Wednesday, March 14, 2007

Scott Adams' Dilbert: Wally visits a financial advisor

(link is below.)

And he finds a guy you really should not even think of trusting with your money. I think I foresee some fun with this motif in upcoming days.

Preach it, Scott! Let's see what Wally is offered. First, we have a two percent advisory fee (some are about that high; there are brokers out there with wrap programs in that area. Some advisers are much more reasonable, starting under one percent for the smallest accounts accepted.

Next, "...things that sound good if you don't look into them too closely." Yep.

Next, (interpreting the advisor's spiel some, 'an actively-managed mutual fund which trades a lot.' So Wally gets insufficient diversification, lots of volatility, a wild ride, and probable overall poor performance over time.

Now skip almost to the end: "a big front load". On top of an advisory fee. Deplorable. A compliance issue? Don't think that this never happens. I have seen one advisor tacking on a one percent annual advisory fee on top of the big commission he got for selling limited partnerships to people. The same money. An ongoing advisory fee on a heavily-commissioned "investment product" that is illiquid, not even a marketable security.

The crowning glory of it all: Poor Wally is a clueless client. He's not stupid, and he is definitely self-interested. Dilbert readers know that! He just doesn't know. I want you to know. Your future is at stake. Do not be like Wally: Educate yourself. Great clients (for ethical practioners,) or great individual investors study, and read, read, read! You could start with anything you can find by Burton Malkiel, John Bogle, Andrew Tobias, William Bernstein, Charles Ellis, or Larry Swedroe.

dilbert2008145770314.gif (GIF Image, 600x208 pixels)

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