The Ocean & Investing Shows No Mercy

No Mercy Given By What You Can't See

by: Brendan Magee

I can't imagine the anguish that the parents of Austin Stephanos And Perry Cohen are going through right now. No doubt you have read or seen the news on the two boys who have been missing off the coast of Florida when they went out on a fishing trip about a week ago. To have your 14 year old sons lost at sea for days has to be about the worst nightmare come to life for any parent. My prayers go out to those boys, their families, and the men and women who are conducting the search. I hope everyone is home safe and sound real soon.

Looking back your vision is always 20/20. We look and see things that we should never have engaged in and clear alternatives to decisions that turned out badly. Perhaps, Austin and Perry's parents would have never let them take a boat out by themselves under any circumstances. Perhaps, the parents would have told the boys they couldn't go fishing until an adult who had years of experience and a license could accompany them. I have to imagine there is a lot of second guessing going on in their minds these days

With investing we can also see clearly looking back. If an investment went bad, no doubt there would be things that would have been done differently. For example, "My gut was telling me that investment adviser's recommendations  didn't feel right and if I had to do it over again, "I would have held off on investing that money in that fund!" In the moment prudent decisions can be hard to see. We get excited, scared, misread, misunderstand over estimate under estimate, etc.


None the less, we can't go back and change the things we've done or the impact they have had on our lives. The big problem is that we don't always have the opportunity or the wisdom to double check what we can't see in making our decisions.

I would imagine that neither Austin or Perry knew that a storm was brewing off the coast of Florida. Unfortunately that lack of knowledge or foresight could prove to be fatal and life altering for their families. I would imagine that in November of 2008 when investors took $58 billion out of the market they couldn't see the rebound that was coming in less than six months. I imagine the investors who absorbed huge losses when China's Stock Exchange plummeted earlier this month couldn't see that coming either. If they threw caution to the wind and loaded up on Chinese stocks they absorbed a loss whose impact is most likely permanent.

The point is it is easy to lose perspective. We get confident in abilities that we do not have. We convince ourselves that the bad things that happen to people when they break the rules of investing won't be too  bad or only happen to other people. That is when we pay a price we never bargained for and couldn't imagine how painful it could be.

The better part of valor is to swallow our pride  and enlist the help of someone else who will act as another set of eyes and ears to see and hear what we can't. We can't always tell we've had too much to drink, but our friends can. We can't always see when we are about to break the rules for investing, but a coach can. In either case the better outcome is to not drive and not make a decision that could cost you everything. You will live and one day you will look back and thank God somebody stepped in and cared enough to stop you.


Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions or comments go to www.coachgee.com or call 610-446-4322.

Confront or Turn The Other Way?

Confront or Stay Silent?

by: Brendan Magee

Today, I am filling up my car with gas, thankful that I paid .30 cents less per gallon due to my super market's bonus points program. A young couple pulls up at the next pump to fill up their lawn mowers and pick up truck. The guy is pumping gas while his lady passenger sits in the front seat with the window down smoking her cigarette. I am having visions of the movie The Towering Inferno. What do you do? Let the couple know they are putting themselves and everyone else at the gas station in danger and risk getting punched in the nose? Honestly, I chose to pump my gas, stay silent, and get the hell out of there as soon as I could.

It doesn't get much more personal than telling someone that their behavior or choices are the source of their failures.This is the dragon that Investor Coach and investor have to slay before investors are going to start achieving the success.

I saw a post on Facebook and the woman was blaming Wall Street for the Crash of 2008. It's easy to blame someone or someone else for our shortcomings. The President, Congress, my ex-wife, my parents, Wall Street etc. are so much easier to blame. If it's their fault I don't have to feel the sting of responsibilities I have failed to live up to. I also stay stuck, but the reality is investors really don't have Wall Street or anyone else to blame for their investing problems.

Yesterday I saw a statistic that was pretty amazing. U.S. Large Company Stocks since 1926 has had annualized returns of a little more than 10%. To put that in perspective, that means that roughly every seven years an investor would have doubled their money if they deposited the money in that asset class and just left it alone. Imagine, that in spite of Depressions, wars, oil embargoes, terrorist attacks, Presidential assasinations, etc. that you would have made out so well.

