Ulog 40: Financial advice non-sense

An old mentor of mine asked me two weeks ago to be on a conference call with him while he discuss his financial goals with the guy. He said that this financial adviser has been asking him to meet for a while now But he kept denying him time. So finally he gave in but said that he wants me to be part of the conversation because I am already helping invest part of his money. Normally, I would probably just ignore it. But I want to make sure the mentor hears different perspective so I agreed to take the call.

Boy, did this so-called “financial advisor” took us for a ride. The first thing he did was presented me with his set of credentials. So he was impressed with himself. Then he asked us if we knew who is Warren Buffet. Unless you’re living under a stone, you know who Warren Buffet is. Then he continued the question with “Do you know what are Warren Buffett’s favorite stocks that he owned? I said “you tell me!” He asked me to guess. So I said Coca Cola, Bank of America and Berkshire Hathaway. He told me, “Seriously!”

Then what he said next assured me that this guy doesn’t know what he’s Talking about. He said that the three favorite stocks are Amazon, Google, and Apple. What! Warren Buffet was late into purchasing shares of Apple. He has been accumulating them lately and adding to his share. But he has no major holding of amazon or google. So what the heck was his guy talking about. It’s a bunch of hot air.

I grilled the financial advisor on this issue. If I was alone, I would have already hung up on him. But I was still with the old mentor and so I had to keep my calm. He went into the cost of college and how Harvard cost $70k today and in 18 years it will be much more if he wants to have money for his grandkids to attend college. All true statements. Probably trying to get people to invest funds with him to prepare for the apocalypse of high education. Most people, especially folks who are accepted into Harvard, receive some type of financial aids in Harvard. Given how modest his income and his daughter’s income is, his grandkid will probably have to pay anything to attend Harvard. Harvard has a program that pays a significant portion of the education cost for families making less than $100k per year.

So even if there is gloom and doom, people tend to take extremes and present them as normal. I think that is what got me angry with this guy. He was probably trying to sell my mentor an inferior investment product so that he can line himself with fees and kickbacks while not understanding the products that he is selling. It’s a shame. But it is probably true for many people. They don’t understand the underlying principles of an investment vehicle and got looped in my these scammers who created complicated portfolios that don’t really add much values beyond what the vanilla funds at Vanguard for example.

Enough of my gripe of the day. Good night and don’t let the bed bugs bite.