Is your variable annuity broken?

Is your variable annuity broken?

Insurers have been cutting future benefits or raising the price of these expensive products. The popular minimum withdrawal benefit now costs an average 1.25%, up from under 1%. That lifts the average base price to 3.7% you are charged EVERY year, no matter how well your investments do. And you may be restricted in how much your account can earn. Some insurers are now limiting stock exposure to 60% of your account. Thus “peace of mind” may cost more than you paid. Your alternatives are not good: transfer to another insurer or pay surrender charges. Better: annuitize now—putting the payments into a tax-advantaged account. Alternatives: http://www.amazon.com/Not-Buy-That-Annuity-Guaranteed/dp/1466494573/

Customize Your Insurance  -Save $3,000 every year

• Buy only what you need and save $3,000 every year.
• Accumulate $1,000,000 free of fees and taxes.
• Avoid the Wealth Killers.

The best guarantee of lifelong security is having money. Accumulating $1 million requires that we avoid high product and advisor fees, commissions, loads and … taxes—the Wealth Killers.

Since we need to buy protection—auto, home, health, life insurance—why not skip the “bells and whistles” and save $3,000 every year? We avoid fees by buying ONLY the financial services we need at a discount. We avoid taxes by using an IRS-approved tax-FREE account. We invest ALL our savings. We accumulate $1 million by leveraging the Miracle of Compounding over time. http://www.amazon.com/Customize-Your-Insurance-Save-every/dp/1490936440/

Insurers against gun-toting teachers

As more states enact laws allowing teachers or administrators to carry guns in schools, insurance carriers are threatening to raise their premiums or revoke coverage entirely. Guns in schools made no sense in the Wild West either. Remember, Dodge City banned gun-carrying within town limits (and schools). People kill with whatever is at hand. While the United States has overall rates of violent crime in line with rates in other developed nations; our homicide rate is, relatively speaking, off the charts. Data: http://www.chicagojustice.org/blog/reporting-as-the-201ccarnage-and-mayhem201d/2008_Murder_Analysis_in_Chicago_CPD.pdf

Who really benefits from all these gun sales?

The top 1 percent of households took 23.5% of all U.S income.

Q: Why do the rich get richer? A: Compounding of high investment earnings. Income includes dividends from shares of stock, rent, and profits from selling something for more than you paid for it. Once you have $1 million, you can let it compound in stocks etc at 10-12% and have $2 million in about 10 years, $4 in 20 and $8 in 30. You don’t even have to use a broker to make money. In fact, Wall Street usually takes more than it gives. http://www.amazon.com/Tune-your-401k-EARN-Tax-FREE/dp/1490591028

Big brother Data saves life (sentence)

An insurance company monitoring device that records when a car is started and stopped has helped clear a northeastern Ohio man in the suffocation death of his 7-month-old daughter. Twenty-eight-year-old Michael Beard was acquitted by a jury in Cleveland of murder and other charges. He was facing life in prison in the May 2011 death of Lynniah Beard. The prosecutors contended Beard suffocated the baby at 4:45 a.m.

But his attorney noted that the Progressive Snapshot device in his car showed he arrived and turned off the car at 4:44 a.m., and turned it back on three minutes later.

His attorney said that in those three minutes, Beard discovered the baby wasn't breathing and returned to the car to rush her to the hospital.

Brokers are against “best advice” rule for customers

A leading Wall Street trade organization told the Securities and Exchange Commission last week thatraising investment advice standards for brokers would force individual firms to spend millions of dollars to upgrade their compliance systems. You don’t want to wait for the government to force brokers to do the right thing. Use unbiased advisors at the major mutual fund firms for free and earn more.http://www.amazon.com/Wealth-Without-Wall-Street-Commissions/dp/1442168137

America becoming a “banana” republic?

Hiring is exploding in the one corner of the U.S. economy where few want to be hired: Temporary work. From Wal-Mart to General Motors to PepsiCo, companies are increasingly turning to temps and to a much larger universe of freelancers, contract workers and consultants. Combined, these workers number nearly 17 million people who have only tenuous ties to the companies that pay them — about 12 percent of everyone with a job. The rise in temp and contract work shows that many employers aren't willing to hire for the long run. The number of temps has jumped more than 50 percent since the recession ended four years ago to nearly 2.7 million — the most on government records dating to 1990. In no other sector has hiring come close. 

