that’s not a normal state that’s lazy okay that’s not normal to be putting your head down on a table to not be moving snap and pop do not be adding wood to your fire look lazy as I wrote in this recent article that was read by almost four million people with I think as of today fourteen thousand likes and just as many dislikes even people rageful and angry maybe you’re getting like that right now about my article that lazy is the new entitlement look just see if this describes you or anyone you know I only do enough I make as little as possible I save as well as possible I invest as well as possible I learn as little as possible in hey I work as well as possible and when my five days are over with each week I have to I must take Saturdays and Sundays off I’m entitled to it these are the policies of a lazy and they are ruining our country they’re ruining anyone that operates with them okay normal a normal state is not lazy a lazy person is actually educated encouraged acknowledged and it’s allowed lazy is an allowed state in organizations so if you see anybody in your group in your organization and your family this lazy hey knock it up man it don’t work you end up with too little money not enough love not enough work not enough customers lazy is a failed policy and I’m here to wake you up about it
everybody jeff rose goodfinancialcents.com with the special little treat today I want to do a little screencast webcast called what you will and to talk about an investment strategy and investment option that I’ve been very partial to over the last couple of years and just want to kind of introduce that too for those of you who haven’t heard of it I don’t view this as a supplement to investing in the stock market and individual stocks mutual fund etc but I definitely think that it could be a complement or something to add to your investment pie and that’s why I want to talk about today so without further ado what I’m actually talking about today is what’s called peer-to-peer lending peer-to-peer lending or p2p lending as it sometime is abbreviated and as you’ll see here kind of jumping the gun one of the top peer-to-peer lending companies is a Lending Club but first some I go to Wikipedia just read for you what exactly peer-to-peer lending is and as Wikipedia States it says peer-to-peer lending is a certain breed of financial transaction which occurs directly between the individuals or peers without the intermediary of a traditional financial institution person-to-person lending is for the most part a for-profit activity that distinguishes it from person-to-person charities person-to-person philanthropy and crowdfunding which also creates connections between donors and recipients of donations but our nonprofit movements so basically what what peer-to-peer lending is what I think of it is imagine you I think as a we’ve all had family members or friends of asked us for Monday you maybe you haven’t I know I’ve been in that situation on more than one occasion and not a very fun situation to be in by the way but essentially what this peer-to-peer lending is you have individuals that need to borrow money for ever reason maybe it’s to pay back a credit card I’m sorry pay back the student loan maybe it’s to pay off a credit card maybe it’s to fund a business venture fill in the blank I think we’ve all needed money at some point time some of us by default go to credit cards or maybe we go to a bank etc what peer-to-peer lending is is that you have a mediator as a lending club that basically allows other people to invest or lend you that money and then also get a rate of return from that and that’s what’s really kind of intriguing about this whole process is that so basically you’re able to lend money to some individual somewhere else in the in the country and you can make a decent rate of return off that by being by loading that person so in essence you’re acting as the bank or the financial institution and making that rate of return off of it so that’s kind of the gist of it and that’s what makes a very intriguing so as I mentioned not to jump the gun but one of the leader of peer to peer lending is lending gun and what really attracted me to Lending Club was that they have a tremendous social media awareness they’re on Facebook they’re on Twitter they’ve got a blog and that’s really where I first learned about them I you know be quite frank I had heard when I first heard of peer-to-peer lending I didn’t know I knew what they’re talking about and wasn’t so I started reading some blog posts and started learning more about it that really kind of got the concept and the one thing once you go to the Lending Club website I think that just is the immediate attractor is this investors average returns of nine point six four percent so obviously that attracted me and when you think of the stock market and how once upon a time how you know you could hear that the market was making you know double-digit returns a lot of this happened prior to 2008 and then prior to the recent downturn that we’ve had so when you start talking nine point six four percent average investor average returns I think a lot of people are going to get interested solis are going to find more about it that that was my my love my lure or like that got me in but real quick just has a quick disclaimer the Lending Club has filed with sec and right on their website you’ll see a prospectus so if you are interested in becoming an investor in Lending Club do take a look at the prospectus so that we can read all the information about it so that’s my quick little