Millennials do not be fooled. 21st century investing requires benchmarks and tools to make an informed choice to achieve the best returns for retirement.

Ok, last week was indeed volatile.  That is what dark pools love, lots of volatility to trade ETF’s, with lots of volumes provided by millennials’ retirement assets shoved into ETF’s, conned into the concept of a “passive revolution” where cheap means better. The more the new passive robo-advisors trade, the more they get paid for their volume by dark pools, on your nickel.

Portfolio turnover and brokerage trading costs matter.  Is your robo-advisor giving you returns after all fees, including portfolio turnover statistics and all brokerage trading costs?  It is time to look at the hard data, the analytics, to determine what money manager is in your best interest, active or passive.  Accepting that passive is better, without the raw data, is like buying a Tesla without a test drive or jumping into an Uber without looking at the Uber driver’s ratings data.

How Did Your Portfolio Perform Based on Computerized Modern Portfolio Theory(MPT), last Month?

Whoops!  The concept of modern portfolio theory(MPT) is to be in various asset classes because they will not all go down at once (of course as the 2008 the financial crisis demonstrated and many economists have long found this theory, efficient market hypothesis and modern portfolio theory are clearly flawed).

Here is a chart over the last month of the computer driven algorithm selections of one of the largest online “robo-advisors”.  Compare the MPT computer generated returns to to Not On My Nickel’s core retirement benchmark funds.  72% of the robo advisor’s portfolio was in the asset classes, taken from their  recommended chart, shown below, for a 31 year old’s retirement portfolio, demonstrated in the chart below vs Not On My Nickel core retirement benchmark funds.

Modern Portfolio Theory Selections at Robo Advisor

Note that the blue and purple lines, in the chart below, represent Not On My Nickel benchmark funds that can be accessed directly, without brokerage fees, or mandatory arbitration restrictions, such as the robo-advisors charge and mandate.  This is in a down market, over the last month, but the data holds up for over fifteen years, where the low-fee active managers have outperformed the low-fee, modern-portfolio theory based passive strategies.  These are Not On My Nickel’s platform benchmarks– Why?

They outperform the relevant index, they are diversified, the managers are fiduciaries, act in your best interest, they do not trade with dark pools, have over five year track records exceeding their index and you do not have to agree to mandatory arbitration, or be subject to conflicted intermediaries–what more would you ever want or need to grow your retirement assets–low fees and top performance.

Not On My Nickel has nothing against passive strategies, if the selections of ETF’s outperform the active managers, after all costs for a minimum of five years, they will make it to our platform.  However, they just do not make the cut as these charts show.  It is clear none of the current computerized passive strategies do out-perform the top active managers.  It is Wall Street hype, as the data clearly indicates.  Yes, the average active manager underperforms, but why wouldn’t you invest with the few that do outperform?  Yes, Wall Street never says all active managers underperform, some do and Not On My Nickel can show who has outperformed the passive modern portfolio theory passive strategies.

Data does not lie, yet, words can misrepresent or deceive, as you can clearly see from the chart below.  Hard to believe that you have been duped? Take a look.  You have.  The “passive revolution” is but hype created by Wall Street to benefit Wall Street.

 

Asset Allocation and the Robo Algos

 

 

As this chart indicates, the greatest percentage of holdings all did go down at once, miserably under performing top-performing low-fee, actively managed balanced funds, not only for the month, but for over 10 years running.

Yes, but isn’t this robo-adivsor option cheaper than traditionally actively managed funds?

Actually, no.  Once one adds the management fee of .25% and the cost of the ETFs, rebalancing fees, and portfolio trading costs, the costs are comparable to the “online robo-advisor” option are more expensive, after all costs and the performance of the passive computerized ETF’s underperform, miserably, the low fee active managers.

How Do Modern Portfolio Theory selections compare to traditional balanced funds and a simple aggressive growth fund, with an overweight on an American technology superstar?

Take a look at this chart.  You be the judge.  You might want to reevaluate the concept that cheap doesn’t necessarily mean better. Yes, performance matters after all fees. Investment selection by trained experienced money managers make a significant difference.  The green, blue and purple lines represent active management, after all fees.  The purple active fund (PRWCX) underperformed the ETF, VTI, since it held bonds, not just stocks.  The ETF’s on the charts below are before advisor fees and trading costs!