The key word in that last paragraph is left it alone. Investors behavior has not been consistent with leave it alone. In that same set of statistics investors have been shown to make changes to their portfolios roughly every three years. What they are doing is selling investments that are not performing or have lost money and buying investments that have done better or are expected to do better in the future. In actuality they are buying high selling low.

As opposed to the 10% return of U.S. Large Company Stocks, the average annualized stock mutual fund investors returns are hovering around 3.25%, barely enough to stay ahead of inflation.

So what are we supposed to do? Do we not have the uncomfortable conversations? Do we never give the investor an opportunity to see that they are the ones responsible for crippling their financial security? Do we never give the investor the opportunity to taste and feel the amazing sensation of transformation?Imagine how your life would change if all of a sudden you could stick to the behaviors that will get them to the point where they are doubling their money every seven to ten years? What does that make possible?

Now imagine on your deathbed you had the revelation that that conversation and all the possibilities it would have created for you and your family was withheld from you, simply because it was safer?


A very wise woman once told me that our power as human beings is in being responsible and being generous. I think this applies to coach and investor. We need to own up to where we are not being responsible. We might have to own up to the fact that we are avoiding difficult conversations because it's safer. We might also have to be generous to ourselves and not make ourselves out to be terrible human beings for making mistakes in the past, maybe knowingly and turning a blind eye to them. Perhaps in forgiving ourselves, it will make it easier to forgive others.

We can't do much worse then we've been doing.


Brendan Magee is the owner and founder of Inevitable Wealth Coaching. With question or comment go to www.coachgee.com or call 610-446-4322.
  

Investors, Are You Doing The Work?

Investors, Are You Doing The Work?

by: Brendan Magee

Over the last two years I have been engaged in a pretty intense workout regimen. If you are familiar with the CrossFit craze that has been sweeping across the country you might have an idea of what I am talking about. The intense hour long workout involves a lot of sit ups, push ups, burpees, mountain climbers, running in place, planks, hitting a heavy bag, etc. When finished, there is no doubt as to whether or not I have worked out. My weight has dropped by about 20 pounds in that time.

Prior to starting this workout regimen I went to the gym four to five days a week did a little treadmill work, stationary bike, some weights, etc and went home. I went to the gym but did I workout? The truth is, not really. Then in October of 2013 I had routine check up with my cardiologist. My weight was up to 214 lbs and cholesterol was higher than ever. 

When the doctor asked if I worked out I answered yes, but in the back of mind I knew I really wasn't. Nobody else but me really knew the truth. It also didn't help that with every lunch I ate,  I had a nice bag of potato chips and a couple of Cokes. As far as my health and vitality were concerned, I wasn't doing the work. The choices were pretty clear, stay on the same course and die or get to work and hopefully live to see my grandchildren. 

The same dilemma faces many investors. Rather than health and vitality (which can be affected by your finances), what is at stake is your peace of mind, quality of life, and freedom. How much or how little of these things you get to experience are tied to how much work you are putting into your money and investments. Merely, putting money into a 401k or an I.R.A. is not doing the work necessary to achieve peace of mind. Matter of fact if that is all that you do, there is a pretty good job your finances will suffer even more.

Putting in the work means determining your investment philosophy. How will your money should be managed is what is being answered by determining your investment philosophy. It means coming to an understanding of how markets and the world of investing actually work. Putting in the work means taking a look in the mirror and getting that some of your behavior and decisions could be  contributing to your lack of financial security. 

It might mean coming to the realization that on your own you will more than likely screw things up and accepting that you need a coach in your life.  

The work doesn't entail giving an investment adviser your money to invest and then walking away leaving your financial future solely in their hands. It entails participating in a system to verify that your advisers decisions are consistent with achieving your agenda. It entails attending investor briefings so that you can stay close to why what is being done with your is the best course of action. Money alone doesn't do the work. Your time, effort, energy, and passion are required. 

Sure there are pills that I could take to lose weight. These pills also promise that I could continue to eat potato chips and drink beer to my hearts content, but we have heard the horror stories that are associated with those wonder drugs. There are also those, via web sites, that tell you all you will have to do is fill out a few questions on an electronic form and from there all your investment worries will be a thing of the past. God help you with those side effects. 