disclaimer on their perspectives so what I really wanted to do today was actually walk you through how to invest with Lending Club I’ve been investing with a lightning club for a few years now and I don’t have a whole lot invested and you actually will see that here in a minute because I really I didn’t understand it I wanted to test-drive it first and I wanted to test drive it before want to put more money into it and two before I told more people about it as far as you know suggesting that at least someone take a look at so here is the website and I went ahead logged in to where you can see where I am at right now right now I have invested a total of twenty-two hundred bucks so not a big investment by any means and I have my net annualized return is ten point eight percent so right off the cuff you can see that I’m already making more than the average I guess investor or Lending Club is making almost a full percentage point more that’s not because I’m any rate investor I just you know I’m very actually passing the way that I choose my notes which I’ll show here in a minute but some of the details I have currently have five hundred twenty-five dollars sitting in cash in my Lending Club account that I need to invest and that’s what we’re going to show today to where show you how I invested how you can also do some research on that so really quick so how we do it is we go to invest click on the link and here is really why I love Lending Club for the people that don’t like to spend a lot of time doing a lot of research they make it very very very simple to wear you can either choose option 1 option 2 or option 3 and let’s just assume that you’re a very high risk person and that you are looking at the 17% that you look at that number you’re drilling over and you want it that’s how much you want to make by quickly clicking that option they then will show you where you’re investing your notes and a notes basically is the agreement that you have with that person that you’re lending to and they rank them just like they would report hard or like a bond you know a ranking be ranking seem ranking initially you’ll notice I by going the more aggressive direction you don’t have any of the a or B type investors and you know these are your higher FICO score credit people may be less likely to default under alum so this is definitely a more of a high yield approach when it comes to a peer to peer lending so you’re gonna of that five hundred and twenty five dollars I had to invest $100 of that’s going in to see investors two hundred dollars of that is going to D investors 150 going to e and then 75 going to F so immediately immediately Lending Club breaks it down for you automatically and I can’t tell you how much I love that and that’s actually the strategy that I have done I don’t do the option three I typically do the option one but immediately they break down the notes for you but they also show you your average interest rate on that is seventeen point nine percent but because of some of those folks are going to default on their loans they’re estimating that 4.42 percent of that you will lose based on default then there is lending clubs charge of 0.52% so your projected return after all said and done is going to be approximately twelve point two five percent and that’s that’s approximately you know maybe all those people do pay back where you’re all good you actually make more that should just give you kind of range and just go to the next step real quick and from here here’s another thing where you can start seeing what some of these loans are useful for example credit card consolidation August 2011 $24,000 loan debt consolidation loans small business law small business loan etc so you can actually see what these notes are amount left is how much more that that person needs to borrow to take care of take care of that debt and if you want to take it one step further you now can see more about the individual their gross income per month if they’re a homeowner or not length of employment their current employer whether located debt to income their credit score range and just gives you a lot more details about that creditor and then even more if you want you can ask them questions if you’re not confident you know or just not need some more reassurance you can actually for this this example here they ask what type of business are you starting and they said we are purchasing an existing flight school and looking for an investor short-term loan to assist with down payment and this Lending Club actually gives you some direct question to ask they didn’t change that a little bit over the past few years I think as far as privacy acts as are some of the questions you could ask but they give us a lot of good basic questions to ask so that’s where you can learn more about it one thing I didn’t mention is that of that five hundred and twenty-five dollars that I have to invest typically only twenty-five dollars of that is going per individual note so that’s where diversification comes into play to where you’re not putting all your investment to one person you know so therefore you conversa fie so I am going to do option one I’m much more comfortable my projected return is to be lower but as you can see I’m actually doing better than that I think I might have done some high-risk in the beginning but typically I’ve stuck with the option one all together and you can see I’ve got a lot more of the a a investors be or be a lender tomorrow excuse me be borrows and none on the FG side so not much on the high-yield I like to be