I get a kick out of commercials for various medications. This isn’t because I actually need or care much about them, but I do enjoy the list of side effects that are required to be included. Yes, this medication may help with your headache; but be prepared as you may have to deal with itchy watery eyes, dizziness, muscle weakness, sleepiness, inability to sleep, uneven tire wear, and in rare cases dreams about winning the lottery from which you will wake up and be disappointed.
The same commercials extol the benefits of the drug, tell you the company may be able to help financially if you can’t afford it, and finally offer the very brief and perhaps only good piece of consumer advice in the ad: “Talk to your doctor to see if ____ is right for you.” It’s a line we sometimes ignore, but at the same time most people consider to be common knowledge. Of course you would ask your doctor! What am I, an idiot?
Like most of you, I feel comfortable believing that practicing medicine should be left to professionals that have had some basic amount of training (typically in the form of medical school). Maybe it’s the white coats that give us a modicum of comfort in trusting their decisions, but I like to think that avoiding accidental death and exploding eyeballs has something to do with it.
Interestingly, I wish the same concepts could be applied to the field of financial planning. It is true that ads for various investment products do include disclosures—“Past performance is not a guarantee of future results.” “Matthew Krajniak offers securities through Royal Alliance Associates, Inc., member FINRA/SIPC.” “Investors should review the prospectus before investing.” That said, I’ve rarely, if ever, seen the risks sufficiently explained. Costs are sometimes buried, and not all of them are listed in the same place. Even a 401(k), which many believe is free of charge, usually has costs in the form of mutual fund expense. Importantly, the words “Talk to your advisor about ____ to see if it’s right for you,” are often missing.
Blanket statements abound. Everyone has a story about how they’re glad they invested in a given mutual fund that their friend suggested, or that long-term care insurance is a waste of money—or that it saved our family. You can get the mail on any day of the week and see an invitation to a steak dinner where you will be shown how to guarantee your income in retirement or how to make money investing in gold. The only real truth, though, is that there is no investment that is appropriate for everyone—and it’s just as rare to see an investment that is always bad.
To help you navigate the turbulent waters of investment choices, you’ll rarely be encouraged to “talk to your financial advisor” because in general investment companies would prefer you to see their ad and look no further. An advisor may have other ideas, after all—especially an independent advisor. At The Krajniak Group, we’ve chosen to affiliate with Focus Financial and with Royal Alliance in order to allow us to be an independent practice. We find our own research, we construct our own financial plans, and we have no requirements to sell our company’s products since in fact they don’t offer any.
It’s also our recommendation to seek the counsel of a Certified Financial Planning professional (CFP). Like a doctor, a CFP’s job is to talk to you first to establish ailments and risk areas. We are required to evaluate your situation and apply a knowledge and skillset backed by a specific education. You should be given multiple options, with potential conflicts of interest and all costs and risks fully disclosed. In addition, we should be prepared to discuss investment ideas that you hear about on the radio or that you’ve learned about over a free meal and help you decide whether such an idea is a good one or if you should pass based on your circumstances.
The next time you see an ad for an annuity, or listen to a radio segment from “Fantastic Bob’s Investment Emporium,” just remember to add the words, “talk to your advisor to see if this product is right for you.” We’re available to help if you need us!