Selecting an Investment Advisor

It was about 15 years ago when I was a young, idealistic, new investment representative. Working for a well-known, national brokerage firm, I was eager to learn the best practices of successful advisors. I joined a networking group with the hope of gathering wisdom from the investment industry’s best. Each month we would meet to analyze client cases. I presented the case of a client who would be coming to see me that day. My client had recently sold a second home and had $125,000 he needed to invest. After presenting my case I waited to hear the advice of these veteran financial planners. The most successful of the group confidently announced that I should recommend the XYZ variable annuity. I had never sold this product before so I asked for an explanation. My mentor told me the reason to sell the variable annuity was “YTB”. All of the other representatives in the group nodded in agreement but I’d never heard of “YTB”. Thinking I was unfamiliar with a unique product feature, I asked for an explanation. The group laughed and said “YTB” meant “Yield to Broker”. The product they recommended gave the highest payout in the industry. As I listened to the other presentations, I realized that all they ever recommended to each other were the products that paid the most or offered the best “due diligence” trips. Soon after I stopped meeting with this group. My wide-eyed innocence was gone.
The lesson that I hope you take from this is to get to know your advisor and approach each recommendation with a critical eye.

401k Plans - Why Fees Matter

Just read a very interesting article about the structure of 401k fees and the "hidden" effect they can have on your ultimate investment performance. While this article is a bit academic in nature, there are many relevant takeaways that apply to nearly everyone who participates in, or sponsors a retirement plan:

• Over a 30-year career, paying an additional fee of .50% can reduce the purchasing
  power of savings at the time of retirement by one-eighth.
• Complete disclosure of fees help employers fulfill their fiduciary responsibility to ensure that the 401k plan they sponsor does not impose unreasonable costs for their employees.
• The Department of Labor is revising regulations to require sponsors to report the fees of their 401k plans more clearly to their employees.

As I have noted many times before, one of the keys to a successful 401k plan is the cost of the plan itself. These costs come in many forms, and it is important that you are able to identify as many of them as possible. At Symphony, all of the fees and costs are completely disclosed and transparent. Can your current provider make the same claim?