Ignore Business Insider’s Reading List: Focus Here Instead & Save Yourself.

Poor Business Insider.

No, wait! Poor you!

Most of the books on BI’s list are not going to get you where you want or need to be financially.

Not today. Not ever.

I’m not saying the books aren’t fine efforts.

What I’m saying is overall they represent a single perspective, one side of the investing coin. A philosophy that doesn’t effectively work through every stock market cycle.

The philosophy of “buy and hold” or “buy and sleep” as it’s eloquently described in one of the books on my best-of list (Cocktail Investing), is not going to help you to navigate a post-Great Recessionary period muddied by unprecedented global central bank overreach, negative rate scenarios, 8 years of below-average global economic growth and the second loftiest stock valuation levels (based on real earnings) since the tech bubble.

The advice from BI fits secular positive market periods like 1982-2000. However, through history, positive or upward cycles conclude and are ostensibly replaced by (as beautifully researched in another selection,) flat or down trending periods that work off bull excesses.

You see. Not every long-term market move is positive. On Wall Street however, every market is a bull. On Main Street, that buy-side mentality will place your household finances in jeopardy.

You must remember.

On occasion, it’s a bull-shit stampede.

As for Business Insider’s list? 


Check the bottom of your shoes before going in. It’s a perfect cycle for them to stink up the joint.

Oh there are several tomes of wisdom. I’ve read all the books listed. Took notes. I did learn from them.  I consistently read 10 books a year.

But through this market cycle, the pervasive wisdom of ‘buy and hold’ or ‘random walk’ where your portfolio trips and blows up your net worth, isn’t gonna fly.

You doubt me?

Ponder the following:

Warren Buffett repeatedly appears on BI’s list. I understand. Greatest investor of all time and all.

One problem. And it’s a big one.

It’s not realistic to think you can invest like Warren Buffett. It’s a romantic inclination. It’s what investors yearn to do but can’t.

Sure, you can prosper from an education in fundamental analysis – company cash flows, balance sheets, income statements, dividend growth, not chasing the hot investment flavors of the day. It’s called doing your homework and doing your homework is required.

In the brief period we’re given as investors, because we’re human – there’s a limited window of opportunity for appreciation. (Like 20-30 years if we’re lucky). Include the increased probability of a decade of below-average returns in stocks (our estimate is below 3%), and a set-it-and-forget-it mindset requires a wake-up call.

Now more than ever.

A new resource library.

You see, it’s close to impossible to match a human life (finite) with that of a market of stocks (infinite). Unless you’re Warren.

Think about it.

As Lance Roberts wrote recently:

“It is important to remember that we are not investors. We do not control the direction of the company, their management decisions or their sales process. We are simply speculators placing bets on the direction of the price of an electronic share that is heavily influenced by the “herd” that makes up the markets.

More importantly, we are speculating, more commonly known as gambling, with our “savings.” We are told by Wall Street that we “must” invest into the financial markets to keep those hard-earned savings adjusted for inflation over time. Unfortunately, due to repeated investment mistakes, the average individual has failed in achieving this goal.”

You don’t have a couple of hundred years like Warren Buffett who is investing not for just his lifetime, but for multiple shareholder lifetimes in Berkshire Hathaway.

So what if one of his investments doesn’t pay off for 30-50 years? He’s dealing with the luxury of that kind of time. The kind of time it takes to earn and book hefty market returns. This is not realistic for most of us. It’s a financial fairytale hawked as reality.

Thankfully, investors seem less receptive to the turd sandwiches they’ve been force fed when it comes to understanding how the stock market performs. It’s unfortunate too as this cyclical bull market we’ve enjoyed since March 2009, is one of the most despised I’ve witnessed. And I’ve been in this business for 27 years.

In part this negative sentiment is due to the continued lack of straight talk by pundits, an overhang from the pain of losses during the financial crisis (remember that?) and a painfully long (marginal at best), economic recovery.

So I share with you my library. My keepers.


A reading and learning treasure trove for the new world.

1). Investing with the Trend: A Rules-Based Approach to Money Management by Gregory L. Morris.


