It’s the rare citizen with an ability to invest wisely. This takes a talent few possess. So, with billions of investment dollars in the hands of Americans, professional investment advisors occupy a position of prominence. Unfortunately, many practitioners who offer their advisory services are equally devoid of investment expertise. The result is predictable; huge sums are woefully misdirected.

As a typical client, if you’re lucky you’ll simply be sold into a number of mutual funds with modest front end loads and relatively low management fees. If you’re somewhat less lucky, the loads and fees will be heavy. Whether the funds relate in any way to your financial expectations is incidental. This is partly because most advisors have little understanding as to what constitutes a sound investment and partly because generating fees and commissions is the paramount consideration in their recommendations.

If providence is not on your side, you’ll be prodded into such packages as annuities, futures, or vehicles tied to derivatives. In these cases, instead of simply experiencing inadequate performance you could encounter true disaster. Firms that specialize in exotic investments of this sort cannot be dismissed as merely misguided. They engage in gross malfeasance. To protect yourself, you may try to prequalify your counselor. However, don’t expect that credentials, such as certification, ensure proficiency. Comedian Mel Brooks provided a classic definition of certified: “You’re a nice guy . . . we like you . . . you’re certified.”

Understand that, as with many other products, financial planning is an exercise in pure marketing. You’ve seen the newspaper and television advertisements guaranteeing that each client will prosper. A sense of skepticism suggests the persons who write the ads are unrelated to those who recommend the investments.

A final warning: You can’t depend upon a hired advisor to responsibly invest your money. You must develop an understanding of what constitutes an acceptable investment so that the final decisions are yours.

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If you enjoy this weekly Straight Talk by Al Jacobs, you’re invited to check out my monthly Financial Newsletter, as well as my new book, Roadway to Prosperity

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