Many, if not most, of you are now working with a full-service broker or a
financial advisor who periodically gives you investing advice. Let’s look at
the dynamics of this interaction from two viewpoints: before you complete an
NAOI Study Course and after.
Before Completing An NAOI Course:
In a typical setting an advisor will recommend to you a stock or mutual fund
and perhaps give you an analyst research report. If they recommend a fund they
will probably place in front of you a prospectus and a glossy brochure showing
that it has historically performed very well. To the passive investor this is
enough. Based only on faith and trust that your advisor is a professional, and
that you are not, you OK the investment transaction. Then you go about your
daily business. You may have invested thousands, or tens of thousands, of
dollars without asking any relevant questions. You don’t know what else to do
so you simply buy and hope.
After Completing An NAOI Course:
Graduates of an NAOI Study Course will know that completely trusting the
recommendations of any third party is a recipe for investing disaster.
This is not to say that you should not work with an advisor. It is the manner
in which you work with your advisor that must change. Let’s look at how you
will handle third party advice as an NAOI graduate
Your financial advisor recommends a fund and presents you with related
marketing material and a prospectus. As an NAOI graduate and a confident
investor the first thing you do is throw away the glossy brochure. Keep the
prospectus. NAOI courses teach you to ignore the marketing hype and perform
your own personal analysis of any stock or fund. Under no circumstances should
you make an immediate trade decision.
Your next action is to leave your advisor’s office, or hang up the phone,
and spend 30 minutes completing the “NAOI Fund Analysis Checklist” discussed
in all NAOI Study Courses. After completing your fund analysis using one or more
Web sites accessed from the NAOI Members Only site you will have a list of
questions or “red flags” related to the advisor's recommended fund. You may
also have a list of similar funds that have better characteristics in the same
category.
Finally, you go back to your advisor and ask questions. You may, for example,
ask why the recommended fund has a higher expense ratio than the average for the
fund category. You may ask why the fund is riskier than the average for the fund
category. You may want to discuss your concerns that the fund is too highly
concentrated in one market sector. And so on. As an NAOI graduate you are
prepared to ask the right questions.
Faced with these questions your advisor has several possible responses. If
they get annoyed or have no answers to your questions, don’t buy the fund. If
they answer the questions to your satisfaction then, and only then, should you
consider acting on their advice.
The same process of evaluating advisor recommendations holds true for any
type of investment including stocks, bonds, annuities, retirement plans, etc.
As an NAOI course graduate you will no longer be a passive participant in the
decision process. You will have the knowledge, the tools and the confidence to
engage your advisor in a productive discussion. If your advisor has a problem
with this mode of operation, find another advisor. Good advisors will be happy
to defend their recommendations. Bad advisors will be insulted that you question
their professional “expertise”. There are plenty of good brokers and
advisors out there. You owe it to yourself to find one. We show you how in all
NAOI Study Courses.
As a confident investor you will quickly be able to separate the good
advisors from the bad. And you will signal quite clearly to any advisor that
they should not place before you any “junk” recommendations presented
primarily to earn sales commissions. The respect you gain by intelligently
questioning recommendations will save you tens or hundreds of thousands of
dollars throughout the course of your investing career.
