Uber Proof your Portolio

It is time to Uber your retirement portfolio.  What do you get when you Not On My Nickel?  You are in the driver’s seat.  You get a road-map. You have the tools to choose what is in your best interest.  It is a pretty picture, not to mention empowering and pleasurable to take charge.  No more headaches of Ponzi schemes or being duped or needlessly sacrificing over 1/3 to 1/2 of your nest egg for the pleasure of having your hand held by a salesman.

There is something new under the Sun.  We spent the weekend in San Francisco. Wow.  Uber is a bona-fide disruptor and a pleasure.  Let’s start with ease of use, followed by cost and a more pleasurable experience.  One appreciates transparency, beauty and cost.

Not On My Nickel delivers transparency and tools — a pretty, sunny, real-time picture:

  • Performance measurement with transparency of returns and costs – In simple, clean charts, you quickly have Performance, updated daily, after all fees.  For the very first time you are able to measure your performance, something your financial advisor has yet to provide you, after all fees. Not On My Nickel believes in evidenced-based investing.  Show me the money, the performance and the actual results, after all fees, not some fancy sales pitch.

 

  • You are in the driver’s seat.  You do not have to wait.  You know exact where your money is, how it is being invested, since you are no longer dependent on an intermediary.  You have direct access to the money manager’s investment philosophy and learn first when there are any changes.  There is no more dependency on an intermediary who filters what you see.

 

  • Crowd sourcing – Our website is a social hub.  Did your advisor testify to the Financial Stablility Oversight Council about the systemic risks of money market mutual funds?  Not a one did!  Not On My Nickel’s advocate did on your behalf.  Advisors will not tell you about the critical issues, nor fight for what is in society’s best interest,  if it detracts from their revenues. As you Not On My Nickel, you know the issues that advisors do not tell you about, before they detract from your performance,  such as:
  1. Why a money market fund might not be in your best interest.  How do they pose systemic risk?
  2. Has your Advisor told you about the SEC’s proposed changes and new exit fees in money market mutual funds?  You may have limited access to your cash in money market mutual funds for over ten days if Wall Street causes another run on your money, as in 2008, with the Reserve Money Market fund.
  3. What is voluntary recapture in a money market fund?
  4. What are the issues with Target Date Funds?
  • Access to superior money managers, based on the most critical Not On My Nickel seven criteria.  Not On My Nickel shows you how to know if you are paying more, in trading costs, if your advisor’s firm is trading in dark pools.  Is your Advisor?

 

  • Dynamic rebalancing – Let the pros do it. Do not let sales personnel, with no investment management experience or some computer algorithm, a so-called “disruptor”, based on historical trends, decide when it is time to rebalance, Not On My Nickel your portfolio and let the pros, the experienced money managers, do it for you.

Remember every “trusted adviser” must file with the SEC in their ADV:

 “Registration of an investment adviser does not imply any level of skill or training.”

As Neil Irwin wrote in The New York Times today:  “Why Can’t the Banking Industry Solve its Ethics Problems?“,  “The complexity of modern finance, the greed and gullibility of individual financial consumers…and financial sharp practices that fall short of fraud…”,

There is a reason why financial advisors’ profits are sky high, as reported in Investment News today:

Ameriprise Advice Unit Reports 29% Increase in Pretax Profit”

There is a reason why financial advisors select the mutual funds that pay them the most:

“DFA, American Funds Retain Top Spot — and Most Money Fund Advisors”

Advisors skim from your retirement nest egg, without adding any value, after all fees.

You can access superior money managers to DFA and American Funds, without paying an Advisor one percent, such as DFA Advisors. One distributor of DFA Funds, Buckingham Asset Management LLC charges 1.25 % (portfolio up to $500,000) to sell DFA Funds. American funds charges a 5.75 % up front-end load.

Every Nickel You Pay to an Advisor is a Nickel that is not Invested in Your Retirement

It is time to DIY your retirement savings and go direct to the best portfolio managers, without a conflicted intermediary.

On a $25,000 retirement account, to purchase a DFA small cap fund, one would pay Buckingham Asset Management $313, annually, or and American Funds, $1437.50, upfront, in addition to their 12B-1 fee, that goes to the Advisor annually–for an additional $60.  Note, the American Fund’s advisor, has no requirement by law, to monitor the investment for you (Non-discretionary portfolio.)  Yes, it is annual income to the Advisor for doing absolutely nothing.

Time to Uber-proof your retirement portfolio.  Learn how to access superior performance, at less cost, with an upfront investment of your time, that will pay dividends each year in greater returns. Take charge with the tools that show you the picture that you have been waiting for:

Look at the Performance Chart Below

The green line is what you could have chosen, on your own, if you had Not On My Nickel’d earlier this year.

The blue line is what your Advisor will sell you for one percent.

The red line is what the so-called Silicon Valley “disruptors”, like Wealthfront or Betterment, will sell you–an Index fund that is cheap, but under performs seasoned money managers.

Screen Shot 2014-07-30 at 12.42.31 PM

Do not be greedy and do not be gullible.  Take charge, as you have the power of compounding on your side.  If you wait, the advantage of time is gone.