a little more conservative with this aspect and immediately they break it down and looks like I owed a some overlap of my last entry so let’s see if we can get that straightened out oh the other thing too real quick is you can actually choose the term of the note Lending Club initially just start out with a 36-month three-year note they now offer a 60 month note 5 your five your notes so that’s actually a little bit more return on on that one but you are looking to your money and you could also sell these notes to so if you are wanting to not hold it for the maturity you can find a buyer just like kind of selling a stock on the market to find find someone to unload those two so all right let’s see if I can finally get this figured out I just want to invest just started with the option one to begin with REO start over sorry about that alright option one continue and look quick you can see some of those cool project other decks salvation loan home improvement loan etc etc so I could actually go in there Alec Hart and I could add more money to one node no take some money away from another no etc you know you have the ability to do that you’ll have the ability to build your own portfolios from scratch so if you want to go through all the different notes that are available you can do that as well I personally don’t have any interest in that so I don’t so with five hundred twenty-five dollars I’m going to invest into twenty-one different notes and my average rate of return will be approximately nine point five eight percent and quick look at the notes and we are going to place the order and you can then give your portfolio and name I I haven’t done a very good job managing this so I’m just going to assign it to portfolio ten and we can go from there so and I will soon get a confirmation now the one thing that with lending code I have noticed is that so I’ve just invested five hundred twenty-five dollars into twenty one individual notes now most likely it will happen that not all those notes will get the entire funding and typically what that happens is is that so the investment that you thought you made you don’t make you get a refund back to you and then from there you can go out and find some new notes so that most likely will happen just FYI so and that is it that is it as far as how to invest with Lending Club I mean that’s how simple it is as far as you know who I would recommend this to this is not a savings account replacement this is not a CD replacement you know even though it is a three year and five year no – you might think of that as a three or five year CD there is definitely more risk involved with this so you know do could make this an apple to apples comparison typically where I see this where I see this in my own my own investment portfolio because you know we have our emergency fund we have our savings account and this is just something to complement what I’m doing in my my stocks and like I said I only have a small investment now but we are planning on shifting some more money there we were building a house had some other improvements that we were doing having a third child so we want to have as much in cash you know have more in cash than we probably should but we just felt comfortable doing that now that we’ve kind of got some of those things out of the way I definitely a lot more comfortable moving some more cash into here start making some more interest I should also say I have never had any note on Lending Club default up to this point so I’ve been doing it for just over two years I believe and have not had a default yet now saying that I won’t but I haven’t had one yet if I do I’ll definitely report it so got more questions let me know on this you’ll find a link below that is a it is an affiliate link so if you do click an open account I do earn a bit of money for doing that that’s you can also go to Lending Club com directly and you know won’t get the affiliate and that’s that’s fine by me as well but feeling requests for the Lending Club or if you got any experiences please share I love to hear more about it and as this becomes more of a mainstream approach for a lot of people this is jeff rose goodfinancialcents.com and we’ll check you again take care
What is going on on everyone? Jeff Rose, goodfinancialcents.com
coming again at you. At this time I am doing one thing
just a little bit completely different. Not a lot a monetary
tip, immediately’s is definitely extra of a monetary
rant. There are quite a lot of issues in our trade
that I get actually labored up on and the next
is a major instance.
I had a shopper that had left her job. She
had taken a brand new place and she or he had a easy
IRA. Easy IRA is type of like a child 401Okay
for small enterprise house owners. My rant or the
factor that simply obtained me so labored up was that
the house owners of the corporate had taken out this
easy IRA with an insurance coverage firm. As a substitute
of getting conventional mutual funds, they’d
an annuity product. Lots of people have their
personal emotions on annuities. I do not actually
need to go down that path, however right here is one
occasion the place I completely despise annuities,
particularly in retirement accounts. She had
left her job. She had been gone for nearly
three months, and she or he needed to roll over
her easy IRA to her personal IRA. We referred to as the
insurance coverage firm and needed to seek out out if
there have been any give up fees as a result of I
simply had this sense of there being a give up
cost. Positive sufficient, lo and behold there was.