From Amazon: Investing with the Trend provides an abundance of evidence for adapting a rules-based approach to investing by offering something most avoid, and that is to answer the “why” one would do it this way.  It explains the need to try to participate in the good markets and avoid the bad markets, with cash being considered an asset class.  The book is in three primary sections and tries to leave no stone unturned in offering almost 40 years of experience in the markets.

Excerpt: The market from 1927-2012 was in a state of drawdown (loss of capital) for more than 95% of the time. In other words, the market was making new all-time highs less than 5 percent of the time.

Rosso’s take: Greg drags the mystical buy-and-hold unicorn behind the shed and destroys it. The book is comprehensive with data that obliterates the buy-and-hold myth and group think that has destroyed so many portfolios. You’ll be annoyed after reading this book. You’ll feel duped by a financial system that compels you to feel helpless. There’s more in control about money than you think, and this book will open your eyes -question your current portfolio management strategy.

2). Cocktail Investing: Distilling Everyday Noise into Clear Investment Signals for Better Returns by Christopher J Versace & Lenore Elle Hawkins.


Chris and Lenore focus on economics, demographics, psychographics, technology, policy and more. In other words, themes. Thematic investing. Their book allows you to tap into the flow and motivation for today’s consumer to spend and where they drop their cash.

From Amazon: Given today’s ever-increasing deluge of information, the average investor faces the challenge of sorting through the babble to decipher what it means, and learn how, where, and why they should be investing given the current economic environment and the uncertain future. This book provides an ‘off’ switch, helping readers apply an automatic mental filter to the incoming cacophony, to filter out only what they can use for smarter money moves.

Excerpt: Shifting demographics & psychographics shape and impact consumer behavior can force companies to make fundamental changes to their business to succeed. Identifying the root cause of these shifts, be they the fallout from a disruptive technology, changing consumer preference, or other pain point, helps you, the investor, identify companies that will profit from the pain as they administer their “soothing” medicine.

Rosso’s take: Talk about changing it up. How refreshing. The dynamic financial duo seek to help investors understand where demand is headed and then prosper from growing consumer trends. This book is an eye-opener if you’re investor looking to hook into the consumer mindset post-Great Recession.

3). The Choose Yourself Guide To Wealth by James Altucher.


From Amazon: We are living in an epic period of change, danger and opportunity. The economy is crashing and booming every few years. People are getting fired and replaced by computers and Chinese workers. The stock market crashes with regularity. Every “fix” from the government makes things worse. The Old World has been demolished… and people are desperate for answers.

This is the field guide to the “New World” we live in. You can play by the old rules and get left behind, or you can use these new ideas and become wealthy. This is not a book for the faint of heart. Read at your own risk, because sometimes the truth is hard to take.

Excerpt: “The Save Big Rule.” Don’t save small. Save big. Big is a worthless college degree. Big is a house. Saving 10 cents on a cup of coffee is a poor man’s way to get rich. There’s a myth that “saving a dollar is the same as making a dollar.” This simply is not true. It ignores the fact that you start off with money. If you start off with $100 you can only save $100 but you can make a gazillion dollars.

Rosso’s take: James as a dear friend and mentor changed my life. He’s not mainstream but he’ll get you to step back, question everything. He’s a dogma destroyer when it comes to ideas of building wealth and healthy daily habits that seek to preserve and nurture the greatest investment: YOU.

James Altucher is the Ralph Waldo Emerson of our age. I promise you won’t regret this one. I can’t promise it won’t get you thinking. At times you’ll shake your head in resistance as James breaks down deep-set societal rules of wealth building and encourages new ones defined by passions and creativity.

4). Animal Spirits: How Human Psychology Drives the Economy and Why It Matters for Global Capitalism by George A Akerlof and Robert J. Shiller.

Princeton University Press.

From Amazon: Animal Spirits offers a road map for reversing the financial misfortunes besetting us today. Read it and learn how leaders can channel animal spirits–the powerful forces of human psychology that are afoot in the world economy today. In a new preface, they describe why our economic troubles may linger for some time–unless we are prepared to take further, decisive action.

