1:26 – Why do some advisers have account minimums?
fee-only investment advisor
0:30 – Fees
3:35 – Money market rates
6:35 – Tough times for retirees
Back in July of 2002, Mullooly Asset Management was founded. At that time, Tom had spent sixteen years as a broker. Our first office was a small 250 square foot space above a store in Avon, New Jersey.
As we near the thirteenth anniversary of our founding, we are proud to announce our recent move to 2052 Highway 35 in Wall Township, New Jersey. Tom’s sons Brendan and Tim have already joined him at Mullooly Asset Management, and their brother, Casey, will become a part of the team soon.
We sincerely mean that none of this would be possible without our clients. We want to thank you all for the trust you have placed in our firm, and we look forward to continuing our relationship with all of you for many years to come.
Thank you for thirteen great years!
We’ve all heard the saying, “Practice makes perfect”, before. It tends to be true whether you’re talking about public speaking, golf, playing the drums, or becoming a great cook. It’s been said that most successful individuals have failed more times than the novices have even tried. The recurring theme is to keep showing up and learning from your mistakes/failures.
I couldn’t help but be reminded of these concepts when reading a recent post by Ben Carlson of A Wealth of Common Sense. Ben discusses the worst part about big financial decisions, and refers to Richard Thaler’s Misbehaving: The Making of Behavioral Economics. Ben summarizes Thaler’s points writing:
“Thaler tells us in the book that in order to learn from an experience two conditions must be met: (1) frequent practice and (2) immediate feedback. With low stakes decisions we all get plenty of opportunities get things right because everyone has to make minor moves on a daily basis that have a small impact on their finances. It’s those big decisions — buying a house or a car, savings for retirement, paying for your children’s college education — that we get very few chances at perfecting. Yet those decisions will have by far the biggest impact on your finances.”
It seems unfair, doesn’t it? We can have all the practice we want making peanut butter and jelly sandwiches or mowing the lawn, but saving for retirement? One shot. No pressure or anything.
I’m not saying that finding a good fee-only investment advisor will solve all of your retirement planning issues, but it might help. This is something we get to help people do over and over again. While we all (personally) only save for retirement once, advisors help individuals save for retirement every day. This daily practice brings the lessons and wisdom you would expect to come along with it. Unfortunately, nobody has it all figured out, but there are many experienced and intelligent advisors out there willing to help.
So if you’re worried about making big financial decisions on your own and would like some guidance, do a little research. Hopefully you’ll be able to find an investment advisor who’s right for you and your personal situation.
When it comes to financial advice, there’s a lot of ambiguity surrounding titles. The list is a mile long and includes names like: financial consultant, fee-based advisor, account executive, associate, financial advisor, investment adviser, financial planner, wealth manager, and on and on. A humongous mistake made by investors is assuming that all of these titles mean the same thing. They all sound similar, but they most certainly are not.
Everything other than investment adviser and certified financial planner are titles that brokerage and insurance firms have created to confuse you. They made up these elaborate titles to make their sales force seem more sophisticated and trustworthy. The title most guilty of confusing investors is financial advisor. This was meant to sound exactly like investment adviser, but shockingly enough, it isn’t.
You see, financial advisors are technically registered representatives of brokerage or insurance firms. The same goes for associates, wealth managers, account executives, financial consultants, fee-based advisors etc. The titles are supposed to make you think that you’re dealing with a trusted adviser. However, registered reps are paid through commissions, sales loads, 12b-1 fees, kickbacks and revenue sharing arrangements. Why is this important? Their advice should not be expected to come without bias because of how they get paid.
A recent Huffington Post article offered two analogies that illustrate this conflict of interest well:
“Would you have as much faith in your guidance counselor’s recommendation to attend a college if she received a $5,000 kickback from that college for every student she convinced to matriculate? Would you be more likely to buy a car if, instead of dealing with Johnny the Car Salesman, you were having a conversation about your vehicular future with Jonathan, Automobile Adviser, CAA, MCS?”
When it’s presented in that manner, it seems a bit ridiculous, right? So why don’t we view financial advice in the same way? I’m not sure how anybody can be trusted to give unbiased advice when they’re compensated to sell you something. A lot of the blind trust investors place with their “advisors” is unfortunately misplaced because they don’t know any better. They let elegant sounding titles distract them from what really matters: how their adviser is compensated.
If you are truly in search of unbiased financial advice, you need to look for a fee-only investment adviser. Fee-only investment advisers are obligated to act as fiduciaries for their clients. This means they must put their clients’ interests ahead of their own. The fee-only structure (not to be confused with fee-based) ensures that an adviser is only being paid by their clients. There are no third parties paying a fee-only investment adviser to push their products on clients. The fee-only method of compensation removes the potential for compromised financial advice.
Unfortunately, in the world of financial advice, you cannot trust titles. Find out how an adviser is compensated before you begin working with them. If you’re looking for a conflict-free arrangement, do yourself a favor and find a good fee-only investment adviser. If you decide to work with another type of financial professional, just remember that their advice probably includes a conflict of interest. I’m not saying they’re bad people, most of them aren’t, but their advice is more like that of a car salesmen than a doctor or lawyer.
In a recent article on the blog, I Heart Wall Street, the topic of broker versus adviser was brought up yet again. This is a reoccurring topic within the industry, and it’s mostly due to the continued confusion surrounding it. We feel this is a very important topic for investors to research.
The primary difference between a broker and an investment adviser is the fiduciary obligation that an adviser has to their clients. The article went on to say that professionals in the industry tend to confuse investors with a number of different titles that sound similar, but mean something different. For example:
Your friendly neighborhood broker is typically called a Financial Advisor. Not an Investment Adviser. Or Financial Adviser. At least not always. And there’s a good reason. Their role is as chameleon-like as their title, changing minute to minute & without having to tell you. Slippery.
We here at Mullooly Asset Management are a Fee-Only Investment Advisory firm, and we want all of our clients to understand the difference between a broker, and an adviser. If you have any questions about the differences between the two, please feel free to call us at (732) 223-9000!