Monthly Archives: May 2014

What Accountants Don’t Know!

I was recently speaking with a client who was telling me that their accountant was questioning some of the financial strategies they were doing and they didn’t know how to answer him. The client knew he was doing the right thing but was not sure because he felt he was being questioned by a professional, and they were supposedly knowledgeable about financial matters.

This is a classic case of a person who has an accounting background deciding to become an expert in financial planning and wealth building. When they leave their area of expertise they become incompetent about financial decisions. Many accountants are micro thinkers who love to get people who are uneducated in the financial world to do things that are not logical. Accountants are great in doing what they do best and that is accounting, but when they step out of their area of expertise they can hurt people financially.

In this case he wanted my client to give up putting money in an area that has no losses and no risk, to put it into a 401k program that was driven by the financial markets. The purpose was so he could look good in front of my client when he did his taxes. He could create a temporary tax reduction through the 401k that would cause my clients taxes to go down in the current year. But, my client would pay income tax on the distributions when he took it out later in life, not knowing what the tax liability would be in the future. He also was putting my client at risk of losing money if the economy did another downward cycle.

Most people who put their money in markets end up losing in the long run. I have been working with clients for 35 years and have seen most people get nice gains, but also huge losses that offset the gains. Many people who recently went through the economic downturn lost major amounts of money, never to recover their loss. Putting your money at risk is not necessary if you don’t have to, but the financial people seem to think that using financial markets is the only way to build wealth.

There are many ways that a person can build wealth and do it risk free but they have to look at their financial picture from a macro grid, and not a micro plan. Most end up listening to someone give them financial advice which ends up being someones opinion, which cost many people large losses. In all cases the financial person who recommended the particular strategy loses nothing. Not Fair!

If you are looking for a way to understand your financial world better tune in to my radio show every Monday Morning at 9:00 AM EST to Financial Freedom Radio. You can either listen live or later. I would love to have you.

Dr. Raymond Jewell

Is Achieving Financial Freedom A Real Goal?

Many people want to achieve financial freedom but don’t know how to do it. They read books, talk to professionals, get financial planning advice from financial planners, but never seem to make it happen.

The statistics are staggering when you look at who is retiring with what over the next 20 years. Why is this goal so illusive? What are people missing?

One of the major road blocks that keep people from achieving financial freedom is the misinformation that surrounds the question. Everyone has an opinion about how to do it and shares their information, or philosophy, on how to become financially free but most of the time its flawed.

One of the major flaws is that when anyone listens to a person who is a representative from the financial world they already have a hidden agenda, which is to get the peoples money and make a commission. Even if a financial person says they only charge a fee the fact is they will put the clients into a financial product and someone is getting a commission. Fee based advice is done because the planner wants to say they have no specific tie to anyone one financial institution, but truth be known, they are going to recommend that you use some financial institution otherwise they would not be in business.

The financial institutions must get your money and invest it, to be in business, so the financial person will direct you to some form of financial product. This is where the rub begins! When you use a financial product you put your money at risk and allow the financial institution to make money on it. They in turn will pay you a small amount of money for the use of your money. This is called Economic Rent. “Whats the cheapest I can pay you for the use of your money”.

When markets go down the consumer bears all the risks since the financial institution is passing it all to the consumer. So lets recap, the consumer gets paid a little when money is made and the financial institution makes the lion share of the money, but when the markets go down the consumer bears all the downside risk. It hardly seems fair does it?

So listening to financial people might not be a great idea unless you know how to play by the rules of the financial institutions.

To learn how to think like a financial institution all you have to do is tune in to and listen to the current shows. Each show addresses how to win using the financial institutions.

Thanks for reading.
Dr. Raymond Jewell