Excerpt: The term overheated economy, as we shall use it refers to a situation in which confidence has gone beyond normal bounds, in which an increasing fraction of people have lost their normal skepticism about the economic outlook and are ready to believe stories about a new economic boom.

Rosso’s take: Markets are math in the long term. From day to day, they’re a hot mess of emotions. Markets are not rational. They’re comprised of people doing impetuous acts to grow wealth, usually at the expense of others. It’s a war between buyers and sellers with prices used as weapons. Best to understand the animal, the push-pull, the primal spirits which feed (and sometimes anger) them.

5). Active Value Investing: Making Money in Range-Bound Markets by Vitaliy N. Katsenelson.

Wiley Finance.

From Amazon: A strategy to profit when markets are range bound–which is half of the time. One of the most significant challenges facing today’s active investor is how to make money during the times when markets are going nowhere. In this book, author and respected investment portfolio manager Vitaliy Katsenelson makes a convincing case for range-bound market conditions and offers readers a practical strategy for proactive investing that improves profits.

Excerpt: For the next dozen years or so, the U.S. stock market will be a wild roller-coaster ride—setting all-time highs and multi-year lows in the process. While the twists and turns of this ride are still to be written by history, the long-term, sideways “range-bound” trajectory has already been set by the eighteen-year bull market that ended in 2000. When the dust settles, only those who adapted their investment strategies to this range-bound market will have captured any meaningful profits.

Rosso’s take: Vitaliy is a master of long-term market cycle analysis (and they’re not always bulls). If half the time, markets are range bound, why does the industry ignore them or count them as insignificant? The narrative doesn’t fit well into the industry’s pervasive “set it and forget it” approach to portfolio and risk management.

6). Happy Money: The Science of Happier Spending by Elizabeth Dunn & Michael Norton.

Simon & Schuster.

From Amazon: Happy Money offers a tour of research on the science of spending, explaining how you can get more happiness for your money. Authors Elizabeth Dunn and Michael Norton have outlined five principles—from choosing experiences over stuff to spending money on others—to guide not only individuals looking for financial security, but also companies seeking to create happier employees and provide “happier products” to their customers. Dunn and Norton show how companies from Google to Pepsi to Charmin have put these ideas into action.

Excerpt: Consumers would get more happiness bang for their ITunes buck if they forced themselves, after downloading their music, to wait – at least five minutes, better hours, and ideally days – before listening.   

Rosso’s take: Hey, you’re going to spend. Why not make the most of the experience, spend less in the process, yet gain greater satisfaction? Millennials seek experiences over stuff. How about you?

7). The Holy Grail of Macroeconomics: Lesson’s from Japan’s Great Recession by Richard Koo.


From Amazon: The revised edition of this highly acclaimed work presents crucial lessons from Japan’s recession that could aid the US and other economies as they struggle to recover from the current financial crisis.

This book is about Japan’s long recession and how it affected current theoretical thinking about its causes and cures. It has a detailed explanation on what happened to Japan, but the discoveries made are so far-reaching that a large portion of economics literature will have to be modified to accommodate another half to the macroeconomic spectrum of possibilities that conventional theorists have overlooked.

Excerpt: Although it has never been explicitly stated in the economics literature, the efficacy of monetary policy is based on a key assumption: the existence of willing borrowers in the private sector. Monetary policy loses all power if this condition is not met.  

Rosso’s take: Sound familiar? It should. You’ve lived through 8 years of a sluggish economic recovery and monetary policy that has had very little positive effect on economic conditions. According to Bloomberg, close to 500 million people in a quarter of the world economy are now living with negative interest rates. Negative rates are a sheer act of desperation. A hallmark of how far monetary policy can be stretched, warped, morphed into ineffectiveness. And guess what? You still can’t be forced to spend. Or borrow.

Richard Koo understood the balance-sheet recession that hit the U.S. better than anyone on American soil. Those in charge still choose to ignore his sage commentary. Global leaders fell for unprecedented central bank intervention as the wholesale solution to decades-long structural economic problems. Go figure.

