Financial advisors can be a blessing or a curse.
They certainly fulfill needs for many who struggle to understand and practice finances.
If you’re making a living wage but can’t stay under budget, you might need a financial advisor. If you’re considering investing money but don’t know where to begin, you might need a financial advisor.
But not all financial advisors are worth hiring.
Some put their own interests before yours. Some simply don’t know what they’re doing.
So the question is: how do I avoid the bad ones?
Here’s a list of red flags to look out for. If a financial advisor has one or more red flags, they may be a bad choice.
1. They aren’t certified
Certification may differ depending on the advisor’s specialty. If you’re looking for a financial planner, a common designation is a Certified Financial Planner (CFP).
Check out their personal website. Typically they have a section that explains their education and experience.
Never be afraid to ask a financial advisor if they’re certified. You may want to do additional research to properly understand their certificate.
Does the certificate come from a trusted source? Is the certificate related to the specific work you’re asking for?
Research the requirements to obtain and maintain the certificate. What are the initial requirements to get the certificate? What does it take to maintain the certificate?
These answers show a financial advisor’s education and willingness to improve their skill.
If they have multiple certificates that’s a good sign. If they can’t produce a certificate, consider hiring someone else.
2. They aren’t a fiduciary
A fiduciary is a financial advisor who has pledged to look after the client’s best interests.
Some advisors are only held to suitability standards.
A suitability standard means the advisor is not obligated to look out for a client’s best interest. It implies they make suitable recommendations for you.
If a financial advisor is a fiduciary it’s not a guarantee they will look out for your best interests.
But if a financial advisor is not a fiduciary beware.
The best course of action is to analyze the person to see if they practice fiduciary standards.
Don’t be afraid to ask, “Are there areas where you are not held to a fiduciary standard?”
Also, figure out when they became a fiduciary and when they became a financial advisor.
Let’s say they’ve been a financial advisor for 2 decades, but only became a fiduciary 6 months ago.
It’s possible the advisor didn’t practice fiduciary standards for a long time, and only recently became one in title.
3. They can’t pass a background check
Research a financial advisor before hiring them.
Start with Googling them, but go beyond that. Don’t be afraid to ask direct questions, such as “Have you ever been convicted of a crime?”
If a financial advisor was convicted of a crime I don’t need to tell you that’s bad news.
Also ask if they have ever been under investigation by any organization, even if they were found innocent.
If a financial advisor has been under investigation you may want to research that incident.
Investigations do not imply guilt, but they should give you pause.
Financial advisors should also be able to provide references of current clients. Verify them and ask other clients what it’s like to work with this particular financial advisor.
When checking references try to find current clients who are using the same service as you.
If you plan to use this advisor for financial planning, ask for a client who is also using the advisor for financial planning.
How long have the clients been with this financial advisor? Are they satisfied? Do they feel the advisor has their best interest in mind?
Researching a financial advisor takes time and effort, but it’s a necessary precaution.
It keeps you safe and gives you peace of mind.
Does your financial advisor have a red flag?
DOJ Files Antitrust Suit Against Google
Yesterday, the US Department of Justice (DOJ) filed an antitrust suit against Google. The Justice Department alleged that Google maintained a monopoly on internet searches. Its dominance allowed it to cut off rivals from critical distribution channels.
Eleven Republican state attorneys general joined the lawsuit as plaintiffs. These are Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina, and Texas.
DOJ Cites Sherman Act of 1890
Under the Sherman Act, DOJ lawyers alleged that Google illegally maintained monopolies. This covered markets for “general search services, search advertising, and general search text advertising.” US Deputy Attorney General Jeffrey Rosen led the filing of charges. He said that “Google is the gateway to the internet and a search advertising behemoth. It maintained its monopoly power through exclusionary practices that are harmful to competition.”
The lawsuit comes after a House Judiciary report that says some tech act as monopolies. Apart from Google, Amazon, Apple, and Facebook also got mentioned. The report recommended Congress to update antitrust laws. These changes can help with breaking up businesses.
Within a month, the Justice Department issued a lawsuit against Google. It is a result of a 16-month investigation into company business practices. Google got involved in a 2013 antitrust suit but did not get charged.
Monopoly Power In Online Search
Google allegedly tied up distribution channels for online search and related markets. The suit said Google “foreclosed competition for internet search” through exclusionary agreements. This prevented rivals from achieving the scale to fight Google’s dominance. The DOJ said Google holds 88% of the U.S. search market and 94% of mobile searches. Google allegedly harmed consumers by providing lower quality search and reducing choices.
The DOJ also claimed Google owns more than 70% of the search ads market. It said that the company’s monopoly power lets them charge more. While they charged more, Google provided lower-quality services in the absence of competition.
Google used exclusionary tactics with distributors of its Android mobile OS. As such, Google also suppressed innovation in the search market. Google allegedly requires phone manufacturers who use Android to agree to certain limits. Android-powered devices that aren’t compliant with Google standards face selling restrictions. The company then provides the same manufacturers access to its “vital proprietary apps.” They do so in exchange for agreeing to carry other Google apps. Under the agreement, the devices should prevent users from deleting certain Google apps.
