One of the Most Anticipated Fed Meetings in a Long Time

Today the Federal Reserve Board met to determine the direction in interest rates. Due to all of the problems in the credit markets written about week after week on this web-site, the bulls were betting on the Federal Reserve Board bailing out the markets.

Although highly unlikely, they were hoping for an interest rate cut. If not, at least there was hope that the Federal Reserve Board to acknowledge that there is a problem and state that they are open to lowering interest rates.

Unfortunately for the bulls, none of that happened. In fact, the Federal Reserve Board is still aggressively fighting inflation.

Jim Cramer has been screaming every night on his stock show that the Federal Reserve Board should bail everyone out. He literally threw a 3 year old fit on television today following the fed announcement.

There is something that the bulls do not acknowledge in the desperate plea for someone to bail out these problems so the party can continue. The fed has every right to be concerned about inflation. However, it is not the type of inflation that they typically worry about during the meetings. They are worried about ASSET inflation getting out of control.

They cannot afford to lower interest rates here. If they do, the real estate markets will ignite again and a good possibility exists that all assets (Stocks, bonds, real estate, etc) would morph into an incredible out of control bubble environment. (See China) Remember bubbles don’t end very well. It would only be putting off the inevitable.

They cannot afford to ignite the speculative spirits of the markets. Thus they are forced to stay on the sidelines and do nothing.

Unfortunately, the economy is weakening and the real estate markets are making it tougher for the Federal Reserve Board to sit on the sidelines. They have to take the lesser of two evils. They are between the ultimate rock and a hard spot. So, they do nothing.

Only a very desperate situation will motivate the Fed to lower rates.

Desperate for Business?

Every morning the first stop of my business day is http://www.minyanville.com/. In fact, I am at this site all day long. It is the best market analysis site available.

I found this article on the site this morning and just looked at my computer with disbelief. This was the ultimate "insult to intelligence" article. The Overstock.com CEO has an ingenious business plan and motto. "Buy it on overstock, then sell it on E-Bay."

“Our motto is buy it on Overstock, sell it on eBay,” Byrne said on a conference call Tuesday with investors.

"If you compare the prices of the stuff on Overstock, it is cheaper than on eBay for commodity goods and such. In fact, there are people — there are lots of people who make their living buying on Overstock and selling on eBay.”

Let's take a step back for a minute. I want to let you in on a little secret. Instead of buying the merchandise on E-bay, you can buy it direct from Overstock.com and avoid paying the additional money.

This guy is getting paid big bucks for coming up with this game plan. In a conference call to investors, is this the best that he can do? Could this be sign of the times? Is business this tough? If I were a shareholder, I would be concerned.

On a side note, the writer of the above article points out that the advice to buy it at overstock.com and sell it on ebay doesn't even work. Apparantly, the prices are lower on e-bay.

Consumer Confidence at 6 year high? Foreclosures up 58%?

Something doesn't seem right. I acknowledge that I have a negative bias on the stock market and the economy and desperately try to stay open minded. At the same time, how in the world does consumer confidence report a 6 year high with the mess that is occurring in the real estate markets?

Well the CNBC analysis says that it is because employment is so strong and the sub-prime mortgage crisis is well contained. Well, that explains that one to me. I guess??

Countrywide the nation's largest mortgage lender says that the defaults are spreading to the prime loans. The sub-prime loan crisis (clearly in the early innings) doesn't sound so "well-contained." The estimated 2 millionj foreclosures this year should stay "wel-contained."

What about that strong employment? The government actually estimates a good portion of those created jobs each month through their own analysis. In other words, they make up job growth. John Mauldin reports that 86% of the jobs that have been reported this year have been created out of thin air by the government.

The bottom line is that the government can spin the numbers at will and create a fantasy economy. The CNBC analysts can tell you don't worry about it and just go back to sleep. One analyst actually said last week that there was clearly "no reason for the sell-off." As Gordon Gecko said in Wall Street," The whole world must be off its rocker." By the way for all of you Wall Street movie fans, there will be a sequel.

Has I have written many times on this site, there are clearly big problems in the markets right now. These are foundational problems. It pays to think differently and not follow the advice of those who clearly have a lot to lose in the event that this bull turns into a bear. That would be every politician, every fund manager who can only invest for a bull market, every financial advisor who thinks that we are in a perpetual bull market, and anyone on CNBC.

Just a Correction in the Stock Market or Something Else?

