Because of the original nature of this website, Aunty has been asked if she is a financial planner or advisor.  Nyet, no, negative.  No license, and no desire to take control of other people’s money.  We have been propositioned by a few bonafide financial planners to control our money, but so far none of them has been in alignment with our goals, needs or plans.

Naks with smarts

Aunty has a good friend Naks (pronounced knocks, short for Nakayama) who is one of the smartest people I know because whenever we get together to talk and we differ, he always says, “You right!”

LOL, it’s not that Aunty is right.  It is that Naks has the ability to avoid useless conflict whether he agrees with the speaker, or not, and that is what makes him wisely smart.

Last week, Naks called to say hello and we began talking about his new retired lifestyle.  He is actually in pretty good shape financially, with more than enough to live on, and retirement funds that he was thinking of juggling around.  Enter into the picture – a financial advisor, CFP.

Group participation, please

Please comment below if you have a financial advisor and what you think of them, how they have done, etc. because this is a relatively uncharted area for Aunty.

The following comments are only Aunty’s opinion of CFPs.

A few years ago, a couple of CFPs came to Uncle and Aunty representing an annuity firm.  Annuities sound wonderful.  You give them your thousands of dollars forever, and you get paid a decent return, forever.  Usually it is 5%, sometimes 6%, sometimes even 8%.  Some have set rates, some have fluctuating rates – anywhere from 0-13% depending on the market.

Aunty was not interested.  The reason was that these bright good looking young men acted like they knew everything and were on top of the world with their very nice cars and homes in the best areas along the California shoreline.  They were making and spending a lot of money on doodads.

Proof is in their own spin

They brought along charts that showed what the return could compound to and how wealthy we would be in 10, 20, 30 years from now.  More charts that showed how much could be drawn out and still have the assets multiply.  Their commissions, they said, were reasonable and up front.  Results were guaranteed.  Nothing was as safe as annuities.  What they didn’t say, but they did flash was that other people’s annuities bought them their BMWs and ocean front houses.

A hidden plan for a sale

At another financial seminar that hyped about taking care of retirement needs, we filled out a questionnaire about our current financial picture and listened to an interesting presentation of what retirement life might be based on social security, income, needs, choices.  Most people were in good shape, and all would be hunky dory, until our health begins to fail.

Thus, the second half of the presentation focused on insurance.  Do you have enough for this, or that, and what if you get sick, disabled, or need help?  Insurance is something you need to have in place BEFORE you need it, so the push was on to buy it today, or else….

The biggest pitch was for Long Term Care Disability Insurance, and Uncle and I bought into it.  It was rather expensive and set to go up as we got older, but it irked me.  It felt like reverse gambling – insuring that you would have your bets covered if you hit craps, but you weren’t even throwing any dice yet.  And, if you never needed it, you “lost” all of those premiums to the insurance company and agent.  After 2 years of paying thousands of dollars, with potential increases as we got older, we terminated our plan and saved money.

*Update:  Aunty has recently purchased a hybrid type long term care insurance with a death benefit from Jason Wong of Shiraishi Financial Services.  It took a LONG time to decide after several meetings and potential policies, and different schedules, costs, etc.  The one that Aunty decided on had HIGH monthly premiums for 10 years, without increases, and then after 10 years, NO premiums are due.  This policy will cost $150,000  in total but will payout $300,000 worth of long term care.  If Aunty passes without using any of the long term care benefits, $300,000 will be paid out to beneficiaries, so double the payout of what was paid in.  Aunty feels a great financial burden has been lifted from her family’s shoulders if she should become incapacitated in the future.   Using a C Corporation has made it even sweeter because premiums are an expense that can be deducted.  (C Corp post coming – one of these days.)

Everything has a spin

Years ago, we had put our retirement funds in mutual funds through our bank of choice.  We chose our own funds based on past performance.  Of course Aunty picked the most aggressive, Uncle chose a bit more conservatively.  20 years later, Aunty’s and Uncle’s portfolios were in sad shape, yet those mutual funds still had good looking historical yields!

The stock market crash of 2008 had not yet occurred, and luckily, we closed out the funds and transferred our sad retirement accounts into self directed vehicles before the crash.

Who is making money?

The answer to that question should be YOU.

A certified financial planner has to be licensed to take care of your money.  To receive their license, they must go through courses, college, apprenticeship.  They become the experts, the specialists, the qualified salespersons.  Many of them are good (Aunty plays poker with one of them), some are not so good.

Sometimes they make good returns for you, sometimes they do not.  Sometimes you might even be losing money.  In any case, good or not so good, they are making money.

Hidden fees

Whenever something is bought or sold, a commission is collected from the client.  Mutual funds, load or no-load, seem to be one of the favorite investment choices for financial advisors.  That, or a basket of this and a basket of that.  Quite a lot of choices, all with layers of unseen fees and many hands that get paid.  The breakdown of those payments is not easily determined, and most people don’t even bother to ask about them.

Real estate is not in their vocabulary

Actually, one of the biggest reasons that we do not use a financial planner is because they do not have cash flowing real estate properties in their arsenal.  It is out of their scope, and there are no commissions or fees for them to generate from your acquiring real estate, unless they are also real estate professionals that are agents or property managers.

You make their world go round

In a perfect world, when you trust someone (a financial planner) with your life savings or retirement accounts, you should get exactly what you were told that you would get.  They make money because YOU made money.  If they lose your money, then they should be paying you back.

The problem is, we do not live in a perfect world.  There are no guarantees.  Past performance does not necessarily predict future performance.  Most people are looking out for themselves, and not for you.

Who loves ya, Baby?

Remember that line, spoken often by Telly Savalas as Kojak?

If you feel inclined to go the route of having a financial planner and buying into whatever they have to offer, then please make sure that they care about you.  You want someone who loves ya, baby.  Or at least someone who is ready to sit down and listen to what you have to say, understand exactly what you want, and then design an individual plan to get you there.

If you get the slightest inkling that they are looking at plans for you that will benefit them the most, then get yourself out of their office and find someone else.

To each, their own

Naks, in his capacity to trust and believe, is vulnerable to vultures, but so far has been safe.  He has hired a financial planner to manage his portfolio made up of stocks and funds.  He seems to be doing okay.

Perhaps Aunty’s previous encounters and dealings with financial planners were not the norm, and Aunty is too jaded.  Aunty really hopes that Naks has found someone who is caring and capable of managing his retirement funds well so that he can have an even better retirement for as long as he chooses.

Aunty’s favorite investment vehicle is rental real estate.  Naks’ choice is for something on autopilot and no stress.  The main thing is that everybody is able to live happily ever after, right?

“You right!”

Thank you, Mr. Nakayama.