The media and Wall Street have a new campaign going on to save the intermediaries that the Executive Branch has clearly acknowledged are fleecing billions of dollars from American’s nest eggs.  The intermediaries, the salesmen, who have distributed product since the advent of 401k’s and IRA, who call themselves “trusted advisors” have now been outed for what they are. As a January 13 White House memo wrote: “studies generally find that investors using financial advisors pay excess fees and that their returns are lower…”  The White House memo estimates Americans could be losing in excess of $17 billion to these conflicted intermediaries.

We all know the phenomenal savings through direct models, from Expedia, to Amazon. Technology also eliminates the need for these conflicted “advisors” or salesmen that distribute investment product, but saveourretirement.com will not tell you about the more cost effective, prudent options that are now available, such as Not On My Nickel.

Bona Fide Retirement Advocacy Groups, such as The Derivative Project, Push for Real Consumer Transparency and Change with Cost-Effective Private Sector Solutions

After over six years working for retirement investor protections with the SEC, the Department of Labor and Congress, The Derivative Project realized Congress, the Department of Labor and the SEC are captured by Wall Street money.  We learned the “advocates” work for Wall Street.

The only solution is for Americans to take charge, which they can, with the proper tools, direct platforms and transparency.  The Derivative Project launched Not On My Nickel to empower every American to take charge to ensure their retirement was invested with the best money manager, who files regular performance with the SEC, at the lowest cost.  “Advisors” do not file their performance with the SEC, but they take an annual fee, without any responsibility. Why pay twice for the same service? The White House memo is an alert, these fees are worthless and harming the average American’s nest egg.

“Save Our Retirement” Promotes this Notion “This is So Complicated You Must Have an Advisor”

Here is an excerpt from their website:

“With so many complicated investment choices to make, Americans need reliable advice they can trust.”

Not On My Nickel research demonstrates the retirement investor is fully capable of selecting a SEC performance filing money manager with the proper platform, education and tools.  To counter act Not On My Nickel’s message, Wall Street began a media campaign, from the New York Times, to Huff Post, stating “everyone needs a financial advisor”, as the Saveourretirement.com website proudly displays, below.

What “Advice” Does the Average American Retirement Investor Need Concerning Investment Selection? 

None:  The average American needs independent, targeted education. The average American needs, like the consumer of any product, the transparency and the ability to understand what option is in their best interest.  They need the tools, information and platform to make an informed choice.  Workplace education on investment selection, provided by Wall Street, for a fee, is like hiring a Ford or Chevy car sales person to tell you what truck is in your best interest.  10,000 poorly performing mutual funds, that Wall Street and employers have stuffed full with American’s life savings, is confusing.

There are so very few top performing fiduciary money managers.  They need to be transparent and accessible to every American.  Competition must become robust, if the best cannot take on any more assets.  New managers must evolve and be in the pipeline.  Women must be encouraged to engage in this profession, not be a “financial advisor” that delivers no value to society.  The trend, written about today in the Financial Times, “Female Fund Managers Decline”, should be the focus of retirement investor advocates, not promoting conflicted intermediaries that cost taxpayers billions to regulate and skim from American’s life savings, while adding no value.

Not On My Nickel has a message:  End the “learned helplessness” Wall Street has created over the past forty years.  If you want more money at retirement, take charge, spend a few minutes to learn how to empower yourself to go direct.  You are very capable. Your fees will be lower, your performance will be better and academic studies estimate you will have at least $155,000 more at retirement.

Not On My Nickel Believes Every American Deserves Fiduciary Advice, From an Investment Company, Registered under the Investment Company Act of 1940, that files regular Performance with the SEC

There is a crucial difference on who is providing the “advice” and if the advisor files regular performance with the SEC, so the retirement investor can determine if the advice is any good. Without accountability as to performance and proper benchmarks, there can be no “fiduciary” relationship.

Not On My Nickel believes every American needs advice from a SEC fiduciary Investment Adviser registered under the Investment Adviser Act of 1940, however, that “Adviser” does the actual investing, files regular performance with the SEC, does rebalancing, picks the stocks or bonds. The investor knows first hand who their manager is, what their investment strategy is, and what their fees and performance are.

Saveourretirement.com – Wall Street’s Campaign to Save their Lucrative Business Model – Obsolete Intermediaries

Consumer Advocates in Sheep's Clothing

Investment Company Act of 1940 Adviser or Intermediary Advisor, Salesperson

These conflicted advocates, operating in Wall Street’s best interest, have launched their latest campaign, a fervent attempt to save these redundant, costly intermediaries that serve to strip billions from the already stagnant wages of the middle class.   Saveourretirement.com states:

“The reality is that—

1)Many advisers are providing investment advice that pays them handsomely but doesn’t serve their clients’ best interest;

2)Those conflicts of interest are taking a huge toll on the retirement savings of millions of workers and retirees; and…”

However, Better Markets’ solution simply perpetuates the excessive costs of the current situation: so-called “fiduciary advisors” who are not subject to existing securities laws.  Just who is the “fiduciary advisor” that Better Markets proposes?  Brokers that took a simple SEC test to say they are now a “fiduciary”, who sell a product, a Wrap Account, with high redundant fees and questionable legal recourse for the consumer. They have no additional experience, they have no higher standards, just a new filing with the SEC.

“Consumer advocate” Better Markets tweeted a recent Huff Post Money article by Paladin Registry:

 

Better Markets Endorses Paladin Registry

 

Better Markets promotes a solution that is in the best interest of Wall Street, not middle class retirement savers.

Most Concerning Is a Consumer Advocate- Recommended Registry that Promote Advisers with Criminal Histories

However the most egregious push by Better Markets is promoting to retirement investors Paladin Registry’s listing of “fiduciary advisors.”  Better Markets’ referral implies they are fiduciaries, ethical and will operate in your best interest, as the Paladin Registry states on their website.

