Tuesday, May 31, 2011

Vindication for My Do Not Buy List

Apparently, the SEC agrees with me that Regulation D offerings under Rule 506 are being used by felons and bad actors to raise money from unsuspecting investors. Under Reg D, money can be solicited from up to 35 non-accredited investors and an unlimited amount of accredited investors. These offers are exempt from SEC registration, therefore the potential for misuse exists.

Under the proposed rule, anyone who has had a criminal conviction, court injunction or restraining order would be prohibited from bringing a Reg D offering to investors. I am not sure if the proposed rule goes far enough, however. It seems to me if someone had their securities licenses revoked, then they would fall outside of this proposed rule. Further, what about someone who has been fined in a civil proceeding for previous securities rules violations? They too should be barred from being able to offer Reg D offerings in my opinion.

You can speak up and offer your own opinion at:


Readers of this blog have long been informed about Reg D offerings and their pitfalls for investors. The bottom line is that I do not like them and neither should you, no matter what lies you may hear about how great they are for you.

Be smart out there!

Wednesday, May 11, 2011

Bernie Madoff Trustee's Fees

The Wall Street Journal wrote an Op Ed piece in their paper today entitled "Madoff and the Mets". Mr. Irving Pickard, the trustee and New York bankruptcy attorney in charge of recouping the funds for the victims is benefiting financially from his role. According to this article in the Wall Street Journal, "He has billed for $175.5 million in fees." The WSJ article goes on to say that "...he seems more interested in collecting fortunes from public figures by humiliating them into a settlement, before his claims are ever tested in court."

For WSJ subscribers, you can read the article via this link:


One hundred seventy-five million five hundred thousand in attorney's fees is what I want to vent about. Why is this injustice allowed in the first place? There is no way that it takes $175,500,000 to do his job. Once again, this kind of injustice should never be allowed. In my opinion, you could have found 100 or more equally qualified individuals to do this job for a $1,000,000 a year flat fee. Anyone of these other qualified individuals would have had the victims best interest at heart and I guarantee you that they would have gladly done the job for $1,000,000 per year in a flat fee.

By my calculations, this trustee is being over paid by $174,500,000. Where is the outrage? Where are the victims of Bernie Madoff? Why aren't they screaming about this blatant rip off? They were already victimized once. Now they are just supposed to stand by and take this lying down? No thank you.

Come on you Madoff victims. Raise a stink, please.

New Addition to My Do Not Buy List

Today, I would like to add another item to My Do Not Buy List. I have to do this without naming names, so if you are promoted something like this by an registered investment adviser, or a brokerage firm, then hopefully, you will recall this article.

Apparently, there is a company out there that loans money to credit worthy investors. Supposedly, these people who need money, cannot get a favorable loan from their local bank, or just prefer not to do business with them. One of the credit score qualifications is 660 or above. So, what happens is this firm attracts investors to put up money for these credit worthy borrows. The investors who put up the money, then are entitled to a high return of 8 - 10%.

Your first clue is the bogus 8 - 10% return being promoted. Your second clue here is that someone with a credit score of 660 or above can most likely easily get a loan in today's marketplace less than or the same as 8 - 10%. My question becomes, why should they go this route when any local bank or credit union will do?

If you dig and little deeper and think about this, then you will see the true picture.

I was just solicited today from a new registered investment adviser who is offering the investments from this lending firm.

The way I see it is the original investors who supplied the funds for this lending firm want their money back, because it is not working out like they planned.

So, what is the lending firm's solution? They created a new registered investment adviser firm that will raise money from guys like me (I'm not that stupid) and then bail out the original investors from the lending firm who want out. For the privilege of buying this credit paper, (or is it toilet paper?) the investor has to pay this new registered investment adviser a 1% fee that grades down a little bit, but not much. Then, the other firm that acts as the feeder fund (where have we heard about feeder funds before? Oh yes, Bernie Madoff) will also charge their fee on top. The total fee could be 2 -2.5% depending on your favorite feeder fund.

