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Financial advisers step up their game

A financial services office of AIG International is seen in an office park March 18, 2009 in Wilton, Conn.

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TESS VIGELAND: We've talked a lot on this show about the small steps you can take to ease your mind about the financial crisis. But flip on the TV these days and the nation's brokerage houses are telling you to take a big step. Move over to our family, they beckon. Our investments are better. Our methodology is better. We have cooler ads. But how big a difference is there, really, among the big brokers? Andrea Gardner tells us that switching firms may be more helpful for your psyche than it is for your portfolio.


Andrea Gardner: At places like T. Rowe Price, Oppenheimer, and Fidelity, now is when they fight for new business.

Kit Yarrow: There's a lot of confusion in the marketplace about who's solid, who's folded. So anybody that wants to stay in the game at all, I think, has got to communicate.

That's consumer psychologist Kit Yarrow. She says people aren't sure which firms are still alive and kicking. And with so many consumers frustrated with their withering investments, they are pointing the finger at their financial adviser.

Yarrow: Consumers hate to switch firms, and don't often move from one investment company to another, and so this is rare opportunity to get people to switch.

So it's no surprise we are seeing a slew of new ads. Schwab's latest commercials show everyday people discussing their financial worries.

Schwab ad: My wife and I thought we were going to retire soon, and now we don't know when it's going to happen.

That's followed by the slogan "Do Something About It" -- reminding consumers they still have control over who manages their money. Here's a softer sell from TD Ameritrade:

TD Ameritrade ad: The way the stock market's been acting lately, you may wonder if you've been doing the right thing. TD Ameritrade's consultants are knowledgeable, and there when you need them. So why not talk to one?

That message is ringing loud and clear with stressed-out investors.

That's a meditation gong inside psychologist Elisha Goldstein's Los Angeles office. There patients lie on the sofa, calm their minds, and seek help with stress. Dr. Goldstein says, since the fall of the stock market, many need help coping with economic stress. He teaches his patients to find calm, breathe deeply, focus on the present, and look at what's within their control. Indeed the topic of switching brokers has come up.

Elisha Goldstein: The question then comes, from my perspective is: Is going to a new financial adviser, is that going to give you a sense of hope? Hope is a strength, a resiliency against stress, anxiety, depression.

He says switching may offer temporary hope, or even false hope. And for some patients, that is enough to be worth a try. Personal finance expert Jordan Goodman agrees -- switching is a short term boost to the psyche, but he doubts it will dramatically improve anyone's monthly financial statement.

Jordan Goodman: It's not as though switching from one to another, by itself, will give you better performance, which is clearly what they are promising in these ads.

Many of the ads also tout a company-wide strategy that will safeguard investments through turbulent times. That, Goodman says, sounds like an empty promise.

Goodman: There is not a "Schwab" advice. There is not a "TD Ameritrade" advice for Baby Boomers. It's a misnomer to think that these particular firms have a philosophy that carries through all of their operations.

Goodman says that's because every firm has hundreds of brokers who all have their own opinions, and many don't rely on the company's research.

Goodman: You go from to broker A to broker B and they are like two completely different animals, totally. One is very conservative, one is very aggressive. One has knowledge in one area, one has knowledge in the other.

Goodman says, if you do decide to switch, choose the adviser that best fits your personality and needs. Talk to them about their investment strategy, especially in the new economic times. He says, far too many brokers just tell clients to ride it out.

Goodman: The world has changed dramatically in the last year, and if you're giving the same advice as you would have given in 2006 or 2007 that is not the kind of person they want to be taking advice from.

The shopping-around process is like a job interview where you are the boss. Goodman says talk to three potential advisers before you pick one. Ask each for a sample financial plan, preferably one they've given a previous client whose finances are similar to yours -- just with the names blacked out. Ask them how often you'll speak directly to them, versus an associate. Find out how they are compensated. Ask to see licenses. And get references.

Of course, it also wouldn't hurt to find a sense of calm, breath deep, and talk it through with your shrink, before you make a final decision.

In Los Angeles, I'm Andrea Gardner for Marketplace Money.

About the author

Andrea Gardner is a journalism professor and writer in Pasadena, Calif.

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