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October 15, 2010
Healing after financial loss
Choosing an investment advisor leaves little room to gamble.
VIOLETA MOUTAL
Most of us are familiar with the physical effects of financial stress – constant worry leading to anxiety, irritability, sleepless nights, digestive problems, fatigue and even depression. Financial hardship rates second among the top eight life stressors after relationship crisis, so imagine if we lost our life savings. This reality can leave us nearly paralyzed.
Most of the questions that pop into our head obsessively in an attempt to understand what happened begin with “why”: Why is this happening to me? Why didn’t I see it coming? We look in the mirror and decide that it is entirely our fault. We missed the boat, we were blind, we trusted and we were betrayed. We feel inadequate, victimized and just plain stupid.
Self-blame is a common reaction for those whose financial stability is suddenly taken away, especially if the loss is not the result of a market crash or the diminution in value of a fund – things over which we don’t have as much control – but rather, we simply made a bad choice, handing over our financial assets to the wrong financial advisor. We’ve lost more than money. We’ve lost trust in ourselves, we’ve lost faith in people and we’ve lost hope. Where do we go from here?
Although there is no one prescription for healing after financial loss, here is my humble attempt to reconcile the grim reality of financial loss with a sense of hope, restitution and healing.
Step 1: Accept the loss. This may take some time, but the sooner the better.
Step 2: Embrace the lesson. We have the choice of not walking away empty-handed. The money is lost, but we can learn from the experience.
Step 3: Move on. Money is not our life. Life is too short and too precious. It is fragile and temporary. We own it until we don’t.
Expanding on Step 2, the lesson, choosing a financial planner is one of the most important hiring decisions you’ll ever make and here are my own personal top 10 life lessons and top 10 myths/red flags in choosing a financial advisor.
Ten life lessons
1. Do not feel afraid to interview the advisor and ask about everything that concerns you.
2. Check the advisor’s credentials, experience, qualifications, family status and personal background.
3. Discuss the types of services offered and related affiliations and memberships.
4. Discuss the advisor’s fees and commissions.
5. Discuss their approach and philosophy to financial planning.
6. Ask about business associates and their roles and services. Who is in charge in case of an emergency?
7. Ask if the advisor has ever been disciplined for any unlawful or unethical actions in their professional career, and do your own
Internet searches about their performance. If they list some of their clients, try to interview them, too, as references.
8. Before making a decision, ask the advisor to provide a written agreement detailing his/her services, commissions and other relevant accords.
9. Ask if the company offers protective insurance on behalf of investors.
10. Ask yourself whether you like his/her character and personality. Is he/she authentic? Trust your gut feeling.
Ten myths/red flags
1. Myth: The advisor’s family’s good reputation is a reason to trust the advisor.
2. Myth: The advisor is Jewish, the friend of a friend, the member of a club to which we belong, etc., and thus is inherently reliable and trustworthy.
3. Myth: The advisor is looking out for our best interest.
4. Myth: The advisor is so much more knowledgeable than us that we shouldn’t question their choices for our money.
5. Red Flag: The advisor offers you a deal “too good to be true.”
6. Red Flag: The advisor offers you a special deal, and asks you to keep it to yourself, as it only available to “you.”
7. Red Flag: The advisor shows unprecedented concern for you.
8. Red Flag: The advisor has a luscious lifestyle and is overly generous with gifts for clients.
9. Red Flag: We start trusting our advisor blindly, letting our emotions be in charge, rather than our minds.
10. Red Flag: Regardless of our circumstances, our advisor promises us a certain future of financial wealth and paints a bright future of early retirement and financial stability.
While our greatest wealth doesn’t come from our money – but from living with awareness, simplicity, integrity and gratitude – there are several things we can do to minimize potential threats to our financial security.
Violeta Moutal is an executive assistant for continuing studies, Richmond School District, and a language instructor. She is one of the creditors of a financial investment company’s recent bankruptcy.
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