Get wise to your advisor : how to reach your investment goals without getting ripped off

274 Pages·2013·3.65 MB·English

by  Steven D Lockshin

Get Wise to
Your Advisor
How to Reach Your
Investment Goals Without
Getting Ripped Off
Steven D. Lockshin
Coverimage:iStockphoto/DavidFranklin
Coverdesign:PaulMcCarthy
Copyright©2013byStevenD.Lockshin.Allrightsreserved.
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LibraryofCongressCataloging-in-PublicationData:
Lockshin,StevenD.
Getwisetoyouradvisor:howtoreachyourinvestmentgoalswithoutgettingripped
off/StevenD.Lockshin.
pages cm
Includesindex.
ISBN978-1-118-70073-0(cloth);ISBN978-1-118-70069-3(ebk);
ISBN978-1-118-69886-0(ebk)
1. Investmentadvisors. 2. Financialservicesindustry—Evaluation.
3. Investments. 4. Portfoliomanagement. 5. Finance,Personal. I. Title.
HG4621.L54 2013
332.6—dc23
2013013314
PrintedintheUnitedStatesofAmerica
10 9 8 7 6 5 4 3 2 1
To my wife, Allison, my “true north”
and the ultimate fiduciary in my life.

Contents
Preface ix
Chapter 1 Is This Any Way to Choose
an Advisor? 1
Bad Financial Medicine 3
A Murky Industry 7
“You Should Meet My Guy” 11
Key Points 17
Chapter 2 Wall Street’s Dirty Secrets 19
The More Things Change . . . 23
“You Don’t Understand . . .” 28
Misplaced Interests 33
v
vi CONTENTS
Brokers and Advisors 35
Wall Street Brokers versus
Main Street Consumers 37
Peddling Products 39
Omission versus Commission 42
Key Points 45
Chapter 3 The Wall Street Whitewash 47
Image Is Everything 49
Shopping Shortcuts 52
Vegas Rules 59
Key Points 65
Chapter 4 Hold Your Nose:
Other Advisor Options 67
Bank-Based Advisors 70
Private Banking and
Trust Departments 72
Asset Managers 74
Insurance Salesmen 76
Fee-Only Planners 78
Other Options 79
Technology’s Triumph 81
Key Points 86
Chapter 5 The Case for
Independent RIAs 89
The Trouble with
Fee-Only Advisors 92
The Case for Independent RIAs 94
Buyer Beware 99
Contents vii
Do All RIAs Live Up to
Their Title? 102
Disorienting Disclosure 105
RIAs: A Good Place to Start 115
Key Points 115
Chapter 6 Our Lazy Brains: Why
We’re So Bad at Choosing
Advisors (and Investing
Our Own Money) 117
The Gut versus the Mind 121
Salesmanship 101 125
What You See Is All There Is 128
My Advisor Is Handsome, So
Why Am I Broke? 130
Why We Stink at Managing
Our Own Money 136
Key Points 142
Chapter 7 How to Be Your Own
Investment Advisor 145
Don’t Let Costs Mug Your
Returns 156
How to Win the Game by
Not Playing 163
Software-Powered Investing 179
Math First, Emotion Second 183
Why You (Probably) Still Need
a Financial Advisor 184
Key Points 185
viii CONTENTS
Chapter 8 Choosing an Advisor: Know
What You Don’t Know 187
You Are the Family CEO 191
Core Principle: DUTY—Clients
before Profits 193
Core Principle: SAFEGUARDS 198
Core Principle:
PROFESSIONALISM 201
Decoding your Advisor’s Answers 205
After the Interview 215
Key Points 217
Chapter 9 Fees and Ice Cream:
Baskin-Robbins Got It
Right, Why Can’t We? 219
Chocolate and Vanilla 221
Baskin-Robbins 31 3 Flavors? 223
Key Pricing Ingredients
(Building a Custom Sundae) 227
Chapter 10 Change the Game 231
Why Wait? 240
Afterword: Advisors in Perspective 243
About the Author 247
Index 249