Where to get the straight scoop about money

Steve Merrell |

Q: I am trying to learn about investing, but I always feel like financial people are trying to sell me something. Where can I get the information I need without having to worry that someone is trying to take advantage of me?

A: I understand why you might feel a bit wary. Historically, most financial advice has been given by individuals who have had strong financial incentives to sell you products. Several years ago, my 80-year-old grandmother came home from the bank as the proud owner of a deferred annuity. She was so pleased and thought it was a great deal—much better than the CD she intended to buy. When I helped her understand that her money would be locked up for seven years and any early withdrawals would be subject to hefty surrender penalties, she changed her mind. Fortunately, a call with the bank’s manager was enough to get the annuity cancelled. Grandma took her money and bought a CD at a different bank.

I don’t hear those kinds of stories as much anymore, but it is always wise to keep your eyes open for conflicts of interest. Above all, it is important to do your homework.

Part of the challenge is that investing is a highly technical field of expertise. To be successful you need a solid foundation in economics, experience in the financial markets and a clear understanding of how specific investments work. In addition, making sure your investments fit your unique situation requires an understanding of portfolio design and financial planning principles. With all the complexity, it isn’t surprising that people sometimes struggle to understand what they are buying or how to compare various options.

Recognizing that beginning investors need unbiased information from authoritative sources, the U.S. Securities & Exchange Commission (SEC), the Consumer Financial Protection Bureau (CFPB), and FINRA, the non-governmental regulator of broker-dealers, maintain websites that are informative and educational. Of these, I personally find the SEC’s website (www.investor.gov) to be the most helpful.

Among other things, the SEC investor website allows you to research the compliance background of your investment advisor. Enter your advisor’s name in the “Check Out Your Investment Professional” box on the home page and you will be able to see if they have had any complaints against them and how those complaints were resolved.

The website also provides an overview of the information you need to start investing, including an extensive list of investment product types. Click on any investment type and you will be taken to a page that describes how the investment works, a description of its primary risks, basic terminology, what fees are typically involved, as well as links to related information.

You will also find a section titled “Research Before You Invest.”  Here you will find some great resources for doing due diligence on potential investments, including entries on how to access and read annual and quarterly SEC filings by public companies.

The FINRA website (www.finra.org/investors) contains similar information, but I particularly like the section on “Choosing an Investment Professional.” This page describes the various types of advisors, what they offer, and how they are regulated. There is also a link to do a background check on your broker.

Another organization with a helpful website is the National Endowment for Financial Education (www.NEFE.org). The NEFE is a completely independent noncommercial organization dedicated to improving financial decision making by individuals and families. It was created in 1997 with proceeds from the sale of the College for Financial Planning (the organization that originally established the CFP® designation). The NEFE receives no support from individuals, government or corporations so you can be confident there is no conflict of interest. All their programs are provided at no cost.

Whether you invest on your own or eventually seek the help of a professional, learning more about investing and personal finance will give you greater confidence in the process. It will also help you make informed decisions about who you trust to give you the advice you need.



Steven C. Merrell  MBA, CFP®, AIF® is a Partner at Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey.   He welcomes questions that you may have concerning investments, taxes, retirement, or estate planning.  Send your questions to: Steve Merrell, 2340 Garden Road Suite 202, Monterey, CA  93940 or email them to steve@montereypw.com.