Time to Uber – proof your portfolio and take charge, where you are in the driver’s seat.  It is time to Not On My Nickel on our soon to-be released retirement platform.

Time to end the learned helplessness and dependency on conflicted sales personnel, whose objective is their bottom line, not yours.

 

 

Wall Street, through its bullhorn (CNBC) has anointed the “Disrupters” to Wall Street.  Remember CNBC is pure entertainment and books the guests that will simply sell their show, it is just that simple.  The CNBC Disruptors are in turn all Wall Street “broker- dealers”, making money off of trading, unfortunately in venues, with inherent conflicts of interest, that are destabilizing the markets for all of us.  We hardly call that disruptive.

We like the concept of one of the “CNBC disruptors”, lowering financial intermediary costs.  Wealthfront is Number 20 on CNBC’s list.  Yet, we don’t want the average retirement investor to fall prey to the new Wall Street/CNBC hype that these firms are bona fide “disruptors”, if they are actually providing lower returns and contributing to market instabilities.  We have concerns with the actual performance and all in results from these new online firms are providing for retirement investors. Here is Wealthfront’s CEO Adam Nash’s comment (in red below) to CNBC,on being selected a “Disruptor”:

Wealthfront Comment to CNBC

Concern Number One – Wealthfront (Betterment and Motif – also on CNBC’s new list) Questionable Broker-Dealer Practices

The Senate Securities, Banking and Insurance Committee held a hearing today, “High Frequency Trading’s Impact on the Economy” and the Senate Committee on Permanent Investigations held a hearing yesterday, “Conflicts of Interest, Investor Loss of Confidence and High Speed Trading.”

Andrew (Andy) M. Brooks, Vice President and Head of U.S. Equity Trading of T. Rowe Price Associates, Inc. spoke elegantly in defense of a regulated market structure to protect the average retirement investor.  In his written testimony he stated:

‘We are supportive of genuine market making; however, we acknowledge that there are predatory strategies in the marketplace that have been enabled by our overly complex and fragmented trading markets. Those parties utilizing such strategies are exploiting market structure issues to their benefit and to the overall market’s and individual investor’s detriment.

Market participants utilizing such strategies are essentially making a riskless bet on the market, like a gambler who places a bet on a race that’s already been run and for which he knows the outcome.”

Wealthfront Takes Payments for Trade Routing and Takes No Responsibility for Obtaining Best Prices -Is this Inappropriate?

Wealthfront’s broker-dealer deals with “market participants” described by Mr. Brooks above. Why? Wealthfront is involved with one’s retirement dollars in the payment of fees for “order” flow, where one might get a lesser price than available at the time.   Payments to broker-dealers, such as to Weathfront’s brokerage, was a topic of concern at both Senate hearings this week.  As Wealthfront’s Customer Agreement states:

(1) “Wealthfront shall not have any responsibility for obtaining for the Account the best prices or any particular commission rates. Client recognizes that Client may not obtain rates as low as it might otherwise obtain if Wealthfront had discretion to select broker‐dealers other than Broker.”

Wealthfront, Betterment and Motif all use a relatively new broker, clearing firm, custodian – Apex, that receives payment for order flows and deals in dark pools, where there is no price transparency.  Wealthfront’s customer agreement states it also accepts payments for trade execution:

“Apex or Wealthfront may receive compensation or other consideration for the placing of orders with market centers…”

As the testimony at the two Senate hearings revealed,  these new automated trading systems and high frequency trading firms are creating conflicts of interest, higher costs, market instability, potentially such as the May 6, 2010 Flash Crash..  Quite possibly, volume for their trades is being funneled to them by Wealthfront, Betterment and Motif. You have agreed to this order flow in your Customer Agreements and it in no way benefits the retirement investor.  It strictly benefits Wall Street.

Increased regulatory costs to monitoring their destabilizing “conflicted” behavior may be costing the U.S. retirement investor in higher trading costs and most definitely wasted tax revenues to fund the regulation and studies to determine how to stabilize our capital markets.  This money could be better spent on sustainable economic development, to benefit society overall.

What is a retirement investor to do to bring about change, better returns, less risk and lower taxes?

  • Remove your money today from any “money manager” that has or utilizes a broker-dealer that is receiving money for routing retirement dollars for payment and/or to dark pools, where there is no price transparency.
  • Obtain your one and two year trailing annual returns from Betterment and Wealthfront  for your retirement account. Are there better options?  Are these online “advisors” adding value after all costs? Are they really “disruptors” or actually new “parasites” generating profits through a lower fee on passive investments combined profits from direct payments for trade executions, hiding your actual performance after all costs, resulting in guaranteed returns below the relevant index?

The selection of this years Nobel prize winners’ beliefs reflect the Committee’s respect for both active and passive strategists, Shiller and Fama.. Are you leaving too much on the table by simply letting computer algos decide what passive strategy may work for your retirement nest egg?  How do you know this computer algo is any good? Despite these firms statements these are “new” computer strategies, they have been used for over 30 years in managing retirement dollars for small accounts.

