June 14, 2013

What a Pretzel Entrepreneur, a Navy Widow and an Ex-Rep All Need From Their Advisors

Someone to put their interests first, but they can’t quite finger what that’s called

Barbara Roper, right, with Marilyn Mohrman-Gillis at TDAI conference. Barbara Roper, right, with Marilyn Mohrman-Gillis at TDAI conference.

“My profession has left me shamefully undereducated on financial planning and investment issues.”

A consumer panel at TD Ameritrade’s 2013 Fiduciary Leadership Summit in Palm Beach, Fla., on Thursday featured three unique—and at times emotional—situations that required top-notch financial advice. Did they receive it? Yes and no, according to the panelists.

The panel, convened to discuss consumer awareness of the concept of fiduciary and moderated by Barbara Roper of the Consumer Federation of America, quickly deviated into other issues, as panelists agreed that acting in their best interest was important even if they never heard the term fiduciary used in that context.

The panelist referred to as Jeff, responsible for the quote above, noted his background in insurance while at Aetna in the early 1970s. He took the Series 7 exam and was for a time a registered rep, but the recession of 1973 stopped his career before it started. Preferring more of an entrepreneurial bent, he and his wife started a business that was eventually sold to Berkshire Hathaway, “so for a time I worked for Warren Buffett,” he quipped.

“I’m not concerned about fiduciary, because my insurance background meant I read scrolls of disclaimer,” Jeff added. “I’m more concerned about finding someone with a particular area of expertise that justifies their cost.”

The second panelist, Terry, noted his father invented the pretzel-twisting machine, which Terry then built a successful business around. He recently came into a large sum of money as a result of the company’s sale. 

“I was able to monetize 40 years of work, but then I gave it to strangers to invest in companies I know nothing about that exist in markets I know nothing about,” Terry related. “People ask me how retirement is going. I say, 'stressful.' There is a fear factor involved.”

The most emotional panelist situation came from Jessica, whose husband was a Navy pilot killed in the line of duty. She received the news as a mother of a two-year-old. Jessica was also was nine months pregnant with their second child.

“I was handed a pretty sizable check within two and a half days of hearing the news,” she said. “I was a deer in the headlights. I was numb and had no idea what to do. It was all a blur. I have to make these decisions that could affect the rest of our lives.”

Her brother recommended a professional he was using, a former Army soldier that Jessica felt she could trust because “he would understand the situation and the benefits I would receive.”

“I have to focus on being a mother and the well-being of other people,” she noted. “I had to turn it over to him and say ‘here, you deal with this. Please don’t mess it up.”

Terry noted he was working with two advisors at the moment, and that he was "doing kind of a fly-off" between the two to see who he feels comfortable with.

Jeff’s wife, Deborah, noted that because they are both entrepreneurs, they are moving slowly in engaging an advisor because they “loathe giving up control and turning over the reins. On the basis of a few meetings, you have to completely trust someone.”

When asked by Roper if her financial professional was a broker or investment advisor, Jessica said, “I think he’s an investment advisor, but I’m not certain.”

“I know at some point I’ll have an advisor,” Jeff concluded. “I’m dangerous enough with my background to know what it is I don’t know. Every time I turn on CNBC, it seems the experts are consternated. If they’re consternated, what hope do I have? If you have a particular area of expertise, promote it, because that is very helpful to someone like me. I don’t see how you can be a general practitioner in today’s market an add value over and above the RIA fee.”

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More from the TDAI summit:

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