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Is an Investment Advisor Really Worth the Investment Advisory Fee?
Submitted by Sundance Wealth Management on May 24th, 2017

A recent survey indicates that an increasing number of high net worth investors are willing to pay for solid, unbiased, fee-only investment advice, which is not surprising considering the challenges of today’s markets.

What is surprising is that there are still some investors who would rather go it alone, thinking they can do better on their own, or that investment advice is not worth the cost, or both. With the average fee charged by an investment advisor around 1 percent, some investors are asking themselves whether the advice they receive actually amounts to a 1 percent advantage in their investment performance. In other words, could they do better on their investment returns if they didn’t have to pay the 1 percent fee?

On the surface that may seem like a fair question, at least until you examine what value the right fee-only investment advisor actually brings to the relationship. The real question is whether or not you feel the advice you receive will add at least 1 percent of value to your portfolio. If you feel that it doesn’t or won’t, then the answer is obvious – you could probably do better on your own.

However, I would add one important caveat to that answer, and that is you really shouldn’t ask the question when the markets are doing well. That’s because most advisors, and for that matter, many do-it-yourself investors, generally look good in up markets.

The time to evaluate the worth of an investment advisor’s advice is during the down markets. Here’s why:

A good investment advisor will have positioned your portfolio with proper diversification to withstand increased volatility and reduce the downside exposure. A well-diversified, strategically allocated portfolio will almost always decline in value less than the stock market indexes. If your portfolio only declines 7 percent while the stock market declines 12 percent, you’ve covered you cost multiple times over.

A good investment advisor will keep you focused on your long-term objectives rather than the market shifting macro events of the day that will have no impact on the long term performance of your portfolio. Many investors who fled the market in 2008 still haven’t recouped their losses, while those who rode the coaster have more doubled their money since then.

A good investment advisor will help you avoid the many common mistakes investors make like trying to time the market (which is nearly impossible) or chasing performance (which is almost always a trap), or trying to pick the winners (which less than 40 percent of the pros can do with any consistency). These mistakes can cost investors a significant portion of their portfolio value.

A good investment advisor will always have your best interests and long-term objectives in mind, which will free you of the time, energy and worry spent trying to manage your portfolio on your own, and that could be priceless.

A truly honest appraisal of the value of investment advice would have to consider how much you stand to lose when the going gets tough, not while everyone is riding the wave of a market rally. If a good investment advisor can help you in any one of the four ways described above, they could be worth their weight in gold. But, a really good advisor will typically help you in all four ways. What’s that worth to you?

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.

Edward Jones Sued Again!
Submitted by Sundance Wealth Management on November 20th, 2016

Getting sued for the second time this year. Fined by Finra earlier in the year for taking kickbacks from mutual fund companies for shelf space, i.e., pushing their funds. Why does this matter to you? Consider this. A person gets their first securities license and hires on with EJ. Okay, so what do they know. Most likely, nothing.

They took a crash course to be able to pass the Series 7 exam but nothing related to the course has anything to do with assessing a client's risk tolerance, constructing a portfolio, asset allocation for starters. They will also sell you mutual funds that are on EJ's preferred list. The green guy thinks that these must be real good ones but in reality they are the companies that are making backdoor payments to EJ. All I'm trying to point out is you need to know who you're working with and who you're taking advice from. What training have they had? How are they being compensated? How do you know if they are acting in your best interest? I'm not picking on EJ, just using them as the latest example of what you need to look out for. Here's the article on the suit.

Complimentary Dinner AGAIN!
Submitted by Sundance Wealth Management on October 24th, 2016

These "invites" keep coming every week. They make it sound like what they're selling is the answer to all your prayers. What is it they're pushing? Fixed Indexed Annuities is what. Are they bad? No. Like any insurance contract, some are better than others.

However, they will press all your hot buttons and make it seem that what they have is the ultimate solution you've been waiting for.. Could one of these have a place in someone's investments? Sure, but everybody? No. An FIA is appropriate sometimes but in my decades of experience in financial planning and portfolio management, I've only rarely encountered situations where something like this would fit in. I'm writing this so you'll be informed. Please think. Do you think anybody would be spending a pile of dough just to "educate" you. Of course not. The goal is to set you up and sell you an annuity whether it fits your situation or not. In addition, the rush is on because the Dept. of Labor issued a regulation regarding retirement plans that requires anyone who gives advice must act in a fiduciary capacity. That means they must act in your best interest 100% of the time. I've been working in a fiduciary capacity for over 20 years. More on that in my next post. So, my guess is there will be a big rush on over the next few months to get as many sales in before the April 2017 deadline. If you have any questions you are free to call or email me with them. In the meantime Caveat Emptor!

