John Elway duped out of $15 million in ponzi scheme

[tonyd19]

Here are some basic tips from an honest wealth manager.

 

1) Invest your money with a fee only or fee based firm. Preferably a Registered Investment Advisor, or a large bank like BNY Mellon or JP Morgan Chase that specializes in wealth management (ie- not the Bank of America's or Wells Fargo's of the world.)

 

2) Stay away from hedge funds, private equity, penny stocks, etc. Unless you have a minimum of 10 million dollars and you have a lot of knowledge about the firm or companies you are investing with....and you understand the much greater risks you are taking.

 

3) Primarily invest with index funds, ETF's or Dimensional Funds as the base of your portfolio.....the lower the internal cost and turnover ratio, the better the performance is typically over time.

 

4) Stay away from the large brokerage houses (Merrill Lynch, Morgan Stanley Smith Barney, Etc.)....They are salesman, not advisors.

 

5) Stay away from insurance companies (ING, Equitable, The Hartford, Etc)....They are salesman, not advisors.

 

6) If you go with an RIA (Registered Investment Advisor) Make sure your money is held in custody at a large well known custodian like Schwab or Fidelity, if this is not the case, run away....fast.

 

7) If you go with a large bank, make sure they will sign or disclose that they have a fiduciary responsibility to you as the client, not to the firm....This rule also applies to RIA's.

 

8) Make sure all compensation arrangements by your advisor are disclosed to you up front.

 

9) 95% of all of your returns will come from proper asset allocation and diversification. Your advisor will never create wealth, markets do.....always. Your advisor should stay away from active management, as this typically will cost you more money than you will make.

 

10) If it sounds too good to be true.....it is....always. You should average around an 8% to 9% annual return in a fairly aggressive, well diversfied portfolio. Make sure your expectations are reasonable and attainable.

 

11) Have your advisor tilt your equity portfolio to smaller value companies. Make sure your debt portfolio has a shorter duration time (no more than 7 years till maturity.)

 

12) Stay away from speculation and forecasting what the market will do. I can tell you right now, nobody knows what will happen tomorrow (especially the "experts" in financial magaiznes and on television). If you follow the above rules you will go from being a speculator (gambler) to an actual real investor where the long term odds are in your favor.

Edited October 15, 2010 by tonyd19

[mabden]

http://sports.yahoo.com/nfl/blog/shutdown_corner/post/John-Elway-invested-15-million-in-a-Ponzi-schem?urn=nfl-276931

 

Maybe the Bills can sign him to a 2 year 15mil contract. Win-win, Elway gets his money back and the Bills go to the Super Bowl!

[Albany,n.y.]

Here are some basic tips from an honest wealth manager.

 

1) Invest your money with a fee only or fee based firm. Preferably a Registered Investment Advisor, or a large bank like BNY Mellon or JP Morgan Chase that specializes in wealth management (ie- not the Bank of America's or Wells Fargo's of the world.)

 

2) Stay away from hedge funds, private equity, penny stocks, etc. Unless you have a minimum of 10 million dollars and you have a lot of knowledge about the firm or companies you are investing with....and you understand the much greater risks you are taking.

 

3) Primarily invest with index funds, ETF's or Dimensional Funds as the base of your portfolio.....the lower the internal cost and turnover ratio, the better the performance is typically over time.

 

4) Stay away from the large brokerage houses (Merrill Lynch, Morgan Stanley Smith Barney, Etc.)....They are salesman, not advisors.

 

5) Stay away from insurance companies (ING, Equitable, The Hartford, Etc)....They are salesman, not advisors.

 

6) If you go with an RIA (Registered Investment Advisor) Make sure your money is held in custody at a large well known custodian like Schwab or Fidelity, if this is not the case, run away....fast.

 

7) If you go with a large bank, make sure they will sign or disclose that they have a fiduciary responsibility to you as the client, not to the firm....This rule also applies to RIA's.

 

8) Make sure all compensation arrangements by your advisor are disclosed to you up front.

 

9) 95% of all of your returns will come from proper asset allocation and diversification. Your advisor will never create wealth, markets do.....always. Your advisor should stay away from active management, as this typically will cost you more money than you will make.

 

10) If it sounds too good to be true.....it is....always. You should average around an 8% to 9% annual return in a fairly aggressive, well diversfied portfolio. Make sure your expectations are reasonable and attainable.

 

11) Have your advisor tilt your equity portfolio to smaller value companies. Make sure your debt portfolio has a shorter duration time (no more than 7 years till maturity.)

 

12) Stay away from speculation and forecasting what the market will do. I can tell you right now, nobody knows what will happen tomorrow (especially the "experts" in financial magaiznes and on television). If you follow the above rules you will go from being a speculator (gambler) to an actual real investor where the long term odds are in your favor.

How about, if you have $15 million you & your family will never need to worry about money, so why put it into anything that has even 1% risk, since your goal should be to keep it, and you have no need to make it grow. Anyone with that much $ and is "investing" in anything doesn't need to.

Now all the investors will tell people they have to grow their money, but when is enough, enough?

[aristocrat]

How about, if you have $15 million you & your family will never need to worry about money, so why put it into anything that has even 1% risk, since your goal should be to keep it, and you have no need to make it grow. Anyone with that much $ and is "investing" in anything doesn't need to.

Now all the investors will tell people they have to grow their money, but when is enough, enough?

 

its called capitalism.

[Malazan]

its called capitalism.

 

..and it's working fine!

[bbb]

 

5) Stay away from insurance companies (ING, Equitable, The Hartford, Etc)....They are salesman, not advisors.

 

 

My friend is an insurance agent who claims to be my financial adviser because I have some things invested with him. But, even though he's my friend, I don't fully trust that he's giving me advise and not selling me something that he gets a better commission on (because I know he's done that before).

