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For Richer or Broker

Ken Begley

I’VE SEEN FINANCIAL advisors do great work and I’ve seen them do poor work. Which brings me to my late father’s experience.

Dad was a heck of a small businessman. Starting in 1956, he and his partner sold and serviced radios, televisions, appliances and furniture. Forty years later, he sold the business to four of my brothers.

By the mid-1960s, Dad had accumulated what was for him a small fortune. This was the time of the stock market’s so-called go-go years. Dad said the market seemed to go crazy for any stock that had “tronic”—as in electronic—at the end of its name. He signed on with a young broker—today, the broker would no doubt call himself a financial advisor—and it was off to the races.

Dad’s stocks just kept climbing and climbing. The broker was obviously a genius. Things seem to go up and up based on his wise recommendations. Dad told me that at that point, if his business had gone bust, he thought he’d just play the market for a living. All was right with the world. That is, until it wasn’t.

The Dow Jones Industrial Average peaked at 995 in 1966. Then the bottom fell out. It was so bad that it wasn’t until 1982 that it finally broke permanently above that 995 mark and headed higher. That’s a “long haul,” as we say here in rural Kentucky. Years later, Dad would laugh at the optimistic notion that he could make a living playing the market.

Dad told me, “I thought it hit the bottom several times. But it turned out to be a straw-bottom and everything just kept going down.” He took a beating like a bad boy and came to doubt his broker. He went looking for a new broker in the late 1960s.

He ended up finding a fellow named Lucien O. Hooper. His new broker was a kindly old man who started on Wall Street around 1919. I think he felt sorry for Dad when he took him on as a client. But apparently, Hooper was as smart as he was kind.

He told Dad to send him a list of his portfolio’s holdings, and Hooper promptly told him to sell most everything and take his losses. Dad couldn’t bring himself to do it at first. Mentally, it’s one thing to have paper losses. It’s another to confirm your bad decisions by realizing your losses.

Hooper then had to read Dad the riot act. He told Dad that, if he wanted him to be his broker, he had to do what he told him to do. Hooper informed my father that all he had in his portfolio was junk, and that he needed to clear it out and buy real stocks that had a real future. Hooper didn’t need Dad to make a living. I think he just wanted to help out this then-young businessman.

My father complied.

Hooper then guided Dad to the most profitable period of investing he ever had. It lasted until around the time of Hooper’s death in 1988. Dad never found another broker that he trusted or who was as profitable.

Afterward, I think Dad mistook Hooper’s financial ability for his own. He fell in and out of love with numerous financial advisors, but came to believe his own financial skills were superior. He died just a few years back, at age 92. I was the executor of his estate and the power of attorney for my mother. I talked with his broker about how odd his portfolio looked to even a novice like myself. The broker said it looked that way because, “It’s insane. It makes no sense at all. Your father listened to nobody.” It really was awful.

My dad was an incredible businessman. He started from nothing, worked like a dog and made a lot of money. I will never equal what he did on his own. But he was not a good investor. Dad was a great candidate for a financial advisor. But after losing Hooper, he never really trusted or respected anyone again, except himself.

Still, he ended his life in very good financial shape because of his ability to make and save money—and not because of his investment abilities. He was no genius in investing. Most of us aren’t.

What do you do when you don’t have a financial advisor you trust and respect, but you don’t trust your abilities, either? I think that’s what target-date mutual funds from low-cost financial institutions are made for. You can get a well-diversified portfolio, preferably filled with index funds, with an asset allocation that’s appropriate for your age.

I’m increasingly moving in that direction myself, and I tell my children to do the same with their retirement plans. It requires no thought or financial ability of your own. You could do a lot worse. I know I have.

Ken Begley has worked for the IRS and as an accountant, a college director of student financial aid and a newspaper columnist, and he also spent 42 years on active and reserve service with the U.S. Navy and Army. Now retired, Ken likes to spend his time with his family, especially his grandchildren, and as a volunteer with Kentucky’s Marion County Veterans Honor Guard performing last rites at military funerals, including more than 350 during the past three years. Check out Ken’s earlier articles.

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