|
by Michael Rogan
Special to Tropical Breeze
After more than 20 years of delivering
sound, time-tested financial advice to individuals and families, I
sometimes find it difficult to maintain my patience. Too
frequently, I encounter financial neophytes who argue with me about
how to build long term serious wealth. Though they don't even know
what they don't know, they still insist on trying to convince me
of some "new" shortcut way to get rich quick. They don't realize
that their "new" idea is an old recycled idea that I first heard
— when it was already old — decades ago. The endless
cycle of new "suckers" falling prey to old ideas can sap the energy
and patience of even the best advisor.
This past weekend I had the opportunity to
attend the most recent "Financial Advisor Symposium" in Las Vegas.
I was in Las Vegas with my wife and some friends who were somewhat
puzzled as to why I didn't care to attend more of the symposium
events scheduled over the four days. I told them I had read the
list of speakers and exhibitors. It wasn't just that I had no
interest in the topics or products; many could actually be
dangerous to the inexperienced advisor.
The irony of the weekend symposium was
that the keynote, closing speaker was Nick Murray
(www.nickmurray.com), a 40-year veteran of the financial advising
business and considered to be one of the founders of modern day
financial planning. I consider Mr. Murray as a guru and mentor,
having followed his sage advice for virtually my entire career.
Having him as the closing speaker was ironic since his message is
virtually the opposite of all of the previous speakers of the
weekend. I had asked my friend to accompany me to Mr. Murray's
talk and I warned him that he might actually hear Nick tell us how
lousy the other messages had been. We weren't disappointed.
My friend is not an advisor; he's a
pediatrician. He does not have experience or training in the
financial business. After hearing the speech, he looked at me and
asked me why more advisors don't understand how to help clients
build wealth. I reminded him of our stroll through the exhibit hall
just prior to hearing Mr. Murray speak.
Booth after booth had nicely dressed young
people sincerely pitching the advisors on some of the dumbest,
hottest, most exciting and sophisticated ideas. There was the group
that wanted to help you buy real estate in your IRA (a terrible and
burdensome idea for the tax issues as well as a lousy idea given
the real estate market). We passed a booth pitching us on buying
gold bullion in your IRA — complete with cute plastic "gold
bricks" that you could take back to your office. There was the
impressive mutual fund that selects its investments using magical
"artificial intelligence," apparently guaranteeing success. Then
there were the dozens of new versions of exchange traded funds
(ETFs in the industry parlance). ETFs allow you to purchase index
funds that trade like stocks, so you can buy and sell them during
the trading day — possibly several times a day. And now you
can buy ETFs that track European emerging market companies, as if
that is the new answer to investor success. It's hard to imagine
worse investment ideas.
Mr. Murray's talk focused on how
Americans, egged on by the (financially illiterate) financial
press, have made a virtual religion out of trying to achieve the
"best performing investments" — ones that "beat the market."
Unfortunately, not only do they fail to beat the market, they
actually fail to underperform their own investments! By a wide
margin! While this seems nearly impossible, it is actually true.
People are wired wrong for proper investing. The same emotions that
motivated people to load up their entire portfolio with internet
stocks in the late 1990's, bail out of the stock market entirely
in 2002 at one of the best valuations in recent memory, jump
headfirst into bonds in 2002 at the worst time for bonds in 50
years, mortgage the farm to buy condos and rental real estate in
2005, etc., are the ones that always convince them to do the wrong
thing at the wrong time. We have already discussed that the
financial press is motivated to pitch you the most popular (and
worst) ideas of the moment.
How truly disappointing it was to attend a
financial advisor convention where the same stupid ideas were being
pitched to advisors. None of this silliness is necessary, but
sadly, the stories repeat themselves year after year, decade after
decade and generation after generation. PT Barnum said there's a
sucker born every minute. When you are tired of being one of them,
take the time to create a long term plan based on your needs,
dreams and personal situation, find a professional focused on the
long term success of the plan and then get busy living your life.
Turn off the financial media forever, enjoy your family, succeed at
your career and you will be virtually guaranteed to be more
financially successful than all of your friends and neighbors. Now
that's saying something.
Michael Rogan is president of Rogan &
Associates Financial Planners, a locally-owned financial planning
brokerage firm based in Safety Harbor. He brings nearly two decades
of financial expertise to the local airwaves on the radio show,
Financial Planning for Life, heard at 11 a.m. weekdays on AM 1250
WHNZ. For more information, call 727-712-3400 or visit
www.RoganFinancial.com.
|
Front Page 
Columns 