With last week's stock market decline (largest in weekly drop in the Dow in 5 years), the forever bullish are claiming that this is no big deal. It is a "correction." Let's first define correction. A correction is a pause in a bull market. It is a normal decline that should create any worry.

This is the mantra of Wall Street. They made that claim through the bear market in early 2000. The problem as I outline this week in the Stock market outlook is structural. It is within the credit system. The credit system has been the foundation for this stock market bull rally that started back in 2002.

We are talking about foundation problems. If this problem worsens, there will be big problems on Wall Steet. I am not in the business of making predictions. I am looking at the data and see the problems. I just don't see how Wall Steet dodges this mess. A good proxy for this credit problem can be found in the mortgage market. The sub-prime loan crisis has been noted and written about many times. It has been a prime reason for the foreclosures.

Last week it was announced that Alt-A loans (the next level of loans up from sub-prime) are now producing more foreclosures. Then Countrywide (nation's largest lender) said last week that the PRIME loans are now starting to have problems. Prime loans are supposedly the high quality mortgages.

Be very careful and weigh the facts in the argument of correction versus the start of a bear market. For a good read on the reasoning behind the problemsm go to his link:

http://www.msnbc.msn.com/id/19935772/

Have no fears – the group who calls itself the Invincible American Assembly says that everything is under control. They are meditating calmness into the world and the stock market. I really cannot make this stuff up.

Another Bank of America Complaint

Between paying.5% on their savings accounts to offerring credit cards to illegal aliens, it also seems that Bank of America is getting a little fee happy. An over the limit fee on a savings account? That one is a new one for me. Read more.......

Thank you for the information on Bank of America. I have had an account with them for 10 years and today I think I will switch banks. Today I discovered they assessed me a $27.00 over the limit fee from my savings account. I did not know I had a withdrawal limit from my savings account. I don't recall signing or agreeing to anything that would limit the amount I could withdraw from my savings account. Can you tell me if anyone else you know has had this problem or concern? I had a previous problem with them before when I agreeed to sign up for overdraft protection. I thought what this meant was that if I had insufficient funds in my checking account it would be covered with monies from my savings account. Appparently this wasn't the case because on one occasion I was assessed a $30.00 insufficient funds fee. I don't know what to expect next from this bank. I would appreciate any advice you could give me. Also, I know you cannot indorse or recommend another bank to me but what type of services (free checking, etc.) do good banks usually offer?

From Bob - Century Bank is an excellent local bank.

Just Plain Bad Advice - Nothing Always Works All of the Time

I was reading an investment periodical that I received at my office. It was from a real estate mutual fund company. The title of the article was "The Importance of Remaining Invested." They were talking about the importance of buying and holding investments for the long-term.

The article is talking about helping your clients feel comfortable with the risk in their portfolio. If your client doesn't feel comfortable with the traditional stock/bond/cash portfolio, consider adding real estate to make it more diversified. The article was making the point that by adding real estate to the mix "the correlation between real estate and stocks, bonds, and cash may help manage the volatility in a portfolio." In other words, reduce the risk.

That might have worked decades ago. Today, that is bad advice. The average year to date return of real estate funds is -7.25%. The fund that this article promotes is down over -9% year to date. (through 7/25/07)

The problem is that a stock is a stock whether it is international, domestic, or real estate. We are in an environment that traditional diversification might just not work. Stocks have all classifications are carrying the same type of risk today.

The flaw in this line of thinking is that traditional diversification and buy and hold ALWAYS work. Just remember that nothing always works. That is why you have to think differently when investing.

Reply to my Chase Post about On-Line Bill Paying

Paul from Chase Card Services/Communication & Public Affairs wrote me in response to my blog on the listener who had problems with the on-line bill paying. In all fairness, I wanted to post his response.


Just saw your blog posting about a problem a Chase customer had making a payment and wanted to follow up with you.

We recently rolled out an initiative we are calling "clear & simple" that is designed to provide customers with information and tools to manage their credit better, avoid fees and protect their best rate. You can learn more about this at http://www.chaseclearandsimple.com/.

On the topic of payments, I'd like to point out that Chase offers a number of tools to help customers always make on-time payments:

1. Setting up free phone/text/e-mail alerts that let them know when their payments are due and/or when a payment has been credited.
2. By setting up automatic payments, customers can choose to make payments in full or minimum payments on their due dates, ensuring that their payments are always made on time.
3. By using online payments, customers can schedule their payment in advance so that it is made on the due date, maximizing use of their funds and ensuring their payment is made on time.