A random selection of Paladin Registry “fiduciary advisors” and inspection of their SEC filings, shown below, revealed advisors that provide no transparency, charge excessively high fees and many who have criminal records.

The Solution -Transparency, Empowered and Informed Consumer, Robust Investment Company Money Manager Competition 

Ask your employer to give you the opportunity to try Not On My Nickel’s tools, direct platforms and transparency.  If they say “no”, what does that tell you about their concerns for your future retirement savings?

There is a better solution.  Join us at Not On My Nickel.

 A Paladin Registry Advisor’s Firm SEC Filings – “Felonies” are deemed Criminal Offenses

Charged with A Felony - Fiduciary Advisor

  A Paladin Registry Advisor’s SEC Filings – Admits Fales Statements, Dishonest, Unethical Behavior

Omits False Statements Unethical

 

A Paladin Registry Advisor Firm Had Past Felonies and is Continuing to Be Subject to Ongoing Civil Proceedings

Ongoing Civil Proceedings

Are you giving up growth in your 401K to high fees and poor performance?

Are you giving up growth in your 401K to high fees and poor performance?

A Recent Government Report revealed 401k Participants May Have High Fees and Poor Performance in 401k Managed Accounts

Raise your hand if you know what a QDIA is or a Managed Account.  Wall Street and the Department of Labor have quietly changed the business of 401k investing, without much fanfare from the 4th estate like the New York Times to NPR or MPR Marketplace to your local newspaper. Seems like those personal finance writers/economic editors may just be working for Wall Street.

Whoops, seems like a pretty critical piece of the retirement savings world was not covered for mainstream Americans and after five years of skimming from 401k plans, another study belatedly shows Wall Street has once again duped the retirement investor in their 401k plan.

Qualified Default Investment Alternative (QDIA)

In many companies today, if you do not sign up for a your 401k or “Opt-Out” of making contributions, your Employer will automatically take money from your paycheck, up to 3%- 6%.  And just where do they put your money, without your knowledge?  Typically in a managed account in your 401k.  Why?  It is best for Wall Street, since they do not have to bother with worrying about such a silly thing as audited performance against a benchmark.  That matters to you, not Wall Street.

This new arrangement was approved by the Department of Labor back in 2006.  Wall Street executives, such as Larry Fink of Blackrock, are pushing to take up to 10% of your paycheck on a mandatory basis.  CNBC:  Blackrock’s Fink:  U.S. Needs Retirement Savings Policy.

Mandatory Savings to Fink's ETF's?

Mandatory Savings to Fink’s ETF’s?

What is a Managed Account?

A Managed Account is a fee-based investment management product. They were used for years to manage the tax implications of investment portfolios for high-net-worth investors. Today in 401k’s, managed accounts are often passive investments, like ETF’s, with an additional management fee. Unlike a mutual fund, which is a “registered investment company” under the Investment Company Act of 1940, a managed account does not have to file  their performance with the SEC.

In 2006, Wall Street convinced the Department of Labor to allow Managed Accounts as a new Qualified Default Investment Alternative (QDIA).  Other QDIA’s are Target Date Funds and Balanced Funds.  Managed accounts are the most popular of the three QDIA’s.

Financial Engines is the largest investment advisor providing “Managed Accounts” to retirement accounts, 401k’s.  They do not provide any performance information on their website, nor file it at the SEC.  They equate “their performance” or their “numbers” with how many sales they have made of their services to participants.  This is taken from Financial Engines’s website today:  “Our experience produces results”…

Financial Engines Equates their Sales with "Performance" for Investors

Financial Engines Equates their Sales with “Performance” for Investors

Ironically, they forgot to “prove” their numbers to your employer, as a recent GAO report revealed and appeared to convince your employer on their worth with a fancy pedigree and “advanced technology” over actual performance numbers.

A Recent Government Report Cites Significant Issues with Managed Accounts in 401k Plans

The GAO recently released its findings on significant issues with Managed Accounts in 401k plans.  Here is a link to that report, 401K Plans:  Improvements Can be Made to Better Protect Participants in Managed Accounts.

What are the significant issues, detailed in this report?

  • Your employer failed to ask what the performance of these new “Managed Accounts” are, after all fees!  Or one could say the Managed Accounts providers pulled a fast one on your employer, hyping their economists and fancy “technology.”
  • The Managed Account providers, such as Financial Engines, may be breaching their fiduciary duty on rollovers at retirement or when you leave your employer for a new job, since they make more money if you keep your account managed by them in your old 401k.

Not On My Nickel believes in the old-fashioned way of evaluating and picking a service when significant dollars are involved, such as for a retirement account. Our seven criteria would have eliminated Financial Engines.  Let’s review each criteria:

Financial Engines Evaluated Against Not On My Nickel Seven Criteria

Our strict criteria for selecting a money manager for your retirement nest egg

Our strict criteria for selecting a money manager for your retirement nest egg

(1)  Superior long term results – Failed – Financial Engines is automatically eliminated by NOMN criteria, as they do not publish their performance.  NOMN prefers a minimum of five years of performance that out-performs the relevant benchmark.

(2)  Low management fees – Failed- Their fees are redundant, since in the workplace you already pay a fee for each portfolio manager, so if you pay for Financial Engines’ advice on what mutual fund to select, you are paying twice for investment management selection.  NOMN’s upcoming retirement platform eliminates this redundancy, savings millions for retirement investors.

(3) Low portfolio turnover – Failed.  They do not publish their turnover to employees or publicly.

