Diversification Isnt Done By Having Multiple Bank Accounts!!!!

Recently I has a conversation with a gentleman to whom, my services, I proposed. As I made my case as to why he should trust me with his overall financial well being strategy, he interrupted me and informed me he was investing in multiple companies that deal in a multitude of industries all over the world. As a licensed investment professional, naturally, I became curious about where his hard earned assets were being managed. He enthusiasticallay mentioned to me that he had a wonderful conversation with his current financial advisor who instructed him to establish multiple accounts in different ways for different purposes. The first account was for his retirement to which he allotted nearly $300 weekly. The next would be for emergencies to which he allotted roughly the same amount. The next two were for his daughters’ college fund to which $50 weekly went into their respective accounts. Finally the holiday/birtthday account which $50 went into weekly.
I agreed with the strategy of having multipe accounts for different purposes and commended his advisor for his recommendation. I then inquired as to which investments were his accounts diversified with. This is when the story takes an odd and rather interesting twist. He informed me that his financial advisor recommended that he place each of his accounts within certificates of deposit, money market accounts and savings accounts at multiple banks. Needless to say, I was floored by this news and I immediately wondered what advisor worth his salt would recommend that a man with obvious youth and relative substantial income place all of his wealth building assets in bank vehicles. I asked him simply, why did your advisor recommend to you that you put your money with the banks in many different areas? He replied that his advisor said that the performance of these accounts were much better than placing his monies into the stock market and alot safer than the market as well. I kept asking him more probing questions. What bank do you have your assets with? The story gets even more interesting with that question. He says his advisor informed him that he should open his accounts at multiple banks and that was the definition of diversification. Again, I was floored by his response. I reminded him of his initial statement “ he was investing in multiple companies that deal in a multitude of industries all over the world” and I asked him how exactly having those accounts was doing that. He commented his advisor told him that each of the banks conduct business in multiple countries and because of that when he puts his money in those banks he is investing where they invest.
I couldn’t take it anymore and I had to show him that the advice he was given was tremendously horrible and totally against logic and reason. I offered him an alternative that would give him access to much higher potential rates of return and also offers proper diversification over company, industry and also has exposure to international growth opportunities. I enlightened him as to how mutual funds would be able to assist him in accomplishing all of his wealth building objectives. First,
I taught him that mutual funds have existed since 1928 and have averaged 10% since then. I showed him an example of an investment offering that has had an average rate of return of over 12% for 80 years. With a great overall risk averse balanced management style. His eyes began to light up as he saw the potential growth of his wealth. I then showed him the top 100 holdings of this fund. These high quality companies extremely impressed him and he couldn’t contain his enthusiasm. Companies like Microsoft, Apple, Intel, Wal-Mart, Comcast and even all of the banks he had his accounts. With the education I gave to him, he realized exactly how he was on the opposite end of the growth spectrum. I also educated him about certain concepts and strategies pertaining to investments such as the rule of 72, dollar cost averaging and understanding the importance of disciplined long term investing strategies.
Once I took the time to enlighten him as to proper strategies to work his money and grow his wealth he became extremely appreciative. He allowed me to move his money into much better programs for a much better strategy as well as becoming highly perturbed as to the information that he was given prior to our meeting. I asked him the name of his advisor so as to do some research on his credentials and licensure and was informed that his aevisor wasn’t an advisor at all, it wwas his accountant that advised him to do such insane things with his money. I couldn’t believe he took advice about his wealth from someone who doesn’t specialize in weallth building and creation. Accountants are masters of what already happened. They reconcile accounts of what has already transpired. They are not future planners nor are they licensed to even speak on any other financial aspects besides accounting. I advised him to seek advice from qualified professionals from now on and as a qualified professional I am highly capable and properly credentialed to handle his financial affairs.

The moral of the story is when it comes to your wealth there are certain strategies and concepts that only a licensed financial professional will be privy to. So when seeking advice concerning your future seek out these professionals and we will give you a proper diversification strategy and also assist you in all other areas of your financial house to ensure that you grow wealth and leave a legacy of wealth for generations to come.