Financial Focus with Robert
Q. Robert, you have written a few times in your column about having a fiduciary responsibility. Why is this so important? – Cedric in High Point
A. Ok Cedric, I am going to share a story with you that I have never really told before. When I was around 25 years old, I was visiting my parents in Salisbury. I overheard them talking with each other about an investment they had made at a local bank. My parents had been dealing with the same bank for years, so when they recommended an investment opportunity to my father, he thought it was a good idea.
To give you some background, my father had worked in the construction industry doing concrete work most of his life. My parents had raised four children, myself being the youngest. Now with the children out of the house my parents were finally able to start saving some money.
So my dad went to the bank to get more information on the proposed investment. Keep in mind, my father had never owned a stock or bond in his life. But he was assured by the young lady at the bank that this was a really good deal. He took her advice then went home to tell my mother the good news. All went well until they got their first statement. It seemed that the numbers did not add up.
What they did not realize was that the fund they bought had a 5% front end load. So my father’s original investment of $160,000 was now worth $152,000. The young lady reassured my father that everything was fine. The account would make that up in no time at all. The account was kept open for five years. Their total return after five years was the same as the original $160,000 investment.
If my father would have known about the 5% upfront fee, he would have never agreed to it. From then on he was always too embarrassed to talk about what he had done.
A fiduciary responsibility requires that an advisor disclose all fees, whether or not the client asks.
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Robert Cooper
CRPC, RFC Registered Investment Advisor Representative / Providing Financial Planning Services in the Triad for Over 20 Years
336-993-2012 • www.coopercares.com
935-E Mountain St., Kernersville, NC 27284
Investment Advisory Services Offered Through Global Financial Private Capital, LLC, an SEC Registered Investment Advisor.
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