(4)  Sustainable economic value – Failed.  The Financial Engines model is not sustainable.  About their website reference “advanced portfolio management technology”–appears someone thinks they stole it.  Financial Engines is being sued for patent infringement, Lawsuit Regarding Computer Generated Advice to 401(k) Participants Revs up Against Financial Engines

(5) N/A – Without performance measurement, portfolio turnover and published investment strategy, we have no idea how dedicated their portfolio management team is, since it seems to have a singular focus of an unproven computer model and not experienced investment management team.

(6)  Approved NOMN custodian - N/A

(7)  “Operating philosophy that proves clients come first” – Failed, employees are not given sufficient information from Financial Engines to make an informed decision on whether or not their service is in their best interest.  Without a minimum of five years published performance against other available QDIA’s in their 401k account, an employee cannot make an informed decision.

We all learned in 2008, Wall Street looks out for their interests, not yours.  The recent GAO report on Managed Accounts in your 401k’s without any published performance is your wake-up call.  Where is your paycheck going?  Why are your falling behind?  Financial Engines’ executive compensation grew over 173% from 2012 to 2013, all from taking fees from your retirement nest egg, without even bothering to report their management performance to your Employer, according to the GAO.

Executive Compensation at Financial Engines grew over 173% in one year.  What was your raise in 2013?

Executive Compensation at Financial Engines grew over 173% in one year. What was your raise in 2013?

Time to Not On Your Nickel your retirement savings with our seven criteria and upcoming platform/tools to make sure your nest egg has the best performance and the lowest costs.  Tools and data now readily available help you find the portfolio managers that do act in your best interest and deliver superior performance, without fancy, questionable academic theories and undefined advanced computer modeling. With charts and tools, you can see right through any undefined advanced theories— you have the hard numbers in one chart to make an informed decision.

 

Do You Know Where Your Retirement Dollars Are?

A custodian is a financial institution that holds customers’ securities for safekeeping so as to minimize the risk of their theft or loss. Traditionally retirement custodians have been commercial banks, but with the significant increase in retirement dollars, more and more brokerage firms have set-up their own custodians, with the advent of defined contribution plans (401k’s).

In the case of some of the newest entrants to managing retirement money, online investment management firm, Wealthfront, for example, surprisingly uses a two-year old brokerage firm, APEX, to do clearing, execution and custody.  Not On My Nickel believes with examples of significant market abuses, such as Madoff and MF Global, it may make sense to have segregation of function. Further, are these relatively new firms adequately capitalized?  This article from Marketwatch, from 2008, when fears of failures were high during the largest financial crisis since the Great Depression, reveals some of the issues with using brokerage accounts as your custodian.

Further, the SEC has issued a detailed and complex answer on their “Custody Rule.”  What firm that is safekeeping your retirement assets is a very complex issue, that should not be ignored.

The issue of custodians typically arises only when there is fraud or significant systemic risk, such as in the 2008 financial crisis.  However, there may be a reason why SEC Commissioner Kara Stein warned about brokerage firms and systemic risk in her speech, June 12, 2014 to the Peterson Institute.  Until brokerage firms that are “safekeeping” retirement assets shore up with more capital, it may be better to be safe, than sorry.

Not On My Nickel has added a seventh criteria for the selection of any money manager for your retirement assets.  Where does that money manager safe keep your retirement nest egg?

As the New York Times finally reported today, that “advisor” in your workplace may not be acting in your best interest.

Ask you employer to include us in your workplace financial education plan.  We are the first and only independent financial education service that provides the tools, transparency and technology to empower anyone to finally understand the investment selection process.  Whether it be a Target Date Fund, a new fangled “robo-advisor” pushing passively managed portfolios or an actively managed fund, one now has the tool to make an informed decision on what investment selection is in one’s best interest, after all fees.

 

 

Chris Farrell, Economics Editor at Minnesota Public Radio (Marketplace Money) writes today,  New Thinking on When to File for Social Security“.  This is more media-induced nonsense Screen Shot 2014-05-06 at 11.24.35 AMsimply to get you to pay more for Wall Street’s advice services, promoted through media shills, in this case the Minneapolis Star Tribune and Minnesota Public Radio, a leader in promoting expensive financial intermediaries, on your nickel.

Why Financial Literacy Efforts Failed:  Wall Street Wrote the Curriculum and Spread the Message with the Help of Public Radio.

Remember, Minnesota Public Radio obtains “sponsorship revenues” from Wall Street firms, such as Financial Engines and the Minneapolis Star Tribune prominently places “financial advisor” ads, next to Chris Farrell’s article.  We would label this piece by Mr. Farrell, “Paid Advertising” and think it only proper for the Star Tribune to do so.

Wall Street’s latest push —”everyone needs a financial advisor” is now a PR Blitz that everyone needs an advisor to understand social security’s complexities.  It is their way to get you in the door and cross sell all their other expensive intermediary services.

Listen to Financial Engines 2/20/14 Analyst Call, in the upper left box..  In this call you will hear Financial Engines describe their strategy to increase the American retirement investor’s dependency on their service: “The social security” strategy.  We aren’t making this up. The facts are on the Analyst Call (2/20/14) linked to above.

You might also want to listen in this afternoon to see how Financial Engines Q1 results are with their new social security entrapment strategy for workplace retirement investors.

As Chris Farrell is telling you, on behalf of Financial Engines,  Social Security is so complicated you now need a financial advisor, such as Financial Engines, to run it through their computer, to determine when you and you spouse should take the benefits.  This is Wall Street’s ongoing push to create brain-dead Americans who are incapable of thinking or feeling, without paying Wall Street a fee.

