3 Sad Truths of Why Minorities Struggle Financially – Reversing the Trend

When I finally had my first full-time job at 17 years old, I wondered why I later found myself a few years later in my early twenties, broke and struggling to make ends meet. After all, making more money while getting promoted up the “food chain” would solve my problems right?

Why did I shortly find myself living paycheck to paycheck. Chances are… it had to do with my upbringing and ethnic culture.

Does it really matter if you are a minority in the US as it relates to your level of financial literacy and ability to make money smart decisions? Does being raised on the “other side of the tracks”, factually matter?

According to several reports it absolutely does.

1) Lack of Financial Education and Awareness

Back in the late 90s, I was in the middle of my second enlistment serving on active duty in the United States Marine Corps. Coming back from a counter-drug deployment in the Bahamas, I walked into my home located in military housing on Marine Corps Air Station El Toro to a stack of credit card bills. Oh joy.

My wife at the time had charged up over $15,000 between 3 credit cards. As a Corporal, this was close to one year’s worth of annual salary. Needless to say, this was a major area of arguments between us which eventually led to our divorce and two years of child custody battles. (Inside military joke, but not really, is that you can’t leave active duty without getting married, have a kid… then get a divorce. Ask around, it’s sadly true.)

What was my attempt to get financial help? I would ask fellow Marines, senior leaders who happened to be Black and Hispanic, just to discover they too faced the same financial difficulties just on different levels. Bottom line, they had no answer. It was the blind leading the blind.

I learned my first rule in personal finance… stop asking for financial help from your broke friends (and even family).

Had it not been for retired Master Sergeant Carleton Enloe, who I happened to meet in a bathroom of a Best Buy in Laguna Hills (don’t laugh), I would have never started a journey on learning how to win the money game. He worked at a financial firm that opened my eyes and took me under his wing.

My solution beforehand to get out of a financial pit was just to find ways to make more money out in town, off-duty, as a Jiffy Lube hood technician and bartender at the Officer’s Club on base.

When I share this story at financial conferences and even our weekly financial workshops, I find that this scenario hits most everyone in the room… even non-minority caucasians who also where raised on the same side of the tracks I was.

2) Underserved, Abandoned and Biased by Financial Services Industry

The fact is, if you are Black and Hispanic, you are deeply underserved by the financial services industry. Most financial firms will not even extend a conversation to help a potential client unless you have at least $250,000 of liquid investable assets or lacking the one-time planning fee of $500 (some as high as $5,000) to pay a Certified Financial Planner/ Investment Advisor just to tell you that you… “you’re broke!”

I spoke at a Women Diversity Conference and I be-friended a financial planner who was the ONLY Black financial professional in the ENTIRE state of Illinois for their national firm. And yet, her office was in the suburbs… no where close to the city.

Think you can find a minority financial professional that you can relate with and understand your cultural struggle and desire to get out of the financial rat race? They are not very common. The American Council of Insurers expose a significant gap in pass rates just for minorities passing a simple life insurance exam as an entry point to the financial services industry

3) Upbringing and Cultural Financial Ignorance

Does it have to do with cultural trends and parental upbringing to handling your personal finances? Comedian Kevin Hart threw out credit score jokes towards dark-skinned women, which he later apologized for, relating to a commonality of poor credit.

Sure, it’s comedy, but could it possibly be true? When was the last memory of your parents teaching you the value of credit and how to build your credit score over the kitchen table?

You know the answer.

Just like me, you’ve had past experiences holding your breath while eating out with friends hoping the server doesn’t come back asking for another form of payment.

Over the past two years, I’ve taken pride in helping build a financial movement where we’ve recruited and trained a new breed of financial professionals entering the money business.

The level of connection with our audience, relating to their financial struggles and finding solutions to transform their financial lives have been nothing less than transformational.