The realization and we have probably all, painfully, come to this realization more than once is that there is no such thing as a free lunch. The cost usually involves money, but that is the easiest part of the solution. The real elixir is your time, effort, attention, and ego. Giving more of some of these and putting the other aside usually produces the results we are looking for. 

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions or comments go to www.coachgee.com or call 610-446-4322.

401k & 403b Plans, Failing The Participant

401k Plans & 403b Plans, Failing The Participant

     by: Brendan Magee

Most people realize that as far as your retirement is concerned, you are on your own. Social Security currently covers maybe 40% of your working income if your lucky. You, and you alone, will be the  left to take care of the remaining 60%. Hence, the 401k plan or 403b plan grows in their importance to the American worker. 

In retirement, the American worker's financial security will depend on how well they have invested in their retirement plan. At the moment, the workers are losing that battle in a big way. Dalbar's Inc. runs an annual report on how well or poorly investors are doing. Over the last 20 years, the average stock mutual fund investor's annualized return was 5.02% vs U.S. Large Company Stocks which did 9.22%. Bond investors did even worse. The Barclay's Bond Index did an annualized 5.74% vs the average bond investor who did a measly 0.71%. 

The task gets even harder when the investments being provided to 401k and 403b plan participants are universally substandard. It also doesn't help when that lack of good investment choices are brought to the attention of the plan sponsors and it falls on  deaf ears. The sponsors in smaller companies could be the owner for the company and in bigger organizations they could have a separate department handling the running of the retirement plan.

I had two such frustrating experiences recently. The first, occurred when an employee at a school district came to me with concerns about the returns on her 403b account.  In 2014 on an account which had an $8,000 balance, her return was just $80 which is a return of just .000875%. By comparison, U.S. Large Company Stocks did an annualized 13.69%. This young lady was woefully falling behind the rising cost of living.  The worst part of it was that the other investment options in the plan hadn't performed all that much better than the investment she was in. 

When she found better investment options than her plan offered and asked her school district's business manager to add her preferred investments to the plan,  he told her to just use one of the other investment options already in the plan. In other words I have no clue about the school district's retirement plan and your concerns are of no importance to me. So frustrating!

The second situation occurred when a 401k plan participant came to me and wanted some help investing in her company's new 401k plan. The company was offering mainly target dated funds where the participant selects options that are designed around when you feel you will retire. There are various options where portfolios are specifically allocated for people retiring in 30 years, 20 years, 10, 5. etc.

When we looked at the various portfolios, the participants money would only be diversified amongst four different investments with any where from 40% to 60% going into U.S. Large Company Stocks. Still feeling the effects of 2008 where U.S. Large Company Stocks dropped by almost 40 percent, the participant wasn't feeling secure with her investment options. 

So here we were in a plan that was fundamentally flawed. With only four asset classes represented in the portfolio and being overly concentrated in U.S. Large Company Stocks there was a lot to be concerned about. We arranged a meeting with the person in charge of retirement plan benefits for the plan and showed him that as it was the plan would create a situation where the participants would be taking way more risk for the expected rate of return for each portfolio being offered. We also show that in some cases the participants would be out hundreds of thousands of dollars in expected rate of return as a result of the lack of diversification in the plan's portfolios.  It was a pretty much cut and dried analysis placed before the benefits manager. 

His response was there were administrative issues that required them to stay with their current plan and no changes would be made to the plan for the foreseeable future. In other words, I do not want to add to my work load no matter how much the participant's financial security is being compromised. 

The truly sad part is that these are just two people amongst millions who have had their eyes opened to how bad their company's 401k/403b plans are. There are millions who have no idea that they are pouring money into plans that will only make it harder and harder to afford retirement, and that the plan sponsors are not interested in solving their problems.

So what's a 401k or 403b plan participant to do? Not participate? Get further behind in the race to build up a sufficient nest egg? Neither of those options are optimal. Most likely, you continue to participate in a bad retirement plan. In most cases the participant is left completely in the dark as to how substandard their retirement plan truly is. The realization only comes when retirement approaches  and they realize they do not have nearly as much money as they needed.

 As in the words of one of the plan sponsors I met with "We are not eager for our employees to find out we have a bad plan." 