Financial Engines has moved into your corporate 401k and now are pushing your employer to take greater and greater fees from you for Financial Engines paid “advice” services. 90% of the services Financial Engines offers, one can obtain on the Web, for free. One of the supposed new “value-added” services is when you should take social security.  You are fully capable of determining this on your own.  Take out your annual Social Security statement and you can calculate yourself how much you and your spouse get under varying scenarios.  The puzzle is quite easy to determine, based on your own needs and desires, particularly when many couples have worked their entire lives and may be close to getting the max from social security.  That limits the options and quickly reduces the “8000″ permutations for most people.

Here is an excerpt from Mr. Farrell’s, New Thinking on When to File Social Security – his latest syndicated piece, promoting Financial Engines:

“Here’s the thing: Social Security is immensely complicated. The program has been revised ever since it was signed into law in 1935. For example, married couples have an estimated 8,000 permutations for deciding when and how to file for their Social Security benefits, according to Christopher Jones, chief investment officer at Financial Engines, the online 401(k) adviser.

The U.S. retirement system is like a pyramid. The base is Social Security. Additional layers are homeownership, employer-sponsored retirement plans (private and government, defined benefit and defined contribution plans), IRAs, and other assets such as bank deposits and savings accounts. In an interview, Jones emphasized the importance of understanding how all these assets affect each other during retirement.”

Mr. Farrell, as Minnesota Public Radio’s economics editor, we would expect more.  (Star Tribune, lets label articles “paid advertising”, when it should be labeled such). Tell the average American how they can analyze their social security statement on their own to make this determination.  It is possible without a computer and without going to an Advisor. Don’t push the already stretched middle class American to pay more intermediary fees, that they simply cannot afford on stagnant wages, as you are well aware.

Let us know if you would like Not On My Nickel to do a follow-up education on the five easy steps to determine when to take social security, without paying onerous fees to do so. That adds value, not another Wall Street wolves’ scheme to extract more …from a turnip.

 

The SEC has very strict guidance on how mutual fund performance may be reported.  When you go to sites such as Yahoo Finance, Google Finance and if you subscribe to Morningstar, you will always find the same reporting standards for monthly, quarterly and annual performance for mutual funds.

Unfortunately, it appears the “media” in personal finance has another Agenda, as we have written about with the New York Times, as in this Blog Post, “Hello New York Times, Please Define “Conventional Money Management”.

In an April 10, 2014 Bloomberg article: Mutual Fund Leaderboard: Who’s on Top in 2014? by Suzanne Wooley, Ben Steverman and Bloomberg Rankings, we analyzed one of their top picks for their large cap blend category.

What is the source of the Bloomberg quarterly returns?

What is the source of the Bloomberg quarterly returns?

 

We have asked Bloomberg for clarification on their methodology and sources, as shown to the left and have not heard back from them.  We wanted to confirm we have not made an error.

Take a look at Not On My Nickel’s research methodology and you be the judge.

Bloomberg selected the Dreyfus Fund (DREVX) as their  top performing large cap blend in its category for First Quarter 2014. Their methodology:  “Bloomberg Rankings identified the top-performing fund in each category.  Included were U.S. -domiclied retail mutual funds with a return above 7% in the first quarter and at least $250 million in assets”.

Here is what Bloomberg’s slide is telling retail retirement investors – that the Dreyfus Fund’s first quarter return was 10.7%. Bloomberg Mutual Fund Leader Board April 10, 2014

What should you look for in personal finance articles on mutual fund performance?

(1) Consistency in reporting standards for returns.

(2)  Performance over several periods and never just highlights for a Fund manager’s quarterly returns that simply serves to encourage performance chasing.

(3)  Always includes the overall fees and portfolio turnover for the fund, including references to the management style and the portfolio holdings.

Pictured to the right are the Total Returns for the Dreyfus Fund (DRVEX) as of 3/31/14,Morningstar total returns for DREVX as reported by Morningstar.  There appears to be a significant discrepancy from what Bloomberg reported for first quarter returns:  10.7% vs 1.23% for Quarter ending 3/31/14, as reported by Morningstar.

Bloomberg Has Done Excellent Work on Institutional Side

Quite frankly we are perplexed by this reporting and await Bloomberg’s explanation for what appears to be a significant misrepresentation.  However, Bloomberg is not subject to SEC oversight and has more latitude than the fund companies in reporting performance.  But, this still is not in the best interest of their retail retirement investors who read their reporting.  It may harm their portfolios with improper return data being published, if selections are based on their inaccurate reporting.

Your Independent Research vs Bloomberg’s Leaderboard

You be the judge.  Do you want biased information from conflicted media sources or unbiased research, tools and training to make an informed decision for your retirement nest egg.  The chart below is for 6 months to give a touch longer time horizon.  However, Not On My Nickel urges our subscribers to look at our Six Criteria (Under Save our Sanity) in selecting any portfolio manager.  Only select a manager that has a minimum of five years SEC – filed audited performance.

One should also note the fees in the Bloomberg top large cap blend selection are higher than the Not On My Nickel ‘s researched large cap blend fund. The portfolio turnover is just 3.79% in the fund below and is over 72.91% in the Dreyfus Fund.  Portfolio turnover is directly related to very high trading costs that take away from your returns—money out of your pocket.

We still have not heard from Bloomberg on their “return” methodology for their “Mutual Fund Leaderboard:  Who is On Top in 2014?”  It appears personal finance columns, in media that should be providing a service to retail retirement investors are providing a major disservice.  The New York Times and now Bloomberg reflect the state of the retail retirement “advice” market- disingenuous, misrepresentative and very conflicted.  Reader beware.

You Be the Judge – Why Did Bloomberg Represent, DREVX, as the Top in their Category-or is NOMN in Error?

