MONEY financial advice

Vanguard’s Founder Explains What Your Investment Adviser Should Do

Jack Bogle, founder of the mutual fund giant, shares what makes an investment adviser worth paying for.

The life of a financial adviser can be very tricky. Many of them believe that leaving a client’s investments alone is the best option, but when, year after year, clients come in asking what the best course of action is for their money, what do you tell them? Jack Bogle, who 40 years ago founded the mutual fund giant Vanguard (it now has about $3 trillion of assets under management), explains exactly what a financial adviser should do and what a financial adviser should say.

Read next: Jack Bogle Explains How the Index Fund Won With Investors

MONEY Financial Planning

8 Steps to Financial Wellness

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Sergio Kumer—Getty Images/iStockphoto

Financial wellness isn't just about wealth. It requires developing emotional and physical wellness as well.

The goal of comprehensive financial planning is to help our clients achieve financial wellness. That’s not the same as helping them get rich.

Building wealth and accumulating assets are important, but they make up only a slice of the wellness pie. Financial wellness also incorporates the ways wealth and income affect our emotional and physical well-being.

Financial wellness requires developing emotional and physical wellness as well. Searching for one inherently will expand to a search for all three. Just as with emotional and physical health, developing financial wellness is a journey—one which few people choose to make, and one in which there’s always a chance of going further.

Here’s some guidance for clients who want to embark on that journey, and for the planners who want to help them:

  1. This is an individual journey. Traveling the path to financial wellness for the sake of a spouse, parent, or friend—or because a financial planner recommends it—won’t work. If the motivation is a “should” or an “ought,” calling off the venture will save a lot of frustration and pain for both client and planner.
  1. You can’t guilt, shame, or manipulate people into this journey, and you shouldn’t help them guilt, shame, or manipulate anyone else to accompany them. We can’t find financial wellness for anyone else but ourselves. We certainly can join with others along the way, but all those on the path need to be there for themselves regardless of whether others are on the path.
  1. Be prepared for naysayers. Not everyone in a person’s life will support his or her quest for financial wellness. Many will try to convince him or her to stop or turn back. Often, the closer people are, and the more dependent they are on the client’s financial choices, the more threatening the journey may be to them and the more they will resist it.
  1. Lower your expectations of how quickly a person’s attitudes and behaviors around money and finances will change. Chances are it has taken a lifetime to develop a client’s relationship with money. Unlike the journey that Ebenezer Scrooge took to financial wellness, those of us in the real world won’t miraculously transform our relationship overnight.
  1. In the early stages of the journey, resist the urge to give people practical, logical information about money instead of looking at their emotions and beliefs around money. Most of the journey to financial wellness is not about the money. It’s about the thoughts and emotions we have about money and wealth.
  2. Be open to new awareness and knowledge. Planners should encourage clients to let go of their most deeply held “truths” about money. The more stubbornly we cling to strong beliefs about how systems work or people function around money, the more likely that those beliefs are not serving us well.
  1. Be gentle with people and encourage them to be gentle with themselves if they get off the main path and have to backtrack. Everyone on the journey to wellness takes his or her share of wrong turns.
  1. You can’t help people go where you are not going yourself. Planners can be trusted guides for clients, sharing their wisdom, missteps, and experience. For us planners to be such guides, it’s essential we be on the road to financial wellness ourselves.

Rick Kahler, ChFC, is president of Kahler Financial Group, a fee-only financial planning firm. His work and research regarding the integration of financial planning and psychology has been featured or cited in scores of broadcast media, periodicals and books. He is a co-author of four books on financial planning and therapy. He is a faculty member at Golden Gate University and the former president of the Financial Therapy Association.

MONEY financial advisers

How to Know If Your Retirement Planner’s Credentials Are Real or Worthless

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It's easy for advisers to add a title after their names without doing all that much, so be sure your pro has actual expertise.