We’re helping close the considerable gap of minorities making $100,000 per year, where today, less than 5.9% of six-figure income earners are Asian, 5.6% are Hispanic and 5.5% are Black. (Source: Wikipedia.com)

Of the 43 financial professionals I have mentored as a marketing consultant and trainer, 35 are either Black, Hispanic or Asian. 8 are bi-racial couples raising bi-racial children. Already, we have a six-figure earner who is a Hispanic woman and a retired-Filipino nurse who cash flowed over $13k last month.

My advice? Continue to love on your friends and family but unfortunately, facts point that they are not the ones to help you lead a path towards financial freedom.

From what you learn about money, bring that back to your community and be that change-agent within your family… regardless of their negative opinions towards you. Stand strong, stand firm, stay focused, stay disciplined.

Reach out, seek and earn the mentorship and association of people who want to have more, be more and willing to DO more. Look past the color of their skin. After all, money has one color and desires to hang out with those who know how to take care of it.

Common Financial Pitfalls Of Divorce

Nearly 3 million men and women go through the devastating trauma of divorce each year in the United States. For many of these individuals, the strain is intensified by the fact that they took a “hands off” approach to finances during the marriage. Faced with divorce, these “non-financial” spouses are at a disadvantage when it comes to dividing up the marital estate and planning for long-term financial stability.

But all is not lost. Knowledge is power, and learning about the common financial pitfalls of divorce can help the non-financial spouse face life during and after a divorce with confidence.

Not Identifying All The Assets

For a non-financial spouse, understanding the assets the couple owns can be a challenging proposition, especially if his or her spouse has been secretive with financial management during the marriage. It is no surprise that assets are often overlooked by the non-financial spouse during divorce. Yet even if an asset is unwanted, it has value and can be traded for another asset the non-financial spouse may want. For this reason, it is critically important that all assets be identified early on in the divorce proceedings, even if this means hiring a forensic accountant (a sort of financial detective) to uncover them. Before the divorce begins is an excellent time to start collecting paystubs, bank and investment account statements, insurance policies and any other documents related to finances.

Mixing Money And Emotions

Divorce brings with it an emotional roller-coaster, especially when it comes to marital assets and property division. While it may seem like a good idea to keep the marital home out of spite or nostalgia, any decision on which assets to demand in a divorce should be made on each party’s long-term best interest – not revenge. While the divorcing parties may loathe each other, transferring those feelings to the “nuts and bolts” of issues like property division only benefits the lawyers. At the end of the day, fighting just to fight will only deplete the marital estate.

Not Fighting For A Fair Share

When it comes to property division in divorce, the general rule of thumb is “equitable division.” While this doesn’t necessarily mean equal, it does mean that each spouse is entitled to his or her fair share of the assets amassed during the marriage. Often times, the non-financial spouse is too intimidated or exhausted to fight for his or her rightful share. Yet to ensure long-term financial security, each spouse must stand up and fight for what he or she deserves. Once the divorce is over and the property divvied up, there is no going back to get more.

Inadequate Records

One of the first things any divorce lawyer will ask from a new client is documentation related to the couple’s finances and assets. Copies of bank statements are usually not enough. If a divorce action is contemplated or has already begun, collecting as much documentation as possible is absolutely required. Tax returns, wills, trusts, loan applications and statements, investment and brokerage statements, insurance policies, deeds for real property and credit card statements are just a few of the items that should be located and copied. If a spouse owns a business, obtaining as much documentation as possible related to that business will go a long way towards finding hidden assets.

Ignoring Reality

While it may seem appealing to bury one’s head in the sand in the midst of the chaos caused by divorce, this is one of the worst things that can be done. So is adopting the attitude of “let the attorneys handle everything.” While legal counsel is there to vigorously represent their client’s best interest, only the client knows what is truly important. Taking an active role in the process, including participation in negotiations, focusing on practical matters, and making decisions based on facts rather than emotion, will all go a long way toward creating a strong post-divorce financial future.