8). Wait: The Art and Science of Delay by Frank Partnoy.


From Amazon: In this counterintuitive and insightful work, author Frank Partnoy weaves together findings from hundreds of scientific studies and interviews with wide-ranging experts to craft a picture of effective decision-making that runs counter to our brutally fast-paced world. Even as technology exerts new pressures to speed up our lives, it turns out that the choices we make––unconsciously and consciously, in time frames varying from milliseconds to years––benefit profoundly from delay.

Excerpt: An expert generally won’t need to delay a decision, but a novice generally should delay, as much as possible. The toughest part of the expert-novice distinction is that we can be experts in an area, with years of seemingly relevant experience, but then be confronted in the same area with a new twist on a decision that turns us into a novice. Not very many experts will admit, or even see, when they are novices.

Rosso’s take: Granted, a bit off topic. Or is it? Investing requires patience. Well, at least for those who follow a discipline, buy and sell rules. Let’s face it: Most financial firms are going to toss cash into the wind of the market because, well, it’s Wednesday and your account has cash in it. Little regard for current valuations. After all, you can’t time the market. Or is that just a convenient, overplayed excuse because financial representatives or investment specialists or whatever you call them, have sales quotas to fill, and financial firms have shareholders to appease? Your business is now booked. You’re history. Time to move on to the next target. Here’s a suggestion: After you finish this selection, recommend it to your broker.

9). The Misbehavior of Markets: A Fractal View of Financial Turbulence by Benoit Mandelbrot.

Basic Books.

From Amazon: Mathematical superstar and inventor of fractal geometry, Benoit Mandelbrot, has spent the past forty years studying the underlying mathematics of space and natural patterns. What many of his followers don’t realize is that he has also been watching patterns of market change. In The (Mis)Behavior of Markets, Mandelbrot joins with science journalist and former Wall Street Journal editor Richard L. Hudson to reveal what a fractal view of the world of finance looks like. The result is a revolutionary reevaluation of the standard tools and models of modern financial theory. Markets, we learn, are far riskier than we have wanted to believe.

Excerpt: But whether guide or master, modern portfolio theory bases everything on the conventional market assumptions that prices vary mildly, independently, and smoothly from one moment to the next. If those assumptions are wrong, everything falls apart: Rather than a carefully tuned profit engine, your portfolio may actually be a dangerous, careering rattletrap.

Rosso’s take: Frankly, I don’t know where I would be without the work of Mandelbrot. He’s the reason I stopped drinking the financial services industry’s Kool-Aid. This selection is always within my reach. I refer to it often. Backed by rigorous analysis, Mandelbrot unwinds and exposes how markets flow (think gusts of wind). His work adds tremendous relevance to the field and exposes the underbelly of markets you’ll never hear discussed at major brokerage firms.

10). Irrational Exuberance 3rd Edition by Robert J Shiller.

Princeton University Press.

From Amazon: In this revised, updated, and expanded edition of his New York Times bestseller, Nobel Prize-winning economist Robert Shiller, who warned of both the tech and housing bubbles, cautions that signs of irrational exuberance among investors have only increased since the 2008-9 financial crisis. With high stock and bond prices and the rising cost of housing, the post-subprime boom may well turn out to be another illustration of Shiller’s influential argument that psychologically driven volatility is an inherent characteristic of all asset markets.

Excerpt: The efficient markets theory has been a fixture in university economics and finance departments ever since the 1970s. The theory has commonly been offered to justify what seem to be elevated market valuations, such as the 1929 stock market peak.

Rosso’s take: In September 2007, I asked many of the ‘experts’ at my former employer if stock prices were dangerously overvalued per Bob Shiller’s Irrational Exuberance. Naturally, I was told “no.” Bob Shiller tends to be early but always correct. Professor Shiller’s work is a haunting reminder of how hefty stock market valuations ostensibly correct and take your investments along for the plunge. Only to leave you spending the rest of your investing life attempting to break even. That’s not how the money management process is supposed to work.

Coming soon (available for pre-order):

11). Fed Up: An Insider’s Take on Why the Federal Reserve is Bad for America by Danielle DiMartino Booth.


