Insurance Quote

I met with a life insurance salesman a few weeks back. During the course of the meeting he matter-of-factly defended a certain mutual fund as a no brainer, easy money investment and said, "that fund did 18% last year, now where you gonna put your money that can beat that?"

After he left, I went to the charts and compared the fund's historical performance to the S&P 500 Index ($SPY).  I set the man's mutual fund recommendation side by side to this most basic of market indexes over a 10-year, 5-year, 3-year, 1-year, year-to-date, 3-month, 1-month terms.  $SPY outperformed in every single time period.

This instance doesn't make a statement about an industry or a profession. But this guy's brashness and overconfidence left me bewildered. This guy most likely had customers that truly believed he knew what he was talking about, they trusted him with matters of their personal finances, and considered him to be an expert in products he sold.

Sure, compared to Certificates of Deposit or savings accounts, he he was speaking a relative truth. Of course for his statement to be as correct as he came across, a person would have to be completely ignorant of the last few years of bull market in equities and bonds. And completely unable to participate in the economy that outperformed his beloved mutual fund.

Bottom line: no one is willing to invest the time and effort to manage your personal financial situation better than you. It's worth every minute of learning and understanding what you're doing. There are a lot of scams and misinformation all over the internet. But along with the junk, it's also easier than ever to find great resources and to learn for free.

Read as much as you can, ask people you trust to help you better understand new terms and ideas. Compare what you hear with what you read and make up your own mind.

Bonus thought for today: if it was up to me, anybody selling financial products would provide personal balance sheets to customers and prospects. If the insurance dude is billing himself to me as a financial advisor, he would have nothing to lose and credibility to gain by showing me his balance sheet.

The suit, the car, the watch… they can all be bought with credit. I'll take my notes from the debt free people driving the used Accord and the $15 watch every day of the week.