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Don t let there be any surprises with your Retirement How to Avoid Outliving Your Money During Retirement The 3 biggest Risks that cause a Failed retirement Retirement Risk #1 Unfortunately, I estimate 90% of investors make this major investing mistake. Perhaps the single biggest mistake that investors make is to falsely assume that the financial professional or firm that they receive advice from has a legal obligation to work in their best interest. Unsuspecting investors do not realize the vast majority of brokers and their firms work under the Suitability Standard. Under Suitability, non-fiduciary, these brokers and their firms are motivated by earning the highest commissions and fees whether the investments they push are good or not. By default, you can expect to be sold inferior, riskier and vastly more expensive investments by these non-fiduciary salespeople, who also act in the capacity of financial advice givers. We constantly see commercials for brokerage firms and insurance companies, and in these advertisements they imply that they are on your side, your Trusted Advisor. But are they really on your side? Should they be trusted? Know the Facts, your Retirement and Investments depend on it! 2
Do you know the difference? Fee-Only Registered Investment Advisor - "Fiduciary Standard of Care" & So-Called Advisor (aka a broker/salesperson) - "Suitability Standard of Care" Numerous surveys and studies have been published examining the public s understanding of the differences between the Fiduciary Standard and the Suitability Standard. J.D. Power: Investors Clueless on Suitability vs. Fiduciary Standards The J.D. Power and Associates 2011 U.S. Full Service Investor Satisfaction Study shows that 85% of full-service investors either have not heard of the difference between the two or do not understand the difference. Click on the following link to read more about the survey: Investor Clueless on Fiduciary vs Suitability Bloomberg Clueless' U.S. Investors Believe Brokers Have Fiduciary Duty, Survey Says Three out of four U.S. investors mistakenly think that financial advisers at brokerage firms are required to put clients interests first, said a survey by several consumer and financial planning organizations. Investors are clueless when it comes to the different standards of care that apply to brokers and investment advisers, Barbara Roper, director of investor protection for the Consumer Federation of America, said in a statement. This lack of understanding is not because investors are stupid; it is because, bluntly stated, the policy itself is stupid. Click on the following link: Clueless investors think Brokers have a Fiduciary duty Troubling research finds: The vast majority of so-called advisors are really salesmen of investment products their firms manufacture, sponsor and are required to sell. Most investors mistakenly believe All investment professionals and their firms have a Legal obligation to work in their best interest. Most investors mistakenly assume Annuity brokers must act in their best interests. Most consumers do not know the difference between the Fiduciary Standard and the Suitability Standard. Most consumers did not know the difference between a Brokerage account and an Advisory account. Do you know if your current advisor and firm is a Fee-Only Registered Investment Advisor with a Fiduciary Standard of Care? Are they working in your best interest? Are they working against you? 3
General example of this difference: Under the Suitability Standard, a so-called advisor determines that an S&P 500 Index fund is suitable for their client. The so-called advisor's firm has a proprietary fund that pays a 5% commission out of the sale amount, with high ongoing annual fees of 2.5% a year and a lousy performance return. An identical fund is available from another company, which pays 0% commission out of the sale amount with low ongoing annual fees of.5% a year, and has an outstanding performance return. Under the suitability rule, the advisor can legitimately "sell" the highpriced, lousy fund and the Suitability Standard has been satisfied. Would you buy a $3.00 loaf of Moldy bread? It s Suitable, but is it in your Best Interest? Under the Fiduciary Standard, the real advisor would have to recommend the better, lower-cost alternative investment, because it s in the Best Interest of the Client. The Fiduciary Standard would also use the $1.50 wholesome loaf of bread! Are you starting to understand the big difference between Suitability and Fiduciary Standards? Retirement Risk #2 Do you understand the difference? Brokerage Account vs. Advisory Account? A Brokerage Account is Suitability that s Investment sales, plain and simple. Also, there are substantial conflicts of interest and high annual expenses. When you have a brokerage account: You are responsible to develop your own investment strategy and implement it. You are responsible to do all your own daily research. You are responsible to know when to buy and sell, and more importantly, you are on your own. Your broker and his firm are not responsible. 4