The top 1 percent's share of national income is over 23 percent. The average inflation-adjusted hourly wage declined by more than 7 percent from 1976 to 2007.

A “banana” republic has 1% elites and 99% in near poverty conditions, like Honduras was.

ObamaCare health insurance exchange

First state to go live is Oregon. Looks like they are ready to cover uninsured. Many GOP states have said they won’t cover uninsured. Will everyone move to Oregon?

http://coveroregon.com/

SCAMS           “Deficits don’t matter” Republican godfather, Dick Cheney, 2002

Buckets of Money advisor has his buckets revoked

Ray Lucia, host of a nationally syndicated daily radio program and famed for his Buckets of Money investment strategy, was fined $50,000 and had his adviser registration revoked by an administrative-law judge yesterday. Mr. Lucia's firm was fined $250,000 and its registration was revoked, the Securities and Exchange Commission said.

AIG, GE, Prudential leveraging again a threat to us

U.S. regulators have labeled American International Group and General Electric's finance arm as potentialthreats to the financial system, designations that bring stricter government oversight.http://www.usatoday.com/

Regulators allow disaster to strike small investors

Hedge funds and other firms that seek private investments will be allowed to advertise publicly for the first time. SEC killed an 80-year old ban on advertising intended to safeguard small investors from taking on potentially dangerous risk. The “snake oil” salesmen are exempt from requirements to report public financial statements. Hedge fund owners, with bank loans, are exempt from paying income tax on their gains already. WOW! Wild Wild West again.

What is wrong with American military-industrial complex?

It was commissioned by the Army in February 2010 to be the Command and Control Facility for Regional Command Southwest during the surge. How could the U.S. military spend $34 million constructing a building in Afghanistan that has never been used - and may now be demolished? In May 2010, even before construction began, the Marine commander cancelled the project. Despite that request, the Air Force told British-based AMEC to construct the facility and, in November 2012, the U.S. government took over the facility. Afgans don’t want it. Private equity firms own British AMEC and got the $34 million. We got the bill.

Is anyone at the Pentagon in charge? Can the Taliban buy it? They are funded by donations from Britain and the Persian Gulf.

Farm bill pays corporations extra money for poor results but $0 for poor

Even conservatives voted against it since it was still "loaded down with market-distorting giveaways to special interests with no path established to remove the government's involvement in the agriculture industry." GOP cut all food stamps and nutrition for the poor: Let them starve, is the message.

IAN

41 Watchung Plaza, B242

Montclair, NJ 07042

973.746.2014

www.InsuranceAdvisorsNetwork.com

Unbiased financial information

Now, an unbiased source of financial information
Unfortunately, there are few unbiased sources of information about building wealth. Most people give up 1-2% of earnings per year—$500,000 over a lifetime—to salespeople for poor advice. Instead of building assets for a secure future, most people are at the mercy of salespeople who are building THEIR own secure future.
An industry joke is Where Are the Customers' Yachts?
Members of the Unbiased Advisors Network work in the financial industry but are unhappy with our industry’s role in NOT helping to educate their fellow citizens. We are unhappy that there is no basic financial education (beyond balancing your checkbook) in our schools. Now you can learn how to buy the best without paying commissions, fees and charges.Show More Show Less amazon.com/Unbiased-Advisors-Network-helps-tax-FREE/

Consumer Reports top car brands: Subaru No 1
The Consumer Reports top three auto brands: 1. Subaru 2. Mazda 3. Toyota Consumer Reports bottom three: 11) Mercedes-Benz 12) General Motors 13) Chrysler Honda fell farthest in the ratings due to lack of car to details, according to CR. Coincidentally, Honda and Acura are recalling 9,000 SUV for faulty gas tank vent. Oh.

