Nine Shiny DimesJohn Nuckel
I’ve been in the financial industry for 37 years. I’ve screamed in the trading pits and presented financial plans in board rooms. In all those years there has been one consistent revenue stream for industry professionals. They count on retail clients preferring nine shiny dimes to one crumbled dollar bill. In my early days the shiny dimes were glossy brochures or steaks and scotch in a power restaurant. Now it’s algorithms and video presentations. All of these shiny objects are presented to convince you to hand over your money so the pros can keep that tenth dime.
The latest edition to the shiny dime concept came to my attention on Facebook. Because of my search history, Facebooks algorithm showed me a video from Betterment one of the leading ‘Robo Advisors.”
As a veteran advisor I was offended by the video and as a potential investor you should be concerned. The offending moment came when an employee started to explain their portfolio theory and the word JARGON was superimposed over his face. You see, the young smiling faces, the perfectly coifed and strategically outfitted professionals smiling at you in the video are the shiny dimes. The JARGON is the crumpled dollar bill. They go on explain that their process to find the right portfolio is like a chef making a delicious meal according to your needs. “Like organic!” Your entire life savings condensed to “like” a simple metaphor.
Here is where I’m supposed to explain the JARGON. Tell you about modern portfolio theory and asset allocation analysis. The truth is, you don’t have to know this in great detail, but you should know more than a two-minute online video tells you. You should ask questions of whomever will be handling your money.
The revolution of technology in the financial markets has pushed down fees to a level that if you’re not a high net worth investor your investments will be on a platform similar to Betterment in the near future. There are many positives to these automated platforms, but be aware that it will be increasingly difficult to speak one on one with a licensed professional.
It doesn’t take a lot of expertise to make proper financial decisions. You can find out a lot by asking four simple questions of a financial advisor. How do you make money? How do I make money? How do you work? What can go wrong? I would add a few “what ifs” to the forth question. If the answers aren’t to your satisfaction move on. Believe me, there’s someone out there who would welcome your business.
If you want a chef to make you a nice meal go to a restaurant. I urge you to call Betterment or any other advisor and ask them to explain the jargon. It has been over ten years since the financial crisis. The biggest change this decade is that small investors have more responsibility than ever. This is your life savings, don’t settle for nine shiny dimes, take the old crumbled bill. Put it away for safe keeping. It will come in handy in the future.
Disclaimer: Notice: John Nuckel is a Registered Representative of Coastal Equities, Inc. and an Investment Advisor Representative of Coastal Investment Advisors, Inc. neither Coastal Equites nor Coastal Investment Advisors, Inc. is affiliated with Diversified Asset Management. Investment Advisory Services are offered through Coastal Investment Advisors, Inc.. and securities are offered through Coastal Equities, Inc. Member FINRA/SIPC, 1201 N. Orange St., Suite 729, Wilmington. DE 19801.