Pre-retirees are Most Vulnerable to Bad Investment Advice, Warns Paladin Registry

ROSEVILLE, Calif., Nov. 1, 2005

Pre-retirees - particularly those folks who will receive sizable lump-sum pension distributions when they retire - are the group most likely to select low-quality advisors, said Jack Waymire, founder of Paladin Registry, LLC ( ). And that could put their financial futures at extreme risk.

In fact, said Waymire, author of the best-selling Who's Watching Your Money: The 17 Paladin Principles for Selecting a Financial Advisor (ISBN 0471476994, John Wiley & Sons, 2003), it happens every day: John Doe, a loyal thirty-year employee, finds himself with hundreds of thousands of dollars in an IRA rollover account. Never having had responsibility for that much cash in his life, he decides he needs a financial advisor. Unfortunately, John Doe has never worked with an advisor before, and he doesn't know high-quality professionals are the exception to the rule - so he hires the first one that sounds good. Over the next few years, as his investments steadily under-perform, his dreams of a secure, comfortable retirement are replaced with the prospect of being a 75-year-old fast-food worker.

"Retirees' assets typically have to last at least 25 years. Bad advice at the beginning of retirement can totally undermine their financial futures," Waymire explained. "Preretirees must build their assets to offset income distributions and the impact of inflation, so they are very dependent on performance. That means they are dependent on the quality of advice they get. Too often, that advice is given by incompetent, self-serving advisors hawking low-quality investment products that maximize their own commissions."

With a little knowledge, pre-retirees can protect themselves and their assets from second-rate financial advisors. First, said Waymire, they must know the key characteristics of bad advisors, as well as those of high-quality professionals. Their selection process should emphasize advisors' competence and integrity and de-emphasize personalities and sales skills. Investors shouldn't select the most convenient or nicest advisors; instead, they should pick advisors with the highest probability of helping them achieve their financial goals.

Pre-retirees that will be using the services of advisors need information that will help them protect their long-term financial interests from unethical advisors who profess to be investment experts. According to Waymire, their best chance for improving their situation is to work for companies that care enough to offer information programs that help employees learn to select quality professionals before they turn their assets over to the wrong advisors.

"Any company that distributes pension assets in lump sums must educate employees who are a year or two away from retirement. These folks need help identifying key differences between advisors who will help them achieve their financial goals and advisors who will destroy financial futures to maximize their own incomes," Waymire said. "Companies that care will take up the challenge to help employees protect their financial futures after they retire."






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