Is your adviser touting questionable retirement-planning credentials? Just last week the Massachusetts Securities Division fined LPL Financial $250,000 after an investigation into the use of senior designations by some of the firm’s representatives. Here’s what you need to know if you’re considering hiring someone for retirement help.

If you were looking for guidance with your retirement planning, would you be more likely to hire someone if his business card stated he was an Accredited Retiree Counselor? How about if he were a Qualified Retirement Strategies Specialist? Or a Certified Retirement Planning Expert?

I hope not, because I just made them up by writing dozens of words like “retirement,” “accredited,” “specialist,” etc. onto little slips of paper, tossing them into a bowl and then drawing them out at random. Which illustrates a fundamental quandry: Given the dozens of official-sounding designations out there, how can you tell whether a string of impressive titles represents real retirement-planning know-how or is a marketing gimmick designed to imply expertise that isn’t there? I have three suggestions.

1. Demand details about the designation. Don’t be shy. Just say you’re naturally skeptical of such titles in light of the recent National Senior Investor Initiative report from the SEC and FINRA and an earlier study from the Consumer Financial Protection Bureau that raised questions about senior designations. Among the questions you should ask: What organization issues the credential? What makes that organization credible (Is it accredited? If so, by whom?) How long did it take to get the designation and what was required (how many hours of study, on-site or online course work, a final exam)? Is continuing education required to maintain it? Basically, you want to know that the adviser isn’t effectively trying to buy credibility.

You can get more information about professional titles and designations by going to the Paladin Registry’s Check A Credential tool and FINRA’s Professional Designations database.

2. Vet the adviser. I don’t care how extensive an array of designations an adviser holds, you still have to do some due diligence to make sure the adviser hasn’t had a litany of complaints clients and/or run ins with regulators. A good place to start your digging into the adviser’s background is the Check Out A Broker or Adviser section of the Securities and Exchange Commission site, which has detailed information on how to research the background of all types of advisers—brokers, financial planners, investment advisers—plus other resources, including links to FINRA’s BrokerCheck system and state securities regulators’ sites.

3. Listen to your gut. Although there’s always the risk of being duped by a Madoff-like investor who’s a complete fraud, the more likely scenario is that you end up doing business with an adviser who’s willing to boost his bottom line at the expense of yours. To lower the odds of that happening, spend some time with the adviser to find out exactly what he intends to do for you and what his products and services will cost.

Start by getting a sense of how he operates: Does he make his living mostly by selling a limited range of products from a restricted menu offered by his own or affiliated companies? Or can he pick and choose investment options from a broad range of firms? You also want to find out exactly how is he compensated—solely by commissions, by annual or hourly fees, a combination of fees and commissions? Each method has its advantages and drawbacks (although I think paying fees for advice has less potential for conflicts of interest). But whatever system the adviser uses, he should be able to provide you a written estimate of his fees and any other charges upfront.

Ultimately, you want to deal with an adviser you feel you can rely on to deliver independent advice, not someone looking to charge bloated annual fees to manage your money or a salesperson looking to unload his inventory on you. So if at any point in the process of dealing with an adviser you feel that something doesn’t ring true or that you’re not really sure you can trust the adviser, my advice would be to move on. There are plenty of advisers out there to choose from.

Who knows, maybe efforts now underway by the White House, Department of Labor and Securities and Exchange Commission to hold advisers to a more rigorous standard may make it easier for consumers to find advisers they can trust. I don’t consider that a given, but we’ll see. In the meantime, though, don’t let an alphabet-soup of credentials on a business card determine which adviser gets to handle something as crucial and irreplaceable as your retirement savings.

Walter Updegrave is the editor of If you have a question on retirement or investing that you would like Walter to answer online, send it to him at

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MONEY financial advice

Financial Website Brothers Share Their Best Financial Advice

BrightScope co-founders Mike and Ryan Alfred talk about retirement savings and their biggest money mistakes.

