I invested $ 30k with IAI / WFG and their Active money manager Foxhall Capital and lost $2500 in three months. One week after they transferred my funds from my checking account the major indices of the S&P 500, Dow Jones, Nasdaq ..etc were up by 1-7 percent yet my account was down. I have never heard for this kind of investment strategy.
Later, when the market retreated I lost even more money. When I requested that Foxhall liquidate they did not so I later demanded it and they did liquidate costing me $1,000 in one day. Imagine that every quarter you have to pay a management fee and your account value continues sink on a daily basis. During this same three-month period my regular retirement account gained 6% in value.
Question. How does this confidence game work?
Answer. IAI / WFG / Foxhall capital claims to have many money managers that will manage money for the little guy just like they do for the rich. They claim they will use various forms of analysis to determine when to buy and sell. They claim there is a bull market somewhere. They will show you the impressive returns of some mysterious investment fund .
They will show you the rule of 72 and how fast money doubles if you earn 12%. The Rep even told me that the fund was up 15% so far this year. Their prospectus and web page even claims that there is a bull market somewhere in the world.
Unfortunetly, I found out that I was placed into various investments at the all time high share price without regard to the careful fundamental, technical, quantitative, qualitative analysis that were promised to be a part of the standard management service I would receive for the 2.5% investment advisory fee I was paying. In fact, only a small amount of the fee goes to the Money Manager and the majority goes to the Rep and IAI / WFG for commissions.
The problem appears to be that $30,000 can not generate an advisory fee large enough to pay for the individual service that the rich get so they must pool your money in a way similar to mutual funds. In fact , they buy and sell mutual funds and ETFs on your behalf. If a Mutual funds buy a sector or group of stocks going out of favor like cassette tape manufactures you will eventually lose all of your money if you don't get out.
But it is possible that in that group of stocks there is one manufacturer that saw what was happening and decided to shift to making CDs and later sell MP3s on the net. Their stock continued to rise with the rest failing. You need a manager that can spot these individul companies in the world wide market not someone who will buy you a basket of losers that I appparently got.
Unless you have a talented manager buying and selling individual stocks you will never get the service the Rich get so why pay the advisory fees as if you are getting that service?I guess that is at the heart of the problem in my case. I expected a level of service that they could not and did not deliver. I needed and wanted an advisor that could use analysis to manage my money on a daily basis so I did not have to. Don't talk to me about return on capital..talk to me about return of capital...Buffet said the first rule of investing is to never lose money..he said the second rule is to remember the first rule.
Contrary to current opinion, wealth is not made over a number of years. It is made on a daily basis by preserving your capital on a down day and gaining small percentages on an up day. Don't buy into the hype offered up by the lazy managers telling you investing is a long term affair. It is a daily affair over the long term! Don't fall for this trap like I did. WFG / IAI / Foxhal have proven they can not manage small amounts of capital at the same level of service.
My advice? Find an advisor that will treat your $30k is as if it is $3million or turn off your big screen, do the research, manage your own money! Good luck.
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