Not On My Nickel Researched Fund v Bloomberg Top Pick

 

 

Professor Shiller Says Everyone Needs a Financial Advisor and the Government Should Help Pay for Them  

Screen Shot 2013-11-03 at 7.42.39 AMProfessor Shiller received the Nobel Prize for his work in behavioral economics.  On October 15, 2013, the Washington Posts Neil Irwin interviewed Professor Shiller, as described here:  “On Monday, the Nobel Prize committee awarded three American economists, Eugene Fama, Lars Peter Hansen, and Robert Shiller, the world’s leading economic prize. Shiller won for his work explaining some of the limits of the hypothesis — advanced in no small part by Fama — that financial markets are efficient. Shiller, a professor at Yale, spoke with me by phone on Monday afternoon”.

What Does a Real 401k Investor think of Professor Shiller’s views that the government should provide everyone a Financial Advisor?

The first comment to the Washington Post article linked to above is, verbatim:

“Excuse me, but this talk about 401Ks has me very interested… If anyone wanted to know what REAL people do and how they act if they’re “fortunate” enough to have one, they’d ask REAL people. It isn’t that REAL people aren’t “interested” in managing “their portfolios.” It is that most REAL people don’t even know what a portfolio is. Or what it’s supposed to do. They’re intimidated by financial talk. They’re too busy working all the time or trying to figure out how to survive and pursue happiness, the little bit of time they’re not working. 401K? We have one. Used to have two. In 2008, we had $50K stolen in the middle of the night! And you want to talk about we need “financial advisors?” Ha! There’s NO ONE we can trust, and we are not economists, we are human beings. We just want to live, survive, eat real healthy food, have roofs over our heads, love and nurture our children and have something to smile about once in awhile. But that just seems like too much to ask anymore. Instead, we give and give and give our lifeblood, everything for the grind that takes more and more and leaves us depleted and defeated. There’s so much expected of us, not by the poor or the sick, or the downtrodden, but by those who exploit us. There’s some real life behavior for you. All you had to do is ask.”

Not On My Nickel was created for the “real” 401k investor, who has limited time, energy and just wishes to spend their precious time with their family and not give every last penny to aggressive, selfish intermediaries. They are devastated by their children drowning in student debt and unable to find a job. They scared about their future job prospects. They want to trust someone.  They want real tools and education, no more hidden fine print disclosures of never-ending conflicts of interest.  Of course, they want to be in the lowest cost and best performing blue chip investment.  They honestly believed that is what their employer would choose for them.  Why wouldn’t their employer give them the best investment alternatives?  They are not.  It is what the economists call lack of “price transparency.”  If you have more interest on the ins and outs, you may read more here from our retirement investor advocacy group, The Derivative Project.

Look hard at the chart, below. If you are a retirement investor would you choose:

Option A – The Department of Labor mandated Target Date Fund (HLHAX) option in your 401(k) that automatically deducts a fee for “financial advice” from your savings, without your prior approval? Your Employer places you in this Department of Labor selection, Target Date Fund, if you did not have the time to choose, or

Option B – The Not On My Nickel researched balanced fund (PRWCX) that meets all Department of Labor standards, but provides you $20,000 more on the average 401(k) balance ($80,000) after 5 years. Yes, better performance, lower fees and a long-term track record with a well defined investment strategy you can understand.

Hint:  Your 401(k) does not currently provide you Option B – Not On My Nickel tools, reserach and education to make an informed choice.  In reality, you are stuck with Option A.  Ask your employer to give you the Not On My Nickel option to understand what is the better alternative that places your limited time and needs ahead of the old type of defined contribution plan designed by Wall Street, not designed for the 401k investor.

Does this Chart Give you A Headache?

Does the Chart, below right stress you out?  Now our readers know where the Washington Post comment comes from.  Exhaustion from an industry that keeps taking and taking without delivering any value.

Screen Shot 2013-08-19 at 5.34.26 AM

Yes, this chart is exhausting. In fact it is beyond outrageous that over $1.75 billion dollars of retirement savings have actually been invested in this fund, NLHAX, a State Farm Target Date Fund.  Please, if you know anyone that is so unlucky to be in this Fund, let us know.  They have options!

The performance of NLHAX is abysmal. The fees are excessive. And we are not done.  You are being automatically charged by your employer a fee that goes directly to pay for “financial advice” fees to help you retire–without your prior approval!  Whoa, that is aggressive.  We honestly cannot think of any other industry that has convinced the government to take money directly from your paycheck without your prior approval.  Can you?  If so, please send us an email at info@nullnotonmynickel.com.

You Now Have a New Choice!

Retirement Investing Defined Contribution Plan 2.0 at Not On My Nickel

Everyone has a choice. It is a small investment in time, but once you understand the process, your time will be limited, you will understand what is of value and the never ending fees will be eliminated.  You will be able to measure the good from the bad, as to performance.  You will protect your self from Ponzi schemes and rogue advisors. You will be empowered and the clouds and confusion, the unhealthy dependency on Wall Street, will all disappear.  You will begin again to trust.

Not On My Nickel is completely independent from all financial services providers.  We give you the tools, education and research to end the dependency on an industry that places their profits ahead of your family and financial well-being.  We designed this new service for investors such as the Washington Post commenter.  We tried for five years of meeting after meeting with the SEC, Department of Labor, FINRA and Congress to change the abysmal chart on the right.  They refused.  It is called “regulatory capture.”  Money gives Wall Street the access to the government officials to keep their profit model that is in their best interest, not yours, flourishing.  The Derivative Project would need millions upon millions to match their access and influence.  We do not have that. Only you can make the change to end the current cycle.  It can be done.

Your only choice is to take charge and not be a victim.  The tools, training and research are now available. It is a small investment of time in your future, that research has shown will save you hundreds of thousands of dollars.  The tools will get you excited to finally understand the simplicity of selecting the best portfolio manager, on your own.  Come take a look. Email us today and we will get started.  We look forward to hearing from you.

