Posts Tagged ‘fear’

The Fears That Cause Investiphobia – Book Excerpt

July 30, 2009

The following is an excerpt from the book, Investiphobia – You Can Invest Without Fear. There are eighteen fears that cause investiphobia. To successfully treat investiphobia, you must know the cause. The following fear is common and directly relates to the previous post about Equity Index Annuities. Almost all annuities have surrender charges and some have lengthy surrender periods. You should know the access you will have to any investment, prior to purchasing, and you should make sure that you are comfortable with any limitations to your access. It is perfectly fine to use products that have surrender fees for a small portion of your portfolio. But, no matter how good a product sounds, you should make sure that you have access to the majority of your funds. We do not know the future, plan accordingly.

To purchase the book, visit,

Fear of Losing Access to Money

Every day, senior citizens across the United States buy investment products that have lengthy surrender periods. You have probably heard on the news, or read in the paper, about someone who cannot get access to their money because of the product that they purchased. This happens fairly regularly, and it is scary to anyone who is retired.

I read an article in a professional journal recently about a woman in her seventies who bought a product with a limitation on access that lasted for over twenty years. She would not have full access until the age of 105! Someone convinced her to put most of her money into this product. Thankfully, the company canceled her purchase and returned her money with interest. How did this happen?

The article did not cover the specific product that she bought. It may be an appropriate product for someone, somewhere, but it clearly did not fit her needs. In my opinion and experience, the cause of this type of sale is either greed or inexperience on the part of the salesperson. They probably attended a seminar and heard great things about the product and the commission that they would earn if they sold it, and they thought she might benefit from it. I’ll bet it had a tax-deferral feature and some guarantees.

Some of the products that have these lengthy surrender charges are good products, and some, unfortunately, are not. In either case, we know that there are products that limit our access to our own money. Some people are fearful that this may happen to them. Some people are paralyzed by these fears, and their paralysis prevents them from using many types of investments. They become singularly focused on access to their money and suspicious of anyone in my profession. Speaking as an insider, they are right to be concerned, but they are hurting themselves more than anyone else if this fear prevents them from investing.

It is not a matter of knowing the answers; it is a matter of knowing the right questions.

The advisor you select is critical to your success. If you select an advisor who is knowledgeable and compatible with you, you can expect them to be willing to help you understand what you need to know before you invest in any product. But not all financial services professionals are advisors, as a matter of fact, most are not. Many are salespeople, hiding behind titles such as financial advisor, investment consultant, vice president–investments, and other equally innocuous, but misleading and legitimate-sounding names. Sometimes salespeople also have the Certified Financial Planner, CFP, which is a very legitimate designation. Always remember that a salesperson with a CFP is a salesperson first!

It is not a matter of knowing the answers; it is a matter of knowing the right questions. I have included several questionnaires in the appendix that will help you. These questionnaires do not require any investment knowledge. You should know exactly how much access you will have to your money. Whenever you are asked to purchase a new investment, use these questions to make sure that you understand what the product will do for you.


Investor confidence going south in July – Investment News

July 15, 2009

Fear and confidence tend to alternate in the financial markets. This article from Investment News gives an indication of the continuation of fear. If there were a Center of Disease Control in the investment industry, the prognosis would be an epidemic of investiphobia!

Investor confidence going south in July – Investment News

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New Investiphobia Introductory Video

July 14, 2009

I’ve now joined the YouTube crowd and have uploaded my first video introducing Investiphobia. To view the new video, just click Investiphobia which will take you to the Media page of the Investiphobia website. Click play and let me know what you think by emailing me at or commenting here.

Fear or Phobia

July 8, 2009

First, a few thoughts on the world of blogging, podcasts, and internet news. I discovered a neat feature available through Google at This feature allows you to enter keywords that might appear in news stories that you are following so that Google can email you when any new story appears that relates to your keyword. As an example, like many, I have been following the Madoff story. By entering “Madoff” as a keyword, any new story that Google finds regarding Madoff is sent to me by email. And there is no charge for this service! It is a great time saver, but it’s not perfect.

One of my alerts is “SEC” or Securities Exchange Commission. Unfortunately, SEC often means the South Eastern Conference for NCAA sports. As football season approaches, most of the stories for the SEC are not exactly what I am looking for, as I graduated from an ACC school. Another alert has “fear” as a keyword. Any story produced by Cape Fear Business News makes it to my inbox. But you still find many stories that you might not otherwise find.

One of my alerts is for the keywords, “fear”+”invest” and I discovered a story in the Chicago Tribune written by Gail Marks Jarvis. Gail is a very well known nationally syndicated columnist and in the July 5 issue of the Tribune she wrote a very good column entitled, “Fear can force more planning, smart investing”. Here is a link to the article,,0,3774957.column?obref=obinsite

The article provides tips for investors from young to old and points out in a very direct manner the possibility that Social Security and Medicare may be weakened by the time the younger generation becomes eligible. Obviously, the burden and responsibility for our retirement is up to each of us. The more concerned we are about our retirement, the more motivated we are to save and invest to prepare for it.

