It is true that most brokers will be covered by E&O liability insurance, but those policies have a limited payout, especially if you are not the only victim of either poor or  incompetent portfolio management by your broker, or his or her firm. And, if fraud or intentional acts are present, your broker has no easy insurance fund at all to try and collect a judgment from.  Also, SiPIC insurance only protects your money from outright failures of the brokerage firm, to protect your capital against loss. It does not cover broker or brokerage mis-management of your money while under their care, custody or control in most cases.  Nor does it cover fraud!  

Link to SiPIC Site to Learn More:  

Arbitration proceedings, or an out lawsuit against a broker or brokerage firm for poor management of your money is an option you may want to pursue. We can't tell you to do so.  That would be practicing law under our state statues.  And, we are not authorized, or licensed to do that.  But, someone needs to document and prepare a professional review of what happened and when it happened -- so a law firm will be able to give you their opinion, or maybe even take your case.  You can do it, or you can hire us to do it.

Winning isn't guaranteed, nor is collecting once you win, in a full blown lawsuit. Sadly, if you win too big, you may never see a dime while the losing side files one appeal after another to have the verdict set aside, or drastically reduced.  Yes, a judge can later reduce the judgment you originally won to a fraction of the original amount. You should also be aware the lawyer will commonly take about a third on a contingency contract.  But, but you should also be aware that adding in other things included in a legal representation contract such as extra ordinary unseen expenses, additional documentation, travel, etc., could easily move to a 40%+ cut before you get the rest. They deserve it, because they spend THEIR money up front and take the risk that if they don't win - you don't have to pay! (At least in most contingency cases that is)

A Wise Investor Never Puts Their IRA in an Aggressive Variable Investment

I need to mention and make a strong point about IRA's, 401-k's, 403-b, Keogh Plans and all other "Qualified" retirement plans you may now have. This is for two important reasons.  First, these type of assets may very well be your first or single most largest, or second largest asset you now own,  (or maybe it was before your broker helped it disappear!)  along with the equity you have in your home.  Secondly, if this constitutes the area you have lost money in recently by mismanagement or dishonesty from your broker of record, you have a very special circumstance that could become a very valid point with a smart law firm.  Read the rest of this article, and I think you (and your lawyer) will agree with me.

By now, you probably have already been told by your accountant that any capital losses in these accounts can not be taken off as a tax deduction, if you lost money inside a traditional IRA that had a zero basis. (Zero basis means you did not make any "non-deductible" contributions into the account) Worse, qualified plan losses therefore will not allow you to match gains and losses for maximum tax deductibility either. So, if you have capital losses in qualified plan accounts, trying to deduct them most likely will get you audited! And, then you will get in trouble!  You just can't do it on the IRS Form 1040!  The reason is that since all contributions are deducted from your income during the working years that you participated, you subsequently can not deduct losses in general that have no IRS tax "basis". 

If you have qualified plans in a securities account, the question comes up –– WHY?

If your recent securities loss was in your IRA, I hope I am not the first person to have to tell you the bad news.  But, if I am the first to tell you that your IRA money lost is not tax deductible, maybe you should find the contact button, OR JUST CLICK HERE, because this kind of information is not easy to take.  

If your loss is irrecoverable, (the account is already liquidated or the money is permanently lost), and not just active but currently down from bad or negative market performance, the IRS says you are out of luck for any tax write offs!  And, that is big!  Why?  Because the loss of the ability to write off a realized loss in these types of accounts can account for up to about 1/3 of potential recovery of your lost money from the tax write off.  Both the IRS and the your state of residence tax authority will give you a simple tax deduction on lost capital in normal capital investments...but not on zero basis IRA's!  It is worth whatever your marginal tax rates are at in the tax year of the deduction.  If this is your situation, I guess I might as well say it --  you need a miracle to get your money back!  Absent that, you need a lawyer to have any chance of any form of lost capital recovery.  That isn't practicing law in telling you that.  It is a proven accounting fact!

