Dissecting the News to Improve Your Retirement Balances

Dissecting the News to Improve Your Retirement Balances

Dissect the news:  The financial reporting that impacts where and how you invest your retirement nest egg, has never been more complicated and apparently self-serving.

Today, most retirement investing news is sponsored by Wall Street, designed to deliver a message to change the individual retirement investor’s behavior, to sell more financial product, principally to retirement investors, now a $14 trillion market in assets under management.  Take a look at some of the headlines over the past year:

“Everyone Needs A Financial Advisor:  Financial Planning for the Masses.”  What if you could save money and have increased performance without an advisor.  It is possible.

“Active Investing is Dead”  Really.  Active mutual fund managers, that charge high fees and mimic index funds, should be thrown out, but hold the baby and don’t toss him out with the bath water.

“High Net Worth Women Love Liquid Alternative Investments”  Really?  We have discussed that before here:  “Liquid Alts, Wall Street, and Media Frenzies that Drive Retirement Investors’ Behavior.”

“Retirement Investors Love Advisors that are Both Broker and Advisor:  The Dual Registrant Model”  The dual model is a recipe for disaster, if a retirement investor is ever harmed.  Fees are higher and roles of the broker and the advisor are very confusing to the retirement investor. Wall Street has it engineered through FINRA’s arbitration process that if an investor is harmed, FINRA will simply say they were wearing what ever “hat” that protects them, not the retirement investor.

Not On My Nickel is pleased to help our retirement investors dissect most of the articles that are simply pushing Wall Street product.

Today’s example is from The New York Times, “How Many Mutual Funds Routinely Rout the Market: Zero”, March 14, 2015 by Jeff Sommer.

Yes, it is indeed true, very few active managers outperform their relevant index. However, there are some that have, they are dedicated professionals, that operate in the best interest of their customer, with low fees and a very transparent consistent style.

There are some active managers worth investing your retirement nest egg with.  ZERO is simply a hyperbole to push a product.

What is the issue with this article?  This article appears to be written by a Wall Street firm selling Wall Street product.

Jeff Sommer writes in his article, which should be, but is not, marked “Sponsored Content”:

“I wrote about the initial findings of that study last summer. It is called “Does Past Performance Matter? The Persistence Scorecard,” and it is conducted by S.&P. Dow Jones Indices twice a year. The edition of the study that I focused on began in March 2009, the start of the bull market.”

Mr. Sommer concludes:  “The study seemed to support the considerable body of evidence suggesting that most people shouldn’t even try to beat the market: Just pick low-cost index funds, assemble a balanced and appropriate portfolio for your specific needs, and give up on active fund management.”

Who did the study?  S.&P. Dow Jones Indices

S&P Dow Jones Indices, a division of McGraw Hill Financial, sells Index product.

Screen Shot 2015-03-17 at 3.11.14 PM

Unfortunately, the article does not provide any links to the actual study to determine what funds were in this study.  The periods they were looking at, were not clear.

Why does it matter to the retirement investor? This article is simply pushing a portfolio of index funds and there are no links to the actual study.  However that raises several questions for the retirement investor:

How does one know what index funds to include in the portfolio?  Are they filing their annual audited performance, with the SEC, of their portfolio of index funds?

Who can one trust to manage your nest egg in an index portfolio that does not provide audited returns to the SEC?  What is that individual’s track record of assembling a portfolio over a minimum of five years?

How does the return of this index portfolio after all fees, from portfolio manager fees, to embedded ETF fees, to custody and administration fees, compare to the top active fund portfolio managers, after all fees?

Time to filter the news and not be sold a theory, promoted with no actual data for the reader, that is designed to sell product.  A picture is worth a million words. Sure looks like an active fund outperforming the S&P in our picture below.  We would not label this “Zero” as Mr. Sommer did at The New York Times.


Active Management V S&P 500



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