Financial advisors strike again

Among IFO’s favorite people are financial advisors who are smarter than their clients. /sarc

For example, WSJ headlines: Come On Gen X, Take Some Chances. Well, you know right off the bat that got our attention. The gist of the article, which is a must-read, is that “young” investors (age 45 and below? – that’s middle-aged!) are too conservative!

They’re opting for what they see as safe investments, such as certificates of deposit and savings accounts.

Among those who do venture into some of the more traditional portfolio assets—stocks, bonds, real estate and commodities—many are shying away from equities and are more concerned about protecting their principal than growing their money.

“They’re leaning toward really conservative portfolios—similar to some retirees,” says Mr. Tilp, a financial planner based in Portland, Ore.

Well, of course! Portland, Ore. Other F.A.’s say the these young investors seek relatively low risk and are far more risk-averse than investors in other age categories. The big ol’ market drop(s) scared them while they were still getting their investing feet wet. Plus, they were probably listening to their F.A.’s.

Here’s an example that one F.A. doesn’t like: a young doctor, worried about student loans among other things, wants to keep half of her portfolio in fixed-income investments. She clearly has been getting some bad advice.

The comments, as usual, are almost better than the article. Here’s a great one:

BRAVO Gen X and Y, You Have the Right Strategies:

1. “Many” advisers would tell you are doing things exactly right; the other advisors are dependent on the fees you pay them for churning your portfolios … which is why such advisors are not retired!
2. “Affluent investors ages 18 to 34” … if you’re “affluent” at that age then you should be conservative!
3. Keep focusing on the “liability” side of your balance sheet … spending and debt; and the “you” on the asset side; your talents will be your path to security; not promises of future excessive returns.
4. Like it or not, deflation is as likely as inflation and in any event VOLATILITY is a guarantee; stay flexible and mobile; manage your “personal” inflation; not the fear promoted by an “advisor”

Good luck Gen X and Gen Y … you give me HOPE.
Douglas Geib II, Brecksville, Ohio (author of Getting to 30, Financial Advice for my Three Sons)


About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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