Not Enough Cash On Hand

Once a divorce is filed, expenses will explode. Often times, one spouse will leave the marital home, resulting in a second set of living expenses that didn’t exist before. Add to this legal fees, court costs, therapy bills and other unexpected expenses and even a spouse with a good salary will find themselves financial stretched. The best time to financially prepare for divorce is before it begins. This is the time to amass as much cash as possible to help weather the tide.

Not Enough Preparation

A divorce isn’t over in a week or even a few months. On average, most divorces take up to a year to be finalized. In some cases, a divorce can linger on for much longer. Understanding that this is a marathon and not a sprint, it makes sense to prepare properly before entering the race. Anyone contemplating divorce should first consult with legal and financial professionals and educate themselves about the process. Timing is also important. If a spouse is expecting a financial windfall (e.g. annual bonus, stock option grant, etc.), the other spouse filing for divorce before that happens could be a costly mistake. Social security is another consideration. A marriage of 10 years or more entitles one spouse to collect benefits based on the other spouse’s earning record.

Not Mentally Preparing

The only certainty that divorce brings is that lives will be thrown into complete upheaval. It is important to mentally prepare for all possibilities. While the worst usually does not happen, speed bumps along the way can be amplified if they weren’t at least considered beforehand. It is important to consider even the most far-fetched scenarios – a spouse disappears and refuses to pay support, a major illness occurs, all financial resources are drained during the divorce. Thankfully, these “what ifs” don’t often occur. Yet, by thinking through the scenarios puts whatever actually happens is put into perspective. It helps to keep panic at bay.

Failing To Look Forward

For many spouses, their career was given up to raise a family. When divorce occurs, these spouses are disadvantaged in terms of re-entering the workforce. It is important to stay strong and begin developing new skills sooner rather than later. Resources such as career counselors at local universities, job centers or community colleges can help to identify suitable interests and opportunities.

Allowing Panic To Take Control

The divorce process seemingly brings with it a crisis around every corner. Whether it is an unexpected bill, escalating legal fees or a stubborn spouse who challenges every decision, there is no shortage of things that will keep a divorcing person up at night. Countless hours are spent tossing and turning, worrying about all the “what ifs.” Instead of letting these worries become all-consuming – and making poor financial decisions based on fear rather than logic – it is important to find some means of stress relief during the divorce. Whether it is yoga, kickboxing or simply writing down your fears and revisiting them in the clear light of day, allowing panic to take control during a divorce will only have a negative long-term impact.

Ignoring Tax Consequences

A major component of any divorce is dividing up the marital assets. Real estate, retirement accounts and investments each come with their own set of pros and cons, especially when it comes to liquidity and taxes. For example, it may be tempting to want the marital home, but that may not be the best financial decision. Maintenance and upkeep are often underestimated, and it can quickly become an albatross rather than an abode. Likewise, accepting a retirement account instead of cash could tie up assets for decades or more. It is important to consult with an accounting and tax professional to ensure that the full implications – both short- and long-term – of any final property division are understood.

Failing To Get Solid Professional Advice

While it may be tempting to save a few (thousand) dollars by trying to go it alone in a divorce, this is usually a very unsound financial decision in the long run. Divorce can be a very complicated process, and without sufficient legal and financial knowledge rights can be unwittingly given up. Hire the best attorney you can afford – not the cheapest. The old adage, you get what you pay for is usually true. Likewise, consider a forensic accountant if you believe assets are being hidden. A divorce financial professional can also be one of the best investments to secure a solid financial future.

Financial Advisors: Top 6 Reasons To Choose Them

Selection of the right person for managing your personal finances is one of the most crucial decisions you will be making. You entrust the job of managing your hard-earned money to an advisor with a hope to make use of his or her financial expertise. So, he or she should help you get solutions and reach your financial goals by preparing the right plan for you and also discovering the suitable investment plan for you. In fact, you are driven to seek the help of financial advisors to get serviced by them, with their professional caliber and integrity.

