Happy Friday DINKS! As we are all (hopefully) in the wealth accumulation stage of our lives, today we are going to discuss loosing it all! The wealth accumulation stage is the time in our lives when we are focusing on paying off debt and saving our money. If we bought our homes in our mid to late twenties, our debts outweighed our assets. Now, 10-15 years later in our mid to late thirties our home values should be higher than our mortgage loan balance. The wealth accumulation stage of our lives also focuses on saving for retirement because we should have our cars and homes already up and running.
We know from his comments that Khaleef works in Finance. Some of you other DINKS may also work in the financial services industry. I want to know how you feel about the financial scandals that have made headlines over the last year. Have you or your families been victimized by the Earl Jones scandal, or the infamous Bernard Madoff ?
How would you feel if your hard earned money and accumulated wealth all disappeared because you trusted your personal banker? I am not saying that all personal investment brokers or independent financial representatives are all bad and lack ethics in their work.
There are definitely benefits to using a personal investment broker vs. a major financial institution. Investment brokers have access to a wider variety of products on the open market than the average financial institution. Generally, Investment Brokers offer a better personalized service because the work 100% on commission, and they have fewer clients to manager.
However, there are also some downfalls to using an Independent Investment Broker vs. a Major Financial Institution. You usually cannot visit your investment broker and also perform other general banking transactions such as deposit, withdrawals, and other cash transactions. The fees to have the services of an Independent Broker can also be very high. Sometimes Investment Brokers charge fee per transaction as well as an annual fee between 1% and 5% of your total account value.
Have a great weekend!
(Photo By SteakPinball)
Kristina,
I would never consider investing with an independent advisor, unless they were independently audited. It’s way too tempting and easy for them to co-mingle or siphon off someone’s assets. I have posted many times they should be required to be bonded and audited at least annually. The SEC and FINRA do not effectively protect depositors from the Madoff and Stanford types. By the time they get involved, the money is usually gone.
Most independent advisors are honest, but those who are dishonest can be devastating. One of the most important tenents of personal finance is to retain control of your money. By giving up control of your assets to a third-party, you are needlessly risking your future.