 

Compare active to passive

The data speaks for itself.  Passive management based on modern portfolio theory is harming your retirement nest egg.  Media and Wall Street are all a buzz about the “passive revolution”.  Why?  It benefits them.  Time to look at the data.  Come join us at Not On My Nickel.  We believe in informed choice— our charts and tools empower you with the data to take charge based on data analytics, not based on Wall Street spin.

Contact us and we will add you to the list to receive our tools and platform first.  Do not let your portfolio be dragged down by the pink, red and yellow lines in the chart above.  It is not 21st century investing.

Informed Choice is 21st Century Retirement Investing

An informed choice, with NOMN’s inter-active cloud-based tools and platform, that empower you to take charge of your retirement assets to access the best active or passive SEC performance filling money manager, without Wall Street hype, is the 21st Century retirement investing revolution.

 

 

It is time for 21st century investing, with the necessary legal protections for America’s IRA’s. Ban mandatory arbitration, and give IRA’s a private right of action.   The photo is from the SEC’s historical files on self-regulation in the securities industry.  Not much has changed since this photo was taken as a recent report reveals.SEC Historical Society Photo on Industry Self-regualtion

Retirement investors must pay attention to this recent study:  Industry-run FINRA Arbritrator Pool Panels Lack Diversity and Fails to Detect and Communicate Biases.

This study underscores how disastrous the situation is for every IRA investor.  There are over $6 trillion dollars in America’s IRA accounts.  Securities laws are breached day in and day out costing retirement investors cumulatively billions through poor performance and high, excessive fees from conflicted intermediaries–investment product salesmen, calling themselves “advisors”, to distribute their investment products.

You can read more at our retirement investor advocate Blog, Blog.thederivativeproject.com.

An IRA, opened up in a brokerage account, has absolutely no legal recourse.  “You have no right of private action” in your IRA and you are also subject to mandatory arbitration  Both these two legal issues must change and adapt to the reality of today–Americans’ retirement savings are all they have–  they deserve 21st century legal protection to go with their life savings.

Almost every IRA is in a brokerage account and is subject to mandatory arbitration before FINRA, which is Wall Street.  They hear your claim and you can bet the arbitrators will not rule in your favor.

University of Minnesota’s Carlson School of Management Professor Akshay Rao stated in this report:  “It is my opinion the process is illusory and especially harms claimant investors.”

Do not hold your breath for Congress to do anything with Minnesota Congressman Keith Ellison (D-MN) sponsored bill the “Investor Choice Act of 2013″.

What Should a Retirement Investor Do for Protection Against this Unfair Legal System?

You have but one choice if you want the best returns at the lowest cost.  Use Not On My Nickel’s benchmarking platform and new cloud-based interactive tools to go directly to the best performing and least expensive SEC money managers.  You eliminate the salesmen and the brokerage account, the only safe option for your retirement assets in this dangerous retirement investing marketplace.

You will save yourself a minimum of $155,000, according to this study and have piece of mind, through less risk.  (See Part II of this Blog Post.)

Learn How to Go Direct and Eliminate A Brokerage Account, FINRA, for Your IRA

You do not have to open up an IRA with a brokerage firm. You do not have to go through FINRA’s kangaroo court and conflicted intermediaries.

We show you how to protect your life savings from the flawed brokerage account system and their self-regulator, FINRA.  You do have an alternative and we will show you how to do it.

Join our 21st century way of investing.  We do not rely on costly, archaic distribution systems that the retirement industry is determined to push, to support their bottom line, which just reduces your nest egg.

We use technology to enable your retirement assets–to go direct to the best, at the least cost.  You need to decide for yourself with our transparency, tools and platform —on active or passive. Not On My Nickel does not sell any investment product or give investment advice.  We are 100% independent.  Not On My Nickel Seven Criteria

With our tools and benchmarking platform, the Consumer Reports of America’s top money managers (passive or active), you are in charge and empowered to make an informed decision, for the very first time.

Take a look at our seven criteria, to the right, for a money manager to make it to the Not On My Nickel benchmarking platform.  Every Not On My Nickel manager is required to file holdings and performance to the Securities and Exchange Commission, on a regular basis. We urge you to only access money managers that do so.  Your financial advisor does not file their performance with the SEC, on what investments they select for you and neither do new “robo advisors”.  That is too great a risk to take with your life savings to not be able to look at an audited history of a minimum of five year performance, after all fees.