Desirable Duties A Financial Advisor:

1. The first and foremost desirable duty that a financial advisor (FA) should perform is to help his or her clients to make the appropriate investment choices based on an in-depth review of his or her clients’ financial circumstances.

2. A financial advisor should guide his or her clients to remain steadfast and committed to their financial strategies.

3. A financial advisor should guide his or her clients by caring that they are never carried away by excessive euphoria or pessimism about any financial offer.

4. A financial advisor should monitor and review the portfolio of his or her clients on a regular basis and manage them to keep them seamless.

5. A financial advisor should let his or her clients know the latest changes and developments in the financial world and help to visualize them their possible impacts on their investments.

6. A financial advisor should support his or her clients in documentation and paperwork related to their investments.

When You should approach a Financial Advisor:

You may have the capacity to invest, but you don’t have the idea which financial plans would be more profitable for you. In such circumstances, people like you need to be clear about a few things before they start their search. They are as follows.

1. Make sure if you have proper investment capacity. If yes, you should go to a financial advisor.

2. If you want to secure your investment with right investment planning, you need to seek advice of a financial expert.

3. When you have little bit understanding of the financial market and its products and have no idea how and where to invest, you need to seek advice of a financial expert.

4. Even if you have the capability of making your own investment decisions, you need to select someone who is expert to draw up a financial plan in sync with your financial capacity and goals.

5. As financial experts perform financial documentation and paperwork more professionally, you should seek their advices. However, the execution part of the financial planning should always be left to your discretion.

6. You need to go to a financial expert when a new financial plan is launched or when you need to save you from paying hefty taxes.

Types of Financial Experts:

There are typically three types of financial advisors. They are as follows.

i) Independent Financial Advisors (IFA or Agents)

ii) Relationship & Wealth Management Officers (RWMO)

iii) Qualified Financial Planners (QFP)

IFAs work independently, as the very name signifies. They are keener on maintaining long-term relation with their clients and are also committed to deliver quality services to their clients. Relationship and wealth management officers are associate members of financial institutions like banks or large distributors. RWMOs usually offer a large variety of financial products, but they are choosy about the profiles of their clients. They prefer to deal with HNI (High Networth Individual) clients only. The QFPs help to draw up bespoke financial plans for their clients. They can customize financial plans in accordance with the financial needs and goals of their clients because of their deep understanding of a comprehensive range of financial market. Although the right to execute a plan is absolutely up to the clients only, all these financial experts help in executing the plans.

To choose a financial advisor, clients should meet them and discuss all necessary and relevant points with them. Most importantly, clients should ask them for revealing their point of views regarding current investment opportunities and possible growth of a fund which they may be advising them to choose from many. During discussion, clients should compulsorily seek to identify if the FA is better than other FAs, what advisory process they are following, if they evaluate and monitor investment market regularly, or whether they keep their clients updated about market developments, and if they review the portfolios of their clients meticulously. Bear in mind, the financial market is rich in all aspects itself and that is needless to say, as needless to remind you that you will have hundreds of financial experts available in the market to choose from.

Joy Kumar Das wields genuine command over financial market and investment strategies, business promotion and strategies, and advertisement management, among others. His writings express his thoughts which emanate from thorough analysis. This article is an outcome of his elaborate research.

Stable Financial Freedom

Introduction – Nature & Definition

Human life needs multiple things for survival and growth such as food, cloth, shelter, vehicles, knowledge, and skills. Generally, the needed items are acquired through spending some money units on it. Apparently, the plentiful availability of money units for buying required things gives financial freedom to an individual; on the contrary, the scarcity of money units for purchasing necessary items may lead someone towards financial dependence/financial subjugation. Realistically, it is livelihood that gives financial freedom to an individual.

