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.

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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.

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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.

An Exception to the Free Market Economy – Something Just Doesn’t Add Up with So Many Poorly Performing Mutual Funds

Many studies repeat the theory that there are approximately 10,000 mutual funds and 75% under perform their relevant index.  We all know a free market economy is based on free choice and competition. If a free market is based on free choice and competition why is anyone investing in these perennial under performers?  Wall Street has some explaining to do–why are there so many poorly performing mutual funds if there is a competitive marketplace?

Screen Shot 2013-11-12 at 3.35.33 PMWho is investing in all the poorly performing mutual funds?

  • Who are the advisors recommending these funds to their retirement clients?
  • Why hasn’t anyone given retirement investors the tools to make an informed choice and not select the poorly performing/high fee funds?
  • Why do employers put poorly performing Funds in their 401(k)’s?
  • Why do paid CFP’s and other Defined Contribution Plan consultants recommend these poorly performing funds to employers?
  • Why is the Department of Labor allowing poorly performing/high fee funds in your 401(k) plan?

Listen to this video interview with a Financial Advisor, conducted by the Financial Times’ Financial Advsor IQ, on how an Advisor selects a mutual fund.  The reality, as the last financial advisor in this interview told the Financial Advisor IQ, is one needs an Advisor to sort through all these poorly performing funds.  The industry, “Wall Street” has created the need for a “financial advisor” by stuffing thousands of poorly performing mutual funds with retirement investor assets and into 401(k) Plans.

In the article linked to above, Michael Rosen, Financial Advisor told the Financial Times Financial IQ:

“Hey, you could just throw a dart at a board. No, realistically, there’s a million of them out there, but there’s plenty of tools that you can break them down, like tenure of the manager, the volatility of the fund, then doing a fact-find on what the client’s looking to do and then you try and put it together and make the best decision. But, again, that’s why you need a financial advisor, because there are a million different choices out there and you try and simplify it for the client.”

Not On My Nickel’s concept is simply you select the one or two portfolio managers that will do all the work for you, with top performance and low fees.

Your results:

  • Less Fees to the mutual fund manager
  • Proven investment strategy from top portfolio manager, that has a 10-15 year track record of out-performing their relevant index
  • No Fee to a Financial Advisor, who you do not know if they are any good at selecting Funds for you or if they may have conflicts on what they select for you
  • The tools and training for you to decide what portfolio manager/mutual fund is in your best interests.

Remember, just because Wall Street has created over 10,000 poorly performing mutual funds, you do not need to pay an Advisor to select one of these poorly performing funds for you, as they have in the past. Not On My Nickel gives you the tools and the confidence to select the portfolio manager, the investment style and a top performing Portfolio Manager to manage your retirement nest egg.

Further, how do you know if the financial advice you have been given is any good, in terms of investment selection?  You do not know unless you can compare the Advisor’s recommendations against a benchmark.  Chances are you are losing thousands of dollars in worthless fees and poor performance.

Not On My Nickel is the education service that shows you how to evaluate the investment selection advice you are given, through tools and the benchmark.  When there are a few top portfolio managers that have demonstrated they can out perform the relevant index, why would you ever settle for an index fund or a passive investment or poorly performing fund. You are guaranteed to under perform the index, if you pay an Advisor for a passive investment or a package of passive ETF’s, based on a computer model.

Help Us Return to A Free Market, A Competitive Market Place for Mutual Funds

Once you exercise your informed choice and select the top performing mutual funds, the poorly performing funds will disappear. It is call free and open competition. You are in charge of restructuring this flawed marketplace, littered with thousands of poorly performing, high fee mutual funds.

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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 = FutMP900341471Not On My Nickel presents revolutionary change in retirement investing:  Transparency and bona-fide financial education, with regular performance reporting— the key to superior retirement performance

 

 

 

Not On My Nickel’s Number One Retirement Investing Rule to Achieve Superior Performance

How do you achieve the best retirement performance? Do not take advice or pay an assets under management fee to any  “financial advisor” that does not file regular performance results, against a widely published index, with the Securities and Exchange Commission, SEC.  Only make informed choices.

