Who is Responsible?
With some of the financial scams that have taken place recently don’t you find yourself feeling a little sorry for those that were taken? I become confused when I hear that people placed all of their savings into one investment!
Come on, no one should put all their eggs in one basket. There have been many cases in which individuals have placed all their money in their company stock. Later, after the company went bankrupt, all their investment monies were evaporated. People began to blame their company for the loss. In reality, the individual made the mistake by being greedy and not diversifying.
When you see someone do something beyond common sense, you say…gee, that was stupid. You see, everyone needs to be responsible for their actions. Unfortunately, in this country the tide has changed and no one wants responsibility for anything.
I came across a blog about frivolous lawsuits that have resulted in ridiculous warning labels like:
• “Remove child before folding,” on a baby stroller.
• “Harmful if swallowed,” on a brass fishing lure with a three-pronged hook.
• “Never iron clothes while they are being worn,” on a household iron.
• “Shin pads cannot protect any part of the body they do not cover,” on shin guards.
I can only imagine what financial advisors will now have to print on their ADV and application forms to alert clients to the obvious as this irresponsibility sweeps the country.
All of this raises the question: What is your responsibility as an investor to minimize the risk of fraud or failure in the management of your account?
Your steps:
• Do your due diligence.
• Work with financial advisors that have credentials and maintain ethical conduct.
• Develop an Investment Policy and Asset Allocation.
• Do not invest in anything that you cannot handle a loss level greater than your tolerance.
• Make sure your advisor uses an independent custodian.
• Do not invest in anything you do not understand.
• Evaluate your advisor, not just on performance, but on his/her ability to listen, communicate, and respond to your concerns.
Funny how investors never praise an advisor when their portfolio goes up, but they criticize or sue when the portfolio goes down. This thinking is a true portrayal of the American attitude today of…”I am not responsible for anything that goes bad in my life.”
If you want someone to take care of you so that you never get hurt, well, that brings to mind a saying I learned long ago…“Beware of someone who offers to take care of you, for your caretaker may soon become your jailer.”