but they charges you high fees, they try to predict the market, they jump in and out. I kind of agree with the answer above that only you can make this work. You need to be wise and stand on you ground.
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