Save until it hurts was the first thing Mike Alfred, a co-founder of BrightScope, said about retirement savings, and that’s part of his best financial advice to give others as well. “Live below your means,” he said, “which sounds very simple in theory but it much more difficult in practice.” His brother Ryan, the other BrightScope co-founder, suggests keeping your investments at arms-length so you’re not tempted to overanalyze them.

Mike said his biggest mistake was buying in to the dot-com bubble, while Ryan talks about how they funded a large part of their business on their own credit cards.

Read next: The Co-founders of BrightScope Share The Painful Secret to Retirement Success

MONEY financial advisers

Why Even the Rich Don’t Trust Themselves with Their Money

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Helder Almeida—Shutterstock

When the affluent are nervous, it's time for middle-class investors to make sure their portfolios are on track.

If the wild market swings of the past week have you feeling anxious about your portfolio, you’re not alone. Even wealthy investors say a volatile stock market puts them on edge, perhaps because so much of their money is bound up in stocks.

A new study finds that almost 40% of affluent investors don’t trust themselves to manage their own investments during market downturns—in fact, more than 60% of those surveyed say they currently work with a financial adviser. (Although the study targeted people with more than $250,000 in financial assets, the group surveyed had a median $450,000 parked in the stock market.)

It’s not just wealthy investors who are worried about their finances, of course. Another recent survey found that 62% of Americans overall reported being kept awake by money concerns, though the percentage is smaller than in past years. Among those losing sleep, 40% reported worrying about retirement savings; among those ages 50-54, fully half said this concern keeps them up at night.

No question, the markets have been especially turbulent lately. After a fairly quiet spring, the VIX—a measure of volatility in the S&P 500—jumped at the end of June, as the Greek debt crisis and China’s stock market turmoil made headlines. Plus, a technical glitch shut down the New York Stock Exchange. (The crisis in Greece appears be on track to a resolution, but China’s shaky stock market may yet upend global markets.)

The Surge in Advice

Granted, investment surveys like these tend to play up market anxieties—and the need for professional hand-holding. Wells Fargo, the sponsor of this particular survey, made more than $800 million off its financial advisory business last year.

It’s just one of the proliferating number of financial services firms offering advice to nervous investors. That list includes not only brokers (like Wells Fargo) and fee-only advisers, but also the new breed of low-cost online investment advisory services (often labeled robo-advisers) such as Wealthfront and Betterment.

Established fund groups like Charles Schwab and Vanguard have also gotten into the act by offering a mix of automated advice and human guidance for significantly lower fees—or no fees at all, in the case of Schwab Intelligent Portfolios. Meanwhile, some fee-only advisers have changed their pricing model to create an offering for younger and less affluent investors, which is paid through monthly retainer fees rather than charging a percentage of assets. (Such plans give younger investors access to unbiased advice, but the resulting price tag winds up being well above the traditional 1% of assets.)

Where to Get Help

Should you opt for one of these advice services? The answer may depend on how susceptible you are to fear, greed and other portfolio-undermining emotions. If the answer is “very,” there are simple ways to get some guidance.

The easiest move is to use a low-cost target-date fund, which will give you instant diversification, automatic rebalancing, and an asset mix that grows more conservative as you approach your retirement date.

You can also consider one of the online offerings. You can start small—Wealthfront, for example, just lowered its minimum investment to $500. Above $10,000, you will pay a fee of roughly 0.25% of invested assets.

But if you think you can go it alone, you can save yourself even that modest fee. After all, that Wells Fargo data shows that 61% of those wealthy investors still do trust themselves to stay calm when markets shake. If you know you’ll be able to keep your head while flying solo, pick a simple portfolio allocation, fill it with low-cost index funds and rebalance once a year.

Read next: Meet Your New Financial Adviser

MONEY financial advisers

HBO’s Ballers Puts Financial Advisers in the Limelight

Spike TV's "Guys Choice 2015" - Show
Michael Tran—FilmMagic Dwayne Johnson aka The Rock speaks onstage during the Spike TV's "Guys Choice 2015" held at Sony Pictures Studios on June 6, 2015 in Culver City, California. Johnson stars in the new HBO show "Ballers".

