Electricians deal with electricity. Plumbers work with pipes. The work of grocers is all about… yes, groceries.
One might think that investment advisors, therefore, advise about investments.
It is a funny business. The work of some investment advisors has virtually nothing to do with investments. They traffic in fear, not investments. Our clients know that investments and markets go up and down. It is an integral, inescapable part of striving to achieve investment returns: we learn to live with volatility. Some fear-based advisors portray normal market volatility as some kind of horrible risk that nobody should face.
The “solutions” they offer to cure the fears they hype often include “guaranteed” products whose returns will inevitably reflect the current relatively-low interest rates available. We recently saw a proposal of this type, offering a product with a surrender charge of up to 14% that lasted ten years. It was a bold suggestion for a 75-year-old, a ten-year surrender charge.
The proposal came from a supposed investment advisor. In cases like this, we’ve discovered from you that this sort of professional cannot answer your questions about the stock market, nor comment in detail about ownership in any particular company, nor communicate the long-term potential of long-term investments… because they do not actually do much work with investments.
They provoke fear of investing in order to sell high-commission, high-expense products. This is a sales tactic. It is not investment advice.
So what to do? When you come across an offer that’s attempting to scare you, we suggest you hold onto your money and get a second opinion before you proceed. Yes, the world has risks. We are all about sorting out the ones that we can reasonably live with.
But the risk of getting locked into a poor deal from a fear-based peddler? That’s one to be wary of, no matter what they call themselves.
Clients, if you would like to talk about this or anything else, please email us or call.
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