So, why take that chance? A collected judgment on a winning securities arbitration or full lawsuit claim will help you recover some of your losses.  But absent the chance of also being granted a punitive award and collecting on it as well, the approximate 40% in lawyer fees will net you about 60% of the paid settlement as a rule of thumb.  And, the recovery funds will most likely be fully taxable, since it is an IRA type account, that remember, has "no basis" for tax purposes. 

The lesson is this, IRA funds probably should be invested more conservatively to reduce this nightmare capital loss scenario if you are using variable investments. (Note:  Nearly all variable investments can lose principle a.k.a. your hard earned capital!)  And, don't forget that though using simple tax write offs after gain/loss matching and selling can recover up to a third of your lost money without a lawsuit -- that only applies to non-qualified funds only! 

But, if it is an IRA - forget it!  THE ONLY GUARANTEE TO NOT GET CAUGHT IN THIS TRAP, WHICH MANY GET IN WITHOUT EVER KNOWING IT -- Is to transfer your remaining IRA money, or the bulk of it - into an investment that can hold it and GUARANTEE no principle losses for the rest of your life!  If you need "higher risk" on some of your investment money, cool your jets on your retirement funds and put the hammer down on your "Non-IRA" type accounts.  (With the assumption that the higher risk brings higher rewards)  Just don't forget that higher risks also brings higher capital loss potential as well!

We already reviewed the three choices you have for finding a new and safer home for your investment money. Of course, the first one will cost you full taxation, and a 10% IRS penalty if you sell before reaching age 59 1/2.  And, how smart would it be to keep your cash at home?  So, the first option is not really valid is it?

So, that leaves the second and third option that you have left to decide on what you are going to do now with IRA type variable investment money.  Remember, the second is the bank.  We already told you how they operate with using securities and annuities as the last result to keep your money with them.  I'm sorry if it sounds harsh.  It may even sound like I am saying bad things about bank investment people and their marketing strategies because I have to compete with them.  Well, I do lose investment money to banks.  But they are not my biggest competitors.  

My biggest competitors are the "Charlie Keatings" of this world who I actually lost investment money to back in the 80's - when I first moved to Arizona.  His former Savings & Loan was offering non-secured interest securities to Arizona depositors that paid an interest rate higher than anyone in town could offer.  That is, right up until they came and shut the doors and then later tossed him in prison for his illegal activities.  If you are a young investor, you may not remember him.  One thing is for sure, he had an ego and a taste for an extravagant lifestyle - bigger than Texas!  (He also is in the history books for bringing down the U.S. Savings & Loan industry to it's knees!) 

Yes, my biggest competitors are the "legends in their own minds" investment salespeople who promise you the world up front - and deliver a few chunks of dirt instead.  The "Duan Juans" of investment lure that love themselves a lot.  But, they love even more to tell you anything you want to hear -- and I mean anything -- to see what you do next! They are the "braggy", "flashy" types that come after your money!  They are downright "commanding" in order to gain your trust.  Once they get your trust -- your money passing from your hands and into their hands is the next step!  

If you came to this information site because you are a scorned or jaded investor because someone similar to what I have described -- lied or cheated you, or just took advantage of you, would you not agree I am giving you an earful to think about?  If you agree, I am accomplishing my goal in producing, publishing, and paying for this website.  After years of observing the countless times tax clients came to me "after the fact" of losing money in needless fees, charges, penalties regarding their money - I felt it was time to try and educate them more on how to avoid losses.  And, I hope that by giving this information away for free, you will consider me and my company the next time you are searching for a new financial advisor.

The last or third option is to take the time now and investigate the tax deferred annuities offered by some of the largest firms in the world (they just happen to be insurance companies) with an investment professional and company that is founded on honesty, truth, and the preservation of your capital!   I WANT TO HEAR FROM YOU.  I WANT TO HEAR WHAT HAPPENED TO YOU.  I WANT TO KNOW "YOUR" STORY.  Feel free to send me a short E-mail right now.  It will be in the strictest confidence, I promise!  And my own, personal response will follow in 24 hours or less back to you.  I PROMISE, THERE IS NO OBLIGATION. 