If you look at the future, and specifically at your retirement, it is reasonable to experience fear when you think of Social Security and Medicare. What will they be when you become eligible? Fear, based on knowledge, is a helpful motivator. But, what if it becomes a phobia?

Investiphobia is caused by fear that becomes irrational and persistent. Where fear can be a motivator for the good, phobias discourage us from finding a solution. At, “motivate” has four antonyms. For those of you who haven’t heard the word “antonym” recently, you might recall that it describes words that have the opposite meaning. The four antonyms of motivate are: Depress, Disconcert, Discourage, and Dissuade. None of these antonyms help an investor handle their portfolio! When fear becomes a phobia, the investment process is disrupted. Depression, disconcerting, discouraging, and dissuading demotivators are extremely destructive to an investment portfolio. When you suffer from Investiphobia, you will find it difficult to make a sound investment decision.
Fear can be a good motivator, but not if it develops into investiphobia! If you think you suffer from investiphobia, you need to get the help of a qualified fee-based advisor or planner.

Back to Gail Marks Jarvis. She wrote another excellent column back in 2007. Here is a link, and I highly recommend this article!,0,1720366.column I particularly like the cockroach analogy, although it isn’t as appealing as my little squirrel! Gail’s column is now on my reading list and I have also ordered her book. I will let you know what I think in a few weeks. She maintains a website, and I recommend it to you. It is at

What is the price of worrying?

July 5, 2009

I found this article interesting. It was written by Caryn Colgan, the Denver Karma Examiner for Worrying can lead to investiphobia and Caryn does an excellent job of presenting the costs of worrying.

For some of you, this article may be a bit beyond your comfort zone, but her points are very valid. Besides, when was the last time you read something from a Karma Examiner? Enjoy, Paul

What is the price of worrying?

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Investiphobia – Advisors get it too!

May 18, 2009

According to an article in today’s issue of Investment News, it’s not just the investor who suffers from investment fear.  It is often their advisor.  In an article entitled, Financial Advisors Face a Crisis of Confidence, Investment News writer Dan Jamieson addresses the “compassion fatique” that many brokers and advisors are currently experiencing.  Here’s a link to the full article,  The term “compassion fatique” was originally intended to describe medical personnel, including nurses, doctors, and anyone who deals with the terminally ill.  Evidently the trauma of the current market conditions are causing casualties across the world of professional investing.  And, maybe that is to be expected.

But would you have expected 80% of affluent investors to be “disgusted with their adviser because their adviser is spooked”?  The  Investment News article quotes consultant Matt Oechsli, president of the Oechsli Institute Inc. in Greensboro, N.C., who stands by that figure.  For those of you that prefer fractions, that means that four out of five wealthy investors are disgusted with their advisor.  If you wondered what a wake up call looked like, look no further.

It is natural for anyone to be concerned in the current market, but it is an indictment of my profession that so many brokers and advisors are being affected.  Let’s look at other fields.  How about transportation?  If you are on a plane and there’s turbulence or a ship in heavy weather, don’t you expect the captain and crew to be confident and reassuring?  Not just for show, but because they have experience, knowledge, and everything they need to know to make it to their destination.  

And, maybe that is the issue.  Many brokers and advisors may have the academic training but lack the experience to handle the first decade of the 21st century.  Half of the past ten years will probably end up negative.  Tough environment if you started with your first client in 1999 or even more recently.

The second issue is the amount of new products and complicated money management methods that have been introduced over the past 10-20 years.  There are books on the bestseller list that talk about the end of Modern Portfolio Theory, Asset Allocation, etc.  When tried and true portfolio methods, like these, are discarded in favor of hedge funds, derivatives, and other really neat sounding products, it shouldn’t surprise anyone that the professionals who foisted this change on their clients are feeling “fatigue”.  Particularly after the tech bubble bust, the housing crisis, the sub-prime mortgage fiasco, auction rate securities…  Ouch!

As an industry, professionals need to return to basics.  There are many good things to consider, even in the current market, but not when you have lost confidence.  Clients will gradually force the industry back to solid investment management methods.  Until then, for many advisors, the path is going to be rocky!  If you are a do-it-yourselfer, you might want to consider that advice as well.

If you work with an “advisor”, make sure that they really are advisors.  The second half of Investiphobia contains a comprehensive, but easy to read, review of the differences between brokers, advisors, and other professionals in the industry.  In this environment, I highly recommend that you avoid the commission “financial advisor” in favor of a professional that works with you on an ongoing basis with no incentive to “sell” anything.  This isn’t the time for creative new products.  Solid advice, careful and diversified asset allocation, and long-term commitment will see us through this storm.

Focus on living, not investing.  My bet is that you and your portfolio will both benefit!  And, as I say in the book, remember:

Money is not your life.  It is simply the means to the life that you want.