Would You Take This Business Deal?


This blog post may shock some people and open their eyes or make some people angry when they become educated on what's been going on with their investments for decades. Some people are not going to like me talking about this.

This information I found caused me to leave my previous company after being there for twelve years. Because of this, I choose to become a Prosperity Economics Advisor with Partners For Prosperity founded by Kim Butler, where we educate people about the whole truth on money when it comes to building wealth.

Imagine this scenario...

I come to you and say: "I have a great business idea that can make us money. Here are the conditions. YOU put up 100% of the money, YOU take 100% of the risk, and YOU'RE going to pay ME whether we make money or not. When it comes to paying me, I have a complex document that you are going to have a hard time understanding that's going to explain all of the different ways I can charge you. When it comes to the profits, I keep 70%, you get 30%. You in?"

What would you say to me? "You're nuts and I would never take a business deal like that! You can take that idea and hit the front door!"

Yet millions of people across the world have already taken that deal and new people take it everyday. Why would someone take a deal like that?

It's because people have been conditioned to accept this deal as normal and don't give it any second thoughts.

Now you may say, "What deal are you talking about about?"

This deal I'm talking about has been sold to the masses for decades as a way to invest their money and become financially secure. It is mutual funds which are used in IRA's, 401(k)'s, 403(b)'s, and other qualified plans.

Mutual funds make their money by charging fees which are tied to many investment products. Mutual Fund companies have been charging fees for decades and the majority of people have never questioned how much they have being paying or they had the misunderstanding that there were no fee's being charged in their accounts.

Would you buy something that you didn't know the price of? Of course not! And if you were paying for something, you want it to be a reasonable price or fee.

How do you know if mutual fund fees are reasonable?

I first became aware that the industry was charging excessive fees when I used to collect "assets under management" at my previous company. A low fee "Third Party Administrator - T.P.A" came in and said "The industry is in the business for itself." That statement got me thinking and I started looking for proof. What I found was shocking!

Some people may disagree and for proof and evidence, review some of the sources below. I have links to their sites and what you find may make you angry.

Quote: "The mutual fund industry is now the world's largest skimming operation, a $7 trillion trough from which fund managers, brokers, and other insiders are steadily siphoning off an excessive slice of the nation's household, college, and retirement savings." - Senator Peter Fitzgerald, cosponsor of the Mutual Fund Reform Act of 2004 (killed by the Senate Banking Committee)

Forbes Article: "The Real Cost of Owning a Mutual Fund," by Ty Bernicke in April 4th of 2011, found that the average cost of a fund was 3.17% per year.

US News and World Report Article: "The Mutual Fund Fees We Don't Talk About." by Brett Carson in March 4th of 2015, talked about the erosion of wealth to investors.

The report by Robert Hiltonsmith who has a PhD in Economics and the Deemos Organization: "The Retirement Savings Drain: The Hidden and Excessive Costs of 401(k)s" report written in May 29th of 2012. He did research for a month to attempt to find out how much in fee's he was paying in his 401k account. His conclusion was there wasn't a chance that his account would flourish with the excessive and hidden fees that were draining it.

The PBS Frontline Special: "The Retirement Gamble" in April 23rd of 2013, questioned how Americas financial institutions protect our retirement savings. This is a must see documentary. In it you will see how these excessive fees over time can take up to 70% your returns. Even though it was made in 2013, you will realize it is still applicable today.

Kim Butler's book: "Busting the Financial Planning Lies", where she exposes the information that's left out of "typical" financial advice that can be dangerous to your financial health. You can download an excerpt from my website.

Tony Robbins book: "Money Master the Game", where he exposes many myths that have been told to the average person when it comes to investing.

Tony Robbins "Unshakable" Podcast Episode 3: "Rescuing Our Retirement Plans: What Your 401(k) Provider Doesn't Want You to Know." Richard Bradley, Editor-In-Chief of Worth Magazine interviewed Tom Zgainer and Josh Robbins of America’s Best 401k on the fees that are in your plan. If you are a 401(k) participant or a plan sponsor, this is a must listen to. It will shock you.

Today, new Fuduciary rules are supposed to be put in place to protect the average investor. With the rules being rolled back, only time will tell if the benefactor will be Wall Street or the average investor. Remember, the financial services lobbying organization is very powerful in Washington.

If you have a mutual funds, IRA's, 403b's, 401k's, or any qualified plan, make sure you get the information to see if the fees are reasonable. Your financial life depends upon it.

If you follow "typical" financial advice, over the long term you may be left short when you need your money the most.

Since wealth is non-typical or uncommon, wouldn't it make sense to start to look for uncommon or non-typical advice when it comes to building wealth?

With all of the financial pressure that the middle class is under today, we need to become educated about money and fees. For years Wall Street, large corporations, and the government have been the main benefactor of getting wealthy, while the average person has watched their wealth grow slowly while the markets breaks record highs or they have lost a large percentage of it during stock market corrections.

As a Prosperity Economic Advisor, one of the Seven Principles of Prosperity that we practice is "Control." We believe that you should be in control of your money, not Wall Street, large corporations, or the goverment. That's what prosperous and affluent individuals do. That's how they became affluent.

We don't collect assets under management. We follow time proven philosophies to build wealth that has been around before the rise of financial planning and the 401(k).

If you want to be educated on an alternative way to build wealth, read Kim's book or explore the Partners For Prosperity site. It will be eye opening.

Sheldon Singleton

Robotic Financial Concepts

Prosperity Economic Advisor and Investment Advisor Representative with Partners For Prosperity