Finding a trustworthy source of financial advice

Dear Friends, A couple weeks ago, we sent out a podcast that we recorded several years ago.  It has been by far the most popular podcast over the last 10+ years. Over 980,000 listeners have opened, and hopefully listened to the podcast entitled, “Could This Be the #1 Reason to Use Index Funds?” While the podcast […]

The post Finding a trustworthy source of financial advice first appeared on Paul Merriman.

The post Finding a trustworthy source of financial advice appeared first on Paul Merriman.

Dear Friends,

A couple weeks ago, we sent out a podcast that we recorded several years ago.  It has been by far the most popular podcast over the last 10+ years. Over 980,000 listeners have opened, and hopefully listened to the podcast entitled, “Could This Be the #1 Reason to Use Index Funds?”

While the podcast addressed a number of important aspects of indexing, the suggestion is accepting indexing as the way to build long term wealth in IRAs and 401ks, will usually eliminate the use of commission based advisors and other advisors who may have huge conflicts of interest.

Every time there is a big payday for the sales force, your lifetime return is likely to go down.  In some cases the commission sales people are not only getting a load up front (the commission is gone from your life forever), but likely recommending actively managed funds with higher expenses, less diversification and higher taxes—all potentially leading to lower long term returns.

In total these advisors may create a negative impact that could easily cost an investor 2% lower returns on an annual basis.

But that is not the end of the potential costs.  The other potential danger lurking in their bag of tricks, is the sale of a product that promises big guaranteed  returns.  These products often have huge commissions, low liquidity, or liquidity with a very high penalty.

And sometimes the risk isn’t just the salesman who comes to your home or calls you on the phone.  Sometimes the potential risk is in the relationship you might have with an online or on air person who is not your personal advisor but whose advise you trust would be in your best interest.

One of the most trusted on air and on line investment experts is Dave Ramsey.  I have never been a fan of his work but I wouldn’t be surprised to find out he doesn’t agree with what I suggest either.  He is okay with load funds, okay with actively managed funds and is way overweighted to large cap growth.

But my concern has always been with potential conflicts of interest. To be fair it’s hard to find an area in the investment industry that doesn’t have severe conflicts of interest.

I think you will find the following article, “Dave Ramsey is Sued Over Failed Promises of Advertiser,” of interest.  There are many articles on the topic, including USA Today, Washington Post, CBS, and even many religious publications.

Here is another article that covers the story from some different angles.  https://www.businessinsider.com/dave-ramsey-faces-150-million-lawsuit-over-timeshare-exit-promotions-2023-6

I don’t suggest that Dave Ramsey, or his firm will be held liable for the legal claims  I do suggest that it is better to find sources of information that  are far from the potential conflicts of interest that he, or others like him, may have.

One of my goals this year is to help those following our work, find hourly advisors who will offer a conflict of interest free approach to combining our approach to building wealth, with the financial guidance to get the other parts of their financial life headed in the right direction.

Stay tuned!

Testimonial

“I would like to thank you for all of the work you do and education you provide to the public. Your teachings, amongst others, have set a foundation for investing and retirement planning that I will be eternally grateful for.

I currently work as a Field Training Officer in a Police Department. I truly appreciate the free downloadable books 2-Funds for Life and We’re Talking Millions. Along with teaching my recruits the proper way to be a good upstanding Police Officer, I ensure that they are provided the links to both of these books, and help them enroll in our department’s deferred compensation program.”    K.L.

Bootcamp 2023

There are easy choices in the investment process.  Much of the advice we offer is very simple and without much disagreement.  On the other hand there are choices that must come after a thoughtful understanding of long term historical results along with an understanding of your need for return and personal risk tolerance. Jerzy Gregorek says it simply (not about investing).

“Hard choices, easy life.  Easy choices, hard life.” I would make a change in that quote to represent what I know about investment choices. “Easy choices, good life.  Hard choices, great life.”

The following series of articles, podcasts and videos address 8 investment decisions that Paul feels require deeper consideration and more statistical information than the simple choices that most people understand intuitively.

⁠Ultimate Buy and Hold Strategy⁠
⁠Sound Investing Portfolios Risk and Return History⁠
⁠Fine-Tuning Your Asset Allocation⁠
⁠Fixed Contributions⁠
⁠Fixed Distributions⁠
⁠Flexible Distributions⁠
⁠The Simple Story About 2 Funds for Life⁠
⁠Selecting the Best in Class ETFs

Helping you build a better financial future,

Paul

The post Finding a trustworthy source of financial advice first appeared on Paul Merriman.

The post Finding a trustworthy source of financial advice appeared first on Paul Merriman.