It Will Not Happen to Me

When I was a senior in High School, I did not think that my father would die of a heart ailment at the age of 39. When I had my first son, I did not think he would die three months later of Sudden Infant Death Syndrome. My wife and I could not believe that we had not one, not two, but three miscarriages. I never fathomed that my little brother would get killed in a car accident. Nor, did I ever imagine that my best friend would be murdered and my adoptive father, the only father that I ever knew would die in the same week. It all happened like it or not.

How does someone respond to such tragedies? Each person responds differently. As I grew older, I reached out to my aunts for pictures and stories about my father that I never knew. I met my other brother, Jon and my two sisters Tami and Kelly. We all shared something in common, albeit a tragedy.

When my son Reese was born, my wife and I had dreams not unlike any other parent for our newborn. Those dreams were shattered when Reese died. My wife and I stumbled into a group of bereaved parents that met ever so often. We ended up leading the group for a time. Every parent in there had lost their child, or in some cases children. I remember one lady who lost three boys in a fire. When I heard her story, I quit feeling sorry for myself. There is always someone worse off than you.

Once Reese died, we decided to try to have another child and we were blessed with our son Marshall. He is truly an amazing son. I am so proud of him.

My brother David lived on the same street as me. He had the best yard in the neighborhood. Hunting was his passion and he was a big boxing fan. Anytime there was a boxing match on television, he would have everyone over at his house to watch it. In 1978, he bought a Emerald Green Camaro. Over the years, he tinkered around with it and added some glass packs. Whenever he drove up our street, I always knew it was him. After he died, that Camaro sat in my mom's driveway for years. She could not bear to part with it. However, when my son Marshall turned 16 years old, I offered my mom a dollar for the Camaro. Her eyes lit up knowing that David's Camaro would stay in the family. Marshall and I worked on it for a time and brought it back to life. It still needs some work, but it is a beautiful car.

After the third miscarriage, my wife and I watched a little movie called "Rudy." We decided right then and there that we were not going to give up. Our child was going to be named Rudy if it was a boy and Rudi if it was a girl. We were blessed with our daughter Rudi. God takes care of you even in the most difficult circumstances. Rudi is proof positive of that fact.

My best friend, Mike Rowland was murdered when he was 39. His poor mother had already lost her daughter to a murder. She never imagined that she would lose a daughter and a son to murder. I still exchange Christmas cards with his mom. After Mike's death for a few years, we had a Circle of Friends golf tournament to raise money for the Arkansas Deaf and Blind School which was where his murdered sister Kelly went to school. Mike Rowland was the greatest. You will probably find at least a dozen other guys who will say that he was their best friend, too.

Recently, I read a book entitled Divine Alignment. It is a book about God's plan for us and something the author referred to as Godwinks. Godwinks are little things that happen that make you think of how God is working in your life. Little affirmations that he is there or your lost love ones are there watching out for you. http://books.simonandschuster.com/Divine-Alignment/SQuire-Rushnell/9781451648560

The other morning, I was milling around in my closet. I have a box of hats up on a high shelf in the closet. For some reason, I dropped the box and all the hats fell out. I quickly gathered all the hats and put them back in the box. I threw the box up on the high shelf, but it fell again and hats went everywhere. Once again, I piled them all back into the box and this time made sure that the box made the shelf. As I looked down on the floor, there was one hat laying there. It was a Michael Rowland Circle of Friends golf hat. I picked it up, smiled thinking of my friend and put it on the shelf by itself.

Later that day, my wife called me and told me that I got a card from Mike Rowland's mom saying she had moved to Dallas near her daughter. What are the odds, I thought to myself?

Later that night, a friend of mine called me from Arkansas. He was having a beer with a friend of Mike Rowland's. He handed the phone to the guy and we chatted for a moment. I told him that I had just received a card from Mike's mom that very day.

One of Mike's favorite sayings was "he was having a hay day" which meant he was having fun. I think on this day, he was having a hay day messing with me! Certainly, a Godwink in my direction.

