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Most Helpful Customer Reviews
4.0 out of 5 stars
Good history book on early days of financial planning,
By Dale C. Maley "Index Fund Investor" (Fairbury, IL United States) - See all my reviews (VINE VOICE) (REAL NAME)
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This review is from: The financial planner: A new professional--yesterday-today-tomorrow (Hardcover)
I never heard of Loren Dunton until I was doing some research on writing a book chapter on how to select a financial planner. Using a Google search, his name popped up as the Father of Financial Planning.Investing and financial planning has been a hobby of mine since 1979, and I have read over 200 books on investing....but I never heard of Dunton. I was intrigued, so I bought this book plus a couple others by him. I started investing in 1979 in mutual funds, and those infamous limited partnerships. Back in those days, inflation hit double digits, CD's were paying double-digits, the prime rate hit 21%, and tax avoidance was popular. Dunton's book was published in 1986. He passed away in 1997. Dunton claims the climate back in the late 1970's and early 1980's drove the need for financial planning. He correctly observed that most of the players in investments were looking out only for their best interests. They were not looking out for the best financial plan for the customer. Banks thought deposit accounts were the answer for everything. Insurance salesmen said insurance was the only answer. Stockbrokers focused on moving the customer's pile of money over to their own personal pile by excessive trading of anything to get commissions. Consumer goods companies advertised and pushed spending versus saving. Mutual fund companies ignored insurance. Real estate brokers said forgot stocks, mutual funds, and insurance because real estate was the answer. Dunton also correctly observed that the American school system does a lousy job of educating our citizens about saving and investing. This is still true today. In the early 1980's, high inflation, high tax rates, and high commissions drove the limited partnership industry. In 1986, shortly after Dunton wrote his book, The Tax Reform Act of 1986 wiped out the value of limited partnerships. Many investors sued their brokers and these lawsuits went on for years. From Google searches and reading a couple other Dunton books, it appears he spent his early career as a salesman and sales manager for things like silver flatware, new homes, etc. I wondered why this guy switched from a sales career to starting up associations for financial planning. Dunton said he took his family on a world trip, and many foreigners asked him a question. They asked why in the US, the land of free markets and capitalism.......did 95% of the citizens at age 65 end up relying on a socialist program to survive (Social Security)?? Dunton said this paradox drove him to start the first financial planning association and certifications. Dunton attributed the quote about 95% of people at age 65 are broke to a John Kennedy speech where he said only 2 of 100 citizens are not broke at age 65. Venita VanCaspel, another financial planner from the same era as Dunton.....includes the following in her New Money Dynamics book in 1978: We live in a country with the highest per capita income ever known to mankind; yet of every 100 of our citizens who reach the age of 65, 95 are flat broke! Of every 100 who reach their "golden years," only 2 are financially independent, 23 must continue to work, and 75 are dependent on friends, relatives, or charity. I have always wondered what the source data was for this quote. I googled John Kennedy speeches and did not find this exact info......so I still don't know the source data for this quote. It was interesting to note that on page 65 of the book, an example uses a 12% safe withdrawal rate in retirement. It was commonly accepted in this time period that one could withdraw the average return rate of the stock market each year in retirement. In 1994, Bengen demonstrated that you can only withdraw an inflation adjusted 4% each year.......because you will outlive your money if the stock market has some bad years early in your retirement. It was also interesting to note that in the several examples of suggested ethics statements for financial planners, I did not see one example saying it should be a fiduciary relationship (where the planner is legally bound to do what is best for the client.....not what gets the biggest commission for the planner). Back in those days, commissions were the norm versus today where fee-only planning with no commission is the norm. This book is now almost a history book of the early period of financial planning. He includes a profile of Venita VanCaspel. I would only suggest this book if you are interested in the early years of the financial planning industry. In this age of full disclosure, it can be noted that I am the author and publisher of the book INDEX MUTUAL FUNDS: HOW TO SIMPLIFY YOUR LIFE AND BEAT THE PROS. This book is an introduction to the concept of index funds is and is sold on Amazon. I am also a contributing author to the book THE BOGLEHEADS GUIDE TO RETIREMENT PLANNING available from Amazon with an estimated release date of October 2009. I have also written 21 short stories on investing which are also available on Amazon. If you want practical ideas on long term passive investing, read some of the books below: The Richest Man in Babylon Bogle on Mutual Funds: New Perspectives for the Intelligent Investor The Millionaire Next Door The Four Pillars of Investing: Lessons for Building a Winning Portfolio A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth Edition The Coffeehouse Investor: How to Build Wealth, Ignore Wall Street, and Get On With Your Life The Bogleheads' Guide to Investing
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