ROSEVILLE, Calif., Aug. 1, 2006 — Paladin Registry, LLC (http://www.paladinregistry.com) released additional results of a recent survey that showed more than 90% of investors did not know the right questions to ask to determine the quality of financial planners and advisors. The question is, if they don't know how to determine advisor quality, then how do they select financial professionals?
Jack Waymire, Paladin founder and author of Who's Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor (ISBN 0471476994, John Wiley & Sons, 2003), said, "Millions of investors use very subjective processes. One frequent method is to select advisors because they have likeable personalities and say the right things (sales pitches). Another popular, but equally subjective method, is selecting advisors from brand-name financial services companies because they feel safer. However, are they really safer or is that a false sense of security that has been created by billions of dollars of advertising?"
Advisors from brand name companies may not be the safe choices investors think they are for five reasons:
-- Their companies are publicly owned so their first responsibility is to shareholders and not investors. -- In their companies' quests for profits and higher share prices, the advisors have more conflicts of interest than other financial professionals. -- The companies have a long history of abusing investors to maximize profits. -- The companies have paid billions of dollars of fines for cheating investors. Thousands of their executives and advisors have gone to jail or left the industry. -- The companies have spent billions of dollars on lobbyists who make sure new legislation favors companies and not investors.
Waymire added, "If these facts aren't enough to raise concerns, then another telling statistic is the thousands of advisors who left brand-name companies so they could do what was best for their clients. These advisors got fed up with the constant pressure to sell products that maximized profits versus provide quality services that helped their clients achieve their goals. They couldn't change the system so they left."
Waymire also said, "Most of these breakaway advisors started their own Registered Investment Advisory firms or became Investment Advisor Representatives. For the first time they were able to acknowledge their fiduciary status and work for fees, and they no longer had to cater to the demands of management to sell particular products regardless of quality. As independent professionals they had the freedom, flexibility, and choices to do what was best for their clients."
You can learn more about financial advisors and the companies they work for by going to the Paladin Registry (http://www.paladinregistry.com) and clicking on Tips-4-Investors. Paladin provides free public services and no registration is required to access Tips.
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Jack Waymire
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