I hope this is helpful. Thanks for your time, and please feel free to contact me if you have questions or would like additional information.

Bob - your information is always appreciated

Who Monitors the Politicians?

I always find Congressional testimony interesting. You have a panel of elected politicians grilling someone who has taken the stand on some issue. The politicians ask the tough questions and seek to lay blame.

As I write, Federal Reserve Chairman Ben Bernanke is on the stand. The Federal Reserve Chairman has the responsibility to report to Congress two times a year. The politicians are grilling the Fed Chairman on consumer debt and of course the crisis known as sub-prime loans.

One democratic politician just made the statement that the Federal Reserve was a sleep at the wheel. They allowed this to happen. There should have been safeguards built into the system to prevent predatory lending.

Our political system is a joke as are these hearings. The blame lies with our politicians. They conveniently ignore all of these lending practices and allow them to happen for two reasons. First, it gives the economy a short-term boost. It produces economic growth. Second, these banks pay their bills. I might add that MBNA is President Bush’s second largest campaign contributor. You certainly don’t want to bite the hand that feeds you.

Even more frightening is the lack of knowledge that these politicians have regarding these issues. Much of the questioning makes absolutely no sense.

When do we get to put the politicians on the stand and ask the tough questions? When do they take responsibility? They all look shocked that this sub-prime crisis is happening. You could see this train wreck coming a mile away.

Another Example of Being Careful Making a Credit Card Payment

Dear Bob,

- In August of '04, I was moving from California to Dallas, TX and I lost my checkbook in the meantime so I couldn't send my payment to Chase Credit Card. I called them to let them know the situation and they said I can make payment by phone but they'll charge $10 to do so. Well, I was a college student at the time so $10 goes a long way. I refused and told them that I'll make the payment on-line. They said okay. I made the payment on-line and it was a done deal. Well, the next months statement said that I didn't make a payment and they charged with a late fee and everything else they could think of. I called them immediately to find out what happened. Well, they had the wrong acct number that I had originally entered. I confirmed with them that if the internet system works and they said yes. So I tried again and it showed an accepted payment. Unfortunately, the situation occurred again and the payemnt quadrupled. Every assistant I talked to did not help me at all and gave no grace, but just demanded the payment. There was no solution. Eventually the payments were so high that I couldn't make it. I left it alone and they handed my acct to the collection agency. I talked to an agent and he himself was surprised because I've had perfect credit since '98 and all of a sudden there was a tragedy. I had to transfer all funds to one credit card and continue making high payments with that card. Is there anything that I could have done, or anything I could still do in that/this situation? Thanks.

Henry

You are not going to like this answer. The bottom line is that the payment (regardless of the issue) did not make it to the account. My assumption is that the payment was never drawn from your account. If it was drawn from your account and credited elsewhere, then that would be a different story.

They look at it from the standpoint that the payment never arrived. From their standpoint you could use any excuse as a reason for not making a payment. It is unfortunate. It is a sleazy system set out to damage credit for the smallest of mistakes.

Keep the Faith

Bob

True Credit Lock Very Different from LifeLock

I had a question come up regarding the new Truecredit (http://www.truecredit.com/) credit file lock. I have commented in the past on how Lifelock (http://www.lifelock.com/) works. Lifelock is simply putting fraud alerts on your credit reports every 90 days in order to help you fight identity theft.

As a review, the law states that you may only issue a fraud alert in the event that you are a victim of identity theft or you think that you might be a victim of identity theft. It doesn’t say that consumers should just apply a fraud alert because of general identity theft concern. So, this is a company taking advantage of a gray area in the law. If you don’t have an ethical issue with it ( I do by the way) then you can do it for free for yourself.

I have always stated that Truecredit is an outstanding company. So, I don’t want you to get these two programs mixed up. Truecredit are just stating that the company will put a lock on your TransUnion credit reporting agency credit report and not all three. They are not issuing fraud alerts.

TransUnion owns Truecredit. They can easily offer this program due to the ownership. Thus, TransUnion can elect to lock a consumer’s credit file outside of whatever the law says. Is it a benefit? Truecredit doesn’t charge for it. Locking up 1 of the 3 in a sense is a false sense of security. An identity thieve can still access the other two credit reporting files. In a business of aggressive marketing, it is probably Truecredit’s way to stay up with the competition without taking the low road like Lifelock.

