Has Your Broker Been Skinny Dipping?

Warren Buffet famously once said, “Only when the tide goes out do you discover who has been swimming naked.”  Mr. Buffet was explaining that rising tides (or markets) can mask a lot of unseemly and improper behavior.   In other words, it is often only when the markets drop in value that one can tell what is really happening below the surface.  With the recent Wall Street downturn, now may be the time to determine if your broker has been skinny dipping.

You should review your holdings and ask questions.  Why did your account lose value?  Were your investments diversified?   Is your account over-concentrated in speculative or illiquid securities?   Does your portfolio reflect your investment objective?   Answering these questions will often uncover the real reason why your account has dropped in value.

Remember, your broker or financial adviser is required to understand your risk tolerance, investment objective and your investment timeline and invest accordingly.   Failure to do so often results in the mismanagement of retirement accounts.

[Mark Brewer has represented hundreds of investors and retirees in disputes with their financial advisers.   Mark Brewer can be reached at gmbrewer@investmentrecoverycounsel.com.]