Your nest egg will no longer be in one of the 8000 poorly performing mutual funds.  Low cost does not mean better. Get all the facts before you invest. Poorly performing new robo advisor passive strategies carry great risks, interest rate, currency and political risks —and these firms may be trading your retirement assets in dark pools, that reduces your returns, but gives them trading income on your nickel.

Email us to get on the list to access our platform and cloud based interactive tools first!  info@nullnotonmynickel.com

You may also want to ask your employer to give you access to our interactive tools and benchmarking educational platform for your 401k.

 

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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.

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Target Date Funds are the default option in your 401(k) or 403(b) account.

Here are a few definitions to get started on this Blog Post:

Target Date Fund: “The funds generally are set up so that investors can put their entire nest egg into a single one linked to the year they expect to retire, in effect putting a savings strategy on autopilot,” as the Wall Street Journal reported in “Missing the Target” on June 14, 2013.

Default Option: Many employees are not aware that if they do not sign up for their 401k or “Opt Out”, their employer will automatically deduct from their paycheck for their retirement savings. Where does your hard-earned money go? Into a highly risky, very expensive, unproven Target Date Fund approved by the SEC and Department of Labor. Why would regulators do that? Wall Street convinced them to.  Here are the risks and solutions as reported by the SEC Investor Advisory Committee.

Simplicity for Retirement Investors: The government likes them because they are simple for investors. Just put your money in one spot. One can do the same at Not On My Nickel education. Learn how to compare what is in your best interest with Not On My Nickel education. There is a comparison below on what you are losing out on by allowing these default options, but first a few more definitions.

Not On My Nickel: A revolutionary retirement research and education service that engages retirement savers to take control of their retirement savings through choosing, on their own, one or two mutual funds.  Not On My Nickel provides ongoing monthly research and education on these funds for the investor. What is the difference between most Target Funds and Not on My Nickel researched funds?  Not On My Nickel researched mutual funds carry less risk, significantly lower fees and proven portfolio manager performance that outperforms indices. It is simple, easy and much more conservative than a Target Date Fund.

Regulatory Capture: The influence of big-monied lobbyists on our nation’s financial services regulators, on behalf of the financial services industry.

Government Oversight: The Department of Labor knows these funds are fatally flawed, but Wall Street likes them. That is what is called regulatory capture. Wall Street determines the investments that go into the Fund. The more assets in the Funds, the more the financial services firms make.

Who Wins: Wall Street- Target Date Funds generate significantly more fees for financial services firms. Take a look at what the holdings are in the State Street 2030 LifePath Index Target Date Fund in the Chart on the lower left:

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Asset manager, BlackRock wins in this case. You will note that most of the holdings in this Target Date Fund, State Farm Life Path 2030 are Blackrock ETF’s or IShares. Who is the lead advisor to State Farm on this Target Date Fund? Blackrock’s Amy Whiteslaw, the Director of Blackrock Institutional Trust Company. Ms. Whiteslaw is one of the Portfolio Managers for State Farm, with an employment history of designing defined compensation plan holdings.  No conflict there?

The unlucky retirement investors that have been placed in the State Farm 2030 Life Path Fund or the TIAA-CREF 2030 Index Fund or TIAA-CREF 2030 Target Date Fund are losing due to higher fees and poor performance compared to Not On My Nickel researched funds.  These retirement investors now have a choice.  Not On My Nickel research and education provides the tools every retirement investor needs to take charge and invest in a few easy steps on your own.

Power of Compounding: The longer you wait to take action the greater you lose. See what waiting costs you at this compounding calculator at the SEC website.

As the Wall Street Journal reported: “Target-date funds, which are often composed of separate underlying funds, also carry widely disparate fees, and higher-cost funds can cut into investor returns. Some of these underlying funds passively track indexes, while others actively try to beat the market—an approach that can push fees up and lead to diverging performance.”

Here is a comparison between the performance of three Target Funds and a NOMN researched fund for your retirement savings.  One can easily select the NOMN researched balanced fund and invest in it, in place of a Target Date Fund. This is accomplished through your 401(k) Brokerage Window or your IRA.  The comparison is compelling.  Less fees, proven performance, less risk…what are you waiting for!  Screen Shot 2013-07-30 at 5.00.16 AM

The green line is a core Balanced Fund (PRWCX) researched by Not On My Nickel. It has proven performance, lower fees and less risk compared to the State Farm 2030 Life Path NLHAX, represented by the Blue Line and TIAA Cref (TCLNX), red line, Target Date 2030 Fund or TIAA Cref 2030 Index Fund (TLHIX), purple line.

