As a seasoned financial professional with over 25 years experience including banking, insurance, brokerage and investment management I would find Berko amusing if he weren’t so sad as an entertainer. Sad because of the damage he wrecks being paid for his entertainment value, then being taken seriously by hard working folks just trying to get fair and honest answers to their financial questions. But for a laugh, you bet! My client came in bearing this recent article and, placing it on my desk, he underlined the part he wanted me to see. “This CEO (advisor) is … a psychopath and swindler; profoundly blind, deaf and dumb” etc. etc.  Why the vitriol?  The poor CEO in the article was a financial advisor who had recommended an Equity-Indexed Annuity.

Now as mentioned, I’ve been in this business a long time and have presented numerous financial plans where Annuities in many forms have been an indispensable solution for particular client financial needs.  There have been clients who purchased annuities and rode out the ups and downs of the past several financial crises and are in better shape financially than those clients who chose to invest their money in those so called “good dividend/growth stocks that make a lot of sense to own” as Berko says. Why? Because they protected the principal, paid a fair credited rate, kept the client from making an emotionally destructive decision and kept the client from spending the money on foolish whims. For many, they also provided death benefit guarantees and guaranteed streams of income that the client can’t outlive.  The result is what I look for when I implement a financial plan – securing a client’s financial future.

Berko says that after 40 years, he thinks Wall Street is trying to “change the laws of nature”.  I say what is he drinking? Has he never seen an annuity he likes?  Has he ever talked to the clients that found an annuity the best thing that ever happened to their financial success? I suspect not.  He even brings God into the equation, saying “God just doesn’t care enough about annuities to invest them with the powers” that allow them to perform better than the stock market.  It was the writer of the letter to Mr. Berko that said the annuity was “over time, always going to beat the market”. How do we know what the financial advisor actually recommended or how the recommended annuity fit into an overall plan?

It is Mr. Berko who is the “articulate incompetent”, in my opinion.  I Googled “equity-indexed annuity fraud” as he suggested and guess what I found? Big surprise! Law firms specializing in suing everybody and everything, specializing in everything and oh yes, “Annuity Fraud”.  Also on page one of search results were articles dating back several years about one financial advisory firm selling annuities and being sued for “moving clients into annuities they didn’t need”. The firm in question has explained how the annuities were providing benefits and the case has not been decided.  Is it possible that someone sold a client a product they didn’t need and the client later regretted it? Sure! Is it possible there will be an advisor that does a poor job or even (gasp) lies and breaks the law? Sure! The same can be said for car salesmen, clothing salesmen, realtors, doctors, lawyers, indian chiefs and yes … even columnists like Berko.

If you google “Malcolm Berko Biography” to find out what his credentials are and find anything useful, let me know!  What I found is that he had a long career with several brokerage firms being fired from or asked to resign from them all and never really has been in the business of living with investment advisory recommendations to real people. Yes, he was a stock broker (earning his living doing the one thing he rails about constantly – making a living by way of commissions OMG!)

The one good thing he says is to “employ a knowledgeable, experienced, wise and caring money manager whom you can trust”. It would not be Malcolm Berko.

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One of the best things you can do for yourself and/or your family is to be prepared to manage your finances responsibly. Even if you see investing as overwhelming or complicated and boring, you need to know the basics behind a well-thought-out investment strategy – at least enough to communicate effectively with a financial advisor or spouse.

What to do first? Be familiar with some concepts of investing. Some basics include knowing the types of investments – the difference between stocks and bonds for example. It also helps to understand that while it is important to take some risks when investing, there are levels of risk “comfort” between conservative and aggressive that you should know about yourself. When trying to decide how much of your savings to devote to an investment plan, be familiar with how much you spend so you can hold back enough to cover several months of expenses. Investments come in all forms, so being familiar with the main goal of an investment can make a big difference. If you need cash income payments versus an investment that grows in value over a period of time is an example. And finally (although this list can go on and on) try to obtain a rudimentary knowledge of different account types and how what role they play for your financial planning needs, such as Joint Tenants accounts and Trust accounts as well as all the various types of retirement accounts like 401Ks and IRAs.

If you feel you aren’t as knowledgeable as you should be about investing, you’re in good company. Plenty of people know less but aren’t willing to admit it. As a result, their portfolios suffer. But recognizing what you don’t know and being willing to ask questions will serve you better in the long run.

An investment in knowledge pays the best interest

Benjamin Franklin

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