Monday, August 2, 2010

How to Be Skeptical – but NOT Stupid – About Your Investments

How to Be Skeptical – but NOT Stupid – About Your Investments

Over the years, as I have spoken at events and consulted with people from across the nation, it has become apparent that some of the proven, common-sense concepts and strategies we prefer and teach here at Laser Financial Group completely rattle conventional thought. How do I know this? Because we usually get looks that translate into something like, “What the heck are they talking about?!”

Consider these three concepts:

  1. Instead of investing in the stock market, we recommend our that clients link their portfolios to the market. That way they are guaranteed to not lose even a cent when the market dips, but promise to make gains – up to a cap – when it advances.
  2. You can grow your retirement income in an account that guarantees 8 percent per year interest, compounded annually for the next 20 years – regardless of what happens to the stock market. Meaning your income accounts’ value would double in 9 years and quadruple in 18 years – guaranteed!
  3. You can use an accumulation vehicle that will allow you to access your income, completely tax-free! And the money may be accessed before age 59½ without any IRS penalties, and without any obligation to repay. You’ll not have any “required minimum distribution” rules to comply with at age 70½ and beyond. And you get to transfer the remainder to your heirs, income-tax free!
If any of these ideas are resonating with you, you may be having your own epiphany right now. But the one thing you should know is that all of our concepts and strategies are based on fact, very practical application, and above all are 100 percent legitimate – we never have and never will base our clients' plans around tax loopholes, because we believe those strategies are just plain stupid.

Should You Reject Something Simply Because It's New to You?

As one would expect, some curious, well-meaning folks try to get validation on our strategies from their financial advisors, CPAs, estate planners etc. And for some reason (which I’m still scratching my head about), a few seek validation from coworkers and friends who are not licensed financial professionals. Some of these so-called professionals become extremely defensive when questioned, and even go as far as attacking our credibility and background, while providing amazingly childish excuses. Here are some of the great ones I have heard – my comments follow, in italics:

  • I am aware of what he’s talking about, but you (meaning the client) don’t need it. Really? If the client is inquiring about it, don’t they at least deserve the courtesy of an explanation so that they can make an informed decision about whether it actually may be better for them?
  • But you (the client) did not tell me you needed something that does what he’s talking about. Wait a minute – who’s supposed to be the licensed financial professional guiding the discussion? A client often doesn't know what they need until the professional recommends it – this response suggests that the client should already have all the information they are seeking from the financial professional.
  • He’s not as experienced as I am. I have been advising your family for years, so you must trust me! Wow – this sounds a lot like the "because we've always done it that way" answer. And since when has that been the right response to trying something new?
  • What he’s saying is illegal or untrue, because I've never heard of it. Nobody, regardless of how many years in the business or how experienced they are, knows everything. To equate their lack of knowledge with the illegality or untruth of the idea being proposed – without even doing any research – should be a bright red flag. 
Should Your Financial Professional Be So Arrogant as to Think He/She Knows It All?

If there’s an option that your advisor hasn’t discussed with you but is very quick to dismiss – without any factual argument, you should be very cautious. I often come to find out that the real truth behind the unnecessary and child-like behavior illustrated in the above examples stemmed from the fact that some of these so-called professionals were completely unfamiliar with our strategies. Then there are those who work for firms that do not offer the products and/or strategies in question or are not licensed to implement a particular product.

I recommend that you seek validation and assistance from true professionals who have the decency to be honest with you by making factual, intelligent arguments, and run as far away as you can from those who simply generalize – like the ones I mentioned earlier.

And just in case you were wondering, YES! I humbly admit that I do NOT know everything, but I do know how to tell folks, “That sounds interesting. Let me look into it and get back to you on the FACTS surrounding the issue.”

If you have questions about a particular financial product or strategy  – or would simply like another opinion/evaluation of your current financial plans, please call us at 301-949-4449 or visit us on the Web to schedule your complimentary consultation.

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