Professional Advice

Since I've been fortunate enough to accumulate a few shekels, I've been privileged to deal with "Money Managers" and "Financial Analysts." They used to be called stockbrokers, back in the day. In 2000, a dear friend convinced me I needed to have some of my money "under management," which means the broker buys and sells stocks and bonds, for a yearly fee, and you don't pay commisions on the trades. Wifey and I chose Northern Trust, and they had us to their wood paneled office on Brickell, and we met our manager, a Michigan Business grad who previously worked for the World Bank. I wrote her a 7 figure check, and told her to grow the money, as I planned to work for many more years... Thereafter, I rarely looked at the monthly statements, and the tech crash happened. Of course, much of the money was invested in high tech stocks, but when I looked closely in 2002, the account was worth half of what I had put in. I met with the financial genius, and asked why I was paying her a fee ($11,000 per year) to let her watch stocks drop without doing anything. She mumbled something about Northern's models. I withdrew the money, and thought about suing, but realized that as a person who dealt with large sums for my clients, I didn't want to admit in court that I was completely unaware of my own financial person losing huge amounts of my own money. Since then, I generally keep control, though I do use three different brokers. I met with one the other night, who "manages" a small amount of my money, and works for a large NY investment bank. We discussed the recent downturn in the market. When I opened the account, I bought, at this broker's suggestion, a mutual fund attached to the energy production. With the crash of oil, that fund is now down 40%. I expected the broker would say "Look -- it appeared to be a good investment, but it turned out bad. You took a risk -- what are ya gonna do?" Ha. As if! Instead, she told me the thing was poised to take off again! And, two years ago, because I invest like an old man, I kept much of the account in cash. This same broker said "OUR decision to stay in cash turned out to be a great one." OUR???? The day after our meeting, I was having lunch at LOL, and ran into a CPA I know from the 'hood. He is semi retired, and told me unabashedly he has "plenty of money." He early on made the excellent professional choice of marrying a woman who practiced medicine full time, and brought to him her very nice salary. Some guys are just smarter than others...Anyway, the man who I'll call Scott, since that's his name, was singing the praised of his broker, a Mormon in Texas. He said the guy has made him tons of money, and has 9 kids. Red flag, I thought. Anyone with 9 kids may become financially desperate, and pull a Mormon Madoff... I laughed, and was just happy I keep things in perspective. Brokers are typically salespeople who simply push the products their higher ups tout. Any scholarly study worthwhile concludes that over time, no one beats the market itself, and the best investments are simply index funds. Still, it's hilarious to watch experts take credit for when things go well, and avoid blame when investments lose... I guess it's human nature. Last year, I gave some free legal advice to someone about an injury matter. The client was considering settling a case for a small amount, and I strongly suggested that he get more data first -- was the injury serious, and provable? Their lawyer was, like many, a lazy one, and probably headed towards the easy way out. Well, the client learned the injury was real, and a six figure settlement resulted. I spoke to the client's relative, and was REFUSED due credit for my advice -- "Oh no, they NEVER would have settled that cheap." Again, as Tony S says, what are ya gonna do? So maybe my brokers feel unloved as well -- I don't praise enough when my accounts go north. But hey, I pay them, so too damn bad! I guess the only explanation is aging crochety syndrome...I become more of a nasty SOB as I get older. On Friday, I had dinner with my sister of another mother, Mirta, and we discussed this -- all of the many, many people who now annoy the hell out of us, as opposed to liking them in the past. Mirta says she's ALWAYS been a grouch -- and I'm one of the few people she really likes being around -- for my support and sage advice. And, of course, I can never thank her enough for all she meant for my mother in the final year of her life -- truly loving and caring for her, and making Mom's last 11 months so much better... But back to the money people. I've reached out to all three about D1's new business, seeking referrals and introductions for her. If they come through, they keep my accounts. If they don't, I will do what I probably should have done a long time ago, anyway, and switch everything to cheap, online accounts. So far, one has come through -- big. D1 is meeting with several prominent members of a leading Gables Country Club, which will hopefully lead to clients. The other two have spoken with D1, but nothing has materialized. So we'll see who comes through, and who doesn't. In the meanwhile, hopefully the market is on the upswing, and I'll be hearing from the success's many parents. Of course, the failures are orphans...