FOREWORD
In 2006, Ed Mahaffy made a career-changing decision. He decided to abandon the hybrid commission and fee-based investment advice model he had followed for years to become a Fee-Only investment advisor—charging his clients based on their assets-under-management. In Ed’s mind, all individual investors must make a choice that comes down to two key questions:

• Do you wish to receive financial recommendations from a financial advisor and firm that have no fiduciary obligation, and whose recom- mendations may be influenced by commissions?

• Or would you rather pay an advisory fee for ongoing financial advice from a person and firm legally obligated to act in your best interests?

These questions seem pretty straightforward—who wouldn’t want to be guided by someone who must place their clients’ interests first and foremost? But what kind of advisor must do that?
That’s the challenge. Investors can’t answer these questions without understanding how the person who guides them is compensated. That’s a tall order when trying to figure out how the system works, what the pitfalls are, and what questions to ask.

Ultimately, Ed’s choice led to the book you’re reading now—but according to Securities and Exchange Commission rules, he first had to apply for (and receive) SEC approval to do business as an investment advisor. That is how Ed and I met. He was seeking assistance with the required federal registration that would permit him to follow the business model he now believed to be the best for his clients, and for himself.

As a CPA and Personal Financial Specialist, my business focuses solely on providing investment advisors with this kind of registration guidance. I’ve worked with about 250 clients in this area over the years, and have held many volunteer leadership roles with the American Institute of Certified Public Accountants. Ed is truly passionate about the subject of investor fees, and about making sure people understand basic information about personal investment business models. He’s also a gentleman and a straight-shooter who doesn’t mince words about what he sees as the burning issue in investing today.

More people are agreeing with Ed, too. There is an entire movement afoot to harmonize the fiduciary standards throughout the industry. It’s even gotten to the level of congressional testimony. Change is coming, and this book is Ed’s contribution to this important movement.

While writing this foreword, I had the pleasure of visiting my retired aunt, Terry and my uncle, Tim. They both saved money well during their working years as a school teacher and industrial salesman, and are now living comfortably. While chatting over coffee, I discovered that they did not know what credentials their “financial advisor” held, nor how he was compensated.

I quickly learned that they had invested the bulk of their savings in a variable annuity with high up-front hidden commissions, sold to them by a registered representative who was not bound by a fiduciary standard. They would have been well served by this book, as would many others not “in the business.”

My hope is that you read this book to begin a journey of learning how best to invest your hard-earned dollars.

This book is for all the Aunt Terrys and Uncle Tims out there. Once you read it, you’ll have a great blueprint for deciding whether your investments are in the right place. More importantly, you’ll know what to do if you decide they’re not. What I love most about Ed’s book is that I could hand it to anyone who needs help with their investments. He has spelled things out so clearly that any reader should be able to understand the implications of various
decisions for their portfolios. Time spent with Ed’s book is time very well spent, indeed.

Ellen M. Bruno, CPA/PFS
President, Compliance Advisor Professionals, LLC

---

INTRODUCTION
Although many good do-it-yourself investment books have been written,managing our investments and personal finances has become increasingly complex. Many people do not want to take the do-it-yourself approach because they lack the interest, the background, the time, or some combination of the three. They seek the support of a financial advisor.

People are seeking trustworthy financial advice, but they do not know where to begin. What I’ve seen in the last few years is that investors no longer trust Wall Street. They have lost faith, and they have lost money. Many of them feel that the markets are rigged, and that they are at a huge disadvantage.

I have often encountered people with no financial plan who are unaware of exactly what investments they own, or their true costs of ownership. They lack the knowledge necessary to evaluate their financial advisor with respect to investment performance, cost-effectiveness, and whether the advisor has a legal obligation to always act in their best interests.

My mission is to explain what you should be seeking in a financial advisor, and to empower you to find an advisor who will work in your best interests. Among the issues that should matter are: the advisor’s disciplinary history, knowledge of a broad range of financial issues, industry experience, and expertise in the areas that the investor’s particular situation demands.

However, differentiating among the many types of financial advisors is very difficult. My goal is to cut through the fog of advertising and vague promises.

If you can’t answer these basic questions about your investments, then you probably need assistance. If you have a financial advisor, and he can’t (or won’t) answer these questions, then you need another advisor:

1.What investments do you own?
2.Why do you own those investments?
3.What is the true cost of ownership of those investments?
4. Does your financial advisor have a legal obligation to always act in your best interests?
5.What is your true cost of receiving financial advice?
6.What are your alternatives for investment products? What are their costs?

I look forward to explaining how you can take control of your investments, your financial future, and your relationship with your financial advisor.

Have a question? Contact Ed Mahaffy.

Receive Complimentary Copy Of eBook (Includes All Graphic Charts)