Screen Shot 2013-11-25 at 4.26.17 AM

 

The concept of “Fiduciary” is meaningless today when discussing the financial advice industry, whether that be a stockbroker or a RIA*

Are financial advisors worth the money?  Are they adding any value in investment selection?

In an article yesterday, pictured to the left, The Financial Times is asking the questions that American media and  our Department of Labor, tasked with regulating retirement plans, refuse to ask.  Whether it is a new unproven passive strategy, a mutual fund that is loaded with fees and poor performance or a financial advisor that overcharges you to select one of these high-fee mutual funds, it is long over-due for the US media to follow the media coverage lead of those across the “pond “. As this article states, ” The question financial advisors have to ask are the moral and ethical questions, as the Financial Times wrote:

“Asked by an audience member how asset managers could stop their reputation becoming as bad as that of estate agents and second-hand car salesmen, Mr Utermann said managers have to question whether they are delivering value for money to clients.”

 

The Goal of American Fiduciary Advisors is Singular:  Gather More Assets Under Management – Not Am I Adding Value

What value are financial advisors, for investment selection, delivering to American retirement investors, after all fees?

What is the primary focus of US financial intermediaries today?  A picture, below, is worth a thousand Screen Shot 2013-11-25 at 4.23.15 AMwords.  This is from an article in a trade journal for financial advisors, published last week.  The primary focus of the financial advice industry is to gather as many assets they can, at the lowest possible cost, and then see how much money that can charge the retirement investor, without the investor crying foul. “100 Billion or Bust”. It is just that simple.

Performance, after all fees is not relevant to advisors and advice firms.  They have never been held accountable. There are now trillions of dollars in 401(k) plans and IRA plans these financial advisors are salivating over and the smoothest salesmen or those with the best guerilla marketing plans, such as Dimensional Fund Advisors, are coming out the winners.  Your retirement performance, after all advisor fees, is never revealed by any of these “fiduciary” advisors.

Ironically, the new “passive” movement has yet to provide performance results, after all fees.  For example Dimensional Fund Advisors, charges 1 percent to purchase a predominantly passive strategy.  Hint:  If you pay one percent to buy an “index” your performance is one percent below the index.

When you buy a car or a house, there are “lemon laws” and home inspections, documenting all the potential pitfalls of what you may be buying.  You can comparison shop online for cars.  You have full transparency. The new breed “online advisors” believe they are above full transparency and because they are not placing you in high-fee mutual funds, their new-fangled service must be better.  You must trust their computer model and their theories, even though many academics have proven them wrong.

Are these new services any better?  Unless, they can provide you with at a minimum a five year past performance history, based on their model, after all fees, including theirs, and you can then compare their results to comparable top performing active or passive managers, who can provide 5 – 20 year history, why would you run the risk of selecting underperformance over a proven strategy?

Car Salesmen and Real Estate Agents Have Full Transparency

Buyer beware, these new breed “advisors” should not be compared to real estate agents or car salesmen—at least there you know what you are paying for and have full transparency.  The financial advice industry is far worse. There is no transparency or accountability for performance after all fees.

At Not On My Nickel, we are not a stockbroker or a financial advisor.  We are the first and only independent financial education and research service that gives you the tools to compare the value of your traditional advisor or the new-fangled passive strategies to the proven portfolio managers that have outperformed indices for decades, after all fees.  We have run the numbers.  Not On My Nickel researched portfolio managers outperform the new-fangled passive modern portfolio theory computer models, after all fees every time. Yes, you are also diversified and the portfolio managers, human beings, do the rebalancing for you, not a computer model.

There are not many portfolio managers that have-outperformed- but why not invest with them if your performance far out performs, after all fees?  Who are these active or passive portfolio managers, you can easily access directly without paying an advisor 1 -2 percent?

*RIA is the term for a SEC registered investment advisor, who is supposedly held to the strict “fiduciary” standard in the Investment Advisers Act of 1940.

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Someone Has Made Picking a Mutual Fund Way Too Complicated

It just isn’t that tough to do, with the proper tools, training and benchmarks.  Here is a very simple secret.  Before the advent of 401(k)’s,  individuals with some accumulated wealth were able to locate a top performing fiduciary portfolio manager without a financial intermediary.  Not On My Nickel takes you back to those days.

There is a debate going on at both the Securities and Exchange Commission and the Department of Labor on whether or not a stockbroker should act in your best interests, to the “fiduciary” standard of ERISA or the “fiduciary” standard of the Investment Advisers Act of 1940 or the “suitability” standard of the stockbroker.  The reality is it really doesn’t matter for the average retirement investor.  Why?  Both types of Advisors are conflicted and the only solution for the average retirement investor is to learn how to use the simple tools to make an informed choice themselves. Neither stockbroker nor fee only planner provides any performance results after all fees.  You simply do not know the value of either intermediary – stockbroker or fee-only fiduciary planner.  Based on Not On My Nickel’s analysis comparing the returns of the top performing active balanced fund managers and blended growth and mid-cap growth funds, to the very few performance records available for fee-only planners, you are losing out significantly to high fee and poor performance selections using either type of intermediary.

Listen to Representative Hurt (Republican VA) speak on why you need access to a stockbroker’s advice to pick a mutual fund, Congressman Hurt Floor Speech on HR 2374.  

Ask Congressman Hurt why it makes sense to pay more each and every year for the exact same product that you can buy yourself at a discount brokerage firm, or directly from the Fund firm, without these high fees, using tools, research and information through educational services, such as Not On My Nickel?  (For the record, Not On My Nickel offered to show our analysis to the House Financial Services Committee prior to their vote on HR 2374.  They refused to accept the information and refused to meet with us to understand another alternative for today’s retirement investors, that might be in their best interest.)

