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Leafing through the newspaper, I noticed an ad from standard financial planning "business. We are seeing more and most of these advertisements that are designed and written to appear as an actual item for publication.
The ad entitled "How rise to a 10% return on your money safely? tells the story of Denny Dolan, who drives a van Dealer courtesy car twice week because he was bored after a year of fishing, golfing and skiing. Denny said: "I have not lost $ 0.01. In fact, over five years, I made almost 6% (per year).
The rest of the article / ad continues to talk about returns achieved and horror story about Denny's neighbor, who used a traditional financial planner and have seen their savings halved. Suddenly, the announcement ends. Notice something missing? The large 4 "x 11" ad failed to tell us how the advertiser has produced impressive returns without risk.
Almost Certainly, the advertiser is selling equity-indexed annuities. First, as anyone who read my blog before know, I am of the opinion that these people need to stop referring to themselves as "financial advisors" and call themselves what they really are: the sellers. After all, these people are never paid for advice? No, they are only paid when they sell a product. Secondly, I am not particularly fan of paper-indexed annuities because they pay the sellers of such committee are heavy and they put a cap on the debilitating annual profit. However, it is not the issue. The real question is why these "financial planners" are so secretive about the products they recommend.
To make my point, I called the 800 number at the end of the ad and send them a free report. Unsurprisingly, the report was almost as secret as newspaper advertising. The 15-page report does not bring up the product they recommended (equity indexed annuities) to Page 11. More worryingly, the report was never discussed what an equity index annuity is actually! He merely reproduce quotes which had been posted on a forum for general chat about how these products are, but not why they were attractive. None of cited were even accredited. (It is sad to note that the pension industry hires people to do nothing but surf the web all day and write citations that look like they are a satisfied customer annuity to explain how they are happy with their purchase.)
My point is that the lack of disclosure and transparency in an advertisement should be a red flag when it comes to financial products and consumer advisers must take account. If the product is not recommended good enough to mention in the ad, is it worth buying?
Beware Ads which do not clearly specify the investment product or strategy driven, and ask about the difference between a financial advisor who is paid to provide objective advice and "financial advisors" who are nothing more than sellers. A good starting point is to speak with one tax financial planner who accepts a fiduciary duty to always do what is in the best interest of their client.
Lon Jefferies is an investment adviser representative with Net Worth Advisory Group, a fee-only financial planning and investment advisory firm in Salt Lake City, Utah. He specializes in developing custom financial plans, implementing investment strategies, and providing ongoing support and service in order to help clients reach their financial goals. He can be contacted at (801) 566-0740 or lon@networthadvice.com. Visit the Net Worth Advisory Group website at http://www.networthadvice.com and read Lon’s blog at http://www.utahfinancialadvisor.blogspot.com
Bridal Photography by Scotty Reed