A person having livelihoods enjoys financial freedom. What is livelihood? In 1991 Robert Chambers and Gordon Conway provided the first elaborated definition of the livelihood, “A livelihood is a mean of making a living. It encompasses people’s capabilities, assets, income and activities required to secure the necessities of life.” In addition, they proposed the concept of sustainable livelihood, “A livelihood is sustainable when it enables people to cope with and recover from shocks and stresses (such as natural disasters and economic or social upheavals) and enhance their well-being and that of future generations without undermining the natural environment or resource base.” In nutshell, for financially independent people, the livelihood or income from assets or job or business is greater than expenses and the earning stream is stable.

Absence of livelihood means financial dependence. It happens on account of two reasons – personal & interactive. At personal level, the very negation of independent life-pattern is cause of meager livelihood. At interactive level, the utter denial of interdependent life-pattern is reason behind insufficient livelihood. Financial freedom is the state of having sufficient personal wealth/income to buy independently needed items and desired goods/services.

Achieving Financial Freedom

Financial freedom is prerogative of every economic agent. An economic agent is one who is regularly involved in earning activities such as job, import, export, manufacturing, teaching, training and consulting. A successful economic agent designs SMART (Specific, Measureable, Achievable, Realistic and Time bound) financial goals. There are five steps procedure for setting and achieving financial goals:

1. Define exactly what you want in each area of your life; for example, specify the savings for children / old age or income generating assets. The optimistic view towards life is vital for effective specification of financial targets. (Specific Mindset towards Paraphernalia of Life)

2. Go for only the measurable financial targets, for example, it is wrong to chase richness without exact specification of income stream. Write down the necessary actions or work plan in order to realize the measurable goals. Prepare work plan/action plan clearly, meticulously and concisely. (Measuring Mindset towards Execution)

3. Now you have made a list of every-action you might think crucial in attaining your goals. Take actions immediately, it is decisively important. (Attainment is outcome of Proactive Behavior)

4. Realize something every day that moves you towards the realization of your goals. You may encounter hurdles, detractors and limitations. Manage them wisely and maintain momentum and morale during upcoming situations or challenges. (Consistent Behavior towards Realistic Targets)

5. Set a definite deadline for tasks. If it is a long-run goal, break it down into sub-deadlines and organize the items in proper sequence and priority. It is utmost important to follow the maxim, put first thing first. A goal may be unachievable on account of some reasons, revisit the goals to avoid wasted efforts. Abandonment is, sometime, a best strategy towards various surreal targets. Right abandonment saves money, efforts and time for some realizable goals. (Time Efficient Behavior)

Absolute Bases of Financial Freedom

Human beings are epitome of Divine Scheme of Creation. God bestowed us many powers, latent and patent, to enjoy life and to conquer His universe for the benefit of humanity. The ingrained productive capacity of earning is natural gift of God. The natural productive capacity can adopt three routes through proper nourishment, i.e., entrepreneurship, consultancy, and workmanship. Workmanship is the ability of an individual to accomplish an economic work, efficiently. Consultancy is the capacity to provide professional advice/workable idea to someone on economic work, honestly. Entrepreneurship is the ability of an individual to innovate/realize business idea, effectively. The innate productive capacity is wasted or damaged on account of wrong beliefs or heinous crimes, whatever may be the reason, conceptual or practical, the dormant or depleted productive capacity can be regained or replenished through concerted economic efforts and earning skills. The prominent replenishing tools are learning of new earning techniques, application of acquired skills for earning and networking with relevant people or institutions. In nutshell, it is learning, earning and networking during economic struggle. An important dimension of productive skills is investment talent, it is unavoidable for business. However, the investment talent is not natural productive capacity rather it is based on earned capital and offshoot of natural productive capacities i.e., entrepreneurship, consultancy, and workmanship. An effective investor is supportive during multiple financial crises, pragmatic towards business opportunities and precise towards accounting works of a business.