Do you really believe it is worth paying more money to a stockbroker each year for the exact same product?  Do you think you should pay your real estate agent a finders fee each year for the wonderful home she found for you?  Also, remember the Stockbroker has no ongoing duty to monitor this Fund they told you to buy.  That is your responsibility.

  • Do you know what your investment performance is after all fees, when you pay an intermediary for advice?
  • Do you know how that compares to if you simply invested, yourself, in the top performing balanced fund and growth funds that have out performed their relevant indices for decades?
  • Do you know if your returns are better after 10 years based on a computerized portfolio management model based on modern portfolio theory, in active or passive funds and paying a fee for advice, compared to selecting these Funds yourself, based on targeted research?

It is more than beyond time that you are given the answers to these questions.  Not On My Nickel helps you gather these answers so you can know what you are paying for in all-in asset management fess, just as easily as you can determine what is a fair fee to pay today for the IPad Air.  However, the difference is you need this transparency as the costs have estimated to impact you in the $100,000′s of dollars – a far greater impactful decision that saving $20 on the IPad Air.

How To Save Hundreds of Thousands of Dollars Over Your Retirement Investing Lifetime

Today we will share with you how you can purchase the same mutual fund, yourself, and save thousands upon thousands of dollars over your investing lifetime in one simple step.

As the concept of Target Date Funds is suggesting, the average retirement investor just needs one or two low fee, consistently managed balanced funds and for the young, one or two top growth funds. The problem is the Target Date Funds currently offered carry higher fees and poor performance compared to the select top balanced funds that NOMN has researched.

As NOMN wrote on August 2, 2013:  Target Date Funds Carry Greater Risk and Cost More: Why is the Department of Labor Allowing Them?

Let us a assume you buy the T. Rowe Price moderate allocation fund (PRWCX) directly from  a discount brokerage, such as Scottrade, your self.  You pay Scottrade a one-time fee of $17. You can also buy the Fund directly from T. Rowe price and save any transaction fee.

If you buy the same fund through a stock broker you will pay greater fees each year, for the exact same Fund, or precisely .35% more of your outstanding balance, than if you purchased the Fund on your own.

Think about this.  Your are paying more for the exact same product, year after year, after year.  What other industry allows this type of dysfunctional pricing?  What are you getting for paying hundreds of dollars more for the same product?  Nothing. Under the “suitability” standard the stockbroker has no further obligation to you.  Once you buy the fund, his responsibility ends, even though you keep paying him an annual fee!

The Drawback of the Stockbroker – How Much You Lose Each Year By Using a Stockbroker in Dollars and Cents

Here is the chart from the moderate allocation mutual fund, PRWCX, T. Rowe Price’s 6-30-13 semi-annual prospectus, filed with the SEC.  Take a look at how much you are giving to the stockbroker and the financial services firm for using an intermediary. You pay 1.04% each year of the outstanding balance if you buy the Fund from a stockbroker. If you buy it your self, you pay only .73% each year!

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The Fund firm, T. Rowe Price, also shows you how much you lose in performance on your investment by buying the mutual fund through a stockbroker in this chart below:

 

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What the above chart tells you, for the year ending June 30, 2013, if you had purchased the Mutual Fund PRWCX from the stockbroker you would have made on $200,000, $35,780.  If you bought the Fund on your own, you would have made on a $200,000 investment, $36,520 or $740 more in one year!  Remember, through the power of compounding and as your balance grows, your loss for purchasing this fund from the stockbroker will grow larger and larger each year, as you will always pay expenses at the “Advisor Class” rate.  Again, under the “Suitability” standard, the stockbroker does not even owe you a telephone call for the extra fees you are paying.

Do You Know Where to Get the Best Price on the New I Pad Air?

Of course you do.  There is complete transparency on the new I Pad Air pricing.  It is called capitalism and a free and competitive marketplace.  Read today’s article from “tom’s Hardware.”

Apple, Staples, Best Buy, Matching I Pad Air Pricing

The financial services firms provide the “financial education” in your workplace.  There control the message and information flow. There is not any transparency, which is a major contribution to our current retirement crisis and “financial literacy.”  Retirement investors have been made to depend on all these high-fee intermediaries and have no idea about how to value the pricing and performance of the advice they are paying for. Of course, these intermediaries are conflicted.  Their livelihood depends on you buying mutual funds from them and not on your own. We are certain very few employees are trained in their workplace by the financial services firms on the devastating impact these fees have on the growth of your retirement portfolio.

Not On My Nickel seeks to provide retirement investors the same pricing transparency you can get from tom’s Hardware, so one can make an informed choice on the largest investment of their lifetime.

Part II of this post is forthcoming on why a “Fee Only Planner” costs you as much or more as a stockbroker and may even be less of a fiduciary, despite their claims that they are.

Education = FutMP900341471Remember Not On My Nickel’s Number One Rule

Make only informed choices through proper education and financial tools. Do not take advice or pay an assets under management fee to any “investment advisor” or “financial advisor” that does not file regular performance returns, against a widely published index, with the Securities and Exchange Commission, SEC.

This includes paying for investment advice to a CFP or to new online start-ups, such as Betterment or Wealthfront While their intermdediary fees are lower, it is still the same flawed “assets under management” business model. Until any investment adviser can deliver published performance returns against an agreed upon index, (for a minimum of five years and ideally 20 years) do not do business with them. The risks are too great.

Remember, just because the business model is online and costs less, it is not necessarily any better. Performance does matter. Modern Portfolio Theory, that these online services are based upon, has significantly detracted from retirement savings performance. Not On My Nickel experiential education and tools help you understand the pros and cons of Modern Portfolio Theory. It is in your best interest to make an informed choice on why or why not you would want such an online service to manage your money. Without the education and the proper tools, you cannot make an informed choice.

