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Financial Malpractice Radio
03-08-2008, 04:53 PM
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#1
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Moderator
Join Date: Oct 2005
Location: Texas Hill Country
Posts: 7,253
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I'm working out in the garage listening to a financial/investment planning show on local Austin radio. I'm taking a few minutes to write this before I forget the details.
The first guy I heard call in mentioned that he and his wife earned about $180K, both maxed out their 401K plans (including catchup as they were both over 50), and wanted to see how they could shelter more of their money from taxes.
He mentioned a traditional, non-deductible IRA as likely the only option, because a $180,000 income is too much to qualify for a Roth.
Hold on, now. He neglected to ask one critical question: Is that a $180K AGI *after* 401K deductions, or is $180K your total income before all taxes and deductions? If it were the latter, the radio guy gave terrible advice, because if they have a $180K income *before* deductions, then maxing out two 401K plans with over-50 catchup takes $41,000 off their AGI and makes them eligible for a Roth for a total of $10,000 in 2007 and $12,000 in 2008! In other words, he could be steering them into a non-deductible traditional IRA when a Roth may still be an option!
I shook my head at this "financial planner" type not asking this question in a scenario where this question is critical.
Next up was a guy who had two jobs and was eligible for a 401K (and matching) in both. He said he wanted to contribute up to both employer matches and wondered if that was illegal or a violation of tax law. The radio guy said it wasn't and he'd recommend doing that. (Okay, he's right on this one.) The caller mentioned being afraid of running over some "$5,000 limit" he'd heard about. Well, Radio Guy didn't mention that he was probably thinking of the 2008 IRA contribution limit, but said "I *think* this limit is $15,000" (nope -- it's $15,500).
Then he compounded the blunder by saying he thought that limit was $15,000 per employer and not a combined limit!!!!
How can ANYONE who supposedly knows enough about financial planning to get a radio show be this clueless about things? I never got what his credentials were.
Wow. I just had to share that. Now back to work in the garage.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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03-08-2008, 05:01 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Apr 2004
Location: South Texas~29N/98W
Posts: 3,011
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Wow! You have located radio porn. Cool!
__________________
Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx
In dire need of: faster horses, younger woman, older whiskey, more money.
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03-08-2008, 05:12 PM
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#3
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Thinks s/he gets paid by the post
Join Date: Mar 2006
Location: Houston
Posts: 2,431
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The reason all of the bad advice was the broadcast was out of Austin. The guy was probably coked out or at least hung over from 6th Street the night before. 
Seriously, the guys on the radio financial shows basically buy their time or, in some cases, work without pay. They are really ads for the FA doing the show. Some are more blatant than others and the weekends are the best of breed for these. He/she convinces a few people how smart he/she is (they must be an expert because they're on the radio) and they get to charge the rubes a 1-2% fee for managing their money.
Houston has their share of radio "experts." They are always representing their great money management operation. I've heard lots of bad advice. I will admit that the terrible mistakes with simple Roth and 401k rules beat the bad advice I've heard here.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
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03-08-2008, 05:19 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Jul 2005
Location: Baton Rouge
Posts: 2,063
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 Quote:
Originally Posted by ziggy29
I'm working out in the garage listening to a financial/investment planning show on local Austin radio.
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Sounds like his advice could have been dangerous - I hope you weren't distracted enough to risk injury 
__________________
Age and treachery will usually overcome youth and ability
Countown clock is at 9 weeks to be SIRE'd
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03-08-2008, 05:47 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Apr 2006
Posts: 1,457
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sometimes advice is worth less than what you pay for it
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03-09-2008, 12:47 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Apr 2004
Location: South Texas~29N/98W
Posts: 3,011
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Quote:
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the guys on the radio financial shows basically buy their time
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Good point 2B. There is a local show in South TX on Saturday AM that sounds like a call-in show, however they never have any folks on live as they call in (they quote their 800 number every 5 minutes or so.) Why? I'm sure that they see this as a marketing tool to scrounge up folks that just think that they are calling in to ask a simple Q about financial planning or investments.
The thing that tops this "show" off is the fact that they go on and on about eqiity indexed annuities (EIA) and how wonderful they are. They are quick to trash VAs (a good thing) as well as mutual funds (a bad thing). I suppose that if they actually allowed "callers" on the program, there would be many Q's about the inner workings of the much dreaded EIA and all of its negative issues.
__________________
Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx
In dire need of: faster horses, younger woman, older whiskey, more money.
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03-11-2008, 12:50 PM
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#7
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Aug 2006
Posts: 9,174
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Quote:
Originally Posted by mickeyd
The thing that tops this "show" off is the fact that they go on and on about eqiity indexed annuities (EIA) and how wonderful they are.