Soon we may have more information on our broker/advisor
The regulators are considering making the information about complaints and discipline actions available to the public in more useable forms. Financial salespeople have been lucky up to now since the data is hard to decipher for most customers. Most of us just assume that if their salesperson is working for a national firm, they must be ethical. Regulators want to give the info to vendors who will use it to simplify it. http://www.investmentnews.com/article/20120301/FREE/120309986/-1/INDaily01&dailycount=1&issuedate=20120301

Is your advisor taking you for granted?
Advisors are instinctively sales people. They must enlarge their client list or be demoted or fired. In order to serve more people, they must make certain assumptions about keeping your business. Advisors think they are the professional you will always seek for advice. They want you to contact them when you have money to invest/spend. They can’t afford to hold your hand every day unless you have a large account. Things are changing. Advisors naively believe in their clients’ loyalty, vastly underestimating the number of their clients who have direct accounts. Advisors reported that only 20% of their clients maintain direct accounts, which is at odds with what clients reported to Cerulli in a survey. More than three in four clients surveyed (76%) said they owned direct accounts. There are many reasons to have an account you control yourself. 1. Easy access 2. Low cost 3. Investing experiment thrill 4. Multiple account safety. Members have learned the hard way that advisors can take $500,000 or more of their account value in fees over time. amazon.com/Wealth-Without-Wall-Street-Commissions/dp/1442168137

Advisor chosen stocks lag passive index investing in most markets
In most markets, owning a fund that matched the market average return beat stock pickers’ fund returns. Even when active management beat the index fund, it was impossible to buy the correct fund that beat the index since not all won. Since the winners change every year, you would never own the winners consistently over time. SPIVA:http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldata&blobtable=MungoBlobs&blobheadervalue2=inline%3B+filename%3DSPIVA_US_YearEnd_2010_FINAL_0311.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1243867401012&blobheadervalue3=UTF-8

Smart investors pick Roth IRA
Smart investors choose Roth IRAs over traditional IRAs, according to a recent study by Texas TechUniversity. The researchers determined that people with high IQs were the most likely to own a Roth IRA, even after controlling for education, income, and net worth. 12,686 young adults participated in the National Longitudinal Survey of Youth beginning between ages 14 and 22 and who were between 43 and 51 in 2008. Some 14.3 percent of people in the highest IQ quintile owned a Roth IRA by 2008, compared with 3.8 percent of all the study participants and just 0.9 percent of people with the lowest IQs. Members pick Roth because withdrawals are FREE: amazon.com/Create-Your-Tax-FREE-Financial-System/

Chase and Bank America only want customers with over $100,000
The largest U.S. banks said about 70 percent of customers with less than $100,000 in deposits and investments will be unprofitable following regulations that cap lenders’fees.Banks want to sell more products to those with more assets and will target their offerings appropriately. Major banks tried the $5 monthly fee but customers baulked. Customers with less than $100,000 may find services curtailed. The defection rate for large, regional and midsize banks averaged between 10% and 11.3% of customers last year, according to a J.D. Power and Associates' survey of more than 5,000 customers who shopped for a new bank or account over the past 12 months. Perhaps it is time to shop for a better deal. Members find other alternatives with better rates: . amazon.com/Insiders-Guides-Discount-Financial-Services/dp

ME denies Anthem increases
State regulators were justified last May in denying a planned rate hike by Anthem Health Plans of Maine, the state's highest court ruled.

Tax credits that increase your refund
There are credits that give you cash even when you owe no taxes—refundable credits. They have restrictions but you may qualify. 1. The Earned Income Tax Credit is for people earning less than $49,078 from wages, 2. Child and Dependent Care Credit is for expenses paid for the care of your qualifying children under age 13, or for a disabled spouse or dependent, 3. Child Tax Credit is for people who have a qualifying child. The maximum credit is $1,000 for each qualifying child. 4. Retirement Savings Contributions Credit, also known as the Saver’s Credit, is designed to help low-to-moderate income workers save for retirement. Read how to claim: http://www.irs.gov/newsroom/article/0,,id=255095,00.html

Do you have money coming from the IRS?
There are $ billions waiting to be refunded. For more information: http://www.irs.gov/newsroom/article/0,,id=254725,00.html

Employers dropping health insurance—more deaths expected
The number of Americans getting health insurance from their employers continues to drop, hitting a record low of 44.6% in 2011. Not surprisingly, the percentage of Americans who are uninsured has increased, rising to 17.1% this year. Preventive care like colonoscopy is reduced.