Want to hear something hilarious? The lending firm normally charges 1% for their services. Out of the goodness of their heart, they are going to waive this 1% fee for investors who give money to their new registered investment adviser firm. The truth is they own the registered investment adviser firm and they are charging the 1%, so they are not really waiving anything. The money is only going from the left pocket of the lending firm to the right pocket of the registered investment adviser firm that THEY OWN! I told you that was hilarious, didn't I?

The investor who buys this opportunity for high income (don't make me laugh) will instantly have no liquidity after they buy it. You see, this was the problem with the original investors who put the money up for the lending firm. They did not like the way things were working out, so they are screaming for a solution. They have no liquidity. Did I mention that they have no liquidity?

This lending firm created their own brand stinking new registered investment adviser firm full of conflicts of interests, by the way, and decide that they will reward these original investors with a buy out from other registered investment advisers who are stupid enough to put their clients in this investment. Is this really an investment? No.

It is a black hole with no liquidity and no guarantee of a return of principal.

They will tell you otherwise, of course. They will say there is a secondary market for these investments. Oh yes? Where is it? On the New York Stock Exchange? Not hardly. THEY are the secondary market! Let me get this straight. The original investors, in my opinion, want out. There was no secondary market for them. That is until they created this new registered investment adviser out of thin air. The feeder funds will be the solution for the original investors. They will get out with their original investment. But, the investors late to the party, they will not. When they want to liquidate, then they will find out how small and mostly non-existent that secondary market is for them.

This lending firm apparently is finding out that they are in competition with banks and credit unions. They have a stable of unhappy original investors who want their money back. Further, they are also finding out that they need an endless supply of feeder funds to keep their juggernaut going into the future. I predict that this firm will eventually go out of business once the banks get hot and heavy back into lending to consumers. Until then, this lending firm may have some limited success.

Sadly, I have to assume that there are people lining up for this high income opportunity. The readers of this blog will be protected from "opportunities" like this one. Drum roll, please! Here is your new addition to My Do Not Buy List.

Consumer Credit Funds.

They may call them something similar like Consumer Loan Funds, or Short Term Credit Funds. Be aware of differences in how they may be promoted. Be on guard!

The weird twist to this scenario is that this is all perfectly legal. Just like everything else on my Do Not Buy List.

The bottom line is Do Not Buy this ever!

Monday, May 9, 2011

My Marketing Brochure

After careful thought, design, input and prayer, I have approved for printing my business brochure. No brochure will sell itself or make you a bazillion dollars, but you should have one to deliver to prospective clients and centers of influence. Also, existing clients may want a few to hand out to select friends.

This brochure is 11 x 17 inches and when folded over, each page is 8 1/2 by 11 inches. When you take a peek at it, be sure and zoom to 100% to get the feel of it. Follow this link to see it:

MarianFS Brochure

Feel free to leave your comments here, or you can contact me directly at 904-262-0888. If you prefer email, then you can email me at rick@marianfs.com. I would love some feedback.

Louisville Meetings Upcoming May 24th

I plan on being in Louisville on May 24th to speak about my book, Keep Your Assets. Take My Advice. It is Easier to Climb Out of a Shallow Hole. I also will be speaking about my investment philosophy, my rules for investing and specific information about my business.

These meetings will be held May 24th at 10:00 a.m., 2:00 p.m. and 6:00 p.m. The location is the Hyatt Place Louisville East with an address of 701 South Hurstbourne Parkway, Louisville, KY 40222. The Hyatt Place phone number is 502-426-0119.

If you are in the Louisville area and would like to attend, then send a email to rick@marianfs.com with the number that will be attending, along with each name, phone number of each attendee and the specific time that you wish to attend. Or, you can call 502-241-2858 or 877-241-2858 to make a reservation.

If you do attend, then you will learn how not to be a victim of Wall Street's shenanigans. I look forward to seeing you there.

Tuesday, May 3, 2011

A Tale of Two Leaders, Or Make That One Leader

There are certain things that happen in our lives that are truly the work of God. God puts people into our lives for a reason. He wants to teach us something. It is up to us to recognize it.