Major Path Hurdles during Financial Struggle

A work for monetary benefits is called economic work; it gives monetary independence to individuals. Economic works are countless. The very selection of a definite economic work depends on personal choice of an economic agent. In addition, the financial Intelligence is required to accomplish multiple economic works, successfully. Financial intelligence is an ability to differentiate between possible economic opportunities and economic threats. Generally, an economic work realizes stipulated money units for personal use. An effective economic work must demands three vital steps – acquisition of financial education, aspiration of financial goals, and application of financial techniques for financial goals. The major path hurdles during an economic struggle are – financial idealism, in-discipline, fear of failure, get rich quick mentality and procrastination.

Concluding Remarks

The road towards financial freedom is dominantly sustainable livelihood. The decisive personality elements of financial sovereignty are moral sense, independent mindset and interactive behavior. The aforementioned personality traits attract financial independence. Financial independence means effective planning, strategic execution and patience in struggle till logical outcome of struggle is not appeared.

What Wall Street Doesn’t Want You to Know About the Independent Financial Adviser

The word independent can be described as autonomous, unbound by another entities force, direction or will, or perhaps and most importantly freedom. But in the context of your financial advisory relationship independence means much, much more. To understand just why the independent financial advisor model is so vital to your long term financial success, you must understand the difference in advisory models from the ground level up.

According to a survey by Cerulli Associates, an industry polling and research firm, the channels of financial services models can be broken down into roughly six major categories:

National Full Service Brokerage – These are firms such as Merrill Lynch, Smith Barney, Morgan Stanley and Goldman Sachs. A financial advisor at one of these firms works for their employer directly, but can provide financial advisor services and sell you insurance and investment products (maximizing profits and enriching company value). There are approximately 70,000 “financial advisors” at national full service brokerage firms.

Regional Full Service Brokerage – These are smaller geographically specific brokerage firms such as Robert W. Baird, Edward Jones, and AG Edwards. Regional brokerage firms are nearly identical to their national counterparts in business model, however they’re smaller in size and typically geographically anchored to service a smaller segment of investors. There are approximately 15,000 “financial advisors” at these smaller regional full service brokerage firms.

Independent Broker-Dealers – These are firms such as LPL Financial (Linsco Private Ledger), Associated Securities Corp., Ameriprise and ING. A broker-dealer acts as either a sales organization selling consumers investment and/or insurance products OR as a buyer of securities. Some broker-dealers act in both capacities. There are approximately 100,000 “financial advisors” at independent broker-dealers.

Bank Brokerages – These are banking institutions who also offer financial advisor and investment management services to their banking customers. Banks such as Wells Fargo, Bank of America and Citigroup offer these services and employ roughly 15,000 “financial advisors”.

Insurance Broker-Dealers – Firms such as New York Life, ING, AXA Advisors, Equitable, and Transamerica are involved in the exchange of insurance contracts and services from company to consumer. There are roughly 35,000 “financial advisors” in such firms.

Registered Investment Advisor Firms – There are roughly 25,000 Registered Investment Advisor Firms. A Registered Investment Advisor (RIA) is a firm registered directly with the Securities and Exchange Commission (SEC) or their state securities licensing division. My firm Red Rock Wealth Management is an SEC Registered Investment Advisor Firm. Nearly half of all Registered Investment Advisor firms are also working with or through a broker-dealer (at some level) however to facilitate investment and insurance transactions.

Removing the RIA’s with broker-dealer affiliations this means roughly 5% of “financial advisors” are solely in the Registered Investment Advisor model.

The words “financial advisors” are in quotations because these firms hold their employees out to the public in a financial advisor capacity, yet they may or may not be true financial advisors depending on their employment status. In fact, they may be nothing more than facilitators of brokerage transactions for insurance and investment products.

Why is this industry knowledge important to you and your financial future? Because there are varying levels of DEPENDENCE in the first five models for financial advisors. The pure Registered Investment Advisor model with no broker-dealer affiliation is the only completely INDEPENDENT model.

To be clear, many financial advisors at independent broker-dealers like LPL consider themselves independent, and provide financial services in that manner. However there are still issues of reliance on the company that pays their commission checks. Outside of the RIA model however, the independent broker-dealer is the closest thing to a purely independent financial advisor practice.