 

But, it seems to me there are no just plain advisors. They all seem to have to sell you something. Would those you mention in number 1 be the people to go to?

[Fan in San Diego]

I'm certain this is just a lie.

 

What he probably meant is that he lost a good portion of his poorly allocated retirement investments when the market went south, which correlated closely with the time of his retirement.

 

Bummer, for sure, but let's not let factual information be a burden here.

 

I'm guessing, but if you had 10mil in a single bank account of a bank that failed and they gave you back $250K only. I would feel like I lost the whole thing. But you can split it up and distribute under different corp. identities I believe. Just being in different banks does that protect you ? Or do they cross reference SSN's?

[tonyd19]

My friend is an insurance agent who claims to be my financial adviser because I have some things invested with him. But, even though he's my friend, I don't fully trust that he's giving me advise and not selling me something that he gets a better commission on (because I know he's done that before).

 

But, it seems to me there are no just plain advisors. They all seem to have to sell you something. Would those you mention in number 1 be the people to go to?

 

 

Yes, anyone who works for a broker or insurance company is paid based upon the products they sell. If you want truly objective advice, you should go to a "fee only" registered investment advisory (RIA) firm.

 

By being "fee only" the company has structured their firm to not accept commissions or other compensation of any kind from investment products or providers. They only generate fee's direcrtly from their clients, much like an attorney or a CPA.

 

Your friend may be a nice guy, but I can assure you he has a conflict of interest with the prodcuts he recommends. I know this because I worked at one of the largest insurance companies in the world for three years as a broker, then for one of the largest investment banks in the world before opening my own fee only practice.

 

I can assure you, an independent, fee only RIA is the best business model for clients and true advisors alike. (Just make sure they have a proper custodian!)

 

An added bonus, RIA's are required by law to take a fiduciary oath to their clients. This means they are required by law to always put the clients best interests first. If they do not, they can be sued. Wirehouses (IE - Merrill Lynch, Goldman Sachs, etc.) Take a fiduciary responsibility to the company they represent first. The same holds true for insurance companies and their representatives.

 

I am knot saying there are not good people at these firms, because there are. All I am saying is that if you want accountability and transperancy to be a requirement, don't invest there.

 

How about, if you have $15 million you & your family will never need to worry about money, so why put it into anything that has even 1% risk, since your goal should be to keep it, and you have no need to make it grow. Anyone with that much $ and is "investing" in anything doesn't need to.

Now all the investors will tell people they have to grow their money, but when is enough, enough?

 

That is actually a good point. When you have acquired a great deal of wealth, most families and foundations are much more interested in preservation than growth. At this point it is even more important to invest prudently and have a disciplined apporach.

 

Inflation averages around 3% per year. So to maintain your standard of wealth, you need to make at least that every year, just to maintain the value of your current assets.

 

But there is no need to be reckless with the money by being overly risky. Keep in mind the cost of capital is the expected return. The more expected return, the greater the risk you take....there are no exceptions to this rule. So to preserve wealth, instead of grow it, you simply build a portfolio that takes on less risk, while attempting to generate a smaller return.

 

This will provide income while preserving the original assets over time if done correctly. If you do this correctly, you are being a real investor, not a sepculator, and you will be successful.

 

..and it's working fine!

 

+10000000000000000

Edited October 15, 2010 by tonyd19

[bbb]

Yes, anyone who works for a broker or insurance company is paid based upon the products they sell. If you want truly objective advice, you should go to a "fee only" registered investment advisory (RIA) firm.

 

By being "fee only" the company has structured their firm to not accept commissions or other compensation of any kind from investment products or providers. They only generate fee's direcrtly from their clients, much like an attorney or a CPA.

 

Your friend may be a nice guy, but I can assure you he has a conflict of interest with the prodcuts he recommends. I know this because I worked at one of the largest insurance companies in the world for three years as a broker, then for one of the largest investment banks in the world before opening my own fee only practice.

 

I can assure you, an independent, fee only RIA is the best business model for clients and true advisors alike. (Just make sure they have a proper custodian!)

 

An added bonus, RIA's are required by law to take a fiduciary oath to their clients. This means they are required by law to always put the clients best interests first. If they do not, they can be sued. Wirehouses (IE - Merrill Lynch, Goldman Sachs, etc.) Take a fiduciary responsibility to the company they represent first. The same holds true for insurance companies and their representatives.

 

I am knot saying there are not good people at these firms, because there are. All I am saying is that if you want accountability and transperancy to be a requirement, don't invest there.

 

Thanks, Tony - great info. Do you know where I can get a list of fee only RIA firms? I seem to be able to google a list of those in India!

[birdog1960]

Here are some basic tips from an honest wealth manager.

 

 

 

3) Primarily invest with index funds, ETF's or Dimensional Funds as the base of your portfolio.....the lower the internal cost and turnover ratio, the better the performance is typically over time.

 

 

are you able to set up dfa (dimensional) investments (these are the index funds started by the u of chicago economists, correct)? i looked at these a couple years ago but found i couldn't get into them without an advisor setting up an account (and charging a fee). has this changed?

[JohnC]

are you able to set up dfa (dimensional) investments (these are the index funds started by the u of chicago economists, correct)? i looked at these a couple years ago but found i couldn't get into them without an advisor setting up an account (and charging a fee). has this changed?

 

Have you looked into the Vanguard Mutual Funds? They have a slew of index funds. No entry fees and low cost managed funds. After getting hit with capital gain taxes from another mutual fund I moved all my stock money into Vanguard. It is a safe and simple way to invest. If you have a certain amount of money to be moved they will even help you make the transfer.