Dwayne "The Rock" Johnson stars as a former NFL player turned financial adviser to pro athletes.

The trailers for the new HBO show “Ballers” may be the wealth management industry’s best tool for recruiting new advisers.

The promos show the main character, a financial adviser and former National Football League player named Spencer, networking at decadent lunches, luxurious pools and Miami nightclubs.

But upon watching the show, we see his life is not as glamorous as it seems. Played by Dwayne “The Rock” Johnson, Spencer is practically broke after loaning a pro athlete friend $300,000 in an attempt to sign him as a client.

“Ballers” may take creative liberties when it comes to the wealth management industry, but some advisers said it was fun to see their jobs through an HBO lens.

“If it were a depiction of what my life is really like  I wouldn’t watch it because I live it every day, and this is far more entertaining,” said New York-based private wealth adviser Jason Katz of UBS Financial Services Inc. His clients include about 15 professional athletes.

“Ballers” highlights the challenges of advising athletes, who are young and live contract-to-contract. They are sometimes brash and often try to support large entourages.

An oft-cited 2009 Sports Illustrated story reported that 78 percent of NFL players have gone bankrupt or are under financial stress within two years of retirement, and about 60 percent of National Basketball Association players are broke within five years.

But a study this year by the National Bureau of Economic Research was less dire. Of the 2,016 players drafted into the NFL between 1996 and 2003, only 15.7 percent had filed for bankruptcy 12 years into retirement.

Katz, who manages money for professional baseball, football and basketball players, has clients write wish lists.

“When you put it to paper, you may realize some things might be outlandish,” said Katz, whose clients’ lists have included building a bowling alley and in-home barbershop.

Frank Seminara, a private wealth adviser in Morgan Stanley’s Global Sports & Entertainment Division, said athlete clients often need him most at the beginning of their careers, when tempering their enthusiasm for big purchases can be an issue.

Retirement is another critical time, when athletes often must adjust to living off their interest income and capital gains.

Like the fictional Spencer, Seminara, whose team manages about $1 billion in assets, is a former pro athlete now managing money for athletes. He played professional baseball for the San Diego Padres and New York Mets from 1992 to 1994.

Seminara also had his share of late nights networking with potential clients at bars. But he credits most of his success to years of cultivating friendships with athletes by going to practices and visiting them on the road.

Building up trust and educating clients is important, Seminara said, noting that Morgan Stanley has financial literacy program for its athlete clients.

“I think the days of wining and dining and the short cuts are over,” Seminara said. “I think athletes are becoming more educated.”

MONEY financial advisers

Why Financial Advisers Need a Good Bedside Manner

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It's not just what you say, it's how you say it.

We financial planners are a bit like doctors: In both professions, how successful you are early on in managing people’s health, whether financial or physical, can have a big impact on how well those people live later on.

Like doctors, we financial planners also benefit from having a good bedside manner when communicating with the people we’re helping. That’s particularly true when the news we have to deliver is not so good—especially if the bad news stems from a self-inflicted wound.

Not too long ago I read a financial advice column in which the person seeking advice shared how his financial decisions, his health challenges, and macroeconomic events resulted in him and his family being in a very tough financial situation.

As I read the writer’s request for guidance, I could feel his stress. He was obviously seeking help and didn’t know where to turn.

The columnist’s response was unsympathetic. There was harsh judgment of the person asking for help and the financial decisions he had made. To say the response lacked empathy, would be an understatement. As for the advice itself, you might call it “tough love,” but I thought it was minus the love.

I’m sure we’ve all experienced some degree of poor service, but chances are it was a transaction that started and ended in that moment. Many of us have encountered a health professional who has been cold and aloof, and I’m sure it didn’t feel good.

