Category Archives: General Financial Planning

How to choose a financial adviser

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Simple, but not easy. Anyone and their brother can call themselves a financial adviser, advisor, planner, investment specialist, wealth manager, etc. And let me tell you that you would be shocked by the brouhaha in financial trade journals over whether or not advisors should have to be compelled (!!) to adhere to a fiduciary standard. A fiduciary standard simply means that the advisor is legally obligated to put YOUR best interests first, rather than, say, the product that pays him the best commission, wins him the free vacation contest, or allows him to meet his sales quota and keep his job.  People who are not fiduciaries are SALESPEOPLE and, uh, maybe what they’re peddling to you is somewhere in the realm of possibly being remotely suitable for you. If you hear any of the following terms, hold onto your shirt and wallet and run: non-traded REITs, master limited partnerships, most annuities, whole life, hedge funds—wait, the list is getting a little long.

 

But don’t take my word for it. Gregory Karp, who writes a column called Spending Smart for the Chicago Tribune, recently had an excellent article about how to choose an advisor. You can read it for yourself.  I couldn’t have said it better myself, and I welcome anyone who wants to quiz me on any or all of his criteria. I particularly like that he highlighted the difference between fee-based (you’re talking to a broker/salesperson who is getting a fee AND commissions), and fee-only (you’re paying solely for advice, which should be free of owing any commissions or referral fees to anyone).

 

My only complaint about the article is that the Trib tends to bury consumer financial articles in the business section, where the people that need to see it often don’t. If only we could get this information into the features section, next to the gardening, decorating, recipes, and parenting advice.

 

The cost of food

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It’s not easy to make money selling food. Dear daughter and I have been engaged in a summer long project of exploring an artisanal jam-making business and once you use those calculators to figure your retail price, well, let’s just say now I know why stuff at a farmer’s market costs so much. Once you add up the cost of top quality ingredients, transportation, packaging, etc., and do it on a small scale (so you don’t get the kind of wholesale discounts Wal-Mart can command), you come up with a pretty big price. On the other hand, you can also come up with a fresh and excellent product.

So, if I have to sell an excellent product for $9 a jar, how can these big companies make money selling for $4? Besides the economies of scale and bulk pricing, read the ingredients. As Michael  Pollan says, how many? Ones your great grandmother would recognize?

In his book In Defense of Food, Pollan describes how the food industry can and does make money. After all, it’s a somewhat inelastic market—even a dedicated trencherman can only eat so much. After we lick the plate at around 3,500 calories, most of us are way beyond caloric needs, and probably at as much capacity as our stomachs will hold. So how to make money? Repackage the plain stuff in ever more attractive ways—Go-gurt instead of the plain variety—using ever cheaper ingredients, otherwise known as high-fructose corn syrup, chemical flavorings, and value-added vitamins, fiber, or health ingredient of the moment (whether oat bran or Omega 3). You can charge more for the fruit leather than the amount of apples that might be in it, and individually packaged containers can make more money than a tub. A lot of it is fake, not very good for us, and high calorie.

Pollan, in his many books, blasts the food industry (organic is not spared!) but blasts us, too—our willingness to trade “convenience” for effort, our loss of taste in favor of a shot of sugar or salt, the demise of conviviality and unity represented by a sit down meal with friends or family.  It’s all a sad cycle. We grab a convenience dinner because we’re too tired after paying time and money to work out at the health club, we eat at a restaurant after a too-long day working to pay for that restaurant meal (the restaurant  spending is probably the single most outsized cost I see in budgets); we invest in family vacations because otherwise the only time we spend with our kids becomes driving them to after-school activities.

Yet, I can’t help feeling a certain utopian-ness to Pollan’s works. As anyone knows who has ever cooked primarily from scratch, day after day, it’s real work. And not only the cooking, but the shopping, and just plain thinking up what to eat, week after week, year after year. Add to that the cost of organic, of pasture raised meat, of the inevitable spoilage of some portion of the fresh vegetables, and you’re looking at a big bill.

