Radio Shows: Verify Before You Trust

The radio airwaves are filled with financial and investing advice shows. Should you trust what they tell you. In most cases, the answer is probably not. Before you trust someone, verify!

Here’s an example: The hosts of a financial infomercial that airs in Minnesota and Florida claim to provide investing advice, yet their asset management firm is neither a broker-dealer nor a registered investment advisor.

On their website, they say they are “a licensed financial services company specializing in investment and retirement programs that are uncorrelated to the stock market and economy.”

Yet their only license is with a commodities futures association. For those who unfamiliar with commodities futures, they are generally either a way to hedge against fluctuating farm, metals or fuel prices or, for those on the other side of the transactions, pure speculation.

The firm also claims to subscribe to the tenets of Professor Harry Markowitz’s famous Modern Portfolio Theory (MPT). MPT espouses diversification across asset classes, but Professor Markowitz himself recommends using no-load, low-cost index funds that can only be offered by RIAs or the fund companies themselves.

What do these financial radio hosts (and I use the term very loosely) offer to their listeners:

Expensive insurance based products like annuities, private (and incredibly risky) real estate partnerships and commodities futures investments. None of which stand a particular good chance of making money at a reasonable cost or tolerable risk level.

When you hear someone giving investing advice on the radio ask them a few critical questions:

Are you a registered investment advisor and if so, may I see a copy of your Form ADV part two.

If not, what kind of investments do you offer and how are you compensated. Then, make sure to get it in writing.

You will find that very few hosts of money radio shows are unwilling to answer these questions, much less put their answers in writing. Don't trust anyone who won't (by the way, we will be happy to do so!).

When it comes to your money verify well before you trust anyone!

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