I have had the pleasure of seeing doctors who were very empathetic, but I’ve also talked with doctors who shared undesirable news in a matter-of-fact manner then simply walked away. I wasn’t sure what hurt more—the news itself or the manner in which it was delivered.

Financial planners are not doctors, but we are entrusted professionals who look after our clients’ financial well-being. When financial stress hits the people we serve and they seek our assistance, we have to ask ourselves whether the advice we’re giving is judgmental or empathetic. Are we focused on the person’s financial need, or are we being more critical of the person in need?

While I don’t view any of my clients as children, I’ve learned in raising my sons that tough love isn’t always effective. Encouragement can be just as effective as wagging a finger.

Suffice it to say, I believe having a good bedside manner can make a huge difference in helping our clients achieve better financial health.

Frank Paré is a certified financial planner in private practice in Oakland, California. He and his firm, PF Wealth Management Group, specialize in serving professional women in transition. Frank is currently on the board of the Financial Planning Association and was a recipient of the FPA’s 2011 Heart of Financial Planning award.


4 Qualities a Financial Adviser Ought to Have

Yoda in Star Wars Episode V: The Empire Strikes Back
Lucasfilm/20th Century Fox—The Kobal Collection Yoda in Star Wars Episode V: The Empire Strikes Back

Clients want a leader... but not the stereotypical kind.

It’s not surprising that, according to a 2014 study, almost 90% of clients want their financial planner to be a strong leader.

What is surprising, however, is the way those clients described leadership.

In the study, conducted by the Financial Planning Association’s Research and Practice Institute—and which Julie Littlechild of Advisor Impact discussed in a recent speech—clients said a strong leader should have these four qualities: expertise, skill as a guide, deep understanding, and vulnerability.

Let’s examine those qualities.

1. Expertise: Leaders typically have a strong base of professional expertise that goes beyond general knowledge of their field. This is why continuing education is paramount to good financial planning.

Even more important, leaders have wisdom: the combination of knowledge and experience. A new college graduate has knowledge. A 30-year planner has a high probability of having wisdom.

Clients want planners to be experts, to have knowledge about all things financial, and to know how to apply that knowledge to clients’ unique sets of circumstances.

2. Skill as a guide: Guiding is the ability to use expertise and wisdom to help clients go where they want to go, not where the planner thinks they should go. An effective guide first finds out where clients want to go, devises the safest, most effective route to get them there, and leads the way.

I don’t know of any academic courses that teach financial planners how to guide. It’s learned experientially. Planners learn it by walking the walk, treading the same path for themselves that they will lead their client on.

3. Deep understanding: What’s surprising about this quality is the word “deep.” Certainly, leaders need to understand their followers. But to understand someone deeply is much more intimate and encompassing than a superficial understanding of a person’s general needs, intentions, or desires.

Deep understanding comes through hours of genuine listening, asking probing and thoughtful questions, and having a genuine concern for the client’s well-being. It establishes a deep sense of belonging and acceptance.

For most financial advisers, the capacity and skills to understand someone deeply are not intuitive. They need to be acquired by learning and especially by experientially applying the principles of Motivational Interviewing, Appreciative Inquiry, and Positive Psychology. This training is rarely part of financial planning or finance programs.

4. Vulnerability: This was the most surprising quality. My image of a leader is that of a General Patton or President Lincoln: strong, resolved, visionary, courageous. Not vulnerable. Yet, in truth, vulnerability requires incredible strength of character, vision, and courage.

Financial advisers who are comfortable with their vulnerability are able to expose their humanity and failings. All of us can relate to someone who has screwed up. None of us can relate to someone who hasn’t. Planners willing to admit their errors beget trust and confidence in those around them. The strength to be vulnerable comes from spending a lot of time in self-reflection and personal growth.

Of the four qualities people look for in a strong leader, only one, expertise, can be learned academically. The other three—skill as a guide, deep understanding, and vulnerability—are learned experientially. Anyone who completes the course of study to obtain a financial planning degree has gained only 25% of the necessary skills to become what their clients are looking for in a planner. Someone who adds a degree in counseling conceivably has 50% of the skills.