She needed to pay a 6% give up to roll her
cash out of her previous retirement account into
her personal IRA. It is her cash. It is the cash
that she put apart, however to get entry to it
to roll it over she needed to pay a give up
as a result of it was on this annuity product. To
make it worse she had six years earlier than she
may roll all her cash penalty free. That
burns me to no finish.
That’s the reason -I’ll use it, the hate
word- I hate annuities inside retirement plans.
I feel it is simply ridiculous that any person
has to pay a give up to get entry to their
personal cash. Now it is one thing that she could not
keep away from as a result of that was her retirement account
and she or he was doing the appropriate factor by saving
for retirement. Sadly, she discovered a
higher place and left. Now to get entry
to that cash she has to pay a really sizeable,
lump sum, give up cost to get that cash.
The insurance coverage firm did come again together with her
having the ability to do a 10% free withdrawal for
that cash, so we nonetheless need to do 10% every
12 months. We will do it, and we nonetheless have not determined
what had been going to do, however nonetheless that
simply burns me.
Simply take heed to that. I am not saying
do not put it to use as a result of it’s nonetheless a retirement
financial savings device for you. In case you have no different
choices on the market, I suppose it is higher than
saving for nothing. However nonetheless it is my rant.
I don’t like annuity merchandise inside retirement
plans, particularly people who require a give up
to get entry to your funds.
That is Jeff Rose, Good Monetary Cents with
a very good monetary rant. Be sure you examine us
on the weblog, and for those who’ve not checked us
out on Fb but, please take a look at our
Fb fan web page. Give us the large thumbs
up. We’ll see you round. Take care.
The opinions voiced on this materials are for
normal data solely and are usually not meant
to supply particular recommendation or suggestions
for any particular person. To find out which funding(s)
could also be acceptable for you, seek the advice of your monetary
advisor previous to investing.
This is Jeff Rose. Welcome to goodfinancialcents.com.
A lot of times if you’ve been doing something
for a while, you tend to take things for granted.
I got a call from a prospective client, someone
I’ve known for several years. They called
me to ask me a question that I just thought
everybody knew. It was such a basic question
when it comes to my profession that, like
I said, I just took for granted and thought
that everybody knew how to do it. The question
was how do I buy stock or how do I invest
into stocks? I thought really, you don’t know
the answer? Like I said it is just something
that I just assumed everybody knew. So I just
thought I would take a minute and address
some of the different ways, if you are interested
in buying stocks, you can.
To give you some background on the person
that called, they were in a 401K so they were
investing for their retirement, but they never
actually had gone out to invest into individual
stocks. There was a certain stock that they
were hot on and thought that they could make
some money on so they wanted to go buy it.
I gave her a few different areas, a few different
places that she could go to do her own research
and buy the stock.
First, if you’re looking to buy stocks, make
sure that you’ve got a foundation set. I always
hate it when people call me and they want
to start investing in individual stocks and
yet they don’t have anything saved in retirement.
They don’t have a 401K. They don’t have
an IRA. They don’t have anything. They don’t
have an emergency fund, yet they want to start
investing and playing in the stock market.
That’s one of my biggest pet peeves. It’s
like a house, right? With a house you have
to build a foundation first. You don’t start
putting on the roof or start doing the inner
accessories like the big screen TV and the
couches before you have the frame work or
foundation down. Make sure you have those
in place first before you go out and start
buying stocks. That’s my entry disclaimer,
but I just wanted to get that out there first.
Now if you’re ready to start buying stocks
and you feel comfortable doing this, you have
a couple different areas online you can go
to. The first place you can go is any discount
broker. Think eTrade, ShareBuilders, Zecco,
TradeKing, and I’m sure there are countless
others, but these places are good. One, they’re
very, very inexpensive. Sometimes you can
open accounts for free. Then to execute the
trade, to actually buy the stock you may pay
as little as $7.95 on up to 15 bucks per trade.
