How do you achieve the best retirement returns? First, understand performance does matter. Poor advice will detract from your performance and how much money you will have at retirement.
At Not On My Nickel you learn how to determine what is good and what is bad advice. At Not On My Nickel, you are not doing it yourself. You are given the tools, research and education to select your portfolio manager, who will do all the retirement investment management for you.
Ideally, one does not change managers very frequently. Not On My Nickel helps learn how to research portfolio managers that have been in the business for decades and have the performance results that exceed their relevant indices. There are not many that consistently outperform their index. Not On My Nickel believes in strictly investing with the few portfolio managers that do.
Passive vs Active Management
Not On My Nickel believes in principally active management, but solely with our nation’s top portfolio managers that have proven their worth and have out-performed their index for years. They must meet our six strict criteria, as defined on our home page here, “Save Your Sanity” and have prudent and reasonable fees, as one believes in “an honest day’s work, for an honest day’s pay.” These are the true fiduciaries, not middleman that keep you in the dark as to performance and unnecessary fees on top of fees. By definition, that model is NOT a fiduciary business model. It is simply a model that developed with the advent of 401(k)’s in the early 1980′s. It is a redundant business model.
This business model and the “financial planning” industry is now focusing on lower fee mutual funds and ETF passive investing, solely as a means to keep their high fees of 1%- 3%. Why? In this low interest rate environment, once you pay your “advisor” your returns may be negative. Thus the advice industry is able to retain their fees, if the asset manager (who is actually managing your money) has lower fees, which is the case with passive investing.
There may be instances when passive management is warranted, but a blind adherence to passive investing, guarantees performance, after fees, below an index.
Not On My Nickel’s Vision
We are here to change the current business model for retirement investing. Ideally, everyone would have defined benefit pensions, but that is no longer the case and probably will not be the case. What is the next best alternative today? We believe that in today’s retirement investing marketplace “assets under management fees”, on top of mutual fund fees, are simply a scheme to defraud a retirement investor of savings that belong rightfully to them. We provide the tools and education to help retirement investors take charge.
Take a look at this chart on the left of a 401k investor’s dreadful returns compared to a Not On My Nickel researched portfolio manager, PRWCX. How much is lost, in many of the 401(k) plans today? So much money is needlessly lost, particularly from newly-designed target date options. Yes, in most 401(K) plans, you are often losing your hard-earned savings to fees and poor returns. The returns on the left are the actual returns, filed per SEC reporting standards.
In the instance on the left, if you have a State Farm sponsored plan, managed by Black Rock, as the chart on the left depicts, and are in one of their Target Date Fund options(NLHAX), you could be giving up thousands of dollars needlessly for advice fees, 401(k) fees and poor returns. Further in this instance on the left, your employer may have allowed Charles Schwab/Guided Choice to further charge you an advice fee to select a poorly performing Target Date Fund.
Read the study to the right, prepared by Robert Hiltonsmith. You are losing hundreds of thousands of dollars to worthless fees in most 401(k) plans. Not On My Nickel further highlights the worthless advice fees, not mentioned in this study, that are being skimmed from your nest-egg by “Advisors” and the poor returns of today’s Target Date Funds or packaged exchange traded funds, (ETF’s) that have no performance history! It is like throwing money into the wind.
You can change this picture today! Despite the promotion by main stream media, described in this Blog Series, Part I, by the Wall Street Journal and the New York Times, financial advice for everyone, is not the option. Employer sponsored 401(k) education is conflicted and therefore of little value. Conflicted advice and education, provided by a sales force, selling products, is not advice and education. The result is financial illiteracy. Bona fide retirement investing education that provides real transparency and the tools to make informed choice is the solution.