In 1999, it was a crazy year in the stock market. Everything was going up. Mostly technology stocks and mutual funds. I remember some mutual funds going up over 200%. At the time, I was working for myself, but was quickly realizing that when the market turns south, which it did, then I would be faced with a frozen consumer marketplace. Meaning, that most clients would be inclined to get out of the market than get into the market. So, I was guided by faith go to work for Charles Schwab & Co. Inc. in Little Rock, Arkansas.

The Branch Manager who hired me quickly moved on and was replaced by this guy who was every bit of 6 foot 6 inches tall. He had more energy than you could ever imagine. He had worked at Schwab for several years and had recently turned around a failing branch in Midland, Texas. He had achieved Chairman's Club on several occasions. Chairman's Club at Schwab was for the elite top ten percent of people who worked at Schwab. He was also the top salesman on the Schwab Bond Desk prior to his becoming a Branch Manager. Reaching these two pinnacles of success were no easy tasks. He did it with ease.

When he came to Little Rock, he found a pretty good team of people already in place. His goal was to make us the best that we can be and to help us attain Chairman's Club.

You see, the real testament to a great leader is when their focus is not on themselves and their own career, but rather on you and your career.

I believed in him and he believed in us. It was not long before he was challenging us at every turn, pushing us to do better and motivating us to be our best. At first, Chairman's Club seemed like a impossible goal to us. You basically had to have four great calendar quarters of bringing in new accounts and assets to achieve it. This meant we had to pretty much exceed our normal quarters by a significant amount. Our Branch Manager keep us focused on that goal.

I wish the rest of my supervisors at Schwab better understood their role as potential leaders. Unfortunately, most of them were more concerned with their own careers.

A true leader should inspire you to do so well that you actually can attain or even surpass the role that they are in. This means that they must be willing to risk their own job in order that you are able to climb the ladder.

Our team made Chairman's Club after that first year and we owed it all to him. He is the one who made us believe in ourselves. He is the one who pushed us towards that goal. It was a great accomplishment for our team. This is how he looked at it. It was all our doing he tried to convey to us. But, we knew. Without him, we never would have accomplished that goal.

I have a picture of him and our Chairman's Club team on my office wall today. Stop by sometime. I will be glad to tell you more.

After my wife's job changed, it was a certainty that we had to move away from our home town, Little Rock. With tremendous help and encouragement, my Little Rock Branch Manager helped me get an interview for the Jacksonville Florida Branch Manager position. He was real instrumental in me landing that job. He pounded the phone line with the Florida RVP, whom he did not know, to help me get that job.

This is what leaders do. They help you move on and up.

To make a long story short, I won the job and turned around the failing Jacksonville Branch Office. I ended up through the closing of other Branch Offices being added to my own, managing the largest geographically dispersed office in the country for Schwab. I had clients from Jacksonville down to Gainesville, over to Tallahassee and even southern Georgia in my territory. It was around a $900,000,000 office when I started and a $1,600,000,000 office when I chose to leave at little over two years later.

I only wish that Schwab had more people like my Little Rock Branch Manager. Unfortunately for me, this turned out not to be the case. I had seven RVP's over the four plus years that I was at Schwab. Every time I turned around, I had a new RVP. Sadly, these people were the opposite of my friend in Little Rock. They were all out for themselves. They were real good at circling their wagons. They knew how to play the game of office politics where you belittle everyone who works for you in a feeble attempt to elevate your own self-esteem. Some of the other Branch Managers were the same way. They knew how to play this game. In my case, it all seemed so insincere and a pointless waste of time to play these office political games. I refused.

I made the mistake of telling my last RVP that I wanted to be an RVP at Schwab someday. That was my mistake. From that point forward, she did everything in her power to make it hard for me. Schwab was going to close the Ponte Vedra Branch and merge it with mine. However, this RVP liked the Ponte Vedra Branch Manager better than me. Little did she know while he was sucking up to her, in reality, he could not stand her. She was so naive. So, this gal decided in her mind that she needed to find a way to get rid of me, so you could appoint her Ponte Vedra guy in my place. This was her somewhat diabolical plan. She had no reason to fire me, so she had to create a scenario to make it easier for her to get away with her plan.