That’s pretty reasonable, especially if you’re
only going to be doing a few trades here and
there. Some of them, and I’m not familiar
with all the rules, but they may charge you
an annual fee if you don’t do a lot of trading.
Definitely read all the fine print and rules
before you engage on this. If it’s something,
that you’re going to buying a few stocks here
or there, that could be a viable option.
Another option if you’re comfortable making
the purchases online is to actually buy it
through the company itself. One website that
has a lot of arrangements with a lot of different
companies is Computershare. A lot of times
when I have clients that have a share of stock
that they either inherited or it was given
to them, a lot of times computershare.com
is the custodian. They will have to call them
to liquidate it or to find out how many shares
they own. Computershare just seems to be a
common hub for a lot of these different companies.
How I’ve recently had some more relationship
with Computershare was I wanted to buy stock
for my kids, not so much as an investment,
but more of a keepsake. I wanted to buy a
share, put my son’s name on it as in the form
of a custodial account. They had the actual
certificate, something we could frame and
put it on the wall and have a keepsake. I
was having difficulty trying to find a certain
stock that I wanted to buy. Sure enough I
went through Computershare and they had an
arrangement with that company so I’ll be doing
Computershare has a relationship with a lot
of those companies. You can go to computershare.com
and follow their links. I think you go to
investor’s center and from there you can see
some of the companies that they have an arrangement
for. I think it’s over 500 companies. I’d
have to check the website just to double check,
but that’s another venue that you can go.
I think it’s maybe a $15 transaction charge,
so once again very minimal cost to do it.
It’s another good, do-it-yourself, online
arena where you can go to buy individual stocks.
Okay, if you still want to buy stocks and
you’re not completely comfortable going online
to do it, I don’t blame you. That can be intimidating
for a lot of people. You have to open up an
account online, send some money to some faceless
operation. The other option you have is you
could probably go to a local investment house,
local stock broker and buy stock through them.
Just so you know, by going that direction
you’re probably going to pay more, considerably
more, but at least you have a face of someone
you can talk to. They can share their expertise
of what you think is going to make you a lot
of money, if it really is. Also, you have
somebody that hopefully is going to educate
you in having that foundation set.
All these different brokerage firms differ
on their prices, but I have to think at minimum
you’re going to be spending about $40 per
transaction. So if you buy a certain number
of shares it’s 40 bucks. If you sell again
it’s another $40. That’s for a smaller amount
transaction. The higher transaction you go,
the more shares you buy, or the higher the
share price is will then determine how much
you’re commission is going to be. Some of
these firms as well, if you don’t trade frequently,
they are going to hit you with either a small
account fee or an inactivity fee. Be conscious
of that. It’s definitely not the cheapest
direction to go. Typically when I’m working
with clients and if they want to do some stock
trades or they have a younger relative or
their kid that wants to buy shares of stock
and that’s all they want to do, I usually
will guide them to one of these online platforms
if they are comfortable just to help save
them a few bucks.
Those are some of the different options you
have. If you want to buy stock, you can go
online to one of the online discount brokers
or go to computershare.com. If you’re not
comfortable head to your local brokerage.
Then, when you shop around I would maybe interview
one or two different brokers just to see what
would be the potential cost to do so. I would
just say, “Hey, how much would it cost to
buy 100 shares of…..” and just give them
some stock, maybe the stock you’re interested
in, just to see what it is and how much the
fee is going to be. You want to make sure
you know what you’re getting yourself into.
Make sure you read the fine print before you
proceed and make that initial investment.
If you have other questions about anything
similar to this, you know where to find me,
goodfinancialcents.com. I have tons of information
there. Also be sure to check us out on Facebook
at the Good Financial Cents Facebook fan page.
Thanks again. We’ll be talking to you soon.
The opinions voiced in this material are for
general information only and are not intended
to provide specific advice or recommendations
for any individual. To determine which investment(s)
may be appropriate for you, consult your financial
advisor prior to investing.
