The other day, I went into one of the major banks where I had opened an estate account for a client who passed away. We took care of everything for the client and their beneficiaries and I needed to close the account. I had originally considered opening this account with Schwab, but their review process would have taken three weeks and we needed to close on some real estate sooner than that, so I was forced to go to one of the major banks.
Just so happens, we have some personal accounts at this bank and when I sat down to close the account, the lady tried to sell me everything under the sun. This major bank doesn't do personal loans any more, but they will gladly give you a credit card. She tried to get me to open a credit card account.
I said "No thanks."
Then she tried to get me to take cash out of one of my credit card accounts.
"Why the hell do I want to run up my credit card bill?", I thought to myself.
I said "No thanks."
Then, she tried to get me to refinance my home equity loan for about 1.5% higher than my current rate.
Again, I said "No thanks."
Then, she tried to get me to refinance my home loan which was about 1% higher than my current rate.
"No!", I said.
She finally gave up and closed the account after wasting about 10 minutes of my time. She could tell I was getting perturbed.
This is the typical experience at a major bank today. I hate the damn bank and everything it represents. I would not even have the credit card at this bank if it wasn't for the bank buying my former credit card company. I never even opened the credit card with this bank. They just forced me into their devilish den. I may have to move that credit card account now after that fiasco.
While she was giving me this sales pitch, I couldn't help but notice an older man in the back office with a young stockbroker from a major brokerage firm that just so happens to be owned by the bank. Imagine that. This poor man was around 70 years old and he was doing business in the absolute worst place possible.
Hadn't he read my book? Of course he hasn't. Otherwise, he would have never set foot in that guy's office.
Doesn't he know that these stockbroker's are in business to generate the most revenue possible from him?
Why on earth would you ever do business with a bank owned brokerage firm?
It is so asinine. I am sure that if I reviewed this guy's investment statements, I would see variable annuities, loaded mutual funds, non-publicly traded REIT's and UIT's. Why? Because these are the products that make the bank the most money!
If you do your investment business with a bank or a bank owned brokerage firm, then STOP IT!!! They are ripping you off. For proof, all you have to do is look at your own statements. If you own variable annuities, loaded mutual funds, non-publicly traded REIT's and UIT's, then congratulations you been had. I'm sorry to be so blunt, but you need to wise up and quit letting these people rip you off.
When I went into this bank to close it out, I knew what to expect. I knew they would try and sell me everything under the sun. The poor old man was getting his head taken off in commissions and lack of liquidity and for what? I will tell you for what. The profits of the bank. They don't give a flying you know what about their clients. I don't care what line of BS you hear or what frilly commercials you see on television. They are in business to make as much money as they can off of you. Don't you ever forget it.
The only place to do your investment business is with an Independent Registered Investment Adviser who is not affiliated with a bank, brokerage firm or insurance company.
Of course, when little unknown guys like me write books, it is so hard to get any traction on book sales unless you are somebody famous. In my opinion, if a book does something to help you, then it doesn't make a hill of beans who wrote it. What may surprise people to know is that my book, "Meet Wally Street. The Reason You're Stupid." would have warned the 70 year old gentlemen never to do business with a bank owned brokerage firm period. In other words, it would have helped him!
I described this exact scenario to watch out for in my book. This is how it always is with me. I will write about something and read about other people's horror stories describing it later. Except in this case, I saw it with my own two eyes. It was sad to see let me tell you. I feel sorry for that elderly gentleman.
If you want a Christmas gift idea, then give people my book. You will save them a lot of money and headaches. It is only $3.99 on electronic devices and only $19.99 if you are old fashioned and want a real book. That's a bargain compared to the money that you will save them.
Merry Christmas to you and yours.
Showing posts with label banks. Show all posts
Showing posts with label banks. Show all posts
Monday, December 8, 2014
Wednesday, August 22, 2012
The Three Villains
Who are The Three Villains? Banks, Wall Street firms and insurance companies. Why? Because they do not care about anything but making revenue off of your money. Do not be fooled into believing anything otherwise.
Often as part of our services to new clients, we run an analysis on their existing investments. If I know that they do business with one of The Three Villains, I can almost predict what they are going to hold in their portfolios. Typically, they will own things on my Do Not Buy List. (Search this blog for my Do Not Buy List.) Things like UIT's that pay 2.95% commission. Things like variable annuities with guaranteed withdrawal benefits. Variable annuities with 10 year or sometimes longer surrender charges that pay 6 - 10% in commissions. Let us not forget Non-Publicly Traded REIT's (Real Estate Investment Trusts) that pay around 8 or 9% in commissions. Of course, last but not least, the Class A share Mutual Funds that pay as much as 5.75% in commissions.