SCAMS
NY tells insurers to pay full death benefit
New York regulators told insurance companies they must pay out fully when members of the military are killed in action as the standard practice, rather than automatically establishing a kind of checking account that provides interest to the companies.Families can often get a better return on interest if they invest the bulk payment, rather than draw down from "retained assets accounts" that are now commonly set up by insurance companies. Under the accounts, the families receive some of the return on interest and the company gets the rest. Shame! http://online.wsj.com/article/AP8f5183695b76429cbdaa4b39e2442490.html

We taxpayers are still paying big agrato grow or not AND bribes
Just ten percent of America's largest and richest farms collect almost three-fourths of federal farm subsidies – cash payments that too often promote harmful environmental practices. We pay for their crop insurance too. We are sending $147 million to the Brazil Cotton Institute under an agreement that was forged to get around a ruling by the World Trade Organization (WTO) that subsidies to American cotton farmers violate international trade rules. This is bribe money pure and simple. We pay the subsidies AND the bribe to keep others from complaining. Shouldn’t the largest farm corporations pay for the bribe? http://www.ewg.org/farmsubsidies

Speculators blocking rule that prevents traders speculating on gas prices
Wall Street is pushing to stop a new rule that would crack down on speculation in the energy markets, which many blame for contributing to the spike in gas prices.The new rule -- part of the 2010 Dodd-Frank Act to reform Wall Street -- would set limits on how much traders can buy, preventing firms from grabbing large chunks of the energy market. But those limits may not be set anytime soon. Nearly two years after the new law, the rule has yet to be fully implemented. And on Monday, two Wall Street trade groups asked a federal judge in Washingtonto delay or block the rule.

Who owns your account now?
AutoOne and AutoOne Select Insurance Companies from OneBeacon Insurance Group to Interboro Holdings.

IAN 41 Watchung Plaza, B242 Montclair, NJ07042 973.746.2014www.InsuranceAdvisorsNetwork.com
Alerts available at http://dankeppel.blogspot.com/

Larrysaved $774 on auto insurance
Larry spent one hour with twoalternative insurers to find a better rate than he had for two cars—a 2005 and1998. He found out he was paying for services he did not need, like PIP health
insurance. He has adequate health insurance and is covered by the policy if he
and family are injured in a wreck. He went through the charges with his current
carrier to see if he could drop some other items. His ‘98 car doesn’t need
comprehensive/collision. He raised his deductible too. His new carrier gave him
their alum discount. Find out what you could save using our Guides: http://www.amazon.com/Insiders-Guides-Discount-Financial-Services/

Maybethe health care mandate is not such a bad idea
Healthinsurance premiums for California families rose 153% since 2002, more than five times the29% increase in the rate of inflation, according to a new survey released
Wednesday. The CHCFsurvey found that annual premiums were higher in California than nationally forindividual coverage ($5,970 versus $5,429) and family coverage ($15,724 versus
$15,073). 35 states have some authority to approve or reject health insurance
rate increases, while California has none.
Health care mandate was a GOP idea but it is worth a try. http://www.foxnews.com/politics/2010/03/27/republicans-hatched-idea-obamas-health-insurance-mandate/

Some to see lower health care policypremiums drop
TheFeds have determined that Trustmark Life Insurance Co. proposed unreasonable
rate increases in five states _ Alabama, Arizona, Pennsylvania, Virginia, and Wyoming. Trustmark must withdraw hikes and explain why it wants
more. This is part of the new health care law to reduce costs.

Which discount broker was tops forConsumer Report?
Reader score: 93
Customer service: Top
Website usability: Good
USAA is the winner. Beat other brokers in the business. This is a company run
for our armed service members. They have excellent service and low fees. We
can’t buy their AUTO but we can use all the other financial services with
confidence.
Results from online survey of 7,327 ConsumerReports.org subscribers
reporting on their experiences between Oct. 2010 and Oct. 2011. The reader
score represents overall satisfaction with the firm and is not limited to the
factors listed.

Yourbroker may be forced to change its business model
Ifa strict definition of a fiduciary standard of conduct (NO product pushing)
becomes the fate for broker-dealers owned by U.S. life insurance companies, they could be forced tocompletely revamp their sales and distribution business model. The U.S.
Securities and Exchange Commission in January 2011 recommended the standard to
Congress. It would apply to broker-dealers and investment advisers when they
provide investment advice about securities to individual investors. GE just
sold its broker-dealer so it would be free of this rule. GE can now push its
products without running into trouble with the SEC. Bank America has now outlawed Merrill broker accounts of less than$250,000 so they can collect the annual fees not just commissions.