This is Jeff Rose, goodfinancialcents.com.
Welcome everybody. I have a little neat, exciting
thing to share here. I was interviewed by
Laura Adams a.k.a. The Money Girl. She is
actually a contributor to the blog, goodfinancialcents.com
so be sure to check for her articles. I had
the pleasure of being interviewed by her for
a little Skype interview that we did. This
was our first attempt. We had a little static
near the end but we are learning. I’m getting
all my technical glitches out of the way.
She interviewed me about interviewing a financial
planner for your own services. At the end
I shared some tips of the five mistakes to
avoid when saving for retirement or financial
planning. Be sure to check out the interview.
Hope you enjoy. See you later.
LAURA: Hi everybody. This is Laura Adams from
The Money Girl podcast and author of Money
Girl: Smart Moves to Grow Rich. Today I am
here with Jeff Rose. I am so excited to be
interviewing him. He is a financial planner.
He has a business that is called Alliance
Wealth Management. I thought it might be a
good idea to find out from Jeff what some
of the typical questions are that he gets
about financial planning. Jeff, why don’t
you start out and just tell us what you do
and what type of customers you have?
JEFF: Sure. I have been a financial planner
for just over eight years or so and along
the way I’ve helped many different types of
clients. Being younger, I got started in the
business when I was 24 so I had a lot of younger
clients that just wanted to start saving for
retirement, start saving for their kid’s college
education. Also, I had a lot of the baby boomer
generation that were approaching retirement
and had a large nest egg like their 401K or
their pensions that they’d been saving into
their entire lives and now they had the biggest
decision moneywise to make in their lives
what to do with it. They entrusted me to basically
devise an income plan for them with that money
so that they wouldn’t out live it. That is
really where, I wouldn’t say my focus has
turned, but just my clientele has turned that
way through referrals and through all the
different events that I do. Right now I service
probably about 80% of the baby boomer plus
generation. Most of these individuals I would
say are people that know they need to be invested.
They know they need to be in the market in
some way just to keep up with the cost of
living and to keep up with their desires in
the golden years. They just don’t have the
time and they really don’t trust themselves
with that amount of money so they want to
rely on an expert like myself. I say expert.
I’m not trying to toot my own horn, but they
want to rely on a professional to take care
LAURA: Absolutely, yeah. I’m curious what
your opinion might be about whether everyone
needs a financial planner. Does everyone need
one or are some people able to do it themselves?
JEFF: That is a great question. I actually
just took a poll of my email newsletter because
I was really curious. I just had a hunch.
I talk to people all the time that don’t have
a financial advisor. They’ve been doing it
on their own or they are not doing anything
at all. I really was just curious so I emailed
my subscribers just curious to know the feedback.
The questions I asked were: Do you have a
financial advisor. Yes or no. Why or why not.
Of all the people that responded there was
only about 30% or so that had a financial
advisor. That was kind of my hunch thinking
that most people don’t. The most common reason
was trust. They didn’t trust them. They maybe
had some bad stories from friends or family
members or they had a personal experience
where they had a financial advisor that sold
them something that shouldn’t have been sold
to them, and they just didn’t trust that direction.
Other people just didn’t know if they needed
one yet. They didn’t feel like they had enough
money to get started. I think in all those
situations, maybe you don’t need a full-time
financial planner to manage the investments
on an ongoing basis, but I think it’s like
a doctor relationship. You don’t need to go
to the doctor every single day, but it’s always
advisable to go in at least once a year to
have your annual checkup. Why wouldn’t you
do that with your financial life just to make
sure that what you have in your 401K is where
it needs to be. Make sure that whatever investments
you’ve been doing in your own brokerage account
are in the right funds, stocks, or ETFs. Make
sure you have enough life insurance. I think
everybody needs to have some type of advisor,
maybe not an ongoing basis, but at least someone
to checkup on and give them that annual checkup.
