Nickel adds to Mom’s to do list:

1..  Read your social security statement for you.

2.  Tell you when you are capable of retiring.

3.  Add your social security monthly payment to your 401k monthly income.

4.  Tell you how to find an accountant.

5.  Tell you how to find an estate attorney.

6.  Subject you to senior fraud and Ponzi schemes.

7.  Have access to all your social security earnings information, directly, creating unprecedented potential senior fraud.

Investment News, reported in this article yesterday, “Financial planning platforms target Social Security benefits data for online integration” that workplace advisor, Financial Engines, is trying to strike a deal with the Social Security Administration to get a data feed of your social security benefits directly.  Betterment, a so-called “Robo-Advisor”, who Citibank has invested in, is also working on a similar strategy, as is Morningstar’s Hello Wallet.  What do these three firms have in common?  They all are designed to create a “learned helplessness” and simply offer services that they charge a fee for, that you can determine on your own through ready available information, now all available online.  However, if you are willing to give them a piece of your social security check to have them do it for you, that is your choice, but many in retirement today are faced with watching their pennies closely.

The article stated:

“That’s because Financial Engines, Betterment and HelloWallet have recently struck a partnership with the SSA to develop software to incorporate Social Security data for individuals automatically onto their platforms. It is yet one more of the government’s attempts to assist soon-to-be retirees with their financial planning.”

We caution our Nickel readers, the government, your tax dollars, have already invested significant amounts in informing every American what is available for your social security.  It is all right there at their website and you also get an annual statement telling you exactly how much you will get on a monthly basis, how much your spouse will get and what the maximum is for your every household each year.  If you have any questions call the social security administration or email us here at Nickel.  There are a few alternatives with a two person household in determining how to maximize your benefits, but read one of the great reviews on the strategies.  Remember someone is paying for these tech firms to develop the software integration and these firms are not non-profits, which means you are paying to have them tell you all about your social security benefit, all available at the Social Security Administration.

The costs to society are too great in combatting the potential senior fraud that will ensue through have a salesforce armed with access to American’s social security benefits.

Nothing is free.  Financial Engines, Betterment, Hello Wallet (Morningstar) are all set to take part of your social security check through a fee to tell you when and how to take it.  We reiterate you are capable.  Do not fall prey to their scheme to skim more from your social security check and retirement savings, that the White House Economic Advisor recently reported is costing Americans over $17 billion annually from these conflicted intermediaries, so called “advisors.”

Learned Helplessness and the Financial Advice Industry

Since 401k’s were introduced the financial industry has spent billions of advertising to convince you, that you are incapable of selecting on your own the top US money manager for a simple balanced and growth fund.  It is not complicated if you have the simple tools and benchmarks.  It is the financial advice industry, with conflicted education, that has ensured most Americans feel they are incapable of selecting the top balanced fund in the United States.  They have crafted advertising to ensure you feel dependent on them, to ensure they may receive an intermediary fee. You are very capable, without a salesman, in choosing what is in your best interest.

The latest scheme is to convince the American public that you are incapable of reading a social security statement and determine how to add the income from your retirement plans together with the annual amount from social security.    Yes, there are a few alternatives with two earner families on the timing, but the social security administration is staffed and ready to answer your questions.  Here is where you go online and you can also make an appointment!…for free.

We have warned about this scheme before. Public Radio Shills for Financial Engines.  Don’t fall prey to financial intermediaries seeking ways to take an ever greater piece of your nest egg at retirement.  You can do it!  Here is the Social Security site and email us with any questions


Social Security Adminstration

Social Security Administration:

Social Security Administration Website

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?