The Ballers Guide to Choosing a Financial Advisor

 

Second in a series. Having concluded its first season and been renewed for a second, the hit HBO show Ballers on life after football paints a picture of financial planners and their clients living high on the hog. This post, we offer up some Ballers-inspired cautionary notes on what to look for in a professional financial planner and what scenes should send you running for the hills.

Full disclosure: In all my years as a CERTIFIED FINANCIAL PLANNER, I have never snorted rails of cocaine off a hooker's bosom. Nor have I ever witnessed any of my colleagues doing so either. Yet, if you take the HBO show 'Ballers' at face value, you might think that's all we get up to when we're not working our spreadsheets. Perhaps such hijinks happen in a financial advisors office or two somewhere out there but certainly not in ours. Yet, despite the program's OTT misrepresentation financial planners as party boys (and girls), I still maintain that the show gets many of the follies and foibles about money absolutely correct. 

So what can 'Ballers' teach us mere mortals about choosing a financial planner?  

The Big Four

The four questions anyone should ask before hiring a financial planner are:
 

1) Do you trust them?
2) Can they help you reach your financial goals?
3) Do they have your best interests at heart?
4) Are they a Certified Financial Planner™?

A response of NO to any of these questions should be a deal breaker. For sure, there are many more questions to ask a financial advisor before actually hiring them--things like fee structure, experience and investment philosophy-- but these initial four are easy to answer and are non-negotiable in my book. So bearing this in mind, let's see how the Ballers guys do.

Trust

Joe Krudel (played by Rod Corddry) really epitomizes the sleazy car salesman image of an 80's era boiler room stockbroker who makes outlandish promises that seem too good to be true (and we all know how those usually pan out, right?) Joe may be a nice-ish guy and a lot of fun, but do you really want to trust him with your life savings? If I reminded you that it was your money he was spending while he's partying hard, would you find his shenanigans quite so amusing? Sadly, I've met many a stockbroker who could be twins with this crazy guy whose better judgement gets blinded by the shiny light of fame and glamour.

Most financial firms or advisors wouldn't (couldn't and shouldn't) go the lengths that the Spencer Strasmore (Dwayne Johnson) does. For example we can't legally lend our clients money or borrow from them either. And while it may sound nice that Spence is paying off Vernon's (Donovan Carter) blackmailer, to be able to afford that $150,000 tab he is either dumb with money, or ripping his client off somewhere else.  

Takeaway: Do not expect your financial professional to bail you out of jail or pay off someone who is blackmailing you. (Why do these things always happen outside of market hours, BTW?) Furthermore, a trustworthy financial advisor is neither a dream merchant making promises the market can't possibly keep nor your partner in crime; he or she is your partner in helping you handle your money . . . legally.

Goals

The players of Ballers are far more interested in field goals than long term financial goals, no surprise since they're gifted young athletes at the height of their physical powers. If anything, their biggest goal seems to be getting through practice and back to the party. Living for the moment, and blowing every penny they make (and then some) may seem glamorous and fabulous in the moment, but a big headache after they come down from the fame high and the free flowing fortune that comes with it as Charles (Omar Benson Miller) selling cars can well attest.

Takeaway: Nothing lasts forever and the future will be here before you know it. Leverage Father Time, and his best friend Compounding Interest, and set financial goals for yourself while most importantly developing an active game plan to actually reach them. 

Best interests

The star defensive end Vernon has got himself into a real financial pickle by allowing his boyhood friend Reggie (London Brown) to 'manage' his money. While Reggie means well and thinks he has the athlete's best interests at heart, he doesn't really. In fact, being unlicensed, untrained, and unequipped to control Vernon's increasingly rapacious entourage of freeloaders, Reggie is bringing financial disaster down on the head of his buddy. 

Takeaway: Look for an Advisor who will tell you what don't want to hear. Your financial advisor is not there to be your best friend and the good ones won't back off from telling you painful truths--in ways a friend never could--if it'll help you financially in the long run.