If anything, Pollan’s books might slow up your buying a little, when you realize how long a chain is attached to any purchase decision you make—environmental, taste, time management, employment issues, government price support policy, nutritional bang for your buck.  I don’t have the right answers here, but he’s given me a lot of thought provoking questions.  The most pressing of which, for the moment, is whether I can wrap my mind around ordering a heritage turkey that will cost about what I normally spend on a week’s groceries.

Domestic abuse and money

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English: Boxing Gloves Deutsch: Boxhandschuhe

It’s about money, whether the headlines are horrific cases of bride burning, or a knockout in an elevator with an NFL sports star. Despite the myriad reasons women have been posting on Why I Stayed, many of them boil down to not enough money to leave.

Sure, many of us can answer because I loved him, but I think that the next time he smacks you around, if you had, say, a cool $5 million in the bank you’d think twice about whether love was enough. If you have children, or haven’t worked in a while, or your spouse is making more money than you ever saw before—more than you have any hope of ever making, well, you’ll try to make it work.

Money gives you a much better chance at safety, from beginning to end. When I got a court order of protection, the process server rang my husband’s doorbell a time or two, even though he was living 4 doors away and I could see he was home. What a surprise that he never answered. No, despite what you see on TV, court process servers don’t sit outside waiting, or go to any of the other places you could tell them the husband would be—they never even asked me. But when I filed divorce papers, I paid a private server, and the service was delivered in two days (they nailed my ex at church).

If you have money, you can pay for a better hotel to move into (rather than trying to find a bed at a shelter). You can stay at a residence inn until you find an apartment with a doorman or a security system. You can write a check for the security deposit. You can buy a mattress and some basic furniture. You can eat out until you equip a kitchen. You won’t have to make the humiliating move of begging family, and you won’t need to be somewhere where he can easily find you.

If you have money, you can choose a good lawyer—your pick of lawyers. And if you have money, that attorney won’t be hounding you to find a way to pay, and won’t jettison you because the money ran out and the settlement is too far away. While I know good, caring, and savvy divorce attorneys, like most of the rest of the world, you’ll get more attention if you have money. If you don’t like that lawyer, you can afford to fire him or her and hire another one, with no fear about a second retainer fee.

You can pay for health insurance. For many women, finding themselves off the policy with no employment is terrifying and can certainly be life threatening.

With money, you can pay for the therapy you and your kids are going to need. Without money, you’ll stay and hope for the best, or that you can make it okay for the kids. Or maybe you’ll be talked into couple’s therapy, so the abuser can find another opportunity to make it (“at least partly”) about you. With decent therapy, you can restore your self-esteem (which most abusers are expert at taking apart) and find out you weren’t an idiot or a professional victim or a weakling. Like all victims of abuse and bullying, it had nothing to do with anything you did.

With money, more people will believe you. Most domestic abuse victims should be prepared to lose most of their friends. Maybe, maybe if the guy looks like a thug, is twice your size, and smells in court, some people will give you the benefit of a doubt. But if he’s charming, employed, and can speak a coherent sentence, people will believe him and not you. Particularly if you come off as a teensy bit angry—I mean, why should you be a little angry? Well, obviously you’re a bitch who drove the nice guy to distraction. An abuser’s modus operandi is to fool people into believing that he’s not abusive or that he had a lapse and will never do it again. After all, you believed it so why shouldn’t mostly everyone else? He’s a charmer, that one.

If you, too, can pay to look good, more people will believe you. Go to court in a nice suit or dress. Have your face dermabraded and your teeth fixed, with the confidence that money brings, and your credibility takes a pole vault. Nobody is going to say without him she’d be nothing.

If you start talking about what happened? Well, quiet, you’re embarrassing people. Be noble and shut up (so he can go on abusing you by silencing you). When you have money, you’re way more able to speak out. With money, far fewer people are going to give you parenting or behavioral advice.

If you have money, your kids’ college will be taken care of, you won’t be facing retirement on ½ his Social Security, and you can keep the house or get another one.

So, my guess is that at least one of these reasons is why Janay Palmer Rice is staying for the time being. Does anyone believe they’ll still be together 20 years from now? Given the money involved, and the alternatives open to her, maybe the marriage wasn’t such a dumb idea. As long as she doesn’t pay with her life.