by Shelley Seagler
The Financial Industry Regulatory Authority (FINRA) has wonderful information to help investors educate and protect themselves. Since it is highly likely that you will at some point be invited to a “free lunch” investment seminar, I think a particularly beneficial article for you is FINRA’s Investor Alert titled, “Free Lunch” Investment Seminars – Avoiding the Heartburn of a Hard Sell.
As I read it, I couldn’t help thinking about Snider Advisors’ free Information Sessions and the Snider Method Introductory Course. Although, we don’t offer a free meal at these courses and we certainly strive to provide a good deal of financial education, we make no secret that the end goal of these courses is to help you to decide whether or not the Snider Investment Method is a good fit for your investment objectives.
FINRA’s article makes several useful suggestions including that you, “Turn the tables on the speaker, and ask questions. Ask as many as you want until you are satisfied you know what you are buying and understand the risks and costs.” Fantastic advice.
It actually lists a handful of specific questions you should ask the speaker. Although I’d love to answer these questions for you in person, I know that is not always feasible. Luckily, I have this platform. Before I proceed, I’d should point out that Snider Advisors free courses are certainly different than the typically “free lunch” seminar. First, as I mentioned, we don’t offer a free meal, although we do provide some delicious snacks. We also offer significantly more than just a two-hour sales pitch. We strive to give you enough information that regardless of whether or not you actually move forward with the Snider Method, you become a more educated investor.
Another significant difference is that unlike most free seminars, we’re not selling an investment vehicle (annuity, mutual fund, etc), but rather an investment strategy. Although FINRA’s suggested questions are geared toward evaluating a vehicle, I think they are still quite relevant to what we do.
1. What are the risks of this investment?
Unfortunately, there is no strategy that can guarantee a huge, risk-free return. Investing is about trade-offs. By weighing the benefits of the Snider Method against its risks, we believe you can make a more informed decision. Although you can find a full discussion of risks and benefits on our website, here is an overview of the risks of using the Snider Method.
– Market Fluctuations
Because we invest in stocks, the market value of your account (the amount you would get by selling out of all your positions) will fluctuate up and down. You will also experience unrealized losses until a position closes (a position is a collection of trades for a single stock). This can be one of the hardest things for a new Snider Method investor to embrace.
– Variability of Yields (Income)
Your monthly yield is the sum of all income from the positions in your account. There will always be above-average and below-average positions.
– Variability of Results
Although it’s tempting to believe otherwise, you will not be average. Averages are created because there are data points both above and below the average. Your results could be higher or lower than someone else with the same size account over the same time period.
– Lack of Liquidity
In the Snider Method, you purchase stocks, which by their very nature are not a highly liquid investment. This means that if a stock you own drops in price, you will not be able to sell it without incurring a loss. I’ll go further into the issue of liquidity with questions #4 and #5.
If one of the companies in your portfolio goes bankrupt, losing money is unavoidable. The Snider Method minimizes the risk of bankruptcy by only investing in companies that pass strict bankruptcy tests. While these tests reduce the risk, you cannot completely eliminate the risk of bankruptcy when investing in stocks.
The bottom line is all investments have pros and cons, including the Snider Method. Understanding the risks of a strategy or vehicle is the only way you can make informed choices.
2. How much does it cost initially to purchase the investment?
The price of either the Snider Investment Method workshop or online course is $2,000. However, we do offer promotional discounts from time-to-time. If you’d like to know when we make special offers, sign up to receive our newsletter and announcements. Look for the “Become a Snider Insider” box on our homepage.
We also offer a referral discount. If you have a friend or family member who has taken the course, ask them to send you a referral and you’ll save $300 when you take the course.
3. What, if any, additional or ongoing costs will I have to pay?
Snider Advisors offers optional ongoing trading support for as long as you need or want it. Our team of knowledgeable advisors will be available to answer your questions and help you place your trades each month. The fee for this service is $10 a month. However, you are not obligated to use it, and you have the flexibility to opt in or out at anytime.
We also offer Lattco, a stock screening tool that helps you identify appropriate stocks for the Snider Method. The charge for Lattco is $30 in the months that you use it. Once again, you are not obligated to use it. Although they are not programmed with the specific search criteria Lattco uses, there are similar tools available.
4. How liquid is this investment? If I need to sell or cash in the investment, how readily can I do so?
5. Will my investment be tied up for a period of time? If so, for how long?
These two questions can, and in this case, should be answered together. Once again, stocks are not a particularly liquid investment. Moreover, in the Snider Method you will make an allocation of cash (principal) for each stock position you open. We recommend that you expect this principal allocation to be committed for a minimum of two years. Please note that two years is just a guideline: not every position will close within two years and many will close much more quickly.
Keep in mind, the objective of the Snider Method is not capital appreciation. We don’t buy an asset in the hopes that it will go up in price and we can sell it for a profit. Our goal is to generate cash flow from the assets we own.
6. What happens if I decide to sell or cash in my investment? Are there surrender charges? Other fees?
Snider Advisors does not charge a surrender charge or exit fee. All of our services are optional. However, as mentioned above, although the rules of the Snider Method try to avoid doing so, if you sell one of your stock holdings while it is trading below your cost basis, you will most likely incur a loss.
7. For what type of investor is this investment a good idea? For what type of investor is this investment a bad idea?
The Snider Method is a good idea for anyone who wants to generate portfolio cash flow, now or in the future. You may be a good candidate for the Snider Method if you fit one of the following categories:
– You have at least $200,000 to invest and you want to draw a stable monthly income now or in the future. If you don’t need income yet, you may want to reinvest the yield for growth.
– You have between $100,000 and $200,000 and you want to draw a monthly income, but you can tolerate fluctuations because you have other sources of income. Again, here is no law that says you have to take the income. You may choose to reinvest the yield for growth.
– You have at least $25,000 and your objective is growth.
The Snider Method is not a good idea for someone who has less than $25,000. For these people, we recommend investigating ETF portfolios. It also is not a good fit for someone who cannot tolerate market volatility or fluctuations in the price of the stocks they own. If this describes you, low yield/low volatility vehicles like CDs or Bonds may be a more suitable investment.
If you are solely focused on the short-term, view investing as entertainment, or truly believe you can time the market or pick stocks that will move up (or down) in price, the Snider Method is not right for you.
8. Is the investment registered? If so, with which regulator?
Although Snider Advisors does not sell a particular investment, we do sell an investment strategy and make recommendations about which stocks to buy. To make it through our screening process, a stock must be listed on a U.S. stock exchange. We do not recommend OTC stocks. We want to make sure that any stock we buy has met the requirements of being listed.
Additionally, I think it’s worth pointing out here that Snider Advisors is a state-registered investment advisor and all members of our support team are registered investment advisor representatives. Both our company and our advisors must follow the guidelines set forth by regulators.