RICHMOND, Va.--(BUSINESS WIRE)--David B. Loeper and publisher John Wiley & Sons, Inc., today announced the release of the second editions of Stop the Investing Rip-off: How to Avoid Being a Victim and Make More Money, and Stop the Retirement Rip-off: How to Keep More of Your Money for Retirement.
“As individuals make their New Year’s resolutions and review their finances for 2012, they need to make sure that their planning is aligned with goals that enrich their lives, rather than in line with investment products they don’t need and fit some other advisor’s blueprint for their lives,” said author David B. Loeper, Chief Executive Officer of Wealthcare Capital Management. “Investors need to avoid making needless sacrifices in their lives by adhering to plans that provide a false sense of security, and don’t deliver what clients want or need. My two books help investors avoid these pitfalls.”
A staunch consumer advocate, in Stop the Investment Rip-off, Loeper provides and explains the questions every investor needs to ask before parting with their hard-earned cash. The book shows you the tricks that insiders use to make attractive sales pitches, and how to dig deeper to find out if these opportunities are the real deal.
In discussing “Pitches They All Use to Sacrifice Your Life,” Loeper examines how emotion is used by the industry to sell financial plans based on fear and uncertainty, rather than emphasizing the positive emotions of achieving life goals. Many financial advisors are so focused on the portfolio and the products they are selling that they don’t involve a client’s deeply emotional, personal dreams in choosing investment alternatives. Those dreams shouldn’t be ignored: they are the very reasons for accumulating wealth.
Consumers also need to examine retirement savings costs. Take the example of a 25-year-old couple that earns a combined salary of $75,000, saves $7,000 annually and sees their investment compound annually at a rate of 7.5%. After 40 years of compromising lifestyle choices to make these savings a priority, the couple would have accumulated $2.5 million. Not bad at all.
But what would the financial services industry have made in fees during that time if the couple was charged an excess fee of 2.5%? About $1.7 million! Nearly 70% of what the couple saved. Even paying an excess fee of 1.5%, the couple would be paying their advisors just over $1.0 million.
“Does it make sense for product vendors to make 68% of what you accumulated?” Loeper asks. “What could you do with that extra money in retirement? It’s the other side of the story they’re not telling you, whether it’s a bank, broker, financial planner, insurance agent of financial celebrity. How can you find the investments with the most reasonable expenses and most favorable returns?”
Stop the Retirement Rip-off begins with a chapter entitled, “The Coming Retirement Plan Sticker Shock," which outlines fees that will need to be disclosed by 401(k) providers starting in 2012. These so-called “hidden fees” were discussed by the author over the last decade. As Americans have shifted from defined-benefit plans (funded by companies) to defined-contribution plans (those funded by employees such as 401 (k) plans), there has been a massive opportunity for product vendors to profit from retirement savings. It’s a $3 trillion pool of assets and the fee structure is anything but clear—a situation that has implications for everyone with a 401(k).
Loeper notes that a study by the Center for Retirement Research at Boston College found that “from 1988 to 2004, defined-benefit plans outperformed 401(k) plans by one percentage point, . . . despite the fact that 401(k) plans held a higher portion of their assets in equities during the bull market of the 1990s.” Since employees are bearing ALL of the risks in the 401(k), what could that one percentage point excess cost? Well, if you are planning to retire at age 65 with the hope of a $32,000 annual retirement income, it could cost you any one of the following:
- A 90% chance that the excess costs will reduce your retirement fund at age 65 from somewhere between about $100,000 to $700,000
- Working three more years until age 68
- Living on 22% less than you desired ($25,000 instead of $32,000)
- Accepting a 72% greater chance of outliving your resources
“It’s up to the employee to address the sticker shock that will be revealed when fees are broken out starting in some 2012 statements,” says Loeper. “This book gives you all of the secrets to fix your retirement plan in a positive and proactive manner.”
Loeper outlines the expenses for his own firm’s 401(k) funds, which show that personalized, continuous life-relative advice can be delivered for 0.70% annually for the management, personalized life-goal advice with quarterly goals and portfolio monitoring and management services.
Also of note in this revised edition is a chapter entitled “How Much is that Guarantee in the Window, Stealing Your Bucket List,” a discussion of how minimal the guarantee is in so-called guaranteed products, as well as an extensive review of the hidden expenses in government union and some 403(b) plans—and proposed solutions for the increases in state and teacher retirement benefits while reducing costs to tax payers.
About David B. Loeper
A Certified Investment Management Analyst® (CIMA®), a Certified Investment Management Consultant® (CIMC®), David B. Loeper is the CEO of Wealthcare Capital Management®. He is a SEC-registered investment adviser with over 25 years of experience. Before founding Financeware in 1999, Mr. Loeper was Managing Director of Strategic Planning for Wheat First Union, and served on the Investment Advisory Committee of the almost $30 billion Virginia Retirement System.
Mr. Loeper has been active in several industry associations, including the Investment Management Consultants Association, where he served as Chairman of their Advisory Council. He has also been a featured speaker at numerous industry events and often contributes to industry publications and has appeared on CNBC, Bloomberg TV, Fox Business, CNN and Yahoo! Finance Vision. Mr. Loeper is also the author of The Four Pillars of Retirement Plans, published by John Wiley & Sons, Inc.
About Wealthcare Capital Management®
Based in Richmond, Virginia, Wealthcare Capital Management® is powering the future of financial advising through a unique suite of asset management and advising services. Wealthcare’s goals-based advising approach allows advisors to give their clients measurable confidence in exceeding their goals without unnecessary sacrifice to their lifestyle, while avoiding undue investment risk. This process has been made available in an all-inclusive, low-cost and highly tax-efficient Unified Managed Household (UMH) program. Information about the company’s advisory services is available online at wealthcarecapital.com. Founded in 1999, the company is privately held.
Wealthcare Capital Management® is a DBA name of Financeware, Inc. Wealthcare Capital Management IP, LLC, a wholly-owned subsidiary of Financeware, Inc., controls or owns certain intellectual property rights developed by the companies, including U.S. Patent Nos. 6,947,904; 7,562,040; 7,650,303; 7,765,138, and 7,991,675.