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They suck
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They are quick to trash VAs (a good thing)
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Is it also good to trash EIAs??
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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03-11-2008, 12:56 PM
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#8
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: May 2005
Location: DFW
Posts: 6,334
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And I thought FM stood for "frequency modulation"... 
__________________
Have Funds, Will Retire
"...but do feel free to assert your duly noted opinion on this subject again without benefit of reference or provision of additional information..."
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03-11-2008, 01:19 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Dec 2007
Posts: 4,404
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__________________
If your gonna be dumb you gotta be tough
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03-11-2008, 01:32 PM
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#10
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Thinks s/he gets paid by the post
Join Date: Jan 2008
Posts: 2,020
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Quote:
Originally Posted by FinanceDude
Is it also good to trash EIAs??
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EIAs are outstanding products and I highly encourage everyone to buy three or four.... and soon.
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03-09-2008, 09:24 PM
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#11
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Aug 2006
Posts: 9,174
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Once I called into one here in my area, and acted like I had a meaningful question, and then corrected the rep on an inaccuracy he stated earlier.........and they cut off my call......... 
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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03-10-2008, 09:24 PM
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#12
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Thinks s/he gets paid by the post
Join Date: Apr 2007
Location: Milford, OH
Posts: 1,341
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Forums like this exist because of people like him. My signature says it all- one person's stupidity is this forum's job security.
__________________
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
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03-11-2008, 03:57 PM
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#13
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Thinks s/he gets paid by the post
Join Date: Apr 2004
Location: South Texas~29N/98W
Posts: 3,011
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Quote:
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Is it also good to trash EIAs??
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Yes, and I do so at every opportunity. 
__________________
Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx
In dire need of: faster horses, younger woman, older whiskey, more money.
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03-11-2008, 05:35 PM
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#14
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Thinks s/he gets paid by the post
Join Date: Mar 2006
Location: Houston
Posts: 2,431
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It's nice seeing other people trash annuities instead of just me.
Annuities are intellectually excellent ideas but they are unfortunately only available with oppressive fees that totally negate their potential positives. I can't imagine anything being a "good investment" that has 3.5% to 10% in fees and commissions.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
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03-11-2008, 07:53 PM
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#15
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Thinks s/he gets paid by the post
Join Date: Aug 2004
Location: Laurel, MD
Posts: 1,239
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Radio Talk Show Translation:
Quote:
Originally Posted by 2B
It's nice seeing other people trash annuities instead of just me.
Annuities are intellectually excellent ideas but they are unfortunately only available with oppressive fees that totally negate their potential positives. I can't imagine anything being a "good investment" that has 3.5% to 10% in fees and commissions.
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03-11-2008, 10:39 PM
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#16
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Aug 2006
Posts: 9,174
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Quote:
Originally Posted by 2B
It's nice seeing other people trash annuities instead of just me.
Annuities are intellectually excellent ideas but they are unfortunately only available with oppressive fees that totally negate their potential positives. I can't imagine anything being a "good investment" that has 3.5% to 10% in fees and commissions.
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What has a 10% fee??  :confused:
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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03-13-2008, 05:34 PM
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#17
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Thinks s/he gets paid by the post
Join Date: Mar 2006
Location: Houston
Posts: 2,431
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I have not personally seen the documents showing a 10% fee. I have seen articles that have said salespeople selling some VA products get a 10% commission for selling them. If this is true, somewhere there is a 10% fee baked into the VA. That would probably be hidden as a front end load and/or a graduated redemption fee that protects the VA issuer so they can pay the commission.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
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03-13-2008, 09:10 PM
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#18
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Aug 2006
Posts: 9,174
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__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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03-11-2008, 08:34 PM
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#19
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Recycles dryer sheets
Join Date: Mar 2007
Posts: 462
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Just like you guys are saying heard an "expert" on the radio yesterday explaining this magical product (hybrid annuity) it was painful knowing that his phone would actually be ringing and folks would be giving him money.
__________________
Your focus determines your reality - Qui-Gon
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07-12-2008, 04:05 PM
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#20
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Moderator
Join Date: Oct 2005
Location: Texas Hill Country
Posts: 7,253
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He screwed up again!
Some lady just called him asking about a Roth conversion in 2010 when the income limits will be lifted (unless changed next year). She asked whether or not she could pay that tax out of the proceeds of the IRA. He seemed to indicate that this was something she could do (but at least this time, he admitted he didn't know for sure and suggested she consult with a tax pro).
He used an example of a $100K conversion with $25K tax due. He made it sound as if it should be okay to pay the tax just by keeping $25K out. Never did he mention anything that this, uh, *might* subject you to a penalty on the $25K you didn't convert...
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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