In the world of financial planning, it appears that Father really does know best — if he’s a qualified advisor.
Financial planning writer Emily Guy Birken reminisced recently on personal finance website Wise Bread about the money wisdom that her dad, a certified financial planner, passed on to her before he died earlier this year. Birken’s father, Jim Guy, a first executive vice president and chief marketing officer at Cambridge Investment Research in Fairfield, Iowa, joined Cambridge’s executive group in 1999, and served at the broker-dealer level while continuing to lead his Baltimore-based independent practice alongside his wife and business partner, Helen.
What strikes Guy’s daughter today, even though she is now a 34-year-old woman who “grew up imbibing financial wisdom with my applesauce,” is how incredibly intimidated she felt the first time she met with an advisor who was not her father.
“No matter how much you may already know before you set foot in an advisor’s office, you will still probably encounter unfamiliar financial jargon and advice whose soundness you feel like you have no way of judging,” Birken writes in “Investment Advice You Should Never Hear From Your Financial Advisor.” “Trusting an advisor with your finances is no time to pretend you have knowledge that you don’t.”
Birken’s first advice for investors is to arm themselves against bad or inappropriate advice by asking a lot of questions before making a decision.
“My dad really taught me to be cautious,” Birken said Monday in a phone interview with ThinkAdvisor. “I’m very cautious almost to the point of being paranoid about risk. You really have to know a person’s motivation to know why they’re offering you something.”
Clearly, her thoughts struck a chord: Birken’s blog post has already been shared 22 times on Twitter, and one of those tweeters is Rick Kahler, president of Kahler Financial, Rapid City, S.D., a well-known and respected name in the advisor industry.
“She nailed some major issues to look out for,” Kahler said Monday in a phone interview. “I’m in financial therapy, and I’ve seen tremendous sadness in people over what their parents didn’t tell them about money, and they feel totally unprepared for life in the 21st century, where money is so important.”
Kahler added that he also liked Birken’s blog post because she talks about the relationship that can occur between a child and a parent who is an advisor. “She said things my kids could totally relate to,” he said, then joked, “My kids will be doing therapy over the excessive amount of information I give them and the fact that their dad can turn any conversation into money.”
Keep reading to learn about Emily Guy Birken’s “Investment Advice You Should Never Hear From Your Financial Advisor” and Rick Kahler’s thoughts on Birken’s tips for investors.
1. “You can assume an X% return on your investment.”
“You may recall the brouhaha over financial guru Dave Ramsey’s claim that investors can expect a 12% return on their investment over time,” writes Emily Guy Birken in her Wise Bread blog post, “Investment Advice You Should Never Hear From Your Financial Advisor.” “While many have (rightly) criticized the math (or lack thereof) that Ramsey uses to make such a claim, the bigger problem with this kind of advice is the fact that it’s making assumptions that no one can guarantee. As every financial advisor worth his salt will tell you, past performance does not guarantee future results.”