The Gut Feel of a Terrorist Attack

This is not the typical Prudent Money post. However, I watching Fox News and the ridiculous commentary on Michael Chertoff. Homeland Security Chief Michael Chertoff made the statement on Wednesday that he had a "gut" feel that a terrorist attack was imminent. He has caught a great deal of criticism for making these statements. The argument is that someone in his position shouldn't make these types of "fear based" statements without any factual information. He should make statements that are credible based on fact. If there is specific information, give the American public the information.

First, the homeland security agency cannot give specific information. They have to stay very vague. Think about it for a second. Let's make public everything that they know so the terrorists can be a bit more informed. They cannot share everything that they know. Second, I think that you have a guy who is bombarded with all of the risks. At the least, he wants to send an indirect warning.

I would take his "gut" very serious. This guy sees what is happening. We don't need to know the details. We just need to know that the risk is higher today than usual.

Unfortunately, people in politics want to take this and use this to their own agenda. Terrorism is a very real thing. To just pretend it is not there is the risk.

I felt led to talk about financial crisis today on the radio show. I discussed point 1 of my 3 point plan that I feel is important to have as a foundation for the journey back to prudent stewardship. As a result of that topic, I heard some gut wrenching stories today. People are facing some tough situations. If you are one of them, follow along the next few days as I talk about this plan.

Some of this is going to sound obvious. However, it is the obvious that we many times miss.

Point 1 of 3 - The first and most important place to start is in prayer and a re-commitment to God's financial will for your life. This is the starting place. It is very important to get back into the middle of God's financial will for your life. The safest place for you to be is in God’s financial will.

Fortunately, it is a process that has simple beginning. James 4:8 perfectly illustrates the process.

"Come near to God and he will come near to you."

It is that simple. The hardest part is to commit. Keep one thing in mind. You can go through this crisis in or outside of His perfect will. The crisis began when we attempted to do things outside of God's financial will. At least I know that to be true for myself. I would suspect it is true for you as well. It is important to get back to that place of peace and relationship. From there, allow God to direct you through the journey.

That journey might have trails and challenges. Fortunately, that is not bad news. It is all workable because He is guiding you while you learn and grow and become closer to Him. As you stay obedient to Him and committed to his Will, there is nothing that you cannot get through.

It is the power of relationship, belief, and prayer that ultimately heals a financial crisis.

Another Bank of America Bait and Switch

I am trying to think of how many stories that I have written about Bank of America and their slight of hand marketing tricks. From their keep the change program that pays only .50% on their savings account to their "no fees" mortgage (but you pay higher interest rates), this is a Bank that should not be trusted.

What I am writing about today, is really not new news. However, I just stumbled upon it and wanted to warn my readers about yet another bad BOA deal. Last year, Bank of America was offering a free checking account. However, free ended up being for a limited time and not as advertized. Come to find out, they started charging $ 5.95 a month for the account in February of this year. The "good" news is that they would waive the fee if you would just transfer over
$ 25 to their savings account each month which only pays .50% while a good rate for a money market pays 5%.

It is unbelievable.

A Band Aid Approach to the Sub-Prime Mortgage Crisis

We need real leaders who are going to look out for the American consumer. The banking regulators just put together new "tough" regulations to help consumers who have fallen prey to the sub-prime predatory lending practices. This was a recent headline in a CNN money article:

Subprime loans get new standards

Principles issued by bank regulators include new consumer protections; lenders should only offer loans to those who have proof they can repay.

Now that is revolutionary..... How about lending money to people based on the ability to repay it.

These new regulations do nothing but allow predatory lending to continue. One of the main components of a sub-prime loan is the adjustable interest rate. After a period of time, the interest rate can be adjusted upwards. One of the reasons for the adjustable rate mortgage in the first place is to offer a strategy to the consumer to reduce the payment.

Adjustable rate mortgages in some circumstances make sense. However, it should be used only in certain circumstances. The average everyday homeowner has no business getting involved in a loan that one day they will not be able to afford. When that rate re-sets, the mortage payment increases. Most of the time it increases past the point that the consumer can pay it.

How about some real regulations for the mortgage industry?

1) Make it tougher to get an adjustable rate mortgage
2) Make the underwriting standards very black and white - don't give lenders the ability to make the determination whether someone is credit worthy or not.
3) Stop allowing banks to issue these exotic loans

Most importantly, figure out what is going to happen to the 1,000,000's of people who are about to face this nightmare. Studies show that we are in the early innings of these loans resetting. The high foreclosure rate in America is mainly a result of these sub-prime mortages.

