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No Such Thing as Trust When it comes to Funds by Audra
Shivers
Think you're financially savvy because you have a mutual fund, a 401K, and maybe
even several thousand in stocks? Well, think again.
'Brokers are out to make a commission, and there is nothing wrong with that as
long as you understand what their commissions are,' says Dr. Lois Center-Shabazz,
author of Let's Get Financial Savvy! From Debt-Free to Investing with Ease. Dr.
Center-Shabazz worked 15 successful years as a dentist in San Diego, CA, while
pursuing her interest in investment and financial research. After she decided to
sell her practice and move to Virginia, her newfound freedom allowed her to
fully develop the investment education program she had started many years prior.
What she discovered in her financial research fueled her energy to educate
others. 'I have to retrain people to not blindly trust [brokers],' says Dr.
Center-Shabazz. She was angered to learn that the professionals in the financial
industry were often misleading and uninformed after her own experiences with
many. She says that many people believe that financial specialists work to
increase their clients' wealth; but to the contrary, many of them are out to
stuff their own pockets at their clients' expense. Dr. Center-Shabazz tells
what's really going on in the business of finance through her Web site, book,
and seminars.
Pointing to all of the fiefdoms, from corporate businesses to insurance
companies, she says, 'Look at what happened with Enron, Tyco, Adelphia, the dot-coms
and all those other corporations.' In those cases, she says that workers had
trusted their employers with their money, not knowing that many in top
management were only looking out for themselves. She notes a case with Enron
where a retired worker had more than four million dollars in the company's
stock, which he lost due to his company's fraudulent management of their
investment funds. 'There is no way a retired worker should have had all of his
money in one stock, nor should he have left it with the company well after
retirement,' she says, adding that of course the top brass wouldn't advise him
of that.
Another case Dr. Center-Shabazz notes is one in which a friend who lived
out-of-state received $250,000 through a business sale and decided to invest the
money in an annuity with a large brokerage firm. In terms of hidden and
exorbitant costs, she says annuities are one of the worst forms of investing.
After discovering that her friend had invested all of his money in an expensive
annuity, she asked him to talk with a financial adviser in his neighborhood to
see what the adviser thought about his investment decision. She says her friend
told her that the adviser laughed loudly about his decision'the brokerage firm
had been misleading in their explanation of the annuity. Luckily, she says her
friend was able to cancel his agreement with the firm since he was still within
the 3-day grace period of legal contract cancellation.
Dr. Center-Shabazz says there are ways to invest your money without paying
astronomical fees and ridiculous costs, but brokers don't suggest any of them
because it doesn't make them a commission, adding, 'Do you really think a broker
is going to tell you about a low-cost, no-load mutual fund?' Dr. Center-Shabazz
says that no-load mutual funds do not have front end and back-end loads attached
and there are many from which to choose. Compare them to mutual funds with 3%,
6%, and even 8% front- or back-end loads, which Dr. Center-Shabazz says brokers
are more likely to select when investing their clients' money because the load
is how they are paid. All mutual funds have yearly fees so she suggests you
choose those with low yearly fees, which are readily available through mutual
fund research from most web portals. She includes a list of no-load and low-cost
mutual funds on her Web site, www.MsFinancialSavvy.com.
Brokers' fees may not seem high when it comes to paying for the service of
having someone manage your money, but over time, money that could have been
earned in interest is lost'a fund that appears to yield a high rate on return
only breaks even in cost, or worse, loses money. Dr. Center-Shabazz says that
purchasing a no-load mutual fund is easy, provided you do your research first.
She notes that regulatory agencies like the Federal Trade Commission and the
State Department of Consumer Affairs help to keep fraud down but they can't
dissolve it completely. Consequently she has included an array of financial
information on her Web site to educate the public. The idea for writing her book
evolved from her initial Web venture as people wanted more and asked for a print
newsletter'she in turn took their requests a step further by publishing Let's
Get Financial Savvy! From Debt-Free to Investing With Ease, a two-time
award-winning book.
Dr. Center-Shabazz says she geared her book toward women because women's lives
tend to be more interrupted financially by pregnancies, relocating to support a
husband's career, and also through the experience of death and divorce. 'Women
need to understand that they must have their own financial security'they cannot
depend on their husband's pension or believe that he will always be around.'
She says that after giving one of her financial seminars, an older woman came up
to her to thank her for the information she had shared. The woman divulged that
she had trusted her husband to manage their finances but he later left her for
another woman and rendered her penniless. Dr. Center-Shabazz says there are ways
that women can protect themselves financially. She notes that the Homemakers IRA
is an example of a good account that allows provisions for a full-time homemaker
to attain financial security for her later years after raising and caring for
her family. With the Homemakers IRA if a woman's husband has a job or business
with a retirement account she can fund a separate IRA account for herself.
When Dr. Center-Shabazz conducted her financial research she says she was
overwhelmed in her reading because many financial books often dealt with one
subject'either investing or budgeting or debt-reduction. To fill a niche, she
says, 'I wanted to put everything in a book that was user-friendly and combined
both creative budgeting and investing, while appealing to a wide range of
readers. My book is liked by men also; a substantial number of book sales comes
from men.'
In addition, the North American Book Dealers Exchange (NABE) awarded her book
the 2002 Pinnacle Book Achievement Award for Self-Help, an honor that only 12
books achieve annually from the thousands from which the NABE makes their
selection. Also, her book recently reached an unprecedented high rank of #147 on
Amazon.com.
Today, Dr. Center-Shabazz is working on a novel about a wealthy black family
that has arrived financially but finds themselves the prey of predators trying
to rob them of their money.
She says that she finds her full-time career teaching investments and personal
finances to be very gratifying and yearns to show that managing money doesn't
have to be difficult. 'You have to know it for yourself. Just look at the
thousands of media reports where intelligent citizens are robbed of their life
savings by licensed professionals.'
Indeed, Dr. Center-Shabazz makes it clear that it's not about trust when it
comes to funds.
Related Links
MsFinancialSavvy
http://www.msfinancialsavvy.com/
About Audra Shivers (author of Dr. Lois Center-Shabazz article above)
Audra Shivers is a native of Richmond, VA. In addition to her professional
career as an editor, she has written for various newspapers and magazines, and
was the county correspondent for The Washington Afro-American newspaper. She
is a graduate of Southern Illinois University in Carbondale where she earned a
Bachelor of Science degree in Journalism. Ms. Shivers resides in Upper
Marlboro, MD.