Take the time to get the proper education and the tools to make informed decisions.  It is simply a one-time, up-front investment in time to learn what you need to do to make an informed choice on how to invest your retirement savings.

The Media and the Financial Advice Industry

The media is a master of convincing the public they need financial advice. Why?  It generates advertising revenue for them from financial services firms.  The latest media blitz focuses on the need for the public to have access to “financial advice.”  Financial advice does one thing—it detracts from your investment returns.  There is yet to be a published study that can show it will increase your returns.  Ignore the media hype in articles such as these two:

“A Start-up Aims to Bring Financial Planning to the Masses”  New York Times, July 26, 2013.

“401(k) Plans Add More Personalized Advice” Wall Street Journal, September 5, 2013

Not On My Nickel can state unequivocally your retirement savings returns will increase if you take the time to understand just a few key concepts.  Your returns will increase in two ways:

(1)  You will have ready access to the top performing portfolio mutual fund managers through information and education and (2) you will save the costs for the advice fees that are simply a drain on your retirement savings.  They do not add extra value, by definition.  They are financial intermediary fees that can easily be avoided through transparency, use of education, proper tools and effort.

Why You Do NOT Want to Pay a “Financial Advisor” a Fee for Investment Advice:  It is Conflicted and Not Bona-fide Financial Education

Let us first distinguish between investment advice and financial planning and budgeting.  If you want help with learning how to prepare a budget or financial plan, pay a “financial planner” an hourly fee to learn how to do a budget or a financial plan.  Follow these simple rules:

  • If you need life insurance, buy term insurance from a top rated insurance company for 20 or 30 years.  Never buy “cash value” life insurance.  Learn about life insurance online.  Here is one source: Life Insurance – Wikipedia.  Do not take any retirement investment advice from a life insurance salesman, even if they say there are a “financial advisor”.  They are not trained in portfolio management.
  • If you need a will, go directly online and learn how to draft a will or go to an estate attorney.  There is no reason to pay a middleman, “financial advisor” to tell you that you need to go to an attorney to draft a will.
  • If you need tax advice, go directly to an accountant.
  • If you are in debt and need assistance, there are many free consulting services there to help, such as Debtor’s Anonymous.

Read Helaine Olen’s Book for more background information on the dangers of the advice industry, Pound Foolish. Exposing the Dark Side of the Personal Finance Industry.

If you need investment advice, hire a portfolio manager, who is a fiduciary, registered with the SEC to manage your retirement assets.  A financial advisor, a CFP,  is in 99% of the cases, not a fiduciary, even if they are registered with the SEC. They are not specialists in investments and portfolio management.  Deal only with a specialist, a portfolio manager, registered with the SEC who provides you five- year and ideally, ten- year performance returns, that have been filed with the SEC.

“Financial advisors” DO NOT file performance returns with the SEC and they do not specialize in portfolio management.  Financial advisors are generalists.  Go directly to the best, the portfolio manager for your investment advice and day-to-day investment management.  Not On My Nickel’s research service puts you directly in touch with a short list of the top performing specialists, the mutual fund portfolio managers and keeps you updated on these portfolio managers and their mutual funds, on a regular basis.

Join us tomorrow for Part II of our Blog: Best Retirement Performance Comes from Education, Transparency, Not servicesConflicted Financial Advice.  Or email us today to get started on your curriculum that will shape your retirement investing future.  Ask your employer to incorporate Not On My Nickel’s experiential curriculum in your workplace.

Here is the link to the Not On My Nickel Slide Show for Employers

 

Happy businessmen
With the advent of the Internet, retirement investors can now take control of their nest-eggs with the proper tools and research
With the advent of the Internet and easy access to information, many people are now buying airplane tickets and booking hotels online. The intermediary, the travel agent, has been eliminated in many transactions. Why? One can obtain the same thing through less money and through their own research, perhaps delivering a better vacation by exploring the alternatives that best fit their life styles.

Not On My Nickel believes with the proper tools, real education and transparency, retirement investors can get engaged and pick their own portfolio managers. Why is this so critical today?

No Transparency

(1) In most cases you have no idea what the performance will be for the selections that your financial advisor is recommending for your retirement nest egg. See Not On My Nickel’s Blog on the lack of audited performance standards for Advisors. They are using asset allocation models and placing you in so many asset classes, you really do not know if it is better or worse for your returns.