From Amazon: The culture at the Fed–and its leadership–were not just ignorant of the brewing financial crisis, but indifferent to its very possibility. They interpreted their job of keeping the economy going to mean keeping Wall Street afloat at the expense of the American taxpayer. But bad Fed policy created unaffordable housing, skewed incentives, rampant corporate financial engineering, stagnant wages, an exodus from the labor force, and skyrocketing student debt. Booth observed firsthand how the Fed abdicated its responsibility to the American people both before and after the financial crisis–and how nobody within the Fed seems to have learned or changed from the experience.

Rosso’s take: As the books is slated for release in February 2017, I do not have an excerpt to share. However, I couldn’t wait to pre-order. Danielle was inside the Dallas Fed, but she also maintained an “outsider looking in,” perspective that is crucial for the masses to understand.

A keen observer of how disconnected the Fed truly was during the financial crisis and remains distant from structural deficiencies that still inflict Main Street household balance sheets today, Danielle has a mission to expose the Fed and their economists for what they are: Clueless.

A frequent national media commentator and guest of our Lance Roberts’ radio show, Danielle is razor-blade sharp, passionate and a voice of truth. We’re fortunate as a society she decided to take on the mission to share her observations of the inner workings of the Fed.

The goal of my feverish reading habit is to immerse in the journey of financial wizardly less practiced by the frontline sales-driven asset allocators located at every Charles Schwab or Merrill Lynch retail outlet across the country.

Candidly, there’s enough mainstream financial ‘educational’ material available to lavishly adorn every waste dump on the planet. The written, glossy garbage stinks worse than dead fish full exposed to a west Texas August high noon.

Don’t be fooled.

It’s time to shake up your knowledge base.

I’m honored to assist you on your path.

And help you to question the rotted words of the masses.

Side note: I have learned the rhythm of markets by reading fiction. James Altucher advised me it would be so. After all, the price of a stock is what a willing buyer and seller agree to, the future growth  potential of an underlying business, and educated guesses (a guess is a guess is a guess,) of price trends.

In addition, with the overwhelming response of global central banks over the last 8 years to keep rates low (or negative) investors have taken increased risk to reach for return, especially yield as witnessed in the dazzling positive performance of telecom and utility stocks. Thus, stock prices for dividend stocks and stocks in general, are now extended from underlying businesses fundamentals.

For now, price discovery is overwhelmed by monetary policy response and momentum trades rule the day. In essence, price is built on story and story is fiction (at least in my opinion).

Sooner or later, this overvalued condition painfully corrects which makes my reading suggestions for you more important than a list of quixotic words and adages of old.

Be careful out there..

10 Questions to ask your Adviser. Right Now. Today.


He was annoyed with me after a while. He said I asked too many questions.”

It’s tough for me to imagine speaking these words to a client or anyone seeking guidance.

I don’t have the guts. Or the hubris.

Or the stupidity.

I wonder about (and I’m thankful) for complacency among some advisers. It allows me to continue to gain thoughtful, inquisitive clients who never feel that I’m annoyed by a passion to learn.

The noblest efforts we undertake as trusted financial partners are to listen, answer questions, validate good behaviors, empower improvement and communicate effectively to our audience.

How does a prospective client – One who has a genuine curiosity in her finances, a successful saver and investor, ask “too many questions?”

If you’ve been with an adviser long enough to feel comfortable together, or maybe you’re exploring a new financial relationship, asking questions should be encouraged.

There’s no such concept as “asking too many questions.” You query enough to satisfy your need for information requested. I’ve noticed how the more self-aware an individual is about their financial situation, the more questions that arise.

There’s no reason to feel intimated or stifled.

You’ve earned the right (and the money).

Channel your inner Columbo.

Remember Columbo?


The disheveled, inquisitive, seemingly frazzled (like a fox), detective was a master of detection. His questions on the surface were unassuming. Some appeared silly. However, underneath, there was a method to his madness.

Columbo knew the importance of questions no matter how insignificant they appeared

And when you were convinced he was done with the investigation.

There was always “just one more thing.”

