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

 

 

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