Posts filed under “Investing”

The Fiduciary Standard is Coming!

In 2011, the Securities and Exchange Commission published a study, mandated by the Dodd-Frank Act, which concluded that all financial advisers and stock brokers should be placed under “a uniform fiduciary standard.” Basically this meant that brokers and advisers would have an obligation to put the interests of clients first and must disclose any conflicts of interest that might compromise that duty.

Wall Street was none too happy about this. The industry spent tens of millions of dollars lobbying to prevent this standard from becoming the law of the land. Indeed, of all the regulatory reforms that have come out of Dodd-Frank, nothing seems to displease the financial industry more than the proposed fiduciary rules.

Although other reforms may be inconvenient and clunky, the proposed rules probably would cut Wall Street’s fees, potentially by a lot. This is a radical change from the current rules, which allow a universe of products, costs and behaviors that history teaches us are contrary to the client’s best interest.

The jousting over standards comes amid the awful results that investors have had in their tax-deferred retirement accounts. As too many studies have confirmed (see this and this), the typical 401(k) or individual retirement account investor barely earns 2 percent a year on their savings. In the years since the Employee Retirement Income Security Act (Erisa) rules went into effect in the 1970s, the average portfolio with a 60-40 split of stocks and bonds should have returned almost four times that much.

Although poor investor decisions are part of the problem — chasing hot money managers, jumping in and out of funds, trying to time the market — high fees associated with conflicted advice have also been a persistent drag on returns.

Continues here: Imagine: Brokers Who Work for Investors

 

 

 

Category: Investing, Legal, Regulation

Protect Your Assets: Common-sense Cybersecurity for Investors

Let’s get the scary stuff out of the way upfront: Cybercrime costs the global economy $575 billion annually, according to reports. The United States takes a $100 billion hit, the largest of any country, according to Politico. A report from former U.S. intelligence officials counted 40 million people whose personal information was stolen within the past year.Online theft…Read More

Category: Apprenticed Investor, Investing, Web/Tech

Druckenmiller: Look for Three Market Surprises in 2015

Stan Druckenmiller is betting on the unexpected. With one of the best long-term track records in money management, he is anticipating three surprises: Improving economy in China, Rising oil prices, and no Federal Reserve interest rate increase in 2015.

Stan Druckenmiller: Zero-Interest Rates Unnecessary

Category: Bailouts, Federal Reserve, Investing, Video

Investor Friendly Tax Policy Both Parties Can Like

It’s tax day. Perhaps like millions of your fellow Americans, you waited to the last minute to file and will be trudging off to the post office or filing electronically later today. I’m not going to lecture about your procrastination. However, I am going to ask you two somewhat tax-related questions: 1. How much have…Read More

Category: 401(k), Investing, Taxes and Policy

What Metric Should Be Used for Stock Valuations?

Source: Bloomberg

Category: Investing, Video

Common Sense Security for Your Portfolio Assets

    My Sunday Washington Post Business Section column is out. This morning, we look at how to avoid usual errors when you are managing your online banking, investment, and retirement accounts: Protect your assets by practicing common-sense cybersecurity. Here’s an excerpt from the column: “We spend most of our time in financial markets looking at ways…Read More

Category: Investing, Web/Tech

Reform of NYC Pension May Follow CALPER’s Script

People seem to be genuinely shocked by a new report out of New York City’s Comptrollers Office. The report found that the city’s public employee retirement fund pays big fees to Wall Street but gets little in return. However much anyone is shocked, they really shouldn’t be. That’s because the high cost of hiring outside…Read More

Category: Hedge Funds, Investing, Venture Capital

Average Returns Are Exceedingly Rare

One of the most fascinating things about markets is the sheer volume of data they generate. Every day, millions of data points get created. The vast majority of this amounts to little more than noise. This endless stream of information leads thousands of us everyday on a hunt for meaningful signal amid the cacophony. Most of the time, we…Read More

Category: Cognitive Foibles, Investing, Markets

High Number of Zero-Savers

47% of households have a 0% personal savings rate, see chart below. Source: Torsten Sløk, Ph.D., Deutsche Bank Securities

Category: Consumer Spending, Investing, Really, really bad calls, Wages & Income

Winners and Loser of the Global Financial Markets

Source: BAML via Bloomberg

Category: Investing, Markets