Unfortunately, many should not. The sad story is that if you are like most Americans, you are easy prey for the money advice business that's involved with over
Typically, people seek out professional advice about their money because they don't have a clue about how to proceed. They know they have to somehow stretch their hard-earned savings into years of spending money once they quit working. But investing properly is a mystery, the fine print that goes with products like annuities is overwhelming, and finding the right person to help can be just as perplexing.
Too often, Americans end up in the arms of so-called advisers who aren't really there to protect and help them. They are salesmen or saleswomen, not true advisers who put their client needs first. These brokers aren't rewarded by their employers for steering you into top-quality investments or insurance at the lowest price. They are hired to sell, just like the guy on the car lot. And that means many will sell what's most lucrative to them and the firms that keep them on the job -- not necessarily what's best for you.
These so-called "advisers" may have titles like "financial consultant" and wear nice suits while smiling warmly. They may devote time to little league, community organizations or religious institutions. They may have clients who are rich or famous, or your friends. But what they often won't tell you -- unless you probe for it -- is that they aren't paid to give you the best advice. And amid the naivete of some clients, their sales behavior can be like taking candy from babies. Americans are wasting about
Faced with the prospect that millions of Americans will run out of money in retirement and become a burden on government, the
Those fighting the fiduciary standard claim that tightening rules around advice will lead firms to stop helping clients; especially people with little money in individual retirement accounts and workplace plans such as 401(k)s. The stakes are huge for the industry: There is about
The industry's fight continues, with
"Their marketing is grossly deceptive and securities and insurance regulators have an obligation to step in and bring a halt to the misrepresentation," the report said.
As it now stands, when April arrives the new fiduciary rule is supposed to start being phased in with investment professionals having to live under tougher controls if they want to give advice on IRAs and 401(k)-type plans.
Under the fiduciary rule, brokers will have to make it clear that they are salespeople so you understand the arrangement the same way you do when you go to buy a car. People who give advice will have to declare themselves "fiduciaries" in black and white on paper. It will be the law.
But don't take comfort in these new protections yet. First, know they aren't in place now. So if you want to determine if you can trust an adviser now, you must ask if he or she is a fiduciary and examine their two government-required forms: ADV Forms I and II. Certain credentials -- such as a certified financial planner or registered investment adviser designation -- will help you spot fiduciaries. But also check out the person on BrokerCheck (www.brokercheck.finra.org) to see if your adviser or the firm has been in trouble with regulators. On the ADV form, also examine whether the person gets commissions -- a business arrangement that could mean the adviser collects a fee based on what he or she sells you.
To see if your adviser has been picking solid or weak mutual funds for you, type in the name of your fund at www.finance.yahoo.com. Then go to "performance" for that fund and scroll to "trailing returns benchmark." See one year, five year and 10-year performance. You want a fund that consistently has had a return at least as strong as the "category" return for more than a year. If the return -- or money made in the fund -- consistently lags the category of other funds, you have to wonder why your adviser would have you paying good money to be in a laggard. One year isn't the key. Looking at the trend over five or 10 years gives you real insight.
If your adviser is picking stocks for you, ask the adviser to show you how your stock portfolio has performed compared with a benchmark like the
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