Lessons about Insiders vs. Outsiders. And what can be learned by looking at the world of finance, the real estate industry, and [EHMs] economic hit men…
In recent interview with Tony Robbins, the personal development guru, who has touched millions lives around the world - through his message, “Awaken the giant within” – offered some sage advice.
On the topic of finance, last year, releasing his first book in 20 years, Money: Master The Game, he advocated, “Become an investor instead of a consumer.” Said different, you need to understand how the game is played, so you can know whether you’re playing the right game, and measuring the best metrics to achieve the win.
“Don’t Trust Brokers.”
If there is one rallying cry from the book, regarding financial advice, according to The Pocket Risk Blog, “it is that you should not trust brokers. They often funnel you into expensive actively managed mutual funds, that don’t beat the market (over a sustained period), don’t perform as advertised and favor their own interests.”
Robbins has equated these funds to being “pre-engineered to be in the best interests of the ‘house’” and says, what individuals need, “is a fiduciary.”
By definition, a fiduciary is not a salesperson out to sell you products or additional services, but an advocate to protect your interests. So how do you know the difference? Robbins recommends individuals find advisers based on a set of criteria, to ensure the adviser is:
· Registered with the SEC
· Compensated as a percentage of your assets under management
· Not compensated for trading stocks and bonds
· Not affiliated with a broker-dealer
· Ensure your investments are custodian with a 3rd party like Fidelity, Schwab, or TD Ameritrade.
Robbins’ then goes on to make a final point…. “The added cost of a fiduciary may only be justifiable if they are adding value such as tax-efficient management, retirement income planning, and greater access to alternative investments beyond index funds.”
And if you think Tony Robbins’ isn’t someone to be listened to regarding financial advice, he has a message for you.
Mr. Robbins confidently said he could go “head to head” with anybody in finance, “not because I’m so smart, (but) because I got my PhD in four years basically with 50 of the smartest Noble Prize winners, the greatest hedge fund people on the face of the earth (including Ray Dello and John Paulson), and self-made billionaires, (who) would give me their insight because they saw that I was sincerely here to deliver.”
Simply stated, the man is connected.
In my field of real estate, I write much about the same topic as Robbins’ does, on this idea, first and foremost – you must “protect yourself.” Don’t be the Low-information homeowner. Or the consumer, who voluntarily chooses the short-end of the stick, by default, from having not done the necessary due diligence to ensure the approach they choose is actually in their best interest.
Real estate agents, like the seedy financial services world is a sales-dominated industry – filled with salespeople paid on commission, often motivated by money. To disregard this reality, would be like believing that Vegas slot machines aren’t rigged to favor the house.
“The house always wins” is a recognized truth, because more often than not, it’s true. Put forth, and developed by the best minds at Harvard and MIT, etc., complex algorithms and formulas are developed to ensure the house wins. In economic terms, from the book Confessions of an Economic Hitman - the “odds are created,” not by MIT or Harvard graduates, but by economic hit men. “Economic hit men are the shock troops of what Perkins [the author] calls the corporatocracy, a vast network of corporations, banks, colluding governments, and the rich and powerful people tied to them. If the EHMs [Economic Hit Men] can't maintain the corrupt status quo through nonviolent coercion, the jackal assassins swoop in.”
My point is, whether it’s the financial sector, the real estate industry, or in the highest levels of government and corporate greed – there are insiders and outsiders. There exists a status quo, and there are two sides of it.
There are those who know how to play the game. And there are those who don’t. And those who don’t are the suckers who get “played” by those who do…
I believe that is what Tony Robbins is talking about. “Become an investor instead of a consumer.” Many folks choose their financial planner in a somewhat will-nilly fashion without understanding anything about how the financial game is actually played. Too often, this pits the insider vs. the outsider, where the insider always wins. I see it in real estate too!
The saddest part? The outsider doesn’t even realize he’s playing the part of the fool.
Tim Murphy is the author of ‘The Value-Driven Approach: A practical guide to protect yourself from REAL ESTATE GREED & bank and extra $30,000 by THINKING like the great Warren Buffett.’ He is a licensed agent with Re/Max Results and a local entrepreneur as well. For a free copy of his book visit: www.FreeBook4CharityForward.com