Complimentary, No-Oblgation Dinner
Submitted by Sundance Wealth Management on October 8th, 2016

I get these in the mail almost every week. It's usually an insurance agent pushing annuities, but sometimes they may also be a registered rep so they can sell variable annuities as well. So what's wrong with that? Think about it. If you're a carpenter with a hammer, EVERY PROBLEM IS A NAIL.

They will make it sound like whatever they're selling is the solution for you no matter what your concerns are. Now, occasionally, it can work for someone. But everybody!!?? Fixed Index Annuities have some very good features but there's also some negatives, like really long surrender charges. So go if you don't mind listening to their blather, enjoy the meal. Just remember, the salesman is spending the money on the meals so he/she can make many more times that in commissions and these may not be suitable for you based on your circumstances. Only an in depth analysis of your situation and a well constructed financial plan can help you make the correct decision regarding how and where to invest.

Keeping Up With the Identity Thieves
Submitted by Sundance Wealth Management on September 7th, 2016

Identity thieves are upping their game. In their relentless pursuit of your personal identifying information (PII) they are constantly evolving in their technology and their techniques to stay one step ahead of you. In past blog posts we have hammered on the steps you need to take to fortify your defenses against identity theft.
It is up to you to take every precaution you possibly can, but even that may not be enough. You also need to stay abreast of how they are changing their game. These are a few of the methods law agencies are reporting as increasing in use.

Credit Card Skimmers
Although credit card skimming has been around for a while as a proven method for stealing credit card information, it is becoming more wide spread because anyone can now buy a skimmer for $40 on Amazon. Card skimming devices are placed on ATMs or point-of-sale terminals at gas stations waiting for victims.
We have long been warned to examine the card reader on the machine to look for anything out of the ordinary – a loose fitting, or an odd color. But some of these skimming devices are very authentic looking, and now thieves are placing a PIN-snatching overlay over the keyboard to capture PIN numbers. Even without that, thieves can watch you PIN entry from a nearby camera. The bigger threat may be the handheld skimmers. Anytime your credit card is out of your sight, it takes just a few seconds to swipe the card and capture your PII.
The best defense is to be overly vigilant. Don’t use ATMs in remote locations. At point-of-sale terminals use your cards that contain an EMV chip as they are harder to skim.

Phishing, Spoofing and Smishing
Phishing is another form of ID theft that has been around for a while, and thought to be outdated due to the improvements in spam technology. However, the phishing fraudsters have been successful in staying a step ahead of security technology by upgrading the quality of their attacks. Phishing emails, which are designed to lure a person into providing sensitive account information or a Social Security number, are looking more authentic, and are better at avoiding spam detection.

Spoofing can occur in a couple of ways – on your cell phone or computer. Spoofing is when someone masquerades as someone or something in order to gather sensitive information. On your cell phone, it could happen when your caller ID shows an unfamiliar number, or a number that looks to be legitimate. The person on the other line claims to be from your bank or brokerage firm requesting account update information.
It can also occur on your computer when a scammer sets up a fraudulent website to obtain information or install a virus. The website masquerades as a bank or a retail store, asking for log in information as any legitimate website does. However, when you log in, the scammer can use your information to log into the real website and access your account.

Smishing is similar to phishing except it uses cell phone text messages as the lure. In most cases, the text return address is a URL or phone number. The message usually asks for your prompt response. If you don’t recognize the phone number or URL address, do not respond.
Whether its card skimming, phishing, spoofing or smishing, the objective of the thief is the same: To trick you out of your personal identification information. The only defense is your vigilance and your strict adherence to the cardinal rule of identity theft protection – Under no circumstances should you ever provide sensitive information, including a credit card number or an account number, over the phone or through an email, unless you can absolutely verify the legitimacy of the caller. There is absolutely no reason to give your full Social Security number over the phone or through an email.