This Disclosure or something similar shows up on each new brokerage account application agreement you sign. I would say that most investors have never read this disclosure and certainly would not approve if they did. Read this disclosure, and decide if this is the type of relationship you want to dictate your financial security. Your account is a brokerage account and not an advisory account. Our interests may not always be the same as yours. Please ask us questions to make sure you understand your rights and our obligations to you, including the extent of our obligations to disclose conflicts of interest and to act in your best interest. We are paid both by you and, sometimes, by people who compensate us based on what you buy. Therefore, our profits, and our salespersons compensation, may vary by product and over time. Wall Street s complex, expensive, inferior investment roller coaster inside your brokerage account: Complex investment products don t belong in your portfolio, but your broker and brokerage firm like them. Warning: Brokers and their firms non-fiduciary advisors try to get their clients to buy annuities, mutual funds, non-traded REITs, or other oddball investment products that have front-end loads, early withdrawal penalties, redemption fees or surrender fees. Expensive, riskier, underperforming investment products pay the broker and their firms big fees and commissions that s why they sell them. Do you own any of these below? This is what Warren Buffet says: "Wall Street s basic agenda is to manufacture investment products that are better for them, than for your portfolio. Warren Buffet CNBC 5-7-2012 Avoid these Investments Variable Annuities Mutual Funds A, B & C shares Structured Products Non-Traded REITs Fixed Equity Index Annuities Managed Futures Alternative Investments You want an Advisory Account not a brokerage account An Advisory Account is Fiduciary That s a Managed Investment Portfolio Account under a Fiduciary Standard of Care. A Registered Investment Advisor (RIA) is responsible to have an investment strategy, do the daily research, know when to buy and sell, and more importantly, has the discipline and time to manage your portfolio. 5
Retirement Risk #3 Lack of Investment Strategy and investment management that includes risk management. Risk #1 and Risk #2 clearly outline that the vast majority of investors mistakenly believe their broker and brokerage firm manage their investments. This unfortunately is the cause for most investor s pain, lack of returns and the higher risk they take. Buy and Hold & Asset Allocation pushed by Wall Street is Not Adaptive to changing market and investment conditions. You are always in the same investments regardless of whether they are the wrong place to be for prolonged periods of time, even as they drop 30, 40 and even 50%. After seeing what happened to investors after the 2000 recession and during the financial crisis of 2008, Buy and Hold, Set It & Forget It Asset Allocation portfolios saw 30, 40 and even 50% drawdowns, not once, but twice in 12 years. Why would you own stocks when the stock market is in a prolonged downtrend? Why would you own investments going down for prolonged periods of time? Why would you hold on and sit idly by as your portfolio drops 50%? Simple: Wall Street wants you always invested, even when you shouldn t be, to collect their fees and commissions. Remember sometimes you need to sell. Why we are different and how we manage your portfolio Global Tactical Opportunity Portfolios (GTOP) Our Investment Strategy is Adaptive... All of our Global Tactical Opportunity Portfolios (GTOP) focus on Adaptive/Active Investment Management to Grow and Protect Your Portfolio through all investment conditions. There is a Difference! First, our investment strategy is Adaptive to changing investment and market conditions. Risk management is an important part of our GTOP investment strategy and how we manage your portfolio. 6
Second, we utilize our GTOP relative strength investment strategy that measures the strength/performance of a wide range of investment assets and sectors. We are always on top of changing investment conditions and our strategy allows us to adapt as necessary. Third, most investment firms simply do not manage the risk in your portfolio. Risk management is an important part of managing your wealth. Sometimes that means going to cash or alternative, safe investment assets when our GTOP investment strategy dictates it is time to get conservative. You would benefit from a Consultation if: You realize outdated, "set it and forget it" is ineffective. You desire an Adaptive Investment Strategy that includes growth, income and risk management. You do not have the time or discipline to effectively manage your own portfolio. There is a Difference! We invite you to experience it. Call us for a consultation 800-618-8577 Brian Rezny, CFP, President and Chief Investment Officer Rezny Wealth Management, Inc. A Fee-Only Registered Investment Advisor Fiduciary Standard of Care In Your Best Interest Office & Meeting locations: Florida, Illinois (800) 618-8577 www.reznywealth.com * For qualified investors and you are considering the benefits of Private Wealth Management services offered by Rezny Wealth Management. *We have set a minimum account size for new clients. Please feel free to discuss your situation with us to see if we can help you achieve your retirement and investment goals. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of Rezny Wealth Management, Inc, herein (RWM) may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Investors should always consult an investment professional before making any investment. BEFORE MAKING ANY INVESTMENT DECISION, AN INVESTOR SHOULD CONSULT WITH A FINANCIAL PROFESSIONAL TO DETERMINE IF THE INVESTMENT IS APPROPRIATE, OR CONDUCT THEIR OWN DUE DILIGENCE BEFORE MAKING ANY FINANCIAL DECISIONS. ALL INVESTMENTS INVOLVE RISK, INCLUDING THE POTENTIAL LOSS OF PRINCIPAL INVESTED. Copyright 1995-2016 Rezny Wealth Management, Inc. All rights reserved. 7