My second to last quarterly target was $46,000,000 in new assets. I think we ended the quarter at like $45,900,000 or so. This RVP figured that she would raise my target to an unreachable amount and then have an easy time of getting away with her plan. She had already been talking to my old RVP's and her boss about me. It was not true the picture she was painting to them, but they believed her stories nevertheless. She was laying the groundwork in advance for the eventual day of reckoning she was sure would take place. She was truly confident in her plan. She thought she was going to "take care" of me easily.

A lack of intelligence is not something that I have a problem with. I could see what she was up to and I knew where she was headed with her plan. She was not ready for the lesson that I was about to teach her however.

Here she came with a new quarterly target of $67,000,000. In one quarter, she jumped my target from $46,000,000 to $67,000,000. This is a 45% increase in my target from one quarter to the next. Almost from day one, she was calling me up on the phone telling how I wasn't going to make it. She relished in what she was doing. She even went so far as to try and get me to fire one of my employees which would have made it even harder to reach this target. She failed to understand who she was dealing with, however.

Again, I am not stupid. I decided that if Schwab really wanted me, then they would fight for me. If they believed her and her lies, then why should I stay at a place like this? There would be no more career at that point. That would be the preverbial glass ceiling. So, what I did was gather my team together and we brought in $81,000,000 in that quarter. I faxed my resignation in to the President of Schwab and said thanks but no thanks. At first, my RVP was able to quickly cover her tracks. She never thought in a million years that I would walk out the door and especially blowing out my quarterly target. My first quarter we did a little over $8,000,000. My last quarter was over $80,000,000. Yet, this RVP would lead you to believe that I was a problem child. Not so. She was the problem. Oh ye of little faith!

It didn't take long for the President to figure out that he should have picked up the phone to call me. Not only did he fire my RVP, but he also fired her boss on the same day, a few months later. The President figured it all out.

If you asked her, she would still probably say that she was without fault and she was doing the right thing. If that was the case, then why did she get fired? She was definitely not the kind of person that should be in a position of authority.

Believe it or not, I still have an occasional email or two with the CEO at Schwab who was the President at the time. He did the right thing by getting rid of her and her boss. I applaud him for that fact. Although, I must say I was a little disappointed in him for not picking up the phone to call me. I am sure he had plenty of more important things on his plate at the time. I hold nothing against him. I have moved on to much better things and I still work with Schwab today. Instead of on the retail side, I work with them on the Advisor Services side. It is much better this way.

So, when you contrast the two styles of managers or supervisors, which one would you prefer? Which one is the real leader? I would take my Little Rock Branch Manager any day over my last RVP. There is simply no comparison.

One manager sacrifices everything to help you in your career while the other tries to destroy your career.

I spoke to my Little Rock Branch Manager yesterday. He has an aggressive form of prostate cancer and is not expected to live more than a year. He still has the same great attitude that he has always had. He jokes around like he has always done. Eternally optimistic. That is him. He is more concerned about me than himself. Even when facing certain death, he wants to know how I am and what is going good in my life. What a gift he is to this world. He is looking forward to spending time with his family this year and he is facing his circumstances in an extremely courageous manner. We should all have his faith, courage and disposition.

I knew God put this man in my life for a reason. He has had an everlasting impact on my life. What a great leader and a great example for all the managers and supervisors in Corporate America to follow. Is your firm made up of people like him? If not, there is no doubt it should be.

One thing that I would love to do is be a outside consultant for Schwab and go around and find the true leaders that are there. Perhaps, even institute a leadership program based on the teachings of my Little Rock Branch Manager. It would be a huge success without a doubt.

I would give my report to the CEO. Mr. CEO, these are the people that should be leaders in your company. The ones like my friend and former Little Rock Branch Manager.