LAURA: Yeah, that’s a good way to put it.
What are the different types of advisors that
people might find out there if they go online
and do a search for somebody? Tell us a little
bit about the different types of advisors
that people maybe would or wouldn’t want to
use depending on their situation.
JEFF: It gets so confusing now because right
now everybody is a financial advisor. Everybody
has that title. They used to be a stock broker,
investment advisor, insurance agent. Right
now I talk to everybody and they say I’m a
financial advisor. I’m like what does that
really mean? The different types would be
if you go to a financial advisor at an insurance
company or insurance agency. It has just been
my experience that they are just going to
lead in with some type of insurance product.
That could be an annuity. It could be some
type of whole life or cash value life insurance.
Personally I’m not a big fan. I don’t want
to start harping down on that, but those are
the ones that I would stay away initially.
I’m not saying life insurance is bad. Just
be conscious of what their pitching to you
and what they are trying to put you into.
If you go to any type of big brokerage firm
it could be anywhere from a commissioned advisor
where they are going to sell you a mutual
fund or an ETF, and they are going to earn
a commission off that product. They also could
have a fee-based relationship or advisory
relationship where you are paying an ongoing
fee, a percentage of your total investments
with them. Just make sure you are clear on
that. Where the waters get muddy there is
you might pay an ongoing fee for your account
with the firm, but there also might be transaction
charges within the account. There could be
internal expenses within the investments that
you own. The next thing you know you think
you’re paying 1% and you’re really paying
2½% and that really starts eating away at
your money and it’s hard for you to grow it.
That’s why my heart goes out to the consumer
because there is so many different ways. If
you don’t ask the right questions, if you
don’t know what to ask, you’re just basically
at the mercy of this advisor. Just be abreast
of that. The last one -we talked about doing
the annual checkup- there are a lot of fee
only advisors that basically just charge you
by the hour. These are the folks that will
just meet with you and analyze your situation
and give you a game plan. I think maybe even
a financial coach maybe would fall in that
category of someone just giving them guidance
on where they need to be.
LAURA: Great! So what type of advisor are
you? Tell me a little bit about how you or
your firm charges people. What’s a typical
customer’s fee structure, or what compensation
do you get for a typical customer?
JEFF: Sure. That’s a great question. Just
to give you an insight, I worked for the big
brokerage firm so I’ve been that direction.
I know that structure. Then we left and we
started an independent firm. When I became
independent I had the ability to do commission,
and I had the ability to do fee. I was doing
that for about three years, and the conversations
got so confusing because it depended on the
client and their situation. I liked it because
in some cases maybe a commission relationship
was better for the client if they weren’t
doing a lot of active trading. They just bought
one thing every once in a while. The majority
of my clients I did on the advisory relationship,
the fee based where I was managing their portfolio
helping derive income stream. Whenever I was
having that conversation with people I was
like here I’m doing this and here I’m doing
this. I just got frustrated with it and really
wanted to have a more stream lined presentation
or approach when talking to people. Recently,
I just created my own registered investment
advisory firm where now it’s completely a
fee-based relationship. The fee ranges anywhere
from 1-1½% as my ongoing fee. That is all
encompassing. There’s no more transactions
charges. There’s no IRA fees. At this time
that covers doing a financial plan for the
client and updating that on an annual basis.
Basically the client can call me, not preferably
on the weekends, but they can call me whenever
they need to if they have a question about
anything. I help clients figure out how much
they need to save for their kid’s college.
I’ll take a look at their 401K. That’s not
even part of what I’m managing, but I’m going
to take a look at it for them just to make
sure it’s where it needs to be.
LAURA: Excellent! That actually sounds like
a pretty good deal compared to some of the
fees that I’ve heard. As a registered investment
advisor what type of responsibility do you
have to the client? There’s a lot of confusion
in the market place about what is a financial
advisor’s responsibility versus a broker’s
responsibility in terms of recommending a
stock or an exchange-traded fund. I think
it’s important that people get to know an
advisor who can give them some level of responsibility
versus just throwing out a stock here and
there as a good pick that they think is hot
JEFF: The big thing, the consumer may never
understand this, I know the profession or
our industry is trying to do a better job
of making them understand, but basically the
two key words here are suitability and fiduciary.
