While financial advisers may seem appealing from the outside, the inner mechanics behind their operations make them a less-than-ideal choice for managing your finances. Here are some reasons we highly recommend against using these agents.
1. There is high probability you adviser doesn't have a fiduciary responsibility to you, but to the company that employs the individual. You will never know unless you ask the individual; they are not required to disclose this information unless asked.[1]
2. They might get you to invest in things that you don’t need because they have special interests. Many advisers are not required to disclose who they have a fiduciary responsibility to, so it's in their best interests and that of the company that they represent to get their clients to invest in a fund that might not suit your needs, but theirs instead.[2]
3. A study by Standard & Poor's, an American financial services company (a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities) showed that over the last 15 years, 92.2% of large-cap funds lagged behind an S&P 500 index fund. The percentages of mid-cap and small-cap funds lagging their benchmarks were even higher: 95.4% and 93.2%, respectively. The odds that your financial planner can pick funds or stocks that outperform an index fund is only 5%.[3]
4. Proprietary funds can be a disaster for your 401k. A financial planner for a 401k has an incentive to recommend products over others, through commissions, kickbacks, and fees. All investments have costs or fees. However, proprietary funds have higher costs, and when compounding with your returns, it means less money going to you and more money going to your financial planner. Many of their fees are contingent on how long you stay invested in the funds they push on to you.
5. Stock rating systems used by financial adviser are of little utility. For every rating system that has a sell on a stock or fund, another rating system has a buy or hold. Companies that rate stocks have a major conflict of interest. When a stock is rated a buy from company A, there is a high probability company A holds said stock. They want the stock to go up, and therefore rate it a buy. When it is time to sell, they sell their position, and only after they are out, they rate the stock a sell. It's a classic pump and dump scheme that is incredibly hard to prove.[5][6]
6. A study by Social Science Research Network concluded that technical analysts not only under-perform the markets but end up losing money over the long haul. If your financial adviser says that they have a technical analysts team or trade using a technical analyst strategy, it’s a sign to stay away. [7]
7. Fidelity did a study regarding which clients had the best performing portfolios over a long period. The results were startling. The individuals that had the best performing portfolios broke down into two camps: people that forgot they had an account with Fidelity, and people that passed away.[8]
What does all this prove? You don't need a financial planner or a financial adviser. The tried-and-true strategy of buying the indexes and holding them for the long haul is the best method to growing wealth. We here at the Welch Tribune have based the Core Motif around this concept. It simply invests you in the index funds. We do all the research, and you have complete control over your money.
All you need to do is begin investing with us today. When we update our Motifs, you’re immediately notified. What are you waiting for? Simply hit the invest button below and start putting your money to work for you. Minimum investment is subject to change. Building wealth for yourself and your family starts today!
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It's highly recommended that you read the disclosure statements when you set up an account before you make a decision to invest. We all heard it before, past performance doesn't guarantee future results. Investing can be risky. You know the drill by now.
https://www.cnbc.com/2015/06/16/is-your-advisor-a-fiduciary-chances-are-you-have-no-idea.html
https://wealthpilgrim.com/what-is-a-proprietary-fund/
https://www.cnbc.com/2017/04/12/bad-times-for-active-managers-almost-none-have-beaten-the-market-over-the-past-15-years.html
https://investor.vanguard.com/investing/how-to-invest/impact-of-costs
https://www.cnbc.com/2017/11/20/advisors-weigh-in-on-wall-st-journals-morningstar-ratings-critique.html
https://www.wsj.com/articles/the-morningstar-mirage-1508946687?reflink=e2twmkts
https://www.fool.com/investing/value/2010/04/30/technical-analysis-is-stupid.aspx
https://seekingalpha.com/article/4128813-why-technical-analysis-is-useless
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