The only winner in this is the investment companies. They are brought in to invest people's money and are left unfettered to collect their fees and build huge profits from commissions. The participant doesn't win because it becomes more difficult to impossible to save enough money to retire. The company doesn't win because they are paying for the administration of a substandard plan that none of their employees can feel good about. The solution will only come when the sponsor is bothered enough by wasting money on bad plans. When that comes, your guess is as good as mine.

Brendan Magee is the founder and president of Inevitable Wealth Coaching. with questions or comments e-mail brendan@coachgee.com or call 610-446-4322.

The Questions Not Asked, The Decisions You Don't Get To Make & The Toll They Take On Investors

Questions Not Asked,  Decisions Not Made, 

& The Toll They Take On Investors

                              by: Brendan Magee

Last week, I was having a conversation with a very nice man during which I asked what he did for a living. He informed me he was on his second career. He retired a view years back after the company he worked for downsized the work force and he wound up as one of the casualties. Being close to retirement, he and his wife decided they had enough money to last the rest of their lives and it was time to start enjoying their lives.

Things started out o.k., but along with 2008 and the company's downsizing came the stock market crash. In a bit of a panic, Tom called his financial adviser and told him he wanted his money out of the market. Despite his adviser's advice to stay the course and the penalty that Tom would have to pay, he went with his gut and got his money out of the market and went on his merry way, which didn't prove to be as merry as he thought it was going to be. With the significant loss of his investments, his finances were not going to allow him to stay retired. He had to go back to work. 

My heart sank as he told me his story. Nobody likes to hear about someone struggling and realizing that their life's work won't be enough to fulfill on their hopes and dreams. 

Honestly,  I do not know the details of Tom's finances. I don't know how he had invested his money nor have I ever been privy to the meetings he had with his adviser when the money was first invested or withdrawn from his investment. The one thing I am taking notice of is that Tom's behavior isn't necessarily consistent with the rules for investing, buy low/sell high. So my mind and the questions I asked Tom went back to when he was first deciding how or where to invest his money. I was wondering if he was prepared to live with a downturn in the market or if he know how volatile his investments were. Were his expectations properly aligned with what he invested in?

So I asked him when he first started, did he get asked if he could come up with a mathematical measurement for how diversified his portfolio was? He said, "No, I was never asked questions like that." With that I surmised that Tom, like a lot of investors, made a decision without being able to fully answer and decide on one of the most fundamental questions anyone could be asked about investing and their financial security. Now he is paying the price and quite frankly is still in the dark as to why things have gone so wrong. 

Diversification is the cornerstone upon which all successful investing rests on and Tom was never given the opportunity answer this question. He was/is in the dark and not fully able to make the proper decision for him. I will lay odds he never got to fully answer questions about risk or cost either. 


To right this wrong and for investors not to find themselves in the same boat, more attention has to be given to the questions that need to be asked. The right questions are going to show investors what they aren't seeing and whether or not they are making decisions based on facts or dangerous assumptions.   

How does the stock market really work? Plus,Where do returns truly come from? These would be a just a couple additional questions that need to be answered as well.  The results Tom and his wife have to live with now most likely are not a coincidence. Nor would they be for any investor who wasn't given the opportunity to be asked the necessary questions and make the decisions that are most appropriate to their situation. 

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions or comments e-mail brendan@coachgee.com or call 610-446-4322.

Marketing Fee or Commission: It's Money Coming Out Of Investor's Pocket

Marketing Fee or Commission: 

It's Money Coming Out Of Investor's Pocket

                                           by: Brendan Magee

I was listening to an investment radio show the other day and the hosts wanted to make it very clear to the audience that they do not sell securities. They didn't and won't sell stocks, bonds or mutual funds. They were promoting "Crash Proof" vehicles as they call them. According to them the stock market was way to risky to have your money there. 

In promoting their vehicles, as they called them,they were saying that the companies they use to crash proof people's money didn't pay them a commission.Rather, they paid their firm a marketing fee. The benefit was that 100% of the client's money gets invested right away. All the more reason an investor should do business with them.

First, let's be clear. It shouldn't make any difference how a firm gets paid if what they are doing provides value to the public. Call it whatever you want. In this case, the vehicles are insurance products. They are annuities. Annuities come in a variety of products. There are fixed annuities, indexed annuities, and variable annuities. Indexed annuities are the big thing now as they promote that investors in these products have their money grow when the stock market goes up and they do not go down should the market go down. In essence they are crash proof. 