Becoming a trusted leader and adviser goes further. It requires us to develop and apply in our own lives the relationship skills and leadership we want to offer to clients.


Rick Kahler, ChFC, is president of Kahler Financial Group, a fee-only financial planning firm. His work and research regarding the integration of financial planning and psychology has been featured or cited in scores of broadcast media, periodicals and books. He is a co-author of four books on financial planning and therapy. He is a faculty member at Golden Gate University and the former president of the Financial Therapy Association.

MONEY financial advice

How Vanguard Founder Jack Bogle Invests His Grandchildren’s Money

Ahead of Father's Day, Bogle also talks about the investment advice he gives—or doesn't give—his children.

Just a few days before Father’s Day 2015, MONEY assistant managing editor Pat Regnier interviewed John C. “Jack” Bogle, the founder and former CEO of Vanguard, the world’s largest mutual fund company. The elder statesman of the mutual fund industry—and a pioneer in index investing—talked about the investing advice he gives his children, one of whom runs a hedge fund, along with how he invests, and doesn’t invest, on behalf of his grandchildren. Look for an in-depth interview with Bogle in an upcoming issue of MONEY.

Read next: Where are Most of the World’s Millionaires?

MONEY stock market

A Financial Planner’s Investment Advice for His Son — and Everyone Else

family on roller coaster
Joe McBride—Getty Images

Father's Day has a financial adviser thinking about important lessons to be passing along.

A friend recently asked me to recommend a book for his son on buying and selling stocks.

As I pondered his request, I started thinking about the various books I’ve read or skimmed over my 24-plus years of working in financial services. Initially, I was overwhelmed with titles. Then I started thinking about my own teenaged son and the difficulty I was having getting him to think differently about his money—that he won’t always be able to depend on his parents to help him out. Anyway, I thought if I couldn’t compel a 14-year-old to change his ways, what could I say to my friend’s son, who’s in his 20s?

Finally, I asked myself what would I say—not bark, I promise—to my own son if he were in his 20s and came to me for investing advice? This is what I came up with:

You can go to just about any investment site (e.g. Vanguard, Schwab, or Fidelity) to learn the fundamentals of investing. You need to know, however, that the process of buying and selling is not hard. The real challenge is knowing what to buy, when to buy, and when to sell. If you plan to make investing a career, there is a lot more you need to know than you can learn from a website or book. That would require another conversation.

For now, I would advise you to think long and hard about why you want to invest. In other words, take time to map out your life goals for the next three to five years and the financial resources you will need to achieve them.

Simply saying you want to invest “to make money” will not work when you are invested in a fluctuating market. Short-term volatility can be a bear (pun intended). You have to be willing to ask how much money you can withstand losing when the market goes down, as well as how much profit is enough. As the old Wall Street saying goes, bulls make money in up markets, bears in down markets, and pigs get slaughtered. You also have to be willing to ask yourself how long you plan to stay invested, no matter how much the market fluctuates or falls.

Why am I focusing on declining markets and roller-coaster, up-and-down markets? It’s because people tend to fixate on rising stocks and profits, but pay very little attention to the markets’ inevitable declines. Everyone loves bull markets, which are great for the average investor. But when the market heads south quickly or takes a long, slow journey to the cellar, someone who was looking to make a quick profit can suffer a lot of stress.

Finally, I hope this short note does not come across as too preachy. I congratulate you on your interest in investing, and I will end by saying you are way ahead of the game because you’re thinking about investing now instead of later. Good luck.

Read next: The 3 Most Important Money Lessons My Dad Taught Me


Frank Paré is a certified financial planner in private practice in Oakland, California. He and his firm, PF Wealth Management Group, specialize in serving professional women in transition. Frank is currently on the board of the Financial Planning Association and was a recipient of the FPA’s 2011 Heart of Financial Planning award.

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