By Al Thomas

Driving along the other day and listening to one of the talk-radio financial gurus as he was prattling the usual garbage about buy and hold and do your research (both great Wall Street myths) when one of the listeners called in. He asked, "In your model portfolios A and B what has been the results for the past year?"

His Portfolio A was down 60% and Portfolio B was down 30%. This is a financial planner and that is what he has done with his investors’ money. It is difficult to imagine that anyone would let this dummy manage their money. Of course, he had the standard excuse of "you are in for the long haul" and "the market has its ups and downs that you must ride through" and then switches the subject to his 5 year record. Not with my money. This person does not know how to manage money yet he has several million dollars of ‘poor’ investors money on which he makes a profit every year whether they do or not.

Unfortunately, most investors believe the smoke and mirrors of Wall Street and think what these talking heads say is true. It isn’t. If you want a financial planner let me outline a few simple guidelines.

Don’t have a broker for your financial advice because his number one consideration is commission. A flat-fee based advisor who gets no commission is what you want.

The first and most important rule is the financial planner should not lose money – even in a bear market. Preservation of your money should be the number one consideration. If your account goes down 50% that means you must make 100% in order to get ‘even’ and I don’t have to tell you it is difficult to double your money. Ask if the planner has a model account. He will probably try to confuse you with his having several accounts "based on your long term goals and financial condition". B.S. You then must insist on seeing a real-time trading account, not one of those hypothetical pieces of paper that he made up. If you can’t get it, hang up.

Most financial planners and money managers have not been taught basic trading skills of which the most important is exits – selling out losing positions. Wall Street doesn’t believe in selling. They want you to Buy and Hold otherwise known as Buy and Suffer.

Ask how many accounts he is managing now. If it is over a hundred and your account is less than six figures you are not going to get any service and he is not "going to watch your account". He can’t. There aren’t enough hours in the day. If your account ever drops by more than 20% off its highest amount you should immediately close out, go to cash and find a new advisor. There is no excuse for this kind of poor performance.

It takes work to find a planner. Start with the yellow pages. You can go to the Internet 800# pages to look up financial planners. If you can find one who meets your criteria be sure to check him out with the Securities and Exchange Commission in Washington before you send money. You will want monthly reports and you might be able to have Internet access to check on your account weekly or even daily.

Above all there is one absolute rule – he must NOT lose money. If he does, terminate him immediately. Protection of your capital is prime consideration. Now go get that phone book.

Copyright Albert W. Thomas All rights reserved. Author of "If It Doesn’t Go Up, Don’t Buy It!"

www.mutualfundstrategy.com email to al@mutualfundstrategy.com 1-888-345-7870