Be Careful, Financial Planners Are Salespeople Too

By MoneyBlueBook

The wealthy seem to have all sorts of advisers and planners helping them manage their vast fortunes. But what about the rest of us regular folks who don't have the extra millions of dollars to throw at legions of planners, accountants, and managers? Some of us can rely on planners, but I think it's very important we all learn to educate ourselves about individual financial planning.

Financial Planners Are Also Salespeople

Recently I took a look at my mother's retirement and investment portfolio and was appalled at the funds she had invested in. Apparently, all of her investments were made at the advice of financial planners and account managers that recommended the products. The most glaring aspect was that many of the mutual funds she had put her hard earned money in were front loaded, with unjustifiably high expensive ratios, which meant her brokerage firm took a cut of her money immediately after it was invested in the particular fund and that it also regularly extracted a disproportionate percentage of her investment to cover fund expenses. Some financial adviser obviously profited from this setup and likely received a healthy commission for recommending it to her.

Although we often forget, your personal financial adviser also functions as a salesperson, oftentimes just trying to get his or her commission groove on. In this day and age, with the growth of no loaded funds and exchange traded funds (ETF's) that offer exceptionally low expense ratios, there is no reason why she should have invested in either a front or back loaded

By MoneyBlueBook

Yes I know, the book's been out for years now. I did read excerpts from it in the past, but it wasn't until recently that I sat down and read it in its entirety - Robert Kiyosaki's bestseller Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor And Middle Class Do Not.

The book is somewhat entertaining and written in a very anecdotal style. It compares and contrasts the teachings of his "poor dad", his respected and educated paycheck earning father, with his "rich dad", his friend's father, a drop out but self made millionaire. The book stresses several important themes:

• You should learn the type of financial literacy that is never taught in school. Disturbingly, he downplays the importance of a traditional education.
• You'll never get rich by chasing a higher salary. Apparently, working hard is now a fad.
• You should buy income generating assets, rather than liabilities. Assets are defined as items that generate income such as rental property, stocks or bonds. Liabilities are items that produce expenses such as your home, material goods that you buy, and even your car.

My Thoughts And Take On The Book

The main thing I got out of it was that it's important to increase your financial education and to invest in income producing, passive income type assets. Buying gadgets and toys can contribute to happiness and a better quality of life, but they usually have no earning power, although one can argue whether they have any further residual market value (eBay!).

The book unabashedly idolizes