The Incredible Power of Informed Choice and Education in Leveling the Playing Field

If Americans would begin to follow Not On My Nickel’s most simple rule an industry would be transformed. Through the elimination of this financial intermediary, the financial advisor, societal benefits would be profound:

  • Senior fraud, through confusing certifications, would be close to being eliminated, since these intermediaries are redundant. Informed choice and education would reveal that..
  • Regulatory costs would be close to cut in half as most investment fraud and Ponzi schemes could be eliminated through transparency and bona-fide education. The SEC budget would decline and save significant tax-payer dollars.
  • 401(k) plans and 403(b) plans would change immediately, if every employee used their brokerage window and placed their money with the top performing portfolio managers. The poorly performing mutual funds would simply go out of business.
  • Americans would have significantly more money in their retirement nest egg. Significant sources of revenue would shift from financial service firms into the pockets of middle class Americans at their retirement.
  • Many jobs would be lost, yet new ones would be created in areas that add value to society overall. Financial service firms would be forced to focus on the true societal benefit, prudently managing retirement assets and the best way to deliver the best performance, not skimming off easy middle-man fees.
  • High-fee fund of fund Target Date funds that solely benefit financial service providers, not retirement investors, would disappear.

Why Do I Not Know About the Services of Not On My Nickel?

The Wall Street Journal or the New York Times and most press sources simply report on the firms that generate a revenue stream for them or they agree to the story due to a PR team that gets them to cover it or are connected to the firm since they have “Silicon Valley” venture capital funds. Not On My Nickel does not fit any of those categories.  Not On My Nickel is a new business model different from current financial services firms:

  • Financial service firms will never train you or educate you on how to take charge on your own. They will not provide transparency. Their future is dependent on taking a percentage of your retirement assets or annual planning fees. That is their business model, whether or not it adds any value to your nest egg. Not On My Nickel represents transparency and information to enable informed choice, so one can determine why or why not they should have or not have a “middle-man.”
  • Not On My Nickel takes a little work, for the retirement investor, upfront. Therefore, not many people will “like” us on Facebook or Twitter. We are not the easiest and quickest solution, but we are the best and only solution today. One has to have the inclination to invest some time to learn how to select a portfolio manager on one’s own. Not On My Nickel completely understands that taking the time to do so, is not easy. Work hours are long, families need attention, the house needs to be cleaned. One wants to have some down time on the weekend.
  • Not On My Nickel strictly focuses on the tools that enable an experiential learning to involve every level of investor in their bottom line immediately.  There is not sorting through difficult investment concepts from ‘growth’ to ‘value’ to ‘small-cap’ to ‘mid-cap’.  The learning rewards are immediate allowing excitement in the ability to take charge of one’s financial affairs.

We understand the realities of time constraints and a ‘boring subject’ matter.  We have the techniques to overcome these issues. We will work with you to make you feel comfortable taking charge.. We are up against the media and the financial services firms whose future depends on a chunk of your retirement. We are up against the trillions of dollars of ad budgets, TV budgets, Congress, and the SEC that are all promoting this failed business model that is NOT in the best interest of the retirement saver or society overall.  We are up against an industry that wants to keep you in the dark.

servicesHow to Maximize Your Retirement Returns?  

Join us today and get started on maximizing your retirement investment returns, that will increase substantially through bona-fide financial education and transparency, not self-serving financial advice.    Please read our Part IV Blog, tomorrow, for more information and details on how to get started.  We look forward to hearing from you.

 

Education = FutMP900341471Where Should I Go For Investment Advice? I Do Not Know Where to Begin

Not On My Nickel is here to provide you the basic education and ongoing research so you can hire your portfolio manager on your own, who will provide you investment advice that is not conflicted and where there are no hidden fees. It is the first and only fully transparent bona-fide retirement investing education service and portfolio manager research service.

Not On My Nickel works with you to provide you with the tools so you no longer need to be dependent on untrained, conflicted, self-serving sales personnel. We start with the basics and give you the life-long tools to manage your retirement savings, through transparency, education and unbiased research. We help you learn how to make these most critical decisions on your own:

 

  • How do I select the best portfolio manager(s) for my 401(k) or IRA?
  • Do I need to trade my IRA or 401(k)? Why you should not do so. That is why you hire a professional, experienced portfolio manager.
  • What are the best choices for my small business, to offer retirement savings to my employees?
  • What about asset allocation? You will learn about cash investments, why to avoid money market funds in today’s unprecedented interest rate markets, what is “voluntary recapture”, the dangers of bond funds and how to select the best long-term investment strategies from portfolio managers who have proven styles that have withstood the test of time.

In sum, you will be given bona fide education and the proper tools and training to effectively manage your retirement nest egg.

Not On My Nickel has six strict criteria that you will learn to aid you in evaluating who should manage your retirement nest egg–whether you have just started saving or have amassed a large retirement nest egg.

Not On My Nickel’s Experiential and Independent Curriculum

Not On My Nickel is the very first experiential curriculum for retirement investing that empowers you to cut through all the advertising and the self-serving advice designed to benefit the Advisor. We provide you the financial tools to help you make the determination on why one portfolio manager is better than another. Remember that the “advice” from your 401(k) or 403(b) financial advisor, providing Department of Labor mandated financial “education” is not really education. It is simply comments designed to get you to work with their firm, buy more financial products from their firm, save more in their products or pay annual fees for managing your life savings.

Not On My Nickel is not dependent on any financial services firm. We do not receive any form of payment from any financial services firm. We are the only bona-fide retirement education firm, independent education and research firm, that exists today.

Visit Not On My Nickel’s Blog tomorrow for Part III in our series “Best Retirement Returns Come From Transparency and Education, Not Conflicted Advice.”