Investment Help

If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.

Monday, October 11, 2010

Be Careful Out There!

Brokers are not fiduciaries. They are not required by law to act in your best interest. This fact has been covered up, and only a small percentage of the investing public has any inkling of the damage brokers can do. In fact, even a prominent personal finance columnist this weekend urged her listeners to take advantage of brokers offering "free" asset allocation services. Doesn't she know that this is like asking the fox to buy the lock for the hen house? She should be ashamed--nobody does anything for free in the world of finance. Anyways, I'm off into the weeds. In this post, I want to bring the story of Lisa Detanna to your attention.

Ms. Detanna was the broker for Larry Hagman of "Dallas" fame. At one time, the entire country was engrossed in the "Dallas" TV series and especially the cold, calculating, manipulative business dealings portrayed by Mr. Hagman. Thus, there is a bit of irony here; although it's important to keep in mind one is fictional and one is real.

In thinking about investing and financial planning, the first step is to think about goals.

"The Hagmans told Detanna in 2005 that they needed income producing investments that would protect their principal, according to the claim. By June 2008, their accounts were about 69 percent invested in equities."

For brokers of a certain ilk, there is a problem here. The compensation they receive is just not compelling if they put you into "...income producing investments. . . ." Think about this. For a fee-only, registered investment advisor (RIA), the compensation is the same whether they put you into stocks or bonds; they don't get compensated by what they sell to you. Furthermore, an RIA has a fiduciary relationship with the client. They have to do what is in the interest of the client.

As the story details, Ms. Detanna had numerous complaints against her. Surely a potential client would see this in her ADV filing that she has to make available to potential clients. But wait--brokers don't have to file an ADV. There is no way to get a broker's background, just as there is no requirement for brokers to reveal conflicts of interest.

Instead, individuals see Ms. Detanna listed on Barron's list of top women Financial Advisors and assume she is an advisor worth working with.

My advice for a beautiful Monday morning: if you are using a broker for advice, then carefully read the story detailed in the link. Consider yourself warned.


  1. It never ceases to amaze me just how dumb and blindly trusting actors and athletes are about their investments. If someone had all that money, you think they'd crack a book or two and get self-educated.... or give some thought to risk and diversity. Not blindly delegate their money management to someone who lives off the fees they generate.