Howdid your advisor do in 2011?
Our clients’ portfolio did not lose valuelast year. Our clients use a low-cost provider so when the market is down theypay little in fees. Fees are the best indicator of performance according to
fund tracker Morningstar.

2011 Return Fund Long-term Return* Longevity
1.97% 500 Index 10.36% since 1976
-1.74% Energy 12.71% since1984
-3.73% Extended Market 9.96% since1987
11.45% Health 16.30% since1984
-13.68% International Growth 10.50% since1981
-1.84% PRIMECAP 12.79% since 1984
-2.80% Small Cap Index 10.26% since1960
9.63% Wellesley Income 10.16% since 1970
-4.00% Windsor 11.00% since 1958
2.70% Windsor II 10.18% since 1985
__________________________________________
0.00% Average 11.42%

*AverageAnnual Returns as of 12/31/11.
Seeamazon.com/Working-Millionaire-Tax-FREE-Self-insure-Self-fund/

IsAllstate’s satisfaction guarantee right for you?
Underthe program, eligible Allstate customers who aren't happy with service they
receive on a paid auto claim can write a complaint to the company within 180
days of the incident. If a policyholder complains, Allstate will credit the
customer's account an amount that's equivalent to a six-month premium on the
car involved in the claim, said Allstate spokesman Kevin Smith. The company
tested the program in 2011 in Indiana, Ohio, Michigan and Georgia on its standard auto policies, and Allstate saw a limitednumber of requests in those states, Smith said. As of Jan. 2, the company madethe program available in 31 states, with more states planned later in the year.
Allstate’scredit is not cash. This is not a big deal. You can complain anytime. Claims
are handled by local adjuster. Working with them is the best way to obtain
fairness. If you are paying too much, you don’t get a refund for all those
years you overpaid. Safe drivers shop for the best price not guarantee of what
might not happen. Accidents are infrequent. Use our Guides: http://www.amazon.com/Insiders-Guides-Discount-Financial-Services/

Weare more likely to need extra income later in life
U.S.life expectancy climbedto a new high in 2010 as fewer people died from heart disease and cancer, andhomicide was no longer among the 15 leading causes of death. Life expectancy
increased to about 78.7 years. Now is the time to plan to have enough for
longer income needs: amazon.com/Your-Retirement-Spending-Plan-enough

Romneyis the only person who could FIRE his health insurance company
Where has this manbeen living? The rest of us could NOT fire our insurer because we did not liketheir refusal to pay for our cancer treatment or whatever. We would then be out
looking for new coverage with a “pre-existing condition” which insurers loath.
Only Romney could afford to self-insure—pay for treatments out of his $250
million pocket. The rest of us would need a health law that guaranteed
coverage with pre-existing condition. That system was what Romney put in place
in Mass and what Obama has to defend against the GOP Supremes this year. We all
need that guarantee because we could not get health care in the present system.
No insurer would sell us a policy for any price. Just ask the 50 million
without coverage.

SCAMS
Why do we havea deficit and high unemployment? Taxes go to foreign governments!
Cutting taxes tocreate jobs is a political gimmick—it does not work.

Taxesof $385 billion went unpaid in 2006, according to new estimates by the IRS. IRS
says biggest cheats are small business and corporations who hide revenue and
add expense. For instance, Exxon employed 50 lobbyists, and spent $12,450,000
to influence lawmakers, according to the Center for Responsive Politics. What
does that buy you?

Little tax AND oil subsidies of $4B.

Exxon,which last year reported a record $45.2 billion profit, paid the most taxes of
any corporation, but noneof it went to the IRS: 20 wholly owned subsidiaries domiciled in the Bahamas, Bermuda and the Cayman Islands that (legally) shelter the cash flow from operations inthe likes of Angola, Azerbaijan and Abu Dhabi. No wonder that of $15 billion in income taxes lastyear, Exxon paid none of it to Uncle Sam, and has tens of billions in earnings
permanently reinvested overseas.

Manycorporations send profits overseas so they don’t pay tax at all.

GEearned $14.2 billion in profits in 2010, but it paid not a penny in taxes
because the bulk of those profits, some $9 billion, were offshore. In fact, GE
got a $3.2 billion tax benefit. GE laidoff 21,000 American workers and closed 20 factories between 2007 and 2009.More than half of GE's workforce is now
outside the United States.

