I’m sure most of you already know who Tony Robbins is. Needless to say, he’s financially brilliant. In his latest book Unshakeable, Robbins covers everything you need to know in terms of long-term wealth and financial freedom. He writes it all in easy-to-comprehend formats and gives descriptive examples of everything to solidify the points he makes.
Personally, I loved it the Unshakeable book. I love learning about investing, though, which is what the majority of this book is about. So, if you’re not interested in learning about that (I can’t imagine why anyone wouldn’t be interested in learning about how to better their financial future,) then I wouldn’t suggest picking this book up.
Mutual vs. Hedge vs. Index
If you’re going to understand investing, you’ll need to understand the difference between these three types of investment funds. I was very unfamiliar with the precise differences in all of them before reading this.
Mutual Fund – “A public fund available to anyone. In most cases, they are actively managed by a team who assembles a portfolio of stocks, bonds, or other assets and continuously trade their holdings in hopes to beat the market.”
Hedge Fund –“A private fund available to only high-net-worth investors. The managers have complete flexibility to bet on both directions of the market. They charge hefty management fees and share the profits.”
Index Fund – “Also a public fund, but requires no “active” managers. The fund simply owns all the stocks in the index.” An example of an index fund would be owning all 500 stocks in the S&P 500 index.
Three Kinds of Financial Advisors
In all of the financial books that I have read, each one explains the importance of having a financial advisor. It is someone who knows more about making money than you do and who is willing to help you with that for a small fee. However, what I have not read in any of those books aside from this one is that there are different kinds and Robbins explains how to distinguish them.
Broker – Brokers are advisors who, by law, do not have to recommend the best products or services for their clients. They make a commission on what products or services they do sell to clients, though, so they are more often than not looking out for their own best interests when advising clients to make certain purchases.
Registered Investment Advisor – These advisors are legally obligated to act in their client’s best interest.
Dually Registered Advisors – These guys are both brokers and registered advisors. They can take advantage of both sides of the same coin. That’s not to say they are all out to take your money. It just means you have to be extremely careful when finding an advisor for yourself.
7 Questions You Must Ask When Picking a Financial Advisor
- Are You a Registered Investment Advisor? If they answer no, then they are a broker.
- Are You, or Your Firm, Affiliated With a Broker-Dealer? If yes, then they are able to act as a broker and probably will.
- Does Your Firm Offer Proprietary Mutual Funds or Separately Managed Accounts? You’re looking for an all-inclusive no to this question.
- Do You or Your Firm Receive Any Third-Party Compensation for Recommending Particular Investments? Basically another way of asking if the advisor is acting as a broker in any way.
- What’s Your Philosophy When It Comes to Investing? This is for you to figure out and decide if this advisor is in alignment with how you want your money managed.
- What Financial Planning Services Do You Offer Beyond Investment Strategy and Portfolio Management? This question is geared towards those that are looking for college funds for their kids, real estate planning or any other services outside of the services already mentioned.
- Where Will My Money Be Held? There should always be a third-party custodian involved to hold your funds.
Robbins writes about the power of compounding, 401k plans, hidden fees, and many other components involved in long-term wealth planning. Overall, Unshakeable is a great read for anyone (granted you’re interested in learning about the investment strategy and how to handle your own finances.)
It has helped me figure out what type of funds I should be buying into and I’ll know how to properly pick an advisor when the time comes. Looking forward to the information Robbins includes in his next book.
Have you read the Unshakeable book? What have you taken away from Tony Robbin’s insight? Let me know in the comments section below!