Redundant Fees that Deliver No Value

(2) You are paying the financial intermediary in most cases an unnecessary fee and you are guaranteed to do worse than an index fund, if you are in an index fund, as a result of this fee.

Advisor Created Obfuscation in Employer Plans – Get A Simple Straightforward List of the BEST Portfolio Managers, with Proper Education, at Not On My Nickel

(3) If you are provided a simple list of the very, very few top portfolio managers/mutual funds that have outperformed the index for many years, after fees, you will most likely do better, since you are saving the advisor fee and your returns are not being diluted by poorly performing funds.

Advisors Subject Your Savings to Potential for Fraud - Not On My Nickel Eliminates the Risk of Advisor Fraud

(4) You eliminate the risk of Ponzi schemes! Here is a another one reported recently in Investment News: FINRA alleged that from December 2010 to January 2013, he converted customer assets in two trust accounts, using at least 50 transactions falsely characterized as loans, and transferred the money to two of his friends. One victim was a 77-year-old retired homemaker with Alzheimer’s who lived in a nursing home, FINRA said in the settlement agreement. Mr. Thornes diverted about $1.7 million from the homemaker’s $2 million trust account, FINRA said.

Why Hasn’t The Retirement Investor Taken Charge Sooner?  Workplace Financial Education Has Been Designed To Move Your Towards Hiring a Financial Advisor

Assume for a moment you go to your 401(k) menu selections, how do you know which one to pick?

• Does the financial education package provided by your employer, as mandated by the Department of Labor, show you how to select the best fund for your
needs? Not normally.

• Does the financial education package provided by your employer, as mandated by the Department of Labor highlight the additional costs and risks of going
with a Target Date Fund? (Read SEC Investor Advisory Committee’s List of Risks with Target Date funds here –  It is a long list!)

• Does your financial education package encourage you to get help in picking a mutual fund?  No, there is no employer provided education on how to measure what mutual fund is best for you!  Here is the typical response you get for any employer plan option:  “Yes, click here to hire an advisor.”

• Does your prospective financial advisor show you your monthly returns for your total portfolio after all fees, including the advisor fee, before you choose to invest with them? If not, it is time to take over.

Example – a Fidelity 403(b) Plan

One Employer’s Defined Contribution offers 353 options! Wow, where do you begin?

Now for this plan, administered by Fidelity Investments, it does provide a good screening option for the investments they offer. Say you want to select a Balanced Fund, with low fees. You run Fidelity’s screener using low expenses and here is what you get, shown in the Chart Below:

Screen Shot 2013-07-29 at 12.33.35 PM

Do not hit the button after you take a look at this graph – “I need help, I need a financial advisor!”  Through Not On My Nickel’s real financial education curriculum, that is hands-on, pragmatic and straight-forward, you will be on your way. It is the first and only retirement curriculum designed for you to take charge of your retirement savings, without an unnecessary layer of a financial advisor that operates in their interest.  Learn through Not On My Nickel straight-forward curriculum how to read this chart, what each item means and how to make the choices in your best interest.  Learn why you would never want to select the Target Date Option. Learn how much money you are losing if you are in the Target Date Option.  Learn the fees associated with each option.

Remember from NOMN’s last week’s Blog Post on audited performance standards, if your financial advisor does not post their performance standards monthly on their website, and are measured against an approved index, caution. Note that is a red flag and cause for concern.

Learn more about Not On My Nickel tools, educational services and how to research the select few top performing mutual funds for your retirement nest egg today. Invest a few hours of time and you will be on your way to taking charge of your retirement nest-egg with portfolio managers you believe in, without the high fees and associated risks of the unknown.

Brokerage Window

Remember, if you are in a 401(k) plan with options that have high fees and poor performance, you have an alternative today!  You may use your 401(k) Plan’s Brokerage Window with the research and education provided by a Not On My Nickel subscription, whose annual costs are less than the Load Charge on a typical mutual fund and provides the tools, research and education to eliminate all these fees detracting from the performance of your retirement savings.