Why are people upset?
55%of US corps paid no tax some years: http://www.gao.gov/new.items/d08957.pdf
GOPdebate statements and the facts: http://news.yahoo.com/fact-checking-hampshire-debate-023952440--abc-news.html

Who owns your account NOW?
MorganKeegan to Raymond James
GenworthFinancial has agreed to sell its broker-dealer unit to Cetera Financial Group
GE want to be free to push its products. Ifa strict definition of a fiduciary standard of conduct becomes the fate forbroker-dealers owned by U.S. life insurance companies, they could be forced tocompletely revamp their sales and distribution business model. The U.S.
Securities and Exchange Commission in January 2011 recommended the standard to
Congress. It would apply to broker-dealers and investment advisers when they
provide investment advice about securities to individual investors.

Starry starry night
On average, each of the 100 billion or sostars in our galaxy hosts at least 1.6 planets, according to the study,bringing the number of likely alien worlds to more than 160 billion. "This is a major milestone on the road to finding Earth's twin,"Douglas Hudgins, Kepler program scientist at NASA headquarters in Washington,D.C., said in a statement.

Letme know what you think. Editor@TheInsidersGuides.com
IAN
41 Watchung
Plaza, B242
Montclair, NJ 07042
347.746.2014
www.InsuranceAdvisorsNetwork.com
Alerts available
at http://dankeppel.blogspot.com/

12 things your agent/broker/banker/money-manager won’t tell you.

1. “We have FEES and COSTS for everything. Most are not necessary.” For instance, your life insurance policy is probably one with a higher premium than necessary. Compare the cost of $200,000 benefit for a 50 year old in good health--$356 versus $481 per year. Also, it does not cost $50 to buy 200 shares of IBM. You can buy them for $0. And why should your broker charge you $160 when your account is inactive? Why are you paying 50 cents to deposit a check? Banks should pay you to deposit checks. Is your 401k money manager really worth 1.54% of your assets each year? And looses money too? Your employer should buy a retirement plan that costs you $0.30% or less with no kickbacks.

2. “We offer products that are best for our firm, not for you. We don’t show you all the fees and commissions and financial kickbacks and perks we earn when we sell you our products. Our products are the “best” available because we sell them. We are the best in the industry because our marketing image says we are.” One pension plan provider charges 2.75% a year for their tax-deferred annuity. It has over 9 years of surrender charges so you can’t transfer your money if you change employers. It charges another $30 a year for ‘recordkeeping.’ Its mutual funds are among the poorest performers. One brokerage firm steered customers into their own funds because they have a higher broker payout. Your agent doesn’t sell SBLI, your broker doesn’t sell Vanguard, your banker does offer really free checking, and your money manager doesn’t price your funds at cost—0.1% or less.

3. “We will discuss your financial needs with half truths.” You are told you need $1,000,000 of life insurance but the policy type that your agent picks is the most expensive in the world. Even if you agree you need $1 million, you pay more for permanent, 30 year guarantee term or “return of premium” term than just term. You want a guaranteed income for the rest of your life but your broker doesn’t mention that the annuity payments loose half their value in 24 years. You want to save for college but your banker doesn’t mention that 529 plans are NOT taxed like the custodial account just opened for your child. You want to save for retirement but your broker put you in ‘hot’ funds.

4. “We don’t tell you about other alternatives. We don’t get paid to tell you there are less expensive alternative ways to solve your problems.” You can buy a FREE checking account from your credit union. The CDs pay more, the checking costs less and the loans are cheaper. You don’t need an ATM on every corner. You can defer taxation on your account earnings by buying and holding stocks or tax-managed funds. You can save on liability insurance by buying only what you need. Wealthy people buy “assets that grow by themselves” so they can self-insure and self-fund their needs. Consumer Reports reviewed 47 policies and concluded that “for most people, long-term-care insurance is too risky and too expensive.”

5. “We don’t explain how you can reach your goals in the least costly way.” Banks offer life insurance to cover your loan because you want to get the loan. They don’t explain that your existing term policy will cover the loan. Also, you can build a much larger retirement nest egg by investing in stock mutual funds costing .07% vs. 1.3%. Compounding magnifies the difference—20% more money over time. When new employees sign up for the retirement plan they are encouraged to pick the ‘safest’ option—treasury bonds. Stocks are more likely to grow in value over the long term.