It drove the perpetrators crazy.

Columbo was intrusive, occasionally annoying and he couldn’t care less. He was purposely oblivious. He felt he had the right to ask.

So do you. When it comes to your family’s financial well-being every question you have should be addressed.

Now’s the perfect time, too.


The market is complacent. Volatility is low.

Yet, dark clouds are forming on the horizon.

storm clouds

Political ill-wind is beginning to stir and capture the market’s attention, bond yields around the world are falling (some are negative). The 10-year U.S. Treasury yield is at it’s lowest close May 2013. A clear sign of economic distress. U.S. corporations are in their fifth quarter of negative earnings growth.

There’s never been a more perfect time to ask these ten questions: It would be a mistake not to.

Are you a registered investment adviser or a stock broker? There’s a difference.  A big difference. When people ask me I respond: “Well, I don’t really want to help you break anything. Most likely, I’m going to help you mend something a broker, broke.” You need to ask the question and comprehend the difference.

A registered investment advisor or “RIA” is held to a fiduciary standard. According to www.thefiduciarystandard.org, a committee of investment professionals and fiduciary experts who formed in June 2009 as advocates for fiduciary-level advice:

“Registered representatives of broker-dealers are subject to a suitability standard under the Securities Exchange Act of 1934, while investment advisers are regulated as fiduciaries under the Investment Advisers Act of 1940.”

What does that mean to you? Plenty.

Fiduciaries are held to a high standard of ethics and care which affects all the advice they provide. It’s a much stricter standard. There should be no conflict of interest and if one exists, it requires clear disclosure.

The Committee for the Fiduciary Standard outlines 5 core principles of a fiduciary:

  • Put the client’s best interests first;
    • Act with prudence, that is, with the skill, care, diligence and good judgment of a professional;
    • Do not mislead clients–provide conspicuous, full and fair disclosure of all important facts;
    • Avoid conflicts of interest;
    • Fully disclose and fairly manage, in the client’s favor, unavoidable conflicts.

 “Suitability” guides a broker to recommend an investment that is appropriates for your situation, is not held to the same standard. A broker is required to know your risk tolerance, tax bracket, and time frame for the money you seek to invest. All skeletal in nature. Yet legitimate. Well, it’s suitable.

Feels like something is missing, doesn’t it?

My belief, based on how brokerage firm compliance departments operate and an unpleasant experience with a former employer, is that suitability has been misaligned to protect the financial organization from lawsuits or arbitrations and NOT designed to safeguard individuals seeking guidance.

The Fiduciary Standard is a high calling. It’s there to position the client front and center in the financial advice model, as it should be for every professional who assists consumers with their financial decisions.

 On April 6, 2016, the outdated foundation of financial services was slammed and cracked to make ground for hopefully, a safer, increasingly objective industry with the issuance of the Department of Labor’s Fiduciary Rule.

Mind you, it’s the genesis of a higher standard of care for brokers, so there’s much to be accomplished. I expect the Rule will be pushed, pulled, fine-tuned before it fully takes effect on April 10, 2017 and final policies put in place by January 1, 2018. My thought is this will be a continuous work in progress long after 2018. That’s ok. It’s a step in the right direction.

The new rule resurrects the definition of fiduciary from the 1974 ERISA – (Employee Retirement Income Security Act) and expands upon it. ERISA’s fiduciary standard outlines how a retirement plan fiduciary must act prudently and with undivided loyalty to the participants. Obviously, the retirement landscape in 1974 was very different. The 401(k) plan wasn’t in existence. Defined benefit plans, or pensions, were the most popular retirement vehicles.

Crucial elements of the rule – advice provided must be in a client’s “best interests,” full disclosure of conflicts of interest, and charge no more than “reasonable compensation,” for services. Generally, the fiduciary must sign a “Best Interests Contract” with the client that outlines how he or she will provide advice in the client’s best interest.

A broker’s financial institution will also be subject to the rule. Ostensibly, sales quotas, contests, awards or special compensation that may tempt an adviser to stray from his or her fiduciary responsibilities, will be prohibited.