TO E-mail Your Story to M.D. -  CLICK HERE

Those Who Say That Annuities Shouldn't Also Be IRA's (or other qualified plans) --Ignore the Core Reason Why We Recommend Them!

Some competing advisors or institutions (that investment guy at the bank for example) may throw some objections to putting your IRA into a tax deferred annuity.  First, some lawsuits have been filed saying that it is malpractice to wrap your IRA into a tax deferred annuity shell since the TDA is already tax deferred without making it a qualified plan.  

To that, I say if you need a vehicle to guarantee the principle yet still preserve the chance for good capital growth, only an indexed annuity can do that -- with or without the IRA status! What does it really matter as long as the vehicle meets your suitability?  And that suitability is distinctly defined herein as "NO MORE LOST MONEY, NO MORE CAPITAL LOSSES and/or NO MORE CHANCE MY IRA CAN LOSE MONEY AND BAR ME FROM DEDUCTING THE LOSS ON MY TAX RETURN!"

If you truly want to preserve your capital for the rest of your life, I now invite you to go "guarantee" shopping right now.  So, where do you look for those guarantees?  Insurance companies!  Don't you feel that auto and homeowners premium you pay so often is a guarantee against loss?  Don't you trust your life insurance company to pay your guaranteed TAX FREE death benefit upon your demise?  

So, what is so difficult about trusting an insurance company to hold and grow what's left of your investment portfolio? Especially if they can offer you stock market type returns in the new Fixed Index Annuities (FIA's) our firm promotes?  And, can you visualize trusting again --an insurance company that has about 40 Trillion dollars and some of the highest ratings in the industry? (They are just one of many we are appointed to represent for your behalf)

Also, those who say "Qualified Plans" shouldn't be in tax deferred annuities need a little lesson in history.  We can't ignore those wonderful folks who transferred all those increments of knowledge from the textbooks and their own personal experiences in life - right into our gray matter!  Those wonderful teachers!  (O.K., most of mine were wonderful)  They have had the 403-b IRS statutes long before you got your 401-k at work.  And, it is inherent in that very product also known as a TAX DEFERRED ANNUITY OR TSA for short, to be one and the same. A qualified plan and an annuity! It is inherent that the "Qualified" wrapper and annuity are one!  It is the very product sold and promoted in every public school in the United States, as well as other government agencies!  So, if we trusted our teachers for the most part to educate us, can we not trust them now to use similar insurance vehicles to fund what's now left of your investment portfolio? 

Lastly, a Few Tax Advisors Need to Brush Up on What They Tell Their Clients About Tax-deferred Annuities!

Some tax advisors may say that you should never buy an annuity because you can't deduct the losses as a capital loss.  And you are also forbidden capital gains treatment by the IRS on your capital (income) gains. I say this on the lack of a loss deduction –– don't buy a variable annuity if you don't like that detail. 

A fixed annuity is "wired correctly" to only make you money. Some very conservatively. Others, quite aggressively with the indexing in the standard securities indexes that our firm offers.  We feel they are now the best home for your "safe" money right now and for many years to come.  And, since they can be freely transferred with no tax liability when a direct transfer is done, they always remain flexible in case your circumstances or your investment objectives change as well.

Additionally, tax deferred annuities are what is called a "beneficial asset" for estate planning purposes.  What this means is that as long as you name a beneficiary to receive your money once you pass away, the money transfers free of federal inheritance tax and more importantly, free from any probate!  Though the bank now has a similar feature in their products called a POD (Payable upon death) feature, I have often seen signature cards that list a joint tenant on the very same bank account when assisting the funding of living trusts created by our firm for our Arizona clients.  

