John Oliver – Financial Advisor and His Views on Retirement Planning
John Oliver – Financial Advisor, and the host of famous HBO TV show Last Week Tonight, uses humor to point out real world issues. So, he did a special on something very, very important to everyone – our finances. In his show Last Week Tonight – Retirement Plans, he focused on retirement planning, the role of financial advisors and how so many of us fall prey to huge fees and unethical practices by these so called “advisors”.
Most Americans are clueless about financial planning, which is why many prefer to hire “professionals” to take care of their money for them. This show was an eye-opener as it pointed out how we get duped by such financial “advisors” and how much of our hard-earned money we end up losing.
The first bubble that the show burst was about these so called financial professionals. According to the Financial Industry Regulatory Authority, “Financial Advisor”, “Financial Analyst”, “Financial Planner”, “Financial Consultant” or even “Wealth Manager” were meaningless terms as most professionals with these titles had no special accredited credentials.
Another issue with most financial “advisors” is that they typically work on commission. This spells bad news for you, since they will tend to direct you to investments that will give them higher commissions than those that will actually benefit you. A prime example of this is complex annuities. While they can work for certain types of investment portfolios, they are for everyone. However, “financial advisors” get good commissions for directing more investors towards them. Long story short, you lose.
And then the whole concept of “Active Management”. This Seeking Alpha article explains how active management, which requires skill and insight – and a lot of hard work – has been abused by most financial professionals, leading to huge losses for most investors.
The biggest problem with hiring a financial advisor are the fees. In the show, John Oliver explained how their team set up an experiment by hiring John Hancock to act as the company’s financial advisor for investments to be made on behalf of their employees. The entire experiment proved that the consultancy firm swindled them with unnecessary and exorbitant fees.
Overall, the show gave us something to think about and some really important takeaways.
- Start saving right away. Savings are what will help during retirement and the sooner you start, the more money you will have when you retire.
- The best way to invest for the average person in by investing in low-cost index funds and let them be.
- If you are going use the services of a financial advisor, then make sure he or she is a fiduciary.
- As you age, move your investments from stocks to bonds.
- If you do hire a financial advisor, ensure that your fees are under 1%.
Despite the beating the show gave financial advisors, not all of them are bad bets. A truly good financial planner/advisor/consultant or whatever other name you choose will really take care of you and your money. The challenge is finding the right financial advisor.