My dad, Hillman died of cancer at the age of 57, the same week as Mike. I went to two funerals that week. Hillman was the funniest guy you would ever meet. He had all kinds of quips and sayings. When people would ask how he was doing he would say that he was "hitting the ground in high places and looking down on everyone else." This is what he is doing now in heaven. I know, because he accepted Jesus on the last weekend of his life. I witnessed it.

Last year, I did several seminars with people who had concerns about health issues as they aged or had loved ones with health issues. The smart ones came to see me and my attorney friend, R. Kellen Bryant. http://www.kellenbryantlaw.com/index.php. We were able to help several families with some much needed Elder Care Planning.

Sadly, most of the people that came to our seminars had the attitude that "It will not happen to me." These people simply did not want to face reality, or they thought that they could do better with another attorney or another financial advisor. I know for a fact some of them went to other financial advisers. Of course, if another financial advisor can shoot you down, then they will do it. The problem is that the families still needed the help that we offered. Their financial advisor had no clue about Elder Care Planning and Veteran's Benefits. In the aftermath, these families did not get the help that they so desperately needed. Their assets will evaporate as a result.

Another couple went to two different attorneys for a second and yet a third opinion. The third attorney told them to "go back and talk to Kellen Bryant. He was the best in town." This couple had been sold all kinds of garbage in their portfolio. Annuities and other loaded commission products, yet moving their accounts to me to help them out of the clutches of an unethical advisor was not in the cards.

When I interact with people like this, I often wonder what are they really searching for? Is it the cheapest financial advisor? The Right Financial Adviser was standing right in front of them, if they could have only noticed. The reason they did not notice was because their focus was on material things, instead of being focused on what truly matters.

Something that I know from experience is that it can happen to you. Will you do business with someone who has been there, understands what it means to lose a son, a brother, a best friend or a father, or will you settle for the cheapest financial advisor? Will you still be focused on material things that will not make you happy? Will you go with the financial advisor who is a smooth talker, takes your head off in commissions and puts you in products that are not liquid? For your sake, I truly hope not.

Perhaps, the next time you meet me in person, you can share some of your stories. I am a good listener, because it has happened to me.

Our firm tag line is... The Right Answer. The Right Financial Adviser. Think about those stories above, then you will know why.

Recessions Compared Historically

One of the blogs that I follow is the Calculated Risk Blog. This graph really tells the story of how this recession compares to prior recessions.

Do you see the problem? Look how quickly historically, we were able to recover from prior recessionary periods. The current jobs recession that we are in is the worst in history.

Policy decisions impact this chart more than anything, or the lack thereof. Since the 2008 election, pretty much nothing has been accomplished to add jobs to this economy by the President or Congress.

I believe what bothers most Americans is this fact that nothing is being done. The Democrats say it is the Republicans fault and the Republicans say it is the President and the Democrats fault. I say they are all guilty. These people are playing chicken with the economy by letting it languish as they have done for the last four years.

This November, it is more important than ever that you go cast your votes for what you believe to be the best candidates for the monumental task at hand. We have to turn this around. It starts by exercising your right to vote. Be smart and make the correct decision in the voting booth for the people you believe will accomplish the task of getting our economy going strongly in the right direction.

Why College Tuition Does Not Go Down

Have you ever wondered why tuition at colleges and universities does not ever seem to go down? There is a reason for it. The reason is the availability of student loans. At first glance, having money readily available for student loans appears to be a good thing. However, once you peel back the onion, then you will discover it is actually a bad thing.

When you think critically about this issue, then that is when you have the "ah ha!" moment. If you are a college and you know that anyone that wants to attend your institution can get a student loan, then why would you ever have to worry about competition from other colleges and universities? Now, I understand that there is some competition, but with a guaranteed pool of money flowing into the college from student loans, this minimizes the competitive effect.

From the college's perspective, why would you ever have to lower your tuition, if you know that there is an ever increasing pool of funds to keep your tuition high? Why should there be any accountability to your teachers and professors? Their poor performance does not matter. They will get paid no matter whether they are a good teacher or a bad teacher, because of the flow of student loan money.

