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Bird dog a retirement adviser

By Jennie L. Phipps ·
Thursday, January 20, 2011
Posted: 4 pm ET

All the retirement planning and saving in the world won't help if you don't pay attention. That includes watching carefully and making sure that the people you hire to manage your money are doing the best job possible.

Earlier this week, it was announced that a retired woman from Pittsfield, Mass., was awarded $136,000 in an arbitration with investment firm Smith Barney, now known as Morgan Stanley Smith Barney. In 2006, the brokerage had invested all of the retiree's savings in General Motor's preferred stock. As you undoubtedly know, GM faced bankruptcy in 2009 and the U.S. government bailed it out. Among the biggest losers in the process were preferred stockholders. This retiree lost 76 percent of her investment.

The retiree and her attorney appealed to the Financial Industry Regulatory Authority, or FINRA, and an arbitration panel ruled in her favor. FINRA determined that the recommendation to purchase GM stock was not suitable for the retiree's portfolio. The arbitration panel also ordered Smith Barney to pay the retiree's attorney's fees.

This retiree was lucky. Other people whose retirement funds are invested poorly don't have anyone to bail them out. They just lose their money.

Lynne Ford, who is the CEO of ING Financial Solution's individual retirement division, is a proponent of hiring a financial adviser to help you evaluate your investment decisions -- even if you decide to manage your own money. "Having someone to run your ideas by is very important," Ford says.

But even Ford, who is in the business, thinks picking the right person for that job can be a challenge. "Treat it like medical advice," she says. "If you have a serious issue, get two or three opinions."

Once you have lined up the adviser possibilities, she suggests asking the candidates to produce recommendations, comparing the investment approaches of each and definitely, "Trusting your gut."

Once you've hired someone, she urges you to constantly review what your financial adviser does. And she says you should expect to hear from the adviser frequently. "If you don't hear from your financial adviser regularly, you should fire him," she says flatly.

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End the Ponzi Scheme
January 21, 2011 at 9:50 am

You mean the raw deal programs that are bankrupting the country. I certainly don't see anything wrong with getting rid of them to save the country. Entitlement programs are completely out of hand. Entire generations are being raised to live off the taxpayer, and enough is enough.

You cannot create economic stability by pulling money out of a free market economy for government redistribution. The raw deal extended the depression and was a mistake from the start.

Dave Wilkinson
January 21, 2011 at 8:47 am

Recommendations for changing Social Security from the Enterprise Institute? I don't think so. The Enterprise Institute, as you well know, is a conservative organization; you must also know that the conservative movement grew out of, and continues to embrace, destroying the economic stability programs of the New Deal, including Social Security.

To be fare to yourself, you should be wary of any suggestions from political agencies with an ax to grind -- an axe that would cut only one way.