Breaking stone to be success

5 Responses to “Personal Finance For Dummies”

1. Jeff Borack
   July 2nd, 2010 at 6:44 am

   I disagree with the author of this book on the fundamental conflict of interest issue. Mr. Tyson claims repeatedly throughout this book that insurance salesmen cannot be trusted for their advice because their commission is based on the size of the policy premium they sell you. Salesmen are really compensated in multiple ways. For starters, they do earn a large commission on the initial sale of insurance (or investment products). However, the commission typically continues to pay out over the following 10 years. If you as a buyer decide you were misled, can’t afford to pay the premiums, or just decide you don’t want the insurance, the salesmen looses a significant portion of this commission. Also, most salesmen that refer to themselves as `financial ________’ make a living by servicing a client base. This client base grows through referrals. If a salesmen is pressuring clients into buying junk they don’t need, it’s going to be awfully difficult to develop relationships that lead to high quality referrals. Referring your `financial ______’ is equivalent to tipping your waiter, and it is a significant part of their compensation. Any salesmen who doesn’t quickly realize this will be out of the business rather quickly. The deferred commission and referral process are two safeguards designed to protect the consumer.

   But while were on the topic of conflict of interest, where does Mr. Tyson’s interest lie (pun intended). Well, he is an author of a book. Books generate revenue through sales, and books that sell well are typically entertaining to read. How can we make a book about the value of safe investments, insuring against your own death, and other otherwise boring topics exciting? Well we can always try to scare the reader! I expected this book to say things like “what will happen when its time to retire and you have no money?!?!’ or `who will take care of your family when you get eaten by piranhas?!?!’. But instead, Tyson tried to make us scared of financial professionals. A genius move by an author of a book likely to be read by die-hard do-it-yourselfers. Now it’s us against them! It’s obvious he’s trying to use the good ole’ fear=entertainment shtick when the pages are littered with `BEWARE’ shark-fins and `WARNING’ time bombs. Not only can this conflict of interest be to the readers financial detriment, but Tyson even has the panache to finish off about one paragraph per chapter with an endorsement for another book he authored/co-authored.

   And one other thing I just remembered. Tyson seems to believe that even if you were to find a reputable financial advisor, who makes his salary off of commission, you should not do business with him. Two points of interest:
   1. Many financial advisors can offer you different ways of paying them. If you choose the fee for service method, you should be in a situation where your account will require frequent attention. Otherwise, the commission basis will often be cheaper.
   2. To the best of my knowledge, there is no evidence that the cost ratio of insurance policies sold through highly commissioned salesmen is intrinsically greater. The only study I have found on the subject was published in 1979, and it came to the conclusion that “No evidence suggests that insurers without agents operate more efficiently than do those with agents. ” This can be found in the Journal of Risk and Insurance, Vol. 46, No. 1 page 61-74.
   Rating: 1 / 5

2. Anonymous
   July 2nd, 2010 at 7:58 am

   This book is nothing but a regurgitation of information available in most financial institutions. The book has two main themes, no credit and save money. Those are both a duh; for most people getting the money budgeted to save is the problem. Most of the detail in this book focuses on where and how to invest all your money.
   Rating: 1 / 5

3. G. Navarro
   July 2nd, 2010 at 10:08 am

   Most of the tips are obvious.
   I would get a different book if I had the chance.
   Rating: 2 / 5

4. Erik Lindqwister
   July 2nd, 2010 at 12:16 pm

   This seller is a credit to Amazon. Item was delivered with lightning quick shipping in great condition.
   Rating: 5 / 5

5. Captain Williams
   July 2nd, 2010 at 2:46 pm

   This book is especially good for the person who wants a broad overview of investing. It will give you a solid foundation to begin growing your money from. After reading, I opened a Scottrade account because they had the lowest rates ($7), and no inactivity fee. [. . . ] to get a referral for 3 free trades.
   Rating: 4 / 5