4 Things You Must Know When Working With Financial Planners – If You Want To Retire With More Money

Here are four closely guarded secrets if you will, that I learned while working as a financial planner for a leading investment firm. You need to know each one of them if you want to make sure you retire with more of your hard earned money and aren’t cheated along the way. While all these are all important, the last one will probably shock you if you haven’t seen it before.

1) Your financial planner is often “forced” to sell you an inferior product.

Your financial planner is typically limited to selling (recommending) the funds or investments that their company provides. They may not be the best, but they’re the best mutual funds they have to offer.

As a financial advisor working for a specific company, I hated the fact that I couldn’t offer my clients the best investments at the lowest costs because I could only sell what my company had to offer.

For example, there may be many A-rated large-cap mutual funds in the market but the company your financial advisor works for, may not have one available.  Instead, they have to try to sell you a B or C rated fund. Worse still, they may work for a company with high fees and poorly rated funds across the board.

In addition, brokers and financial advisors are often paid the highest commissions for selling their companies own funds so they push them because that’s how they make the most money.

The best example I can think of is when you have a financial salesperson trying to sell you the false promises of an annuity over anything else. Annuities, in general, carry high-profit margins for the company, which means big commissions for the salesperson.

While they have their place, if the first thing your financial planner tries to sell you is an annuity, be very, very cautious about working with them and always seek a second opinion.

The above is but one warning that the U.S. Securities and Exchange Commission has against using variable annuities:  “Other investment vehicles, such as IRAs and employer-sponsored 401(k) plans, also may provide you with tax-deferred growth and other tax advantages. For most investors, it will be advantageous to make the maximum allowable contributions to IRAs and 401(k) plans before investing in a variable annuity.”

Poor fund selection and high fees are most often the limiting factors for many financial advisors in being able to provide you with market-beating performance.

2) Financial planners and Stock Brokers are first and foremost salespeople, no matter the title they carry.

Their job is to bring in as many assets under management for their firm as possible. That’s how they get paid.

Therefore it’s critically important for you to be able to evaluate the performance, risk, and fees of what they’re trying to sell you before making any investment decision. If you’re unsure of what’s being offered make sure to get a second opinion, just like you would if you were undergoing a complicated, life-threatening surgical procedure. Your financial future depends on it.

3) You can get much of the same information a financial planner provides to you, for free.

After initial training, financial planners are provided a blueprint to follow for their customers. The blueprint or template if you will, is based on how much a person has saved towards their retirement, what their retirement goals are and how much risk they can handle.

Within the templates are the percentages of investment money that should be allocated to different asset classes (such as stocks and bonds) and which funds fall into those categories.

These same templates can be found on leading websites such as Morningstar, Fidelity, Charles Schwab, Vanguard, and E*TRADE, among others.

To get around the information that’s available for free a lot of financial planners like to overwhelm you with a lot of data, graphs, charts and fancy terms to make the financial process sound as complicated as possible. After all, the more sophisticated they sound, the less confident you become and the more willing you are to let them handle your money.

4) You Can Retire With Twice As Much While Saving Less, By  Doing This One Thing

During my time working for a large brokerage firm, I quickly learned how easy it was for individual investors to saves tens, even hundreds of thousands of dollars over their lifetime by using index funds and/or managing their own retirement account.

The problem is, the financial planning industry doesn’t want you to know this.  They make fortunes charging you high fees for actively managing investment funds in addition to the additional fees they charge you for managing your retirement account.

While those “small” fees and hidden charges don’t seem like much, when you see what they add up to, you’ll be shocked! Check out this short article which explains it: The Truth About Retirement Planning.

It explains one of the biggest reason why it’s been so hard for you to save enough money for your retirement.  It doesn’t have to be that way.

In the end, I don’t want to sound like I’m against certified financial planners. I have a few friends that are still in the industry, and I respect and value the work they’re doing, particularly with high net worth clients. They are professionals in every sense of the word and can be an invaluable resource for helping investors make the right financial decisions.

That said, they can’t provide the same level of service to smaller accounts (less than $100,000 to $250,000) that they can for their high net worth clients. That’s one reason why we created the Retirement Investing Journal for our members. To help people like you, get to where they want to be.