Jim is the former President of Preferred Retirement Options, Inc. Jim began his career as a financial advisor in 1994 after successful careers in marketing and business consulting in Southern California. He has taught seminars throughout the United States and Canada to small businesses and investors for over thirty years.
Jim has a Bachelor of Science Degree in Education from Brigham Young University, where he also lettered in Varsity Baseball. He also has a Master of Science Degree from the College for Financial Planning with emphasis in Personal Financial Planning.
Jim is still involved in the business but is mostly retired and enjoys golfing and spending time with his many grand kids.
What follows is an interview Jim had with an industry magazine a few years ago. It provides an excellent overview of our company philosophy and our individual beliefs.
How long have you been in the financial industry?
I started in the Financial Industry in 1994 in Southern California. I started working with my current company in 1997 and in 2009 I bought the company Preferred Retirement Options, Inc. Our company has been in business for over twenty years.
What made you want to be in this field?
I was working as a Marketing Vice-President for a non-profit company in California teaching seminars to small businesses teaching them how to train and hire straight commission salespeople. After a few years, these owners came to me and said they were making so much money they wanted to know how to invest their profits.
I started giving them free investing advice, and I realized I enjoyed it so much that I got my licenses and became an investment advisor. Almost twenty years later and after helping thousands of people achieve a more comfortable retirement, I know that I made the right choice to get into the investment profession.
What areas have you specialized in?
I have specialized mostly in retirement planning and particularly the 403(b) programs for schoolteachers. I have set up payroll slots in about 70 school districts in Idaho and Wyoming. I have met and coached thousands of individuals over the past twenty years.
How have you tried to help people invest their money in the past?
As an advisor, just starting out I used the Morningstar rating system to select mutual funds. It was the only thing I was taught. As I got more experience, I began to weigh my portfolios more heavily into value and small companies’ sectors because they seemed to do better than the other sectors.
I had no basis for my conclusions, but since going through my Master’s Degree program and teaming up with the Matson Money team and their investment philosophy, I now know the reasons for the success I had with the value and small sectors of the market.
What was the biggest problem with this process?
Knowing what I know now, it was a process of gambling and speculating with my clients’ money. Using the Morningstar system was an example of chasing returns and inadvertently using market timing. It did not work and I was always frustrated with the clients’ returns. Having dissatisfied clients was my motivation to find a better way to invest their retirement savings
Did it provide peace of mind for your clients? Why not?
It did not provide peace of mind for the clients or me as their advisor. I was always trying to build portfolios based on the current hot fund. Many times after a down quarter, I also changed portfolios just to pacify the client. This was a classic example of traditional investing techniques that result in poor returns and disappointed clients.
Does financial planning provide peace of mind for investors?
Financial planning is a process used to sell products. It is reports, charts, and a game plan for gathering assets. Most of the time these plans sit on a shelf and are never implemented. They are part of traditional investing techniques used by over 90% of advisors in the profession.
Most clients do not understand their plans and the advisors rarely refer to them. This results in clients changing advisors in the elusive attempt to find an advisor that will help them.
In your opinion how has the financial planning process failed investors?
Because clients do not understand or implement their plans, they have no direction. This is where coaching has a tremendous advantage. Coaching helps investors understand the investment process and gives direction and discipline to clients.
What is the biggest abuse of the planning industry?
To me it is Wall Street bullies who confuse and lead investors down the wrong investment paths. Using the traditional investing tactics of market timing, stock selection and chasing returns, these bullies destroy a client’s chances of getting a market return.
Market Timing is the worst of the three because investors (and advisors) sell out of the market at every downturn and buy after the market has rebounded resulting in terrible investment returns. This traditional investment strategy results in selling low and buying high, which is the opposite of the tried and true investment strategy of buying low and selling high.
The discipline necessary to consistently achieve the strategy of buying low and selling high requires coaching. An Investment Coach is a third party influence that can give un-biased information and provide the discipline to stay the course and not make bad decisions in a bad market.
How do you keep investors from speculating and gambling with their money?
This is a difficult problem because the urge to speculate and gamble with investments is deeply ingrained in people. The only shot an advisor has to keep investors from speculating and gambling with their money is through coaching. It must be consistent monthly coaching and reminding clients about the basics and helping them understand the “20 Must Answer Questions” so they can achieve the peace of mind they are looking for from investing and life decisions.
What are the warning signs that people are speculating with their assets?
There are several signs including: investing in risky speculative products, putting all their eggs in one basket, depending on Wall Street gurus to tell them what stock to pick, listening to Wall Street prognosticators telling them where the market is going, and getting involved carelessly with Wall Street Ponzi schemes.
These are the traditional techniques of active investing, which include market timing, stock picking, and chasing returns. “Wall Street Bullies” use these techniques to convince the investor that they are acting in the clients’ best interests.
What is the result of speculating and gambling?
The result of speculating and gambling is poor performance of their investments and no peace of mind for the client.
What are your feelings about Free Markets and Capitalism?
I am an avid supporter of free markets and believes strongly that capitalism not only increases wealth for everyone, it enhances our personal freedoms. Ironically, both Wall Street and the government attack the free market system daily. Wall Street believes the free market to be inefficient, and seeks to exploit the belief through questionable investing techniques like selective stock picking, market timing and chasing past returns.