Posts filed under “Finance”

Why There Are Two Standards for Financial Advice

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My Sunday Washington Post Business Section column is out. This morning, we look at the various legal standards of care financial advisors must adhere to.

The print version had the full headline Why Two Standards for Financial Advice? while the online version was Find a financial adviser who will put your interests first.

As I have discussed in the past, there is no reason not to put a client’s interest first — unless your goals are to maximize profits to the brokerage firm.

Here’s an excerpt from the column:

“You can buy a Yugo or a Mercedes-Benz. They may both be automobiles, but they vary dramatically.

Regardless, everywhere these cars are sold, they each must meet the same government rules. Safety regulations, crash worthiness standards, fuel economy, consumer warranties, etc., apply equally to both vehicles.

This is decidedly not true of the people who provide you with financial advice. There are two completely different standards for these people — they are governed by two wholly different sets of regulations. The two standards are ‘suitability‘ and ‘fiduciary‘.”

The emails are already pouring in from retail brokers, giving me examples of instances where brokers under the suitability standard did the right thing, put clients first, etc.

And that is my exact point: People who work in this business should not proudly point to instances where the clients were not screwed; rather, not screwing your clients should be the standard operating procedure for those who manage money or provide financial advice.

Hence, why I believe the Fiduciary standard should be the law of the land.

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Source:
Find a financial adviser who will put your interests first
Barry Ritholtz
Washington Post, October 26 2014   
http://wapo.st/1t1Q1sg

Category: Finance, Investing, Legal

Buybacks: Money well spent?

Great charts from the FT’s weekend article, titled Buybacks: Money well spent?:

 

 


Source: FT
 
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Category: Corporate Management, Finance, Markets

Biggest Tech IPOs

Source: Forbes

Category: Digital Media, Finance, IPOs, Technology

What College has the most Billionaire Alumni?

Funny, this came up at dinner just last night:


Source: Wealth-X and UBS Billionaire Census 2014

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Category: Finance, Research, Wages & Income

Bloomberg Brief: 2 Months Free for TBP Readers

I have been getting the Bloomberg Brief for a long time — its a very good daily subscription showing an overview of a variety of market and economic factors. Readers of the Big Picture can get a 2 month free trail subscription on the graphic below and filling out the usual forms. (No, I don’t…Read More

Category: Digital Media, Finance

Fiduciary Duty of Brokers

Source: WSJ

Category: Finance, Legal, Regulation

China’s Bloated Financial System: A Quick Guide

Source: Bloomberg Briefs

Category: Finance

Lefsetz’s Business Rules

1. You’ve got to get along. If you don’t have good people skills, you’ll never succeed, even if you run your own business. 2. Money talks. He who has cash has leverage, and someone always has more than you do. There’s rarely a deal between equals. 3. Leverage is not always about money. I.e. if…Read More

Category: Finance, Rules

Libor: The Spider Network

From the Wall Street Journal: The Libor manipulation scandal has ensnared at least 17 financial institutions and 28 individuals in a wide-ranging investigation spanning 11 countries and four continents. So far, it has netted at least $5 billion in penalties, with more on the way. Below, we’ve taken the most complete list of allegedly involved…Read More

Category: Finance, Legal, Regulation

Your Best Investment Idea for the Next Decade

Yesterday, Business Insider posted a huge piece, wherein they ask various folks for their best idea for a decade. With the low key headlne, Wall Street’s Brightest Minds Reveal Their Best Investment Ideas For The Next Decade, here is how I responded: Financial planning: “As it turns out, that is an easy question: Our own…Read More

Category: Apprenticed Investor, Asset Allocation, Finance, Media