The message is growing strong (there’s a long way to go), to an industry driven by sales pressure: Change your culture. In other words, those ads you run that give the appearance of fairness, caring and client first that not one consumer takes seriously? Make them reality, not fantasy.

Ethical employees who serve financial clients in publicly traded brokerage firms are torn between serving clients holistically for the long term and at the same time are up against the wall every quarter, starting from scratch, to meet outrageous quarterly sales goals and tremendous pressure to sell the hot product of the day (these tactics still exist). The internal friction can generate great turmoil and perhaps push an employee to make sales first and fail to responsibly counsel.

The mixed message from senior corporate puppets to do what’s right for a client and oh, meet big sales targets (or you’re out), builds conflict and distress. Talented workers become discouraged, burned out and move on. It’s an ancient business model. Change is required and it appears to be coming.

Slow is better than no.

Unfortunately, the recent ruling only covers retirement accounts. For now. The Security & Exchange Commission is expected to release a fiduciary standard in 2016 which would cover fiduciary responsibilities for taxable brokerage accounts. Although a uniform fiduciary standard (with the DOL), would be welcomed, it’s too early to draw any conclusion that this will occur. Nor is there any assurance that the SEC will adhere to an October release.

While the Feds work to figure it out, ask the question. Keep in mind, not every professional you engage will operate in a fiduciary capacity regardless of federal rulings. My suspicion is you’ll be hearing interesting, articulate, creative responses but not a clear “yes” or “no.”

Based on the answers received, you’ll gain valuable perspective about what’s best for you and your family’s finances.

Think fiduciary over suitability.

How much will I pay for your services?

 Simple question deserves a simple answer. Unfortunately, not so simple. People share with me their frustration as they’re unclear how their current financial professionals get paid or are compensated for selling investment products.

It’s especially perplexing for mutual fund investors sold multiple share classes and perpetually unclear of how charges are incurred. A clear comprehension of the class share alphabet (A, B, C), is as thick and jumbled as the inside of Campbell’s Soup can.

B &C share classes are popular selections on the product-push list. They represent the finest alchemy in financial marketing. As consumers are generally hesitant to pay up-front sales loads like in the case of A shares (even though when taking into account all internal fees and expenses, they’re the most cost-effective choice for long-term investors,) B & C shares were created to mollify the behavioral waters.

To avoid having a difficult conversation or facing reluctance about opening your wallet and shelling out 1-4% in front-end charges that reduce the principal amount invested, the path of least resistance is to offer share classes with internal fees, marketing charges and deferred sales charges. Either way you pay. With B & C shares generally, you pay more. However, big fees reduce returns, they’re stealth. Thus, they feel less painful to invest in (even though they’re not).

Frankly, the only funds worth considering are no-load mutual funds where you can purchase or sell anytime without a commission or sales charge. Avoid the A, B, C’s all together. Meet with an hourly-fee based Certified Financial Planner or a fiduciary to help you assess your current mutual fund holdings and for recommendations based on your personal situation.

A financial professional may be compensated hourly, by annual flat fee, a percentage based on assets under management, commissions or perhaps a combination. Regardless, to make an informed decision, you must understand how your adviser puts food on the table. If you can, get it in writing.

 There’s no ‘right way’ to be compensated as long as it’s fair and reasonable for services rendered. You also want to understand what motivates your broker or adviser to recommend investment vehicles. If you’re not getting straight answers, well you know what to do. Move on.

How do you incorporate my spouse, life partner and children when it comes to planning for me? You don’t exist in a vacuum. An adviser should maintain a holistic approach to financial planning and that includes communicating with loved ones and teaching children how to be strong stewards of money. The meetings, communication must be ongoing. At least annually.

Why did you select financial services as a career? I recall vividly how the stock market intrigued me through my teenage years. I never missed an episode of Wall Street Week. As early as 13 years-old I was fascinated with how markets worked.

In grade school I enjoyed helping classmates understand how our passbook savings accounts (and compound interest) worked. Every Wednesday, a bank representative from Lincoln Savings Bank would meet with our elementary school class and collect deposits and stamp our passbooks.