Remember these firms have no published performance history with the SEC.  They have changed their “strategy” and investment objectives frequently.  They have flipped flopped from being a “non-discretionary” to “discretionary” investment manager overnight.

These are significant red flags.

After all fees, analysis shows the new “disruptors” are not only fueling dark pools and excessive trading with “maker-taker” that is costing the stability of our markets as several experts testified this week to Congress, but also delivering passive returns, below the index, after their fees and the relevant ETF fees.  There are many market “experts” that still support active investing.  It may be best to hedge your bets, as this years Nobel Prize committee did.

So are the new “disruptors” contributing to lower returns and greater market instability for the retirement investor?

 

 

 

 

 

 

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.

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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.

 Screen Shot 2013-10-07 at 10.15.57 AMWhat is the Number One Financial Mistake Women Make?

If women do not know the difference between using a financial advisor for (1) financial planning and (2) for the process on how to select an investment, chances are they will be sold products that do not suit their needs, pay fees in excess of what is necessary and limit the future performance of their nest egg.

Not On My Nickel assists women in understanding the difference between financial planning and investment selection.  We are here to help you understand why in most cases you will never want to pay a “financial advisor” an annual fee for assets under management and when to pay a financial planner.  It is imperative to have the tools and education to understand the difference.

Not On My Nickel is the first independent financial education service for women 

Not On My Nickel was developed to meet a gapping hole in the investment industry today.  We assist women in understanding the difference between hiring a “financial planner”  for overall financial planning and an “adviser” registered with the SEC who actually manages a portfolio of stocks and bonds.  There is a significant difference.  We explain why you most definitely want to unbundle these services to ensure you are not taken advantage of.

How is Not On My Nickel education service different from a financial advisor?

  1. Not On My Nickel believes in empowerment.  We do not provide advice. We believe in providing the services that give every women the confidence to make a financial decision and the tools to do so.  We focus on the tools and training to help you understand investment selection.  We help you understand how to Benchmark – an investment or an advisor.
  2. We show one how to avoid hidden advisor fees and excessive investment fees.
  3. We separate the “planning” and budgeting from the investment selection.  While you may want a “financial planner” to help you with a budget and an overall plan, we strongly encourage all women to go through Not On My Nickel’s education to understand how to select an investment and what investments are in your best interest, after all fees.  We show you how investment selection is different from the financial planning process and why you must know the difference to protect your nest egg

85 Broads Report On the Top Financial Mistakes Women make

At a recent financial panel provided by 85 Broads, the panel, linked to above, informed the group of women:

“The panel also acknowledged the sometimes-ridiculous complexity of the financial services industry….be it the characteristics of the different types of Financial Advisors, the features of products like annuities, or simply the difficulty in determining fees. While this type of complexity can be a deterrent, the panel urged the audience to find an Advisor with whom they are comfortable to guide them through this.”

Not On My Nickel cautions women, remember this panel is selling financial advice and investments.  It is in their interest to keep it complex and overwhelming. The first step and the biggest mistake most women make is not understanding how to use an “Advisor” and when and why you may or may not need one.

Not On My Nickel is the first service that helps you understand this “ridiculous complexity” from a neutral third party.  We are not an advisor.  We are not selling advice services or financial products. We do provide a second-opinion on what type of advisor you may need or even if you need one. We give women tools to understand how and when to use an advisor and the wisdom to know when not to.

The complexity in the financial services industry has been created by the industry to ensure you will be confused, overwhelmed and (1) pay more for the services of an advisor and (2) buy more expensive product from the advisor.

The first step is understanding what services you need and what services will add value in your situation.  85 Broads assumes everyone must must have an advisor.  Not On My Nickel gives you the tools to determine if their assumption is correct for your personal situation.

Not On My Nickel’s founder began her career in international banking and has over 30 years financial experience in all aspect of the markets today – whether that be in financial planning, insurance, retirement investing, investing a lump sum and the training and education of analyzing mutual fund fees, advisor fees, to complex financial products such as options (Series 4), over-the-counter derivatives and foreign exchange hedging.

Not On My Nickel’s founder believes one of the most important things for women in investing (and men for that matter) is to understand benchmarking and how to use it to judge all investment advice.  Understanding this simple process will provide the confidence in every investment decision and eliminate fraud and Ponzi schemes.

What Do We Provide?

Not On My Nickel provides hourly educational services to women:

  • Going through a divorce
  • Recently lost their spouse or partner
  • Recently inherited a lump sum or received a lump sum from an accident.
  • Want extra help in understanding how to manage their retirement nest egg, whether that be in a 401(K) or in an IRA.

We provide hourly education to help you make a decision to determine if you need an advisor, how to use the advisor and the tools and training to understand any investment selection.  We give you the confidence to believe any decision is the best decision at that point in time.  Not On My Nickel is not “Do It Your Self” from the standpoint of investment selection.  It is the new world order where you understand who is actually managing your money – the trusted fiduciary portfolio manager, who can provide you 5, 10, 15 years published performance that you can compare against a meaningful benchmark.  You have the confidence in your investment selection and know exactly where you money is going, how and why that investment is selected and exactly how much it costs.