Those of you who attended college will recall your own experiences. I am sure that you, like me, had teachers who simply did not care about how you performed in their class. They were just going through the motions, sometimes not even showing up for their class. These teachers could care less whether you passed their course. There was no scrutiny for their performance and because of readily available student loans, they never had to worry about getting paid.

I recall one Economics teacher who made me so mad, that I actually complained to the Dean of the department about him. When the course began, I went to him and asked him if it would be helpful to buy the study guide and CD that were companions to his text book. He told me "Absolutely. Feel free to purchase them," he said.

As the first test of the semester approached in his class, I studied my tail off because I wanted to make an "A" in this class. When I sat down for the test, I looked at the questions and realized that this test had no relationship whatsoever to the chapters we were told to study in our textbook. Come to find out, the teacher used a different textbook than the one he told us to study. What? Are you kidding me? I am studying chapters 1 through 5 in one textbook and he is giving us a test on chapters 1 through 5 in another text book. I was incensed. Why didn't this idiot for a teacher tell us to use the other text book? His answer was..."economics is all the same no matter what text book you study." Yes, you idiot, but if the subject matter on the test is not the same material as the subject matter in the book then that is an unfair advantage for students.

I was so incensed over this idiot, I wrote to the Dean complaining. Of course, not a response from the Dean. No accountability whatsoever. I took four courses that semester and I made three "A's" and a "B" in the Economics class. If I had the right text book, I am certain that I would have made an "A" in Economics. However, this idiot for a teacher eliminated any opportunity that I had at that achievement by pulling the switcheroo with the text books. As you can see, I am still ticked off about it many years later. Teachers like these have no accountability, no fear of losing their jobs and simply do not care how well their students perform. The easy availability of student loans is a major contributor to these problems.

There is starting to be some cracks in the armor of these colleges and universities. Parents and students alike are rethinking this student loan fiasco. Smarter parents are sending their kids to community colleges for the first two years, then on to the big name college the final two years. This saves a lot of money in tuition.

Other parents, who have the ability, are paying as you go, instead of defaulting to getting a student loan. Why saddle your kid with all that debt? It simply is not worth it.

Life insurance policies are being used in unique and novel ways to pay for college. There are a few whole life insurance policies out there that have special 100% cash riders on them. They work in this manner. The whole life insurance is applied for on a parent and the death benefit covers the risk of a premature death and having the funds available for college. The 100% cash rider is added to the whole life policy where parents can dump in money that can be withdrawn at any time for college expenses. The whole life policy with the 100% cash rider acts as the parent's own student loan pool. The parent is in effect borrowing from themselves and paying themselves back. These policies work for any kind of debt, but are especially appealing for college education expenses.

We will not see any real changes in tuition at colleges and universities until the student loan funds dry up. Colleges and universities can raise tuition year after year as long as the student loan money keeps flowing. Perhaps, it is time for parents to rethink this madness. Perhaps, it is time for a different plan of attack.

Perhaps, it is time to see a Certified Financial Planner®.

The Three Villains

Who are The Three Villains? Banks, Wall Street firms and insurance companies. Why? Because they do not care about anything but making revenue off of your money. Do not be fooled into believing anything otherwise.

Often as part of our services to new clients, we run an analysis on their existing investments. If I know that they do business with one of The Three Villains, I can almost predict what they are going to hold in their portfolios. Typically, they will own things on my Do Not Buy List. (Search this blog for my Do Not Buy List.) Things like UIT's that pay 2.95% commission. Things like variable annuities with guaranteed withdrawal benefits. Variable annuities with 10 year or sometimes longer surrender charges that pay 6 - 10% in commissions. Let us not forget Non-Publicly Traded REIT's (Real Estate Investment Trusts) that pay around 8 or 9% in commissions. Of course, last but not least, the Class A share Mutual Funds that pay as much as 5.75% in commissions.

