Posts filed under “Investing”
I wanted to spend a bit of time on the Labor Department’s proposal to place a fiduciary obligation on those who manage or provide investment advice on retirement plans. These include individual retirement accounts and 401(k)s (including 403(b)s). The new rules require the broker or adviser to “operate in the best interest of the client.”
I don’t want to rehash all of the reasons why this is a very good idea — I did that last year in an article with the headline “Find a financial adviser who will put your interests first.” Instead, I want to explain why fiscal conservatives should rally around this idea as a way to hold down taxes.
I first discussed the lack of a fiduciary duty in 2013. The context was a proposal in the U.K. that was going to cap retirement-plan fees. Those rules were passed, and starting in April, annual charges on British workplace pension plans with automatic enrollment are capped at 0.75 percent.
The conservative ruling party in the U.K. did this to save future taxes, as you will see below.
The proposed fiduciary rules are not an explicit fee cap, but they would require that “any fees and costs paid by the client be reasonable for the services provided.” It is probable that the “best interests of investors” will mean athat fees will be reduced from today’s often-excessive levels. If you doubt this, then perhaps you might explain why Wall Street has spent millions of dollars lobbying against the fiduciary standard. They KNOW just what the net result will be — lower fees to brokers and advisers.
To outsiders, Wall Street is a manic, dangerous and ridiculous republic unto itself – a sort of bizarro world where nothing adds up and common sense is virtually inapplicable. Consider the following insane things that we believe on Wall Street, that make no sense whatsoever in the real world: 1. Falling gas and home heating…Read More
As one of those folks who has spent a lot of time bashing economic and stock-market forecasters (see this, this, and this), I have no choice but to take issue with an argument made by former hedge-fund manager Jesse Felder, who asserts “that everything is a forecast.” To quote Felder: Can we please stop bashing forecasters already? There is a…Read More
Earlier this week, Greg Zuckerman of the Wall Street Journal pointed out one of the great mysteries of today’s investment landscape: Despite underperforming by a substantial margin, hedge funds keep attracting more investors and assets under management. It is almost as if (to borrow the headline on Zuckerman’s article), “Hedge Funds Keep Winning Despite Losing.”…Read More
The future of new business is disrupting old businessBarry RitholtzWashington Post, February 1 2015 There are many lessons to be learned from Uber, the taxi- and car-hailing start-up that came out of nowhere and is valued at $41 billion. Less than three years ago, Uber had zero drivers. Now it has more than…Read More
INSIGHT 2015 Investment Themes A. Gary Shilling January 28, 2015 Our 2015 investment themes are quite similar to our 2014 list that worked well for us. If it ain’t broke, don’t fix it. The Treasury “bond rally of a lifetime” still seems intact. The “risk on” investment climate for U.S. equities persists, but…Read More
Last week, I was in Seattle for an event sponsored by the CFA Institute. The trip was booked long before any of us knew the Seahawks were going to defend their championship title in Super Bowl XLIX. Following the Seahawks’ amazing comeback in the NFC Championship versus the Green Bay Packers on Jan. 18, the city…Read More