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This month marks the five-year anniversary of the beginning of the Great Recession and the subsequent gut-wrenching stock market plunge. Many listeners remain wounded, but also know they need to proactively take control of their financial lives. But as Dennis wrote, "With all of the horror stories of investors being ripped off, I am worried that will happen to me."
Dennis spoke for Janet, when he basically asked: who can I trust to help manage my money? There is a veritable alphabet soup of designations among financial professionals, but I still like the CFP certification as the most holistic of the bunch. Because someone is a CFP, does not mean you shouldn't ask questions. Check out these questions you should ask before hiring an advisor or broker.
The questions can also be handy if you already have an advisor, like Kenneth, who is trying to gauge the performance of his managed portfolio. Given that he is paying an annual fee of 1.5 percent, he is considering index funds as an alternative. Index funds are my preferred way to invest, but you have to be willing or able to manage the money yourself. If you are comfortable assuming the responsibility. So when Bob asks about my thoughts about owning dividend growth blue chip stocks versus index funds or low cost ETF's, the answer is easy: stick to the index funds!
If you are going to have a managed account, be sure the advisor is using low cost funds. Aline's investment firm is telling her that "the commission they charge for a managed account is offset by the fact that they invest in a different type of shares." That sounds fishy to me, though they may be talking about using "C" shares. When you buy a mutual fund through a broker or salesman, you pay a commission, or a load. Loads can be paid in three basic ways: up-front when you purchase the fund (A-Share), on the back end, when you leave a fund (B-share), or on an-going basis while you own the fund (C-share).
Here are web sites and resources mentioned in this week's show:
-- NAPFA: National Association of Personal Financial Advisors (fee-only advisors)
Thanks to everyone who participated and to Mark, the BEST producer in the world. If you have a financial question, there are lots of ways to contact us:
Call 855-411-JILL and we'll schedule time to get you on the show LIVE
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