Certification

I will give it to Spencer Strasmore who does go the extra mile for his clients which is nice. More importantly, he works hard to serve them, even when they have little interest in listening to his advice. That being said, he is just there to monetize his football connections. But the biggest red flag, and this is huge, is that he isn't securities licensed. 

The CERTIFIED FINANCIAL PLANNER™ designation means an individual has a CFP® Board-approved education, has successfully passed a rigorous CFP examination, has at least three years of financial planning experience and voluntarily ascribes to the CFP® Board's code of ethics. 

Takeaway: Who would you rather have handling your money, a licensed professional who is all of the above or someone whose claim to fame is knocking out his opponent unconscious while playing defense? Repeat after me, no license, no bueno, no deal-e-o.

This Content was originally posted on  David Rae 

Stock Market Selloff: Top Financial Advisers' Advice For Achieving More Income

Having Two Homes In China Is Not Enough

For the truly affluent Chinese, of which there are hundreds of thousands these days, having a home in Shanghai and one in Hong Kong is passé. You've made your neighbors jealous if you have a home in Malibu. In fact, according to the National Realtors Association, Chinese buyers accounted for 12% of all the non-American buyers of California real estate in March of 2013. That puts them only behind the Canadians, which accounted for 23%. Here's the kicker: China's home buyers spent more than twice what the Canadians spent, dishing out upwards of $425,000 for a piece of the California Dream. Forbes spoke with Andrew Taylor, the Aussie CEO of Juwai.com, China's biggest real estate source for those looking to buy overseas or connect to those who are on the prowl for property. Here's Juwai's top 10 most searched for destinations, along with comments from Taylor. Sales data not included.

Monday's stock market debacle stinks of a robot-driven flash crash

FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.

Paul Schatz, president of Heritage Capital, says Monday's stock market plunge looked a lot like the May 2010 flash crash. In an article for Investment News Schatz wrote, "I believe that high-frequency trading was responsible, not for the whole stock market decline, but for the quick acceleration and pricing dislocations or anomalies." He continued, "Remember, HFT thrives when markets are volatile and liquid. Not so much in quiet and less volatile markets." Schatz points to the big declines in the value of healthcare and biotech ETFs despite their largest holdings being some of the most liquid names in their respective industries as evidence of a HFT-driven flash crash. 

Ray Dalio says the Fed's next move is QE4 (Business Insider)

Ray Dalio, the founder of Bridgewater Associates, the world's largest hedge fund, thinks the Fed's next policy move won't be to raise interest rates. Instead, Dalio believes the central bank will embark on a new quantitative easing program. Dalio thinks "it should now be apparent that the risks of deflationary contractions are increasing relative to the risks of inflationary expansion because of these secular forces." He continued, "Our risk is that they could be so committed to their highly advertised tightening path that it will be difficult for them to change to a significantly easier path if that should be required."

The top advisor concerns (Eaton Vance)

Investment Management firm Eaton Vance surveyed 1,006 financial advisors about their biggest market concerns. The survey found advisors are most worried about market volatility, preparing for the possibility of rising interest rates and generating income in a low-return environment. Interestingly, 87% of advisors noted at least some of their clients were wary of equities.

Schwab fined $2 million for net capital deficiencies (Think Advisor)

Charles Schwab was fined $2 million by the Financial Industry Regulatory Agency for net capital deficiencies. Think Advisor reports, "The deficiencies arose because on each of those dates, Schwab had inflows of cash that exceeded the amounts it could invest with existing facilities, so instead, Schwab transferred $1 billion to its parent company for overnight investment," according to FINRA. Schwab says the transfer occurred because it was trying to avoid keeping too much cash at one institution and that the money was always safely with the company's parent. Schwab self-reported the matter, according to the settlement.

Savant Capital buys the Corcoran Group (Financial Advisor)

Savant Capital has agreed to buy the Corcoran Group, a firm catering to "high- to ultra-high-net-worth, senior-level corporate executives for publicly traded and private equity companies," according to Financial Advisor. The acquisition brings another $4.5 billion AUM to Savant Capital, which has offices in 11 states. Terms were not disclosed. 

This Content was originally posted on Jonathan Garber