With all due respect to the politicians in Washington, how about doing something that helps the people who vote you into the White House and not for the people who pay for it. The finance industry are HUGE contributors to political campaigns. It woul be a setback for the industry if politicians implemented REAL solutions to the sub-prime/foreclosure crisis. (which they allowed to happen on their watch)

"Junk Mail" and why Consumers are getting a Raw Deal with Auto Insurance Rates

Auto insurance companies can raise your rates on your auto loans without informing you ahead of time. This has been a practice that federal regulation has done nothing about. The Fair Credit Reporting Act requires most companies to send a letter called a notice of adverse action to the consumer if the consumer was penalized due to a low credit score.

A group of consumers sued insurance giants Safeco and Geico and won based on this unfair practice. The case appealed all of the way up to the Supreme Court was recently reversed.

Now the reasoning for reversal really leaves you scratching your head. Justice David Souters' reasoning was that it created too much “junk mail.” He did admint it was a loophole in the system. However, he stated that the cost of closing the loophole was way too high.

So, our Supreme Court is protecting us from junk mail and allowing auto insurance companies to get away with raising rates on insurance based on some obscure credit scoring system? The cost for making it a fair system is too high? Who is it to high for?

It is a good thing that the Supreme Court is there to protect the insurance industry. It would be a shame for the industry to be forced to make a little less money sending out those “junk mail” notices to make the system work better for the consumer.

They did allow for a system to where a certain group of people would be notified. However, the system is determined and controlled by the insurance industry. Thus this is more of a smoke and mirrors fix.

Why would it be beneficial for consumers to know about the credit scoring? First, consumers should know the benchmark. A consumer should know that insurance rates would come down if credit scores were below a certain level. Second, many credit scores are low simply due to error. Statistics would show that a high percentage of consumers have enough mistakes on their credit reports to adversely effect their credit scores.

Politics are a way of life. Blatant politics are another story. When the reasoning for reversing a case that would help consumers was based on a “junk mail” problem, something else is obviously going on.

Rent -a- Credit Score - Legal Yes Unethical Yes

There is a new scheme in the credit industry that is gaining a great deal of press as of late. There are companies that "loan" you the good credit of other people in order to increase your credit score. The company has the authorization from consumers with good credit history to make people with low credit scores authorized users on their accounts.

So Joe (who has bad credit) becomes an authorized user on Sally's (who has good credit -who he doesn't know) credit card (which has an excellent track record). Sally's excellent credit history now appears on Joe's credit file thus increasing Joe's score.

As you can imagine, this has lenders in an uproar and for good reason. One company's website, http://www.instantcreditbuilders.com/, states the following in their application:

This service is not sold to defraud or scam past, current, or future creditors.

Seasoned trade lines (credit history) are NOT sold as a quick fix for those who want to cheat the system.

...inherent in the service is the potential for abuse. We will not allow it! Credit Builders will report to the authorities ANY applicant attempting to defraud the credit bureaus or creditors in any way, shape, or form! At the end of the day, if we all play by the rules we all win.

ARE YOU KIDDING ME?

This system gives consumers the ability to lie to creditors. This system is a quick fix to bad credit problems. This is an attempt to defraud the credit bureas because a consumer who is using someone else's credit is misrepresenting themselves as a person with good credit. That my friends is fraud that is created bt this company.

Unbelieveable that there are companies that will go this far to take advantage of the system.

Fortunately, FICO, the company that developed the credit scoring formula, announced today that they are making changes to put a stop to this fraud.

Look Realistically at the Price of Gas

The national price for unleaded gasoline hit a record $ 3.22 a gallon last week. That is up $ 1.05 since February of this year.

There are numerous reasons for this rise in price. There is a large amount of oil refining capacity currently offline. There is strong gasoline demand. Finally, there are lower fuel inventories.

It is estimated that this rise in price is costing Americans an additional 20 billion dollars to drive.

What can you do about it?

There are the obvious solutions such as find ways to carpool, cut back on driving, make sure that you car is running effieciently etc. You don't need me telling you the obvious. However, there is something that is very obvious that people forget to do.

Look at this rise in prices realistically and plan for it!

This is the problem. People don't plan for this additional cost each month based on the notion that prices will go down soon and or it is just ignored until the bill comes. Look out over the next 3 to 4 months and accept it is going to cost you more to drive. Figure out how you are going to adjust. Remember when you don't adjust your spending, you will create debt. Debt is the replacement for the income that wasn't there to pay the bills.

