Baby Boomer’s Email to Their Financial Planner August 2007

I emailed my financial planner in August of 2007 about my concerns for protecting my nest egg. Subsequent event show they were well-founded. Between the letter, this email and several other emails asking more and more questions to which I really didn’t get any answers I could rely on, I waited until the November 12th before asking for my money to be redeemed. I thought 3-4 months was enough time for them to satisfy my concerns. I really got nothing from them.

This Post is the last one I’ll do showing I was trying to get answers to my questions. But it could form the framework for others to use if you are not sure what to ask.

It is very important that you make sure your financial planner knows who you are whether you have your own retirement funds or are in a company fund. You need to establish contact and ask serious questions.

Greg Heiple of The Teeter Totter Principle has just released a new book call the BalanceZone I have been reviewing over the weekend.

My next post will be about it as I believe the BalanceZone is an evolutionary step from TTP to help us Baby Boomers manage our nest egg with or without the help of a financial planner.

Sent: 31/08/2007 10:11 AM ZE10


Thank you for the information about my portfolio. The P/L report is the one I really should be able to get myself online. I could not find out where to get it though. Am I right in thinking it is not available to me? If so this smacks of “keep the investor in the dark”. (I subsequently found out I had to ask my financial planner for this report)

Here is my 2nd draft letter. If you have any personal concerns about it let me know. If not then please send it to whom you consider will act on it for me. As I said I really appreciate the efforts you have gone to personally for Wanda and me. Thank you.

I am beginning to get some perspective on what a Wrap account can and cannot do for people in my position. So here are my thoughts.

I am reviewing the performance of my fund and I have to say I am not impressed. I know we should take a long term view but my long term is far shorter than a 25 year olds. Waiting 5-7 years for a Fund to come good really is not appropriate for someone almost 60 years old. If the market drops 30% and YYYYYYYY do not protect my capital I am in trouble.

As I learn more about this I am beginning to realise the financial industry really is trying to sell the wrong model to people my age.

At my age capital preservation is paramount and capital gain is secondary. It is far better for me to know I have a high probability of getting a regular return of even just the CPI than being up 25% one year and down 15% the next.

It was a revelation to me to realise the Fixed Interest Funds are also traded as Units and can give a negative return. (Yes, I was really dumb on this fact!) I thought it was like being in cash so the worse that can happen is the interest rate is reduced. But that is not the case. I also discovered the Global Index Fund appears to have 57% of it funds in the USA with vary little distribution. If that is not chasing the higher returns available in the Sub-prime market I don’t know what is.

The Property Funds have not performed either. So I’m not sure where the balance is.

I have to look at the risk/reward and had the money been left in the bank I would be approximately $XX,XXX better off.

Next year my pension will be tax free. So a guaranteed return of 6.5% tax free in the bank is a good return measured against the long term returns of the share market of about 9% and its associated risks.

I do want to talk with you on this. But at present my thinking is that I would be better off in cash because I do believe that a down-turn will come and it will be 30-40% when it happens. (The Aussie Index has been down 29% this year and No, I don’t have a crystal ball) I do not believe any of the large Wrap Account managers have anything in place to protect the capital of retirees who are now relying on that money for their retirement. Nor do I believe they will be in a position to get my portfolio into cash quickly when everyone else is rushing for the same exit. Plus with the “Long Term” mindset they are more likely to decide to keep me fully invested and ride out the down-turn. (This is exactly what they did to my friend and look at his results)

The typical response of “You need to take a long term view” is not appropriate when we do not have a long term and when the market had completed its longest up-trend in history. The probabilities of me being able to protect my capital in a Wrap account are very low because of the entrenched “take a long term” view.



So you can see I was asking questions well before the crash. With over 10 years of trading I didn’t think things were right and I should take precautions. You must ask questions of your financial advisers and insist they answer them.

Leave a Reply

CommentLuv badge