Apart from exclusivity, Google’s revenue-sharing model for distributors helped expand its dominance. A senior executive described the model as bittersweet. He said it was“a bitter pill for carriers, and a generous revenue share is a sugar that makes it go down smoother.”
Google’s partnership with Apple is the centerpiece of the DOJ’s allegations. Google allegedly misused its power in an anticompetitive manner. At stake is a major revenue stream for both tech giants.
It’s no secret that Google relies on search traffic from Apple’s iPhones. The search engine is the default service on Apple’s Safari phone browser. This means that consumers get Google search results—and related advertising – automatically. The agency claimed Google “locked up” distribution by entering exclusionary agreements with Apple.
Google responds to the suit
Google Chief Legal Officer Kent Walker responded immediately to the suit via a blog post. He laid out the company’s rebuttal to the DOJ’s claims.
He wrote: “Today’s lawsuit by the Department of Justice is deeply flawed. People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives. This lawsuit would do nothing to help consumers. On the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use.”
Walker refuted claims that Google’s arrangement with Apple is exclusive. Rivals also pay to appear in Apple’s Safari. He said Apple chose Google search because they found it as “the best.” He linked a 2018 article where Apple CEO Tim Cook complimented the search engine.
Missed the Main Point
Walker also said that the suit missed the “bigger point.” He argued that consumers choose to use Google’s services because they want to. In case they didn’t, switching default search engines is an easy task to do. Walker pointed to specialized search engines like Expedia, OpenTable, and even Twitter. These companies help people seek specialized information and are available. While Google pays for digital shelf space competitors “are readily available too.” As for agreements, he said that Google’s contracts are industry standard. They offer nothing unusual.
Watch this as FoxNews reports that the US Department of Justice has filed an antitrust lawsuit against search engine giant Google:
Do you think that the antitrust suit has merit and that Google might be too big a company? Do you use, or even know, any other search engine other than Google? If not, is that enough proof of the company’s monopolistic behavior? Let us know what you think by sharing your comments below.
The August Stock Market Performance
The Stock Market August Performance Is Best in 34 Years
The US stock market’s August performance is one for the books. All in all, the major indices posted their best August for some time now. Both the Dow Jones and the S&P 500 closed out the month with gains of more than 7%, their best in 34 years. The DJIA rose 7.6%, while the S&P went up 7.2%. Nasdaq also emerged as a winner, gaining 9.6% during the month. All three major indices recorded their fifth straight month of gains
The final day of August saw dips from DJIA and S&P 500, but not enough to pull them to the red. The Dow slipped 0.8% or 223.82 points to 28,430.05, while the S&P 500 went down 0.2% to 3,500.31. Nasdaq rose 80 points on August 31, posting a 0.7 % gain. The day’s losses didn’t faze the month’s gains.
August’s last day also debuted stock splits from tech giants Apple and Tesla. Apple split its stock 3 for 1, while Tesla exchanged 5 shares for each stock. Both hoped the splits would make their stock more affordable to investors. The market welcomed them with a barrage of buying. Apple gained 3.4% on the day, while Tesla hovered in the $500 range before settling to $498, closing with a 12.57% increase.
Tech Stocks Push S&P 500
Nowhere are the gains more dramatic than in the S&P 500. August saw the index posting a record high on seven occasions. It helped that the S&P 5000 held some valuable stocks: Netflix, Facebook, Alphabet, Amazon, and Apple. These account for 26% of the S&P’s total value. Removing these five from the index plunges the S&P to a year-long loss.
Dow Jones Reconfigured
The Dow Jones Industrial Index (DJIA), which hosts 30 public stocks, made some changes. This was a reaction to the Apple stock split, which will lessen tech representation in the DJIA. As a result, the Dow added three tech stocks and removed three old-timers. Amgen, salesforce, and Honeywell replaced ExxonMobil, Pfizer, and Raytheon.
With this new lineup, the Dow is now more accurate in reflecting the influence of the tech sector in the market. During the first day with the newcomers, the Dow inched within a few points to its record high of 29,551.42. The 30,000 mythical ceilings got closer.
Nasdaq hits a 5-month high
The tech-heavy Nasdaq Composite also celebrated a positive August. It closed at 11,695.63, increasing 0.7%, and saw its 40th closing high this year so far. The index was the prime beneficiary of the stock splits from Apple and Tesla. Workday Inc also carried Nasdaq on the last day with a 12.6% gain.
All in all, Nasdaq gained 9.6% in August, posting its best monthly performance in the last 20 years.
What’s fascinating is that all these gains are occurring despite the current economy. Coronavirus has kept businesses from operating in full. Unemployment is high for almost half a year, and the economy has contracted. While there are signs of recovery, a full reopening is months away until a vaccine gets approval.
Even with the gloom scenario, the economy started to pick up. Stocks responded to the Fed’s updated fiscal policy and news on an improving job market. By August, the indices have offset all previous losses for the year.
