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Asset Acceleration Planning, LLC

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Black Hat Financial Counselor

The "Black Hat " Financial Counselor signifies our financial counselor's compensation as an independent insurance agent and a registered representative, is through commissions. Why a black hat? According to the erroneous perception pushed by the financial media, any financial professional paid a commissions is a "bad guy" and therefore wears a black hat.

I'm not sure how the idea started. Perhaps it was just by implication, but it seems we believe -- bad guys wear black hats. Perhaps it started in the 1950's. Back then the Lone Ranger, Roy Rogers, Hop-Along-Cassidy, and John Wayne were the good guys, and they all wore white hats. Too many financial pundits would have you believe, anyone taking a commission has an inherent "conflict of interest". Therefore, the financial professionals who are commissioned are said to be the ones in black hats.

This notion is repeated so often in the media, it's turned into a stampede. In an attempt to offer "no-load" funds, it caused the traditional "load" mutual fund companies to offer an alphabet soup of fund share classes, such as A, B, C, R and Z classes. This caused confusion among investors and did not necessarily benefit the investing public. In fact, in some cases regulators have found this to be a deceptive practice. Subsequently, firms are dropping the B share classes.

If you are truly a "no help needed " investor, then the real no-load mutual funds such as T Rowe price or Vanguard Family of Funds may be right for you. However, if you limit yourself to no-load mutual funds, you are leaving out a lot of high performance funds. To turn a phrase, "you're not playing with a full deck."

Would you play poker with just part of the card deck while the other cowpokes at your table played with the full deck? I don't think so. So why would you not consider all mutual funds to meet your financial goals? Furthermore, some no-load funds may not be less expensive in the long run.

For example, while the DWS Technology Fund has a load of 5.75% for investment amounts less than $50,000, it's annual expense ratio is .92. Compare this to many of the top performing no-load specialty funds with an average expense ratio of 1.50. If you hold your mutual fund for ten years or more, the DWS Technology Fund is less expensive than the no-load fund!

When you factor in the cost of a financial advisor who works for "fee only", and the no-load becomes even more expensive. If s/he works for a percentage of assets under management, say .50% to 1% of assets (an annual fee), you would be paying out far more in expenses than paying for the services of a financial advisor paid by a commissioned product.

SIX HATS OF OUR WEALTH AND RISK MANAGER