 

 

 

Don’t Be Fooled Anymore – Get The Audited Numbers on Your Performance, Based on a BenchmarkDunce Holding Paper Money

In this Blog we take you through the steps to learn how to:

  Compare a fund manager’s performance to the appropriate index.

  Learn how a mutual fund’s performance is regulated by the SEC, but your Advisor’s performance is not audited or regulated by the SEC.

In general, financial advisors are not actually managing your money. They place your money with various portfolio managers or some combination of passively managed exchange traded funds (ETF’s). In last week’s Blog we reviewed how America’s top “Advisor” is the best salesperson, according to Barron’s. Read the fine print of your contract. Once your Advisor selects an investment for you, your Advisor has no ongoing duty to monitor that investment, even if they are charging you a fee to do so!

What are the risks for having a salesman managing your nest egg?

As the SEC has warned, your advisor has no training, education or professional qualification to select these portfolio managers; it is not mandated by the SEC.  In its March 13, 2013 Report on the Regulation of Investment Advisers the SEC warned investors that:

“Unlike the laws of many other countries, the U.S. federal securities laws do not prescribe minimum experience or qualification requirements for persons providing investment advice.”

Your Advisor may pick one good ETF or Fund, but may also pick several that drag down the performance of the strong fund, due to lack of experience and training.

Your Advisor does not prepare audited returns that are filed with the SEC, so there is no benchmark to see how you are actually doing, based on the Advisor’s selections, for your retirement nest egg, after the Advisor’s fees.

Your Advisor does not continue to monitor the investments they place you in! It is your responsibility.

There are many Ponzi schemes because there are no standards for Advisors and many “crooks” thus enter this business and prey on your emotions and promise high returns. (Bernie Madoff has warned from jail – “Madoff, Other Felons Say Markets Unfair.”

Eliminate these great risks and investment directly with the Portfolio Manager in a mutual fund(s) that you select and can monitor, based on ongoing professional research and education.

The SEC has defined the benefits of a mutual fund at their website.

Professional Management. The fund managers do the research for you. They select the securities and monitor the performance.

Diversification or “Do not put all your eggs in one basket.” Mutual funds typically invest in a range of companies and industries. This helps to lower your risk if one company fails.

Affordability. Most mutual funds set a relatively low dollar amount for initial investment and subsequent purchases.

Liquidity. Mutual fund investors can easily redeem their shares at any time, for the current net asset value (NAV) plus any redemption fees.

Audited Performance Standards by Your Mutual Fund Portfolio Manager

Mutual funds are regulated by the Investment Company Act of 1940 which
requires:

  The mutual fund company must disclose publicly its financial health on a
regular basis.

  By law, each mutual fund is required to file a prospectus and regular
shareholder reports with the SEC

  It has to register with the SEC and file quarterly reports with the SEC.

  The mutual fund manager has a fiduciary duty to act in your best interests,
not hers, while the SEC permits your financial advisor to act in
their best interest

  There are strict controls for where the securities are held and who has access
to them, which is examined by an independent accountant at least three
times each year.  Do you know where your Advisor is placing your funds and how often it is audited by an accountant?

Here is the format that the SEC requires that the Mutual Fund adhere to for reporting:

Screen Shot 2013-07-29 at 7.02.09 AM

 

Not On My Nickel provides you monthly audited performance figures, per SEC standards (except for taxes, since they are not relevant until distribution in 401K or IRA) on a monthly basis for the mutual funds that you choose. In future Blog Posts we will show you how to determine your overall return if you are in multiple funds and give you a simple format to plug in your own numbers to watch your savings grow.

Here is an example of a researched NOMN balanced fund (Blue Line) and NOMN aggressive growth fund (Red Line) compared to a State Farm Target Date Fund (Green Line).  Do you know how to compare your performance, based on your Advisor’s recommendations in this graph?,  If not, it is time to take charge and get access to the best returns, at the lowest cost, based on audited performance standards.

Screen Shot 2013-07-29 at 8.49.29 AM

So, without audited performance, that the SEC mandates for SEC registered portfolio managers, but not financial advisors, you are throwing your money into the wind. Time to take charge, eliminate the redundant fees and place your money directly with the SEC fiduciary portfolio manager.