this is reprint from a listserve. I didn't get permission
to repost it, but I doubt that's a problem
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Reply-To: James Taylor <jptaylor@advsoftware.com>
In the December 1999 issue of Financial Planning
Magazine, there is an article called "Planning in
Middle America", which details a new 'financial
planning' system being delivered (perpetrated) to
middle class Americans.
Here's how it works, Mr. Bert Whitehead recommends
to his middle class clients (defined as ones with
little to no savings to speak of, no financial plan,
but a job of some kind and some 'equity' in their homes)
totake out home equity loans in order to 'invest' in
the stock market.
He believes his system is so revolutionary, he is
(spreading the gospel)
teaching fellow financial planners how to do it (structure it) for the small training fee of $12,500 and $125 per
month retainer fee. For this fee, a planner receives
a six-day training program, software, forms, a homepage
and 40 interning hours. "That's when you actually sit
in on client appointments with us, so you can experience
firsthand how we work," Whitehead says.
The strategy of tapping home equity for debt and
'investment' purposes stands out. Most controversial,
however, is the fact that advisers are
encouraged to buy credit card machines so that clients
who can't afford to pay them by cash or check, can s
till pay them.
Whitehead argues that the plan is benefiting the
clients since he consolidates their debt, by paying
off other credit cards with a portion of the money
borrowed via the home equity line of credit, which is
also tax deductable.
When this market tanks, I wonder how he will explain to
his clients just how it was possible that they lost
their homes and the equity money they saved for a
lifetime for the thrill of gambling in the stock market. |
