second opinion

The Funny Business of Fear-Based Peddlers

photo shows the dictionary entry for "fear"

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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The Funny Business of Fear-Based Peddlers 228Main.com Presents: The Best of Leibman Financial Services

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Buyer Beware: 4 Tricks to Inform Yourself With

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Investing offers a seemingly infinite range of approaches, methods, products, services, and theories. The abundance of alternatives can be confusing, or even paralyzing. We can equip you with four ideas that may help you to winnow the choices down to ones that are more likely to help you.

  1. Some of the highest-cost products attract the most persistent sales people. If you are being pursued by a seller who is willing to spend a great deal of time and effort and travel to connect with you, assume that there is a very healthy paycheck in the deal and know that you’re ultimately the one who will pay for it.
  2. Sellers love to spend a lot of time with the glossy sales brochures that are full of hope and promise, not the prospectus. You will learn about the dangers and risks and conflicts of interest and the costs from the prospectus, not the brochures. Two things to do: read the front cover of the prospectus, and have a knowledgeable third party review the whole document. If you encounter resistance to the idea of studying the prospectus, you know there is information in there that you should have.
  3. Some financial firms have gotten into the business of manufacturing their own ‘house brand’ products. These products may be impossible to move from that firm should you later elect to do business elsewhere. And companies that manufacture and distribute products have conflicts that independent firms do not. Beware of house brands.
  4. Second opinions do not cost, and may reward you. If you have any questions or concerns about a product being sold to you, call us for a complimentary review.

Bottom line, avoid being “sold.” Take advantage of the legally required disclosures in the prospectus. Beware of house brands. Seek second opinions.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.