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.

 

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

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

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

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

evidence based investing

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

Evidence based investing should be based on evidence

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

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

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

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

Solin goes on in the Huffington Post article to say:

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

What’s an investor to do?

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

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

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