The State Farm Target Date has an Expense Ratio of 1.6%, Brokers get paid .25% (12b-1) fee each year (!) for selling it to you and you pay the stockbroker or financial planner a 5% load to buy it!

What are you waiting for. Take action and move out of your default option. Remember the power of compounding.  Next week’s Blog will show you how much you are losing in Target Date Funds, such as this State Farm one, designed by BlackRock.

 

How does a financial advisor advocate selling investors poorly performing index funds? It’s a case of the emperor having no clothes.

Financial Advisor Dan Solin states in a June 18, 2013, Huffington Post article, “Slick Tricks to Separate You From Your Money”:

Underestimating Your Intelligence: Wall Street hopes you won’t discover evidence-based investing. The entire premise of the brokerage industry — its predictive “expertise” — is flawed. There is a much better way, backed by peer-reviewed data. It does not rely on financial astrologers or other hype. It targets expected returns of the capital markets. Two leaders of this intelligent and responsible investing strategy are Dimensional Fund Advisors and Vanguard. Both are thriving as investors abandon actively managed funds. DFA explains how it invests in this excellent white paper. [Full disclosure: I am a wealth advisor with Buckingham Asset Management [BAM]. Buckingham recommends DFA funds to its clients]. John Bogle, the founder of Vanguard, explains the benefits of evidence-based investing in this lucid talk he gave in 2001.”

Before we go on, have a look at these returns from Yahoo Finance comparing one of Solin’s DFA funds with a Not On My Nickel-researched fund. The DFA Fund’s investment objective includes “Small Capitalization” stocks, so we have used a comparable Not On My Nickel fund.

evidence based investing

  • Green line – NOMN-researched fiduciary portfolio manager
  • Purple line – NASDAQ, unmanaged index
  • Blue line – Solin’s DEFOX, Dimensional Fund Advisors Core Equity 1
  • Red line – S&P 500, unmanaged index

Evidence based investing should be based on evidence

How can Solin, the “Investor Advocate” for the BAM Alliance, actually advocate selling funds that underperform?

He speaks in his article as if he is doing investors a favor, when he’s leading them to do exactly the opposite of what he states. He’s towing the company line to sell mutual funds that fill his pockets with profits, not investors’ retirement savings. It is interesting to note that these mutual funds can only be sold through an “advisor,” most of whom charge about 1.25% per year for an assets-under-management fee.

As you can see above, his DFA fund underperformed the Not On My Nickel-researched fund dramatically:

  • The NOMN-researched actively managed fund, according to Morningstar statistics, Total Annual Return for the 5-year period, ending July 1, 2013 — 15.81%
  • Solin’s “passively managed” fund, DFEOX, according to Morningstar statistics, Total Annual Return for the 5-year period, ending July 1, 2013 — 8.37%.
  • Solin’s recommended fund underperformed the NOMN-researched fund by over 7.4%, before his fees.
  • Now, add Solin’s advisory fees for selecting this passive fund for your portfolio (1.25% for assets up to $500,000, according to Buckingham Asset Management’s SEC filings) and you have lost 8.7% on your investment in opportunity costs with Solin’s advisory services. Seems he’s more of an advocate for his bottom line than his clients’.
  • Since Solin does not disclose actual past performance and advisory fees in his article, one could call this a “Smart Trick to Separate Your From Your Money.”

Solin goes on in the Huffington Post article to say:

“Market beating brokers and advisors are emperors with no clothes, touting an expertise they don’t have and taking advantage of their naive clients.” He’s right. He is an emperor without clothes. He is advocating funds when there exist better alternatives that deliver better performance and without his high fees.

What’s an investor to do?

NOMN believes in full transparency and straightforward explanations, whether one is an advocate for passive investing or active management. Both have a role in retirement investing today.

NOMN seeks to provide transparency for both active managers and passive managers and let the informed and engaged retirement investor make her own decision based on factual information, real evidence.

We don’t believe in charging 1.25% to place anyone in a passive fund, or active fund, like DFA and BAM do. This creates a conflict for the retirement investor. They don’t have a “fighting chance” to get ahead if their hard-earned savings fills an advisor’s pockets and guarantees returns at a passive index minus 1.25%.