The US Government reported that we are going to se up to 10 active hurricanes this season with 3 to 5 being major. We could just be in the early innings of these high gasoline prices.

Make sure that you aware of this and make sure that you plan for it

The Barefoot Boss Promises you Riches - Don't Fall for this scheme

This irresponsible marketing award goes to www.barefootboss.com. They advertise very aggressively on satellite radio. I have found that the majority of radio advertising on satellite radio falls into the irresponsible category. It seems that they are desperate to take on advertising and anything will do.

This one goes through the story of how they will make you millions. Of course, they claim making millions is very easy. Just take these steps (claims the commercial), and you can be working barefoot from home.

They appeal to your emotions by talking about how boring and uneventful your life is right now. They talk about how big business is just using you. "You can free yourself from this life," says the ad. The good news is that they have a "free" book and DVD set to help you. It is 100% absolutely free claims the ad. You can read about the program and see if it is a fit, then they charge you 39.95 so that you can access the rest of the program.

So, you are going to pay them 9.95 for this "free" book and DVD. They call it shipping and handling. If you don't cancel by 14 days, then you are charged the 39.95 for the rest of the program. However, you never get back the 9.95.

What a deal...... for them! They are probably making somewhere in the neighborhood of 3 to $ 4 an order from shipping and handling. That is not a bad spread.

The reality is that they are peddling a multi-level marketing program for Herbal Life. I am not saying anything negative about these programs. I am simply saying that this type of advertising is misleading and a huge rip-off. You can go to a herbal life meeting for free and get all of that information.

Always be leary of the "free" consumer offers. Most of the time, they are selling you something. The problem is that the consumer just thinks it is shipping and handling.

Banks Writing Mortgages for Illegal Immigrants??

I really wish that I could make this type of thing up. Let's see..... mortgage lending is getting tougher because of the real estate bust. Lending standards are getting tighter because of all of the irresponsible lending by the mortgage business over the years. So, business is not as good and standards for lending are going up. So, what is a bank to do to make money?

Well, they can go after the illegal immigrant market. Yes, they can lend money to illegal immigrants so that they can own a piece of the American Dream while illegally residing in this country. Now, let's look past the illegal immigrant debate and issue. I just want to focus on profit motivated banks and how even for them this makes no sense.

They are going to give credit to someone without a credit score who could easily take out the note and go back to their country at a moment's notice. The bank gets stuck with the property in a real estate market that is in the beginning to middle stages of a bust. That makes no business sense at all. However, they do get to charge outrageous fees and very high interest rates to the ones who make the program work.

In Maricopa County the sheriff whose office has arrested hundreds of illegal immigrants, said banks providing these loans are taking on a risky proposition.

Well at least they are not writing sub-prime loans. After all the definition of a sub-prime loan is a loan that is given to someone who is a credit risk and has a very low credit score. Maybe in the interest of fees and high interest rates the rationalization is that the sub-prime issues don't apply here because after all the illegal immigrants don't even have a credit score.

The saddest part of the irresponsible lending practices of banks is that a legal residing resident with poor credit cannot even get a loan today.

Someone really needs to regulate these big banks.

Tricks of the Trade - Marketing Secrets of Financial Advisors

The ad reads:

Financial Playbook is a 68-page glossy magazine packed with entertaining and informative content. It is published semi-annually and is customized to feature individual agents/advisors on the cover and inside as Financial Playbook's featured financial professional.

• Your Photo Ithe advisor) is placed on the front cover
• Your article is published inside
• Generate Quality Leads
• Enhance Credibility
• Use the Power of Print

The best part is that Federal Reserve Board Chairman Ben Bernanke is on the front cover right by your (the advisor) picture.

All the advisor has to do is write a big check and they will put the advisor's picture on the front cover and publish their article inside the magazine. Incidentally, they will do this for anyone willing to pay for it.

A little misleading? It is just another example of irresponsible marketing by the financial services industry. What is irresponsible marketing? It is marketing that creates something that isn't true.

Financial Playbook is not a credible published magazine. It is not like a Wall Street Journal or Fortune Magazine. However, the public doesn't realize that to be true. The advisor is putting themselves out there as someone who is published by request of a major magazine because of their expertise.

So what would the advisor say when asked how this major magazine article came about?

Well the honest answer would be, "It is for marketing. I look credible being in a major magazine. It especially looks good with a picture of me next to Ben Bernanke. No, you can't find a copy of this magazine anywhere else. I just paid for this marketing stunt."

Do you really think that would be the answer? Be careful of the illusion.