Ask any lawyer what that means, and you will see the problems with some of these bank products.  Because the bank employees are under trained in estate planning concepts, a probate may very well be ordered when accounts list multiple forms of ownership or death payouts!  I have even sat in with the surviving heirs after losing a senior client, and witnessed these kind of mix ups! 

If mixed up and confused bank staff can't fully understand how these POD beneficial designations conflict with also leaving the account in joint tenancy with rights of survivorship ownership, you can pretty well be guaranteed the estate will be subject to extreme confusion and extra cost.  In reality, I have noticed that bank managers get the account transferred out to the heirs in such mix-ups, but I really wonder what they told the bank examiner a few weeks later?

Well enough again on the complete and total incompetence that seems to reign in today's modern banks. Employees become victims of their own employer who is not willing to invest the proper time and expense in their estate planning knowledge. They underpay many of these employees who want to learn, and under-train them on purpose!  Many are trained to just be "robotic" in nature to take your deposit, give you a smile (if you are lucky) and issue a deposit receipt.  Beyond that, they can mention other bank products if you look like the inquisitive type (and get a small bonus for the referral), but that is about he full depth of their abilities!  Is it any wonder that the largest investors who constantly are concerned about their estate planning --avoid putting very much money in a bank today?

Regarding the fact that you have to pay ordinary income taxes on your gains, guess how all those bank products get taxed? Yep, same way!  Those gains end up on IRS Form  Schedule B, not Schedule D.  (Income earnings get taxed at your full marginal rate, with no special treatment either)  So ignore this objection when the bank brings it up.  They are just jealous!  

If it comes from the broker or brokerage firm...well, if you read and understand what I have said up to now, PRESERVING CAPITAL is the reason to think twice about maintaining any more large brokerage accounts from now on.  Yes I openly admit that stock dividends get taxed at just 15% capital gains rates as a maximum (plus the full rate from your state), but your losses are still losses!  The only way to avoid loss in a variable investment portfolio is to AVOID THOSE WHO SELL THEM!!!  Had you done that before, you wouldn't be here right now reading this!  

It's Time For The Wrap Up

If you can't believe  a former mid-western Iowa farm boy -- who can you believe?

But more important, guess what they buy for you when you win and collect a lawsuit? An annuity, otherwise known as a structured settlement. Guess what they recommend when you win the lottery? An annuity. Guess what they pay you from your pension fund when you retire? An annuity. Do you get the point? Annuities are the most common way for giving you systematic payments of income when you either need or want them!  

And, if you contract with an annuity company for a set time frame, amount, or one of many other payout options, the IRS will allow about 70% of your systematic payments to become tax free because the original principle you paid into the contract has to be accounted for.  This is done by factoring the payback to you or your spouse or heirs during your remaining lifetime, or the combined lifetime of you and your spouse, or even you and another person! (non-spouse)  So, with just a little common sense on how to take income out, those that run down annuities (again, it is mostly jealous securities brokers) as bad investments do so because they don't like competing against them.  In the past five years, investors have discovered "safety" as a standard again in common sense investing.  HAVE YOU?  

Billions are coming into these products. Not because the blind are leading the blind.  The money is rolling in like a summer monsoon storm here in Arizona because investors are rediscovering the proper percentages of your investment money which should be in variable type investments.  And what should be held in fixed investments.  When it rains, you run for shelter.  When it hails, you try to protect yourself, your loved ones, and then your property.  If you just lost money or are still in the process, do I have to tell you to start running now?  I can't make you run to me and my services.  But, I will invite you to calmly but briskly walk away from the source of your damage and consider an alternative the boys (or gals too!) at the local golf club may still not embrace in public.  

In public, you will still hear jests and bragging about how much someone made on an individual stock they owned.  But, believe me, as an accountant, stock pickers that don't do it full time don't brag about their losses - just the few winners they may get from time to time. But, they tell me about their capital losses every time so I can deduct them!  I have seen many senior clients go to their grave in my long practice.  Many took huge un-deducted capital losses with them!  Sometimes, it was because their broker lost them money.  