While it was all cheers for the markets last month, this month gets the reputation as a buzzkill. LPL Financials warn that September is “the worst month of the year on average.” According to Chief Marketing Strategist Ryan Detrick, this trend goes back to 1950. What’s more, in the last two years the market rose above 5% in August were in 1986 and 2000. The S&P then proceeded to fall by 8.5% and 5.4% the next month.
Stocks often go down in September, the elections might cause even more fluctuations. While the Republicans seem to gain lost ground the last few weeks, it’s still too early to call. Also poised for a thrilling finish are the Senate and Congressional races.
Add to that awaited developments on the fight against coronavirus, and the stage is set for a wild ride. Strap yourselves in!
Watch this as CNBC Market reports on stocks still head for best August since 1984:
Do you think the market’s wild ride will continue in September? Or will September be the start of a screeching end? Let us know which camp you belong to by sharing your comments below.
Jeff Bezos Is Now Worth $200 Billion
Amazon founder and CEO Jeff Bezos is now worth $200 billion. Bezos first hit $100 billion in 2017, is Forbes’ wealthiest person in the world by 2018. Thanks to the pandemic, the richest man in the world got richer by a couple of billions more. As a result, Bezos became the first person in history to have a net worth of over $200 billion.
RELATED: Market Insiders Are Cashing In
Bezos turned his 1993 online bookstore into an e-commerce titan. Little by little, he added more and more inventory to his online warehouse as demand went bigger. Along the way, Amazon swallowed smaller competitors and expanded into other services. By 2015, Amazon had a bigger market capitalization than Walmart.
With the coronavirus pandemic in 2020, demand for online purchases shot up. People afraid to get infected stayed home, and most turned to online shopping to buy what they need. As more physical stores closed, more people went online to shop, where Amazon was waiting. It offered everything from food to supplies to videos and exercise equipment. In addition, pandemic staples like sanitizers, toilet paper, and face masks are available.
As a result of all this demand, stock prices (AMZN $3,420.20) have gone up 80% since January. Along with it is Bezos’ net worth, which depends a lot on his 11% stake in Amazon. In January, that stake was worth around $115 billion, and now its nearing double. Amazon itself is worth $1.7 trillion, making it the second-most valuable company in the U.S after Apple. Despite its considerable spending due to the pandemic, revenue reached almost $90 billion. And investors can’t get enough, pushing the stock price to almost double its January rate of $1,898.01.
Bezos’ shares in Amazon represent 90% of his personal wealth. In addition, he also owns a media company, the Washington Post, and aerospace firm Blue Origin.
Jeff Bezos is by no means the only centi-billionaire among his peers in the tech community. The second richest person in the world, Bill Gates, is worth $116 billion and made most of his money in Microsoft. Facebook CEO Mark Zuckerberg recently became joined this exclusive club. With Facebook hovering at $300 per share, his net worth reached $100 billion this month.
Close to joining is Elon Musk, whose EV company, Tesla, is the world’s most valuable automaker by market cap. Right now, Musk is a few billion short, with his net worth at $96 billion this year. But if Tesla continues its streak, give him a few more months.
The remaining centi-billionaire is the only one outside tech, Bernard Mark Arnault. While the chairman of LVMH lost his spot earlier this year, he reclaimed it in a few months. Arnault is now worth $115 billion and is the 3rd richest person on earth.
How much is $200 billion?
Jeff Bezos would’ve been richer if he hadn’t divorced his wife, MacKenzie Scott in 2019. During the divorce proceedings, he agreed to give 25% of his Amazon stake to her as part of the settlement. At present, that stake is worth $63 billion. Due to this windfall, Scott became the second richest woman and 14th richest total.
In pure compensation, Bezos receives around $1.7 million a year. This includes a base salary of $81,840, plus $1.6 million in other compensation. Amazon shoulders his security and travel expenses. Using this number, he makes around $5,005 a day, including weekends and holidays. For a CEO, these numbers are at the lower end of the spectrum. In contrast, Elon Musk received $595.3 million in compensation from Tesla last year.
If you use Bezos’ net worth ($205 billion as of August 26) instead, the figures become eye-popping. For this year, he will have earned $6,500 a second. This is $1,495 higher than his daily take based on salary.
The numbers don’t end there. Amazon, like most other tech stocks in the market today, is in the middle of an extraordinary bull run. Despite the current pandemic gloom and doom scenario, share prices keep going up. This means the net worth of Bezos and company are still about to rise. So, who wants to be a centi-billionaire?
Watch this as the Amazon CEO Jeff Bezos becomes the first person ever worth $200 billion:
How much money is enough for you? A million? A billion? What number do you see is more than enough to make you stop working or retire? Share with us your thoughts on the comment section below.
Investing1 year ago
How To Invest In Drones
News6 years ago
How to Invest in Graphene
News6 years ago
The Federal Reserve Is A Ticking Time Bomb
Business1 year ago
Why is Small Business in America Dying?
News6 years ago
How To Invest Money in Oil and Gas Today
Dividend Stocks1 year ago
Mcdonalds the Worst Slump in a Decade
News6 years ago
3 Reasons to Invest in the Russian Stock Market Right Now
Commodities1 year ago
Latest Update On Oil – Expected to Settle Between $45 and…