Investment Help

If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.

Wednesday, March 22, 2017

Trump and the "Fiduciary Rule"

Here's a nice opinion piece on the situation with the "Fiduciary Rule" and its potential blockage as it is on the verge of going into effect written by Mitch Tuchman of Rebalance IRA, "Trump's last-second swipe at an Obama retirement rule" (MarketWatch, 3/22/17).

The rule requires investment advisors, in particular  insurance companies and brokers, to act in the best interests of their clients when offering investment products and making investment decisions.

That they significantly affect investor performance in a negative way is supported by mountains of research. How? By charging 1% and higher to manage assets, putting clients' funds into the highest commission products that charge excessive annual fees and tacking on fees that are cleverly hidden.

And, all of this comes out in the wash. Most people don't read the academic studies on performance that track how active managers perform - just insomniacs and academics. Instead investors look at their accounts, read about markets hitting record levels and get a sinking feeling realizing that they are performing way below where they should be. Bluntly speaking, the fast talking fancy suited expensive brief case toters have sold  retirement dreams down the river - and people eventually get it.

And there is an ongoing push back. Investors are flocking to low cost, index funds and managing or considering managing their own assets. Many are moving to robo advisors and in the process disrupting the financial services industry. They are choosing to bet longer term on the entire economy whether it is U.S. or global rather that the touted ability of stock pickers and market timers.

This of course is what DIY Investor has been about for the last seven years and has referenced Buffett, Malkiel, Bogle, Ellis, Solin and others in the process.

For what it is worth, the whole set up of the movement of  retirement investing away from the defined benefit approach to the defined contribution, i.e. 401(k) played a major role in this enabling of the financial services to take advantage of those trying to plan for retirement. It enabled the complicating of the whole process which many saw as an opportunity to obfuscate the fee structure and take advantage of workers. In short, the average person was put in charge of their retirement but not given instruction on how to go about it!

In my opinion the same thing may be unfolding in the health care industry. It is important to understand a basic finding of behavioral economics: choice isn't always a good thing! This is worth keeping in mind when politicians puff themselves up and proclaim that the consumer will have more choices. Sleazy characters hear this and start to plan on complicating schemes that rip consumers off.