Archive for the ‘Conflict of Interest’ Category
Facebook Scam Hits Close to Home
Posted by: Michael Zhuang on: May 14, 2012
Two months ago, I got a call from client of mine, who asked my opinion about an opportunity to invest in pre-IPO Facebook shares. He explained that he and his business partner were offered the opportunity to invest in a private fund that will hold Facebook shares. I know nothing about these funds, but I [...]
Don’t Be a “Muppet”
Posted by: Michael Zhuang on: April 4, 2012
If you had a busy March, you are forgiven for not paying attention to Greg Smith’s open letter explaining why he is leaving Goldman Sachs. In his “resignation” letter, the Goldman Sachs executive sheds a bright light on the culture of this premiere Wall Street investment bank. Let me quote at length: What are three [...]
The High Cost of Fee-Based Financial Advisors
Posted by: fredmdonovan on: March 17, 2012
Many people think that fee-based financial advisors are those who charge their clients fees for service; therefore, they have more transparency and less conflict of interest. That’s exactly what the financial industry wants you to think. Fee-based financial advisors are the financial industry’s response to the rise of independent fee-only financial advisors. Fee-only financial advisors [...]
How to Tell if Your Financial Advisor is a Crook? Very Easy!
Posted by: Michael Zhuang on: December 10, 2011
This week, a business woman came to my office for a second opinion financial review. She explained why she came to see me: she bought a permanent life insurance policy because her financial advisor told her it is a great investment. She has been paying $3000 a month for that, and so far she has [...]
How an Insurance Company Misleads Its Annuity Customers
Posted by: Michael Zhuang on: May 30, 2011
I was called a “wing nut” by a commenter for pointing out all the malpractices of insurance companies. Indeed, I could go nuts seeing how they mislead their customers into financial peril. They know full well that their customers are not going to read beyond the first few pages of their hundred-page contract, so they [...]
A Balanced Portfolio to Avoid (III): Most Financial Advisors Are Not Fiduciaries!
Posted by: Michael Zhuang on: April 30, 2011
My friend is a savvy businessman. However, like most Americans, he has a misconception: he thinks financial advisors are legally bound to put clients’ interests first. This can not be further from the truth. Everybody and his grandma can be a “financial advisor.” Unlike being a “physician”, there are neither legal requirements no educational qualifications. [...]
A Balanced Portfolio to Avoid (II): Hedge Funds Don’t Deliver Outstanding Returns
Posted by: Michael Zhuang on: April 28, 2011
Hedge funds are often peddled as a unique asset class that has outstanding returns that are uncorrelated with the market. In reality, hedge funds are as much an asset class as Las Vegas is. Hedge funds are a general description of private investment companies that are organized as limited partnerships with fund managers as the [...]
A Balanced Portfolio to Avoid (I): Annuities Are Not Without Risk
Posted by: Michael Zhuang on: April 26, 2011
I recently met an entrepreneur friend of mine. I was pleasantly surprised to learn that he had sold his business and was now looking forward to retirement. He has about $1mm in his 401k plan. As any shameless financial advisor would do, I asked him if he had someone helping him manage his money. “As [...]
Are Financial Advisors Required to Disclose Fees?
Posted by: Michael Zhuang on: April 8, 2011
You may not believe it: the term “financial advisor” is a free title. Anybody can use it; there is no legal requirement, nor educational qualification. In practice, though, generally there are three types of people who use this title: insurance agents, stockbrokers, and registered investment advisors (RIAs). Whether they are required to disclose fees all [...]
Suze Orman Talk Money at Google
Posted by: Michael Zhuang on: March 30, 2011
My friend DIY Investor found this pearl. I thought it contains incredibly good advice for young investors. I personally had a few encounters with Google employees (to do their financial review.) In the end, I had to tell them they are fine on their own, they don’t need my help by and large. This is [...]
America’s Top Financial Advisors: How Are They Made?
Posted by: Michael Zhuang on: March 24, 2011
I must confess: I have fallen short of the standards and requirements to become one of America’s Best Financial Advisors. To be exact, I am $497 short. In March of last year, I received an email with a congratulatory title: “You Have Been Nominated To Be One of America’s Top Advisors.” I eagerly opened the [...]
Variable Annuity Fees You Don’t Know You are Paying
Posted by: Michael Zhuang on: March 18, 2011
Recently, a client of mine brought me the variable annuity he bought a few years ago. Prominently displayed on the first page are the benefits of the annuity: Death Benefit: Enhanced Guaranteed Minimum Death Benefit Living Benefit: Lincoln Lifetime Income Advantage as well as the fact that the money will earn an fixed annualized rate [...]
Would You Buy This Variable Annuity with Income Guarantees?
Posted by: Michael Zhuang on: March 10, 2011
Recently, I was approached by a prospective client named John, who has all of his retirement in one annuity. I have always been intrigued by how annuities and life insurance are sold. Listening to John explain his decision-making process and reading through the annuity contract is like turning on the light bulb in my head. [...]
A New Year Resolution for Investors
Posted by: Michael Zhuang on: December 28, 2010
[Guest Post by Tom Warburton] How’s this for a New Year’s Resolution – repeat after me – I Resolve That I Will Abandon Personal Stock Picking And I Will Not Permit That Foolishness To Be Foisted Upon Me By Stock Brokers, Money Managers Or Financial Advisors. New evidence shows up every day suggesting that it [...]
Warren Buffet on Hedge Funds
Posted by: Michael Zhuang on: October 31, 2010
These are Warren Buffet’s own words. As usual, they are as humorous as insightful. “In 2006, promises and fees hit new highs. A flood of money went from institutional investors to the 2-and-20 crowd. For those innocent of this arrangement, let me explain: it’s a lopsided system whereby 2% of your principal is paid each [...]
Small Business 401k, Big Plan Fees
Posted by: Michael Zhuang on: July 15, 2010
A recent study of 401k fees by Deloitte has revealed a troublesome fact. For companies that have less than 100 employees, the average “all-in” 401k plan fee is 2.03% of plan assets each year; for plans that have assets less than $1mm, the average “all-in” fee is 2.37%. As a point of reference, large companies [...]
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