High Costs Warning Signs for 2013

Here are four warning signs of situations likely to involve high investment costs and otherwise be unsuitable:

1---A financial advisor or potential advisor would like to visit with you about or send you information about what he or his firm's research department "sees in the market" for 2013.  Or about his or that department's stock pick recommendations for 2013.  (Especially to be avoided: an advisor or potential advisor who would like to visit with you about how you should position your portfolio based on his or the firm's views on future geopolitical events.)

2---A recitation of historical performance, now including full year 2012 performance, unaccompanied by a measure of historical risk assumed.

3---Worse, an investment referred to as risk-free.

4---A free investment seminar.  With very limited exceptions, free investment seminars are purely trolling-for-clients exercises.  According to a recent New York Times article, a 2009 survey "found that nearly one in 10 people over 55, or about 5.9 million Americans, had attended a free financial seminar in the last three years."  As Helaine Olen explains in her new book Pound Foolish: Exposing the Dark Side of the Personal Finance Industry, “a panicked baby boomer is [the industry's] best customer.”

Happy New Year!