As far as the producer or agent is concerned they are golden because the commission on deposits into these accounts range any where between seven to twelve percent. So if the investor deposits $100,000 into one of these products their commission ranges any where between $7,000 to $12,000, not a bad pay day. If you look at the contract of these products the commission or marketing fee is referred to as deferred compensation and it drops over the a specific period of time.

So everyone wins under this scenario. The investor has their money in a safe investment, and the producer gets paid handsomely. But, what about the insurance company? Aren't they out on a limb? What if the investor decides they don't like the investment for some reason? What if circumstances dictate they need their money back? What if they discover a better investment? The insurance company just gave the producer $7,000. No problem they'll just ask for the commission/marketing fee back, and the producer will happily give back the $7,000, right? Wrong!

No way in #### is the producer giving back the $7,000! They have mortgage payments to make and college tuition to pay for. That money is spoken for. The insurance company has put themselves way out on a limb here, right? Wrong! They are not that stupid. You ask for your money back. The producer isn't going to give back their commission/ marketing fee. Where will the insurance company go to get their money back? Answer? You. 

Deferred compensation,as mentioned above, means that their is a penalty assessed against the money you deposited into your annuity. Let's say the commission/marketing fee was seven percent. The penalty, if you withdraw your money over designated period of time, starts out at seven percent. You get your $100,000 back in this case minus the $7,000 they paid the producer. Now the penalty goes down over a designated period of time,but you won't get your money back before the penalty is assessed  Plus, you are going to pay income tax on the money you take out of the contract if the money was after-tax. 

So yeah, your money gets deposited right away, but you are not being given a free lunch. Your money needs to stay in that vehicle/annuity for a specified period of time or you will pay a hefty penalty. The announcer didn't mention that on her show. She also didn't mention that the penalty is paid by you. 

Like just about everything else, it's what's not being said that is the most important thing an investor needs to hear. 

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions or comments go to www.coachgee.com or call 610-446-4322.

Investors, Do You Know The Rules & Can You Verify They Are Being Followed?

Investor's, Would You Know If The Rules For Successful Investing 

Were Being Followed Or Violated?

                                          By: Brendan Magee

The other day a client of mine asked me for some help with investing in her company's 403b plan, a nonprofit company's version of a 401k plan. She wanted some assurances that she was making the right choices from the list of funds available. 

We sat down with the guide book for her plan which went into not only the investment options, but also participation rules. For example, there was a lot information on when and how money money could be accessed with or without penalty, when changes could be made,etc. The booklet was about 150 long.

As we made our way through the investment options and how much she was going to contribute to the plan, I noticed something pretty significant was missing from all the information we had. There was nothing that clued Joan in on the rules she needed to follow in order to make sure she was going to be successful and achieve  financial security with her retirement money. 

There was also nothing given to her that would enable her to verify that the rules were being followed or violated. After signing up and contributing to the plan, the success she wanted to achieve was totally out of her hands. She was at the mercy of the people who would now be managing her money. People she never had or probably ever would have the chance to meet.

As we discussed what was missing, Joan was not feeling as confident as she would have preferred. She said it would be nice to know what the rules were before she made her investment selections so she would be able to discern which investment companies were following the rules and which ones weren't. She didn't want to find out five, ten, or fifteen years down the road she was being taken advantage of. 

Fortunately, we took our time and went over the rules for successful investing and found a few investments within the plan that she felt good about. We also set up a system to measure whether or not the rules were being followed and the plan was being successful or not.

The question I asked and Joan was wondering about was, "With all the information being supplied to investors, be it in a 401k plan, a 403b plan, or personal brokerage accounts, how come the rules for successful investing are not the first bit of information given to investors? Why isn't it listed any where in the information they are providing investors?"

So the $64,000 questions are, Do you know what the academically proven, empirically proven rules are for successful investing? Do you have the ability to verify that the rules are being followed or violated? If you cannot answer these questions with a 100% yes, give me a call or shoot me an e-mail.

P.S. If you do know the rules, get in touch and let me kow how you came across them and how you verify they are being followed day-in-day-out.

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions or comments go to www.Coachgee.com or call 610-446-4322.