But, many did themselves in.  They got that "tip" from a friend that turned into a "worthless security" tax deduction a few years later! Or, some tried to time the market or worse - tried to be a day trader!  If the major pros who do this full time have a hard time beating the market index's what makes you think you can, if you are a do-it-yourselfer? 

Can you see why my promotion of safety, using market index's and the largest and highest rated companies that have better reserves than any bank is forced to keep is a safe bet for me and my firm as well?  Yes, it reduces my risks to almost zero -- that you would ever have a reason to sue me. Do you think you could learn to live in a "safe" zone regarding your remaining investment portfolio?  Or at least part of it?

History Repeats Itself.  Will You?

Babe Ruth saw many lose everything in the great depression. Some undoubtedly were very close to him and his family.  Many lost their lives or took their lives when they got wiped out by the stock market crash.  You are here, now, reading this final segment most likely because your gut is wound tight in agony from what you have gone through lately with an assumed loss of capital.  It may be no comfort to soak in the knowledge I have shared with you, especially if it came too late!  But, the stock market is not in crash mode right now and yet you are still here, a victim of someone else...and maybe of your own moves that lost you money in a variable investment.  So, I would not be a professional advisor if I also didn't ask -- what if things get worse?  

What if the market really does crash?

Well, if it does and you just ACAT what is now left of your money to another broker, you will have more tax deductions won't you?  But, the Babe might have taught us a lesson you are not aware of.  He watched most of his friends lose everything...as he comfortably smiled because he had most of his money in an annuity!!!  He didn't lose a dime in his "insurance based" annuities! 

TO READ MORE ABOUT HOW THE BABE USED ANNUITIES TO AVOID FINANCIAL DISASTER- CLICK HERE.

Since virtually every life insurance company that does business in America must maintain at least a dollar in reserve for every dollar they take in, and some do much better than that, solvency is not a problem.  As long as ratings are high, and remain high, along with high assets held, you have plenty of "safe" features you can trust to protect your money should you decide to transfer some or all of your investment portfolio to one of our carriers, utilizing the "worry no more" transfer services of our professional advisory firm.

If you are a victim of a securities firm or broker, I am counting on you to investigate what I am saying and openly invite you seek out my help at this time.  I would like to discuss your specific situation and then formulate a game plan of action to help you Preserve Your Capital that is left!  And, if you decide you want to also try to get lost capital back with a qualified law firm, my documentation services and free referral service is available as well!

The first meeting is free, so please send back contact information from this website portal and briefly include your specifics.  FSI receives no income or benefit, directly or indirectly from any CPA or Lawyer referrals we may make on your behalf.  We do receive income from insurance products we help our clients into (100% of your money is invested without any sales charge deductions*)and from fees for tax or legal document preparation services we provide to our clients.  

And, I also provide full Realtor and Mortgage financing as an Arizona real estate consultant and Loan Officer, through separate contracting, for the luxury of my clients to have just one financial advisor handle all of their financial needs.

Whatever service you have interest in, there is no risk or obligation on your part.  Will you drop me at least a quick note to tell me what you think of this free information site?  Thanks!

Sincerely,

M.D. Anderson, President

Financial Strategies, Inc.

P.S.  Being an active Realtor, I can attest that I fully understand the market and the fact that what goes up also comes down. Recently, we entered a down slide that has not found bottom, here in Arizona.  If by chance, someone happens to mention to you that "real estate" is a good home for your 401(k) rollover, or large IRA account, you'd better have a chat with me first.  Buying real estate INSIDE your IRA on the wrong side of this cyclical investment would not only risk your principle  -- but as I mentioned above -- stop you from any loss deductions as well on your income tax returns!!!

*  Early surrenders of any annuity contract generally will cost a surrender charge that varies per contract and carrier chosen.