I mismanaged my “self-administered” retirement plan for about 10 years. Don’t get me wrong, I never lost any of the capital, its just that I didn’t really grow it any better than the bank would have done in a simple savings account. Realizing the error of my ways and getting a little nervous as retirement loomed in the not-too-distant future, I decided to hire a financial adviser/broker (on a straight fee basis from a large firm that claims no commissions on the sale of equities). This was consistent with my recent discovery of Steve’s Third Axiom: “You can’t protect yourself part-time from people committed to taking advantage of you full-time”. I decided as a result of that epiphany that I should surround myself with “experts” whose job it is to protect me full time.

A year before the financial meltdown my business partner, who is something of a financial “guru”, advised that I get out of equities completely and into money-market bonds…which I did. My financial adviser was hurt…she claimed I was missing out on tremendous growth opportunities. The pressure, though subtle, grew over time, and since I am not a financial expert, I decided to let the experts do their job….I authorized going back into equities. Even as the meltdown was happening and I urged her to sell stocks and move into bonds, she balked….”you’re in solid blue chip equities with dividends” she said, “the market will bounce back”.

Anyway, you all know the story. The market continued to decline and within a few weeks my portfolio was worth 25% less…a fate I’m sure is shared by millions of investors. Who is to blame for this situation? My broker claims that no one could foresee these astonishing events that surprised even the mavens, and that she did the best she could. But here’s my point: I PAID HER TO PROTECT ME FROM PRECISELY THESE EVENTS! Hell, I could have mismanaged my own portfolio…if she couldn’t foresee this, why was I paying her those fat fees every year?

Perhaps I need a corollary to my axiom: “You can’t protect yourself part-time from people committed to taking advantage of you full-time – there are no exceptions”.