I can literally close my eyes and write those four investments (don't make me laugh) down on a piece of paper and I would be able to check off at least three of these every time someone does business with one of The Three Villains. Usually, I can guess which of the four investments they own, by virture of which one of The Three Villains that they have their accounts with.

By the way, approximately 85% of every investor out there does business with one of The Three Villains. Yes, that means there is an 85% chance that you are a victim of The Three Villains.

It all boils down to one thing that guarantees that the deck is stacked against the average investor. Any registered representative that works for one of these Three Villains has to produce enough revenue to keep their jobs. In other words, they have a Quota to hit. If they do not hit their Quota, then they can be fired. These Quotas can be as much as $250,000 to $300,000 per year! This means that these registered representatives need to produce that much in commissions and fees for their Villain firm each and every year!

Now, ask yourself this question. How does my advisor, who works for one of The Three Villains, look out for my best interests? Do not tell me that your advisor is different. The truth is, like or not, that your advisor, who works for one of The Three Villians is most likely raking you over the coals.

Another critical point.

The liquidity factor is very important, in my opinion. Why do you want to invest in something that is not liquid? In this economic environment, that would be foolish. Let me repeat that. In this economic environment, that would be foolish. Three of the four investments mentioned above are illiquid, have penalties for early withdrawals, or have surrender charges.

Can it get even worse?

Sadly, it can. The typical variable annuity today is sold with roughly 2.6% in expenses and charges. Then, when you add on multiple guaranteed-withdrawal and guaranteed-stepped-up death benefit riders, you are adding probably another 1 or 2% on top of that. I routinely analyze variable annuities with these riders and in almost all cases, the expenses are north of 4% and closer to 5%. It is easy to make money when you are paying out 4 or 5% in expenses, isn't it? (I am being facetious.) Why in the world do you want to keep a variable annuity that is going to cost you 4 or 5% each year?

Think about this fact. If you give them your money and they charge you the laughing low figure of 4% in expenses and invest that for 20 years, the odds are they might be able to give you a guaranteed-withdrawal benefit of 5%. They are doing it WITH YOUR MONEY!!!

By the way, do not tell me that the reason you will stick with your variable annuity is because of the guaranteed-withdrawal benefits. Insurance companies are under pressure and some of them are writing their clients asking to be let go of those guranteed obligations in exchange for cash. I would not count on your guarantees, if I were you.

Non-Publicly Traded REIT's are built like Ponzi schemes. They take your money then generally, take a big chunk off the top for management and commissions. Then, they pay you back your capital as a "income stream". What a joke. You cannot sell these investments once you buy them for anything close to what you put in. Typically, you have to wait 10 years or more to even have a chance at getting some of your money back. Lots of times, the failing Non-Publicly Traded REIT's are rolled up into another REIT and you had no idea that this could even happen. I have seen people who thought they were going to get an 8% dividend, suddenly find after a roll up that their dividend is cut in half. Would that make you mad? Mad enough to want your money back? Sorry, you have to wait 10 years or more to hope and I do mean hope that you might get 80% of it back.

You are probably thinking that your advisor would not do that to you. Think again. They have that Quota, remember? If your advisor is like most, the only thing he or she really knows about a Non-Publicly Traded REIT is that it pays him 8.5% commissions. They do not know all the bad stuff I just described.

Mutual funds are okay, aren't they?

Sorry to disappoint you, but after your advisor makes his cut of your 5.75% commission, then you have ongoing 12(b)-1 expenses and management fees that can be north of 1% per year. I have seen instances where registered reps have made their 5.75% commission, then months later come back to you and put you in an assets-under-management account for 1.5% a year. So, now, you have paid the 5.75%, you are paying 1% plus in fund management fees, then on top of that, you are paying your advisor 1.5% a year. So, after two years, you may have paid 8.25% or more to be with your advisor.

Is this picture getting any clearer for you? I hope so.

Unfortunately, 85% of the people walking around out there are getting advice from The Three Villains.

You can stop the madness. Here is how. We can run an analysis on your investments to show you the truth. Feel free to contact me if you are in FL, IN, KY or TX. I can prove it to you.

RJ