6. “Our products must be ‘sold not bought. We use half-truths in order to contrive an ‘urgent financial need’ that you can solve only by buying our products.” One firm charged a 91-year-old “client” more than $35,000 for four trades over two years, at approximately $8,800 per trade. The largest annuity seller is accused of misleading policyholders regarding bonus payments promised on annuity products. Life insurance is not the foundation of every financial plan—you are more likely to run out of money than die in the 21st Century.
7. “We believe the hype of our industry: We give good financial advice that you can’t get anywhere else.” There are no classes in our high schools called Financial Health Class. You can’t easily find out the “tricks of the trade” used to sell you the products created to pay high fees to sellers. Young single people don’t need life insurance. They need to invest 10% of their income at an early age to become wealthy. Also if brokerage firms actually followed their own stock selection advice, they would have negative returns. The average return for the top 10 brokerage firms was minus 2.26% from 1997-2001! Most were negative (Investars). 88% of managed mutual funds earn less than the market.

8. “We are experts at figuring out what your “hot buttons” are and using them to get you to buy our products. We exploit the fact that everyone wants to buy the next Google stock or become a millionaire overnight buying and selling real estate or gold. We exploit the fact that seniors fear losing money and want to earn 10% on their money with a completely guaranteed investment.” Finding the next Google is like finding a dime in a football field on the first try. The average equity investor earned a paltry 2.57% annually; compared to inflation of 3.14% and the 12.22% the S & P 500 index earned annually, 1984-2002. You pay for guarantees by earning less and not keeping up with inflation. So even though you don’t lose money, inflation reduces money’s buying power. Putting your money into different investments reduces your chances of losing money and increases your chance of beating inflation.

9. “We don’t sell products from companies that don’t pay a commission—so you never obtain the least-cost product. We only sell products with commissions and fees and kickback incentives and “soft dollar” reimbursements.” When was the last time your broker offered the funds with the highest returns over a 20-year period? Vanguard Primecap--13.6% over 20 years--#1 in large company growth stock funds. Vanguard Health--17.4% over 20 years--#1 in Sector funds. Vanguard Energy--16.4% over 20 years--#2 in Sector funds. Did your agent call to tell you that life insurance rates are dropping so you should apply?

10. “We charge you fees whether we give good service, good rates, good returns, or good benefits.” One money manager charges 1.5% for the same exact fund that charges .07%. With $250,000 invested, you will give up about $700,000 (2,723,138 vs. 2,022,979 over 20 years of compounding at market rates). Only 12% of managers can beat their benchmarks over long periods of time. You don’t get a refund if your manager can’t beat the index. You can’t get a refund if your CD or annuity renews at a lower rate. You can’t get a refund if we mess up your trustee to trustee transfer. We don’t give you a “better” death benefit check for $200,000 when your loved one dies. Many banks hit customers for fees they didn’t know about.

11. “When things go wrong, we treat you like you’re the enemy.” All brokerage firms disallow you to sue for bad service—you must use their arbiter and settle for the decision. One firm has the worst call response service in the industry. Another company pressured outside engineers to prepare reports concluding that damage was caused by water rather than by wind. They just denied all of them in the same geographic area. Another insurer dropped coverage and stopped signing new policies in coastal areas of 9 states. Some long term care insurers aren’t paying claims.

12. “We don’t care if you have been a loyal customer. We buy and sell customer accounts anytime we can make more money from it.” In the last few years, hundreds of customers have had their accounts dumped on others. For instance, John Hancock’s president sold the company to Manulife [Canada], Fireman’s Fund was sold to Allianz [Germany], Household Finance went to HSBC [Hong Kong], and Sage Life went to Old Mutual [S. Africa]. Brown & Co and HarrisDirect went to E*Trade. Golden West Financial went to Wachovia. MBNA and Fleet Bank went to Bank of America. A complete list is available at http://www.theinsidersguides.com/whoowyoacno.html. More consolidation is expected: HSBC, Rydex, Gateway Investment, GAMCO Investors, Julius Baer Investment, UBS AG. Your accounts could be next. You can do it yourself and save.

"Investors should purchase stocks [financial services] like they purchase groceries—not like they purchase perfume…” Benjamin Graham