This question should be used to gauge a perspective financial partner’s penchant for helping others and passion for his or her role as a mission, not a job. How do you know whether a professional sincerely cares about your financial situation and goals? You’ll know it, intuitively.

 What are your outside interests? A successful life is about balance. This question gets to the weekend and evening person behind the financial professional you observe from behind a desk, charts, book, and computers. You may discover activities you have in common and develop rapport on a personal level.

To gain a complete picture of the kind of person you’re entrusting with your investments is a crucial element of your interviewing process. By the way, it’s not prying. It’s curiosity. Ostensibly, you should like the individual you and your family may be working with for decades.

Can you tell me about your firm’s service standards? You want to know how many times a year you’ll be meeting with your financial partner whether in person (preferably), over the phone or web meeting like Go To Meeting. Is it quarterly? Every six months? How would you like to work as a client? What are your preferences? Will you be receiving calls and e-mails throughout the year about topics important to your financial situation like the market, economic conditions, financial planning, and fiscal changes that may affect me?

What is your investment philosophy? Recently, I meet a couple who was upset how their broker placed a million bucks into the market in one day. They believed there would exist a more thoughtful strategy for implementation especially in the face of the second-highest stock market valuation levels since the tech bubble. But THEY DIDN’T ASK. Are you ‘buy and hold?’  You seek to discover  whether the adviser is merely towing the employer’s line or does outside research and shares his or her personal opinion based on research and study.

Is there a portfolio sell discipline? What is it? Frankly, if the word no, or something like it comes up, excuse yourself politely and find another adviser. This investigation is over.

The dirty little secret in financial services is that ‘sell’ is a four-letter word. I’m certain you’ve heard about missing the 10 best days in the market (brokers preach this ad nauseam). How detrimental it is to portfolio return. And it is. But what about the other side of the coin? What about the math of loss?


Per Lance Roberts, Clarity Financial’s Chief Investment Strategist:

Clearly, avoiding major drawdowns in the market is key to long-term investment success. If I am not spending the bulk of my time making up previous losses in my portfolio, I spend more time growing my invested dollars towards my long term goals.

Markets can’t be timed. That’s true. However, risk management is about controlling the math of loss which can be devastating compared to possible gains. Your broker or adviser should have a strategy you believe in to guard against market storms.

Whether it’s a conservative portfolio or asset allocation right from the beginning, or a specific sell and re-entry discipline to minimize portfolio damage, a sell strategy is crucial.

Academics and influential financial service providers are on the band wagon when it comes to sell disciplines. Whether it’s Dalbar, the nation’s leading financial services market research firm, or MIT Professor of Finance Andrew Lo, there’s a growing body of work that shows how investors spend most of their investment life (20-30 years), making up for losses, playing catch up.

Investing, closing your eyes and hoping for the best is not a wise strategy especially in a market propped up by central bank intervention and a P/E 10 ratio at 25.7, the second-highest level since the tech bubble at 44.2. The historic average is 16.7. Real price/earnings over 10 year averages are not going to drive market returns in the short term. However, as an investor, you must be aware of the environment you’re dealing with. Placing 100% of your stock allocation into the market at these levels should be a strategy you avoid, especially if you’re 5-7 years from retirement.

How will I have access to you and your team? A caring adviser will make sure you have the ability to text, access to a cell phone number, the phone contacts and e-mails of support staff and make you feel comfortable to reach out at any time. You should also expect a prompt response to voice mails within 24 hours or less.

When can I meet your clients? Advisory clients possess knowledge and intellectual gifts they love to share with others. Intimate client gatherings provide clients opportunities to communicate, generate business, form friendships. It’s rewarding to witness. The ability of clients to gather and know each other also helps new retirees transition to their next life adventures easier by hearing the life stories from people who have been there already.

Questions are an integral part of any relationship. As a friend recently taught me – not asking them in a timely fashion can create resentment and anger.

You’re not being nosy.

You’re not a nag.

You’re seeking information to make an informed decision.

About a topic close to your heart.

Financial well-being.

No questions asked.

Unless you’re Columbo.

Then keep asking.