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Posted by Don on March 11, 2007, 4:31 pm
>
> I have only one question. Is your planner making you tons of money
> doing what he is doing?
>
> If not, find someone else.
The phrase "tons of money" is misleading. No responsible financial planner
should be expected to deliver "tons of money" whatever the market condition,
and failure to do so certainly is not a shortcoming. A reasonable
expectation would be steady growth over a long period of time, with perhaps
a little better than average growth when the market as a whole is rising and
a little less than average loss when the market is declining. Frequent
buying and selling on the part of the planner, even just a few trades per
year, is a danger signal. One can ask "If this advisor is astute, then why
does he need to sell one fund and buy another so often? Why didn't he get it
right the first time?" If for some unusual reason frequent buying and
selling is actually in the investor's best interest (which is not likely),
it is the financial planner's responsibility to explain in advance why that
approach is desirable.
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