With the previous relationship it was more
of a suitability issue where I would take
a look at a client’s situation and then I
would recommend an investment that I felt
was suitable for their needs. It may or may
not have been the right thing, but that is
what I felt based on the situation. Now as
a registered advisor, as a fiduciary I am
solely responsible for my client’s best interests.
I have to make sure I am doing what is absolutely
right for them and I am absorbing that role.
Before I did an RA I saw that word thrown
out there a lot and know a lot of other RAs
were throwing it out there and I’m like what
does that really mean. Now that I finally
get it and grasp it it’s really important
to me. When I talk to other attorneys and
other professionals and you talk about the
word fiduciary to them they get it. They understand
what that means and that client-advisor relationship.
There’s a tremendous level of respect for
LAURA: Yeah, I come from the real-estate world
years ago and fiduciary relationships with
clients were very important in that industry
as well. So yeah, I want to make sure everybody
gets that. If you go to a broker, they may
or may not have a responsibility to look out
for your best interest basically, but a registered
advisor (RA or RIA), that’s part of the title.
That’s part of the designation, that they
have a higher level of responsibility. I think
that is a great designation to look for in
Also Jeff, I wanted to ask you maybe a little
bit about the differences you see in men and
women that come to you. I get a lot of questions,
different types of questions from men and
women about finances and planning, and I am
wondering if you see a big difference working
with a couple or just a husband or just a
wife. Is there a big difference in the way
that men and women approach money and financial
JEFF: Yeah. Not to say it’s 100%, but it’s
so funny when I look at my baby boomer generation
of husbands and wives versus the Gen X generation
of clients husbands and wives. In my baby
boomer generation I have husbands that worked
10-12 hour days, and the wife was the homemaker
where they basically have relied on the husband
to make all the big money decisions. I always
make sure I bring in both clients. She’s still
a part of the equation because that is the
root of happiness or unhappiness if we haven’t
had the proper discussion. I want to make
sure I want to understand what her thoughts
and concerns are. For the most part they’ve
relied completely on the husband. Whereas
my Gen X I’m seeing more of the wives now
having more of a say in the money matters.
The experience I’ve had in my own office is
where wives are now saying we need to do this,
we need to do this. I think that sound good,
that sounds good, but I see more of a leadership
role than I have ever seen before, especially
with the baby boomer generation. I think that
is neat to see that.
LAURA: Yeah, it is. I do a lot of one on one
coaching with folks and the majority of them
are women who tend to be, like you said, taking
more of a leadership role for whatever reason.
Maybe they are going through a divorce or
they’re just waking up and realizing hey,
I need to be involved. I need to know what’s
going on for my best interests. I think it’s
great that younger women and younger couples
are approaching money much differently than
older generations, and it’s a really good
JEFF: Another thing I will say I have noticed,
and I think it is pretty well universal is
that women generally tend to be more conservative
in their investment tolerance. Even in that
leadership role the husband wants to make
12-15% return whereas the wife generally is
more on the conservative side, which could
be good or bad. I just want to make sure we’re
where we need to be. That’s another thing
I have noticed is that women are generally
LAURA: Yeah definitely. I think women have
that bag-lady syndrome fear that we always
hear. Sometimes women are really afraid of
the consequences of poor planning. That’s
a wonderful thing, but you can take that to
an extreme where you don’t invest aggressively
enough and therefore, you’re not going to
hit your retirement goal. I think having a
balance there between a man and a woman’s
perspective really probably ends up helping
overall if you blend both of those perspectives.
That’s great if people work on money together.
The opinions voiced in this material are for
general information only and are not intended
to provide specific advice or recommendations
for any individual. To determine which investment(s)
may be appropriate for you, consult your financial
advisor prior to investing.