To fully grasp why the national and regional brokerage firms, the bank brokers, the insurance brokers, and the independent brokers are not independent, simply look at who writes their paycheck. Unless you’ve never been employed, you understand clearly that your paycheck is contingent upon fulfilling your duties to your employer as your employer describes said duties, period – end of story.

If your employer is “calling the shots”, to maintain employment and get your paycheck – you fall in line, you follow orders. You do so regardless of whether those shots the employer calls are in your clients best interests or not. To earn a living – you follow orders. This concept is clear and unwavering whether you’re flipping burgers for McDonald’s and must prepare food a certain way, or if your a Fortune 500 CEO and accountable to shareholders and a Board of Directors. If you work for someone else, you’re dependent on fulfilling their idea of what your job description is.

If your financial advisor is beholden to their employer (and 95% of financial advisors are) they’re dependent on that entity for income, benefits, and job security. If they’re dependent on their employer, they must fall in line and follow company orders.

But that’s not so bad is it? 95% of financial advisor representatives being dependent on the company they work for to earn a living? It is if the company they represent is in turn beholden to maximizing profits and increasing shareholder satisfaction. If the financial advice given to you is somehow influenced by corporate profits, how can you be certain it’s in your best interests?

There are several reasons an INDEPENDENT financial advisor will have the upper hand when it comes to providing unbiased financial advice and guidance, but to name a few:

No Proprietary Products – Each of the first five models may create, manage, and sell their own investment and insurance products, or in many cases they have “special arrangements” with other firms to promote and sell “preferred” investment and insurance products. By “special arrangement” I mean kickbacks, a commission, compensation, additional business benefit, etc. The fact is, whether the products are truly proprietary or a special arrangement is made, if the company receives a financial benefit to sell certain investment and insurance products it’s effect is proprietary in nature, as it clearly identifies a conflict of interest.

Highly Profitable Insurance and Investment Products – Perhaps the most common form of abuse with the dependency created in the first five practice models is promoting investment products with higher fees and commissions for higher corporate profits. Certain products, such as life insurance, variable annuities and limited partnerships, pay handsome commissions and fees to the financial advisor and their firm. With such a financial incentive – many advisors and their firms will “tailor” their financial planning advice and investment guidance, leading the consumer to believe these higher cost higher profit alternatives are the best solution for their financial problems. This practice lines their pockets while oftentimes picking your pockets clean!

Investment Banking Relationships – Take for example XYZ Company wanting to go public (a Wall Street machine revenue generator). Wall Street Firm A provides a channel to sell XYZ Company stock through their “financial advisors” (and other methods) to consumers. If Wall Street Firm A has an investment banking deal with XYZ Company, chances are even if XYZ Company is horribly run, unprofitable, and inefficient – they’re going to take XYZ Company public with an incentive for their stock analysts to be kind in rating XYZ Company stock. Granted, there is supposed to be a “Chinese Wall” between the investment banking side of a firm and the retail outlets and stock analysts – however with the inherent conflict of interest it’s naive to believe this doesn’t occur at some level.

Promoting proprietary or higher cost investment and insurance options to consumers is in all likelihood nothing more than an effort to increase personal and company profits. This holds true with many investment banking deals as well. 100% of consumers can benefit from low or no-load investment and insurance alternatives. If a financial advisor’s real underlying goal it to create a positive financial impact for their clients – why aren’t these firms and their financial advisors implementing financial plans using the lowest cost most efficient and effective alternatives? Certainly high costs and fees cannot be a pre-requisite for good performance and financial goal achievement!

A Registered Investment Advisor Firm with no broker-dealer association is the only financial services industry model where the entire compensation comes from the client only – not from the “Wall Street machine”. Those first five of six financial advisor models create an inherent dependence on behalf of their financial advisor employees directly to the company they work for. It’s unfortunate that only 5% of financial advisors are practicing in the form of a Registered Investment Advisor.