I can literally close my eyes and write those four investments (don't make me laugh) down on a piece of paper and I would be able to check off at least three of these every time someone does business with one of The Three Villains. Usually, I can guess which of the four investments they own, by virture of which one of The Three Villains that they have their accounts with.
By the way, approximately 85% of every investor out there does business with one of The Three Villains. Yes, that means there is an 85% chance that you are a victim of The Three Villains.
It all boils down to one thing that guarantees that the deck is stacked against the average investor. Any registered representative that works for one of these Three Villains has to produce enough revenue to keep their jobs. In other words, they have a Quota to hit. If they do not hit their Quota, then they can be fired. These Quotas can be as much as $250,000 to $300,000 per year! This means that these registered representatives need to produce that much in commissions and fees for their Villain firm each and every year!
Now, ask yourself this question. How does my advisor, who works for one of The Three Villains, look out for my best interests? Do not tell me that your advisor is different. The truth is, like or not, that your advisor, who works for one of The Three Villians is most likely raking you over the coals.
Another critical point.
The liquidity factor is very important, in my opinion. Why do you want to invest in something that is not liquid? In this economic environment, that would be foolish. Let me repeat that. In this economic environment, that would be foolish. Three of the four investments mentioned above are illiquid, have penalties for early withdrawals, or have surrender charges.
Can it get even worse?
Sadly, it can. The typical variable annuity today is sold with roughly 2.6% in expenses and charges. Then, when you add on multiple guaranteed-withdrawal and guaranteed-stepped-up death benefit riders, you are adding probably another 1 or 2% on top of that. I routinely analyze variable annuities with these riders and in almost all cases, the expenses are north of 4% and closer to 5%. It is easy to make money when you are paying out 4 or 5% in expenses, isn't it? (I am being facetious.) Why in the world do you want to keep a variable annuity that is going to cost you 4 or 5% each year?
Think about this fact. If you give them your money and they charge you the laughing low figure of 4% in expenses and invest that for 20 years, the odds are they might be able to give you a guaranteed-withdrawal benefit of 5%. They are doing it WITH YOUR MONEY!!!
By the way, do not tell me that the reason you will stick with your variable annuity is because of the guaranteed-withdrawal benefits. Insurance companies are under pressure and some of them are writing their clients asking to be let go of those guranteed obligations in exchange for cash. I would not count on your guarantees, if I were you.
Non-Publicly Traded REIT's are built like Ponzi schemes. They take your money then generally, take a big chunk off the top for management and commissions. Then, they pay you back your capital as a "income stream". What a joke. You cannot sell these investments once you buy them for anything close to what you put in. Typically, you have to wait 10 years or more to even have a chance at getting some of your money back. Lots of times, the failing Non-Publicly Traded REIT's are rolled up into another REIT and you had no idea that this could even happen. I have seen people who thought they were going to get an 8% dividend, suddenly find after a roll up that their dividend is cut in half. Would that make you mad? Mad enough to want your money back? Sorry, you have to wait 10 years or more to hope and I do mean hope that you might get 80% of it back.
You are probably thinking that your advisor would not do that to you. Think again. They have that Quota, remember? If your advisor is like most, the only thing he or she really knows about a Non-Publicly Traded REIT is that it pays him 8.5% commissions. They do not know all the bad stuff I just described.
Mutual funds are okay, aren't they?
Sorry to disappoint you, but after your advisor makes his cut of your 5.75% commission, then you have ongoing 12(b)-1 expenses and management fees that can be north of 1% per year. I have seen instances where registered reps have made their 5.75% commission, then months later come back to you and put you in an assets-under-management account for 1.5% a year. So, now, you have paid the 5.75%, you are paying 1% plus in fund management fees, then on top of that, you are paying your advisor 1.5% a year. So, after two years, you may have paid 8.25% or more to be with your advisor.
Is this picture getting any clearer for you? I hope so.
Unfortunately, 85% of the people walking around out there are getting advice from The Three Villains.
You can stop the madness. Here is how. We can run an analysis on your investments to show you the truth. Feel free to contact me if you are in FL, IN, KY or TX. I can prove it to you.
RJ
Often as part of our services to new clients, we run an analysis on their existing investments. If I know that they do business with one of The Three Villains, I can almost predict what they are going to hold in their portfolios. Typically, they will own things on my Do Not Buy List. (Search this blog for my Do Not Buy List.) Things like UIT's that pay 2.95% commission. Things like variable annuities with guaranteed withdrawal benefits. Variable annuities with 10 year or sometimes longer surrender charges that pay 6 - 10% in commissions. Let us not forget Non-Publicly Traded REIT's (Real Estate Investment Trusts) that pay around 8 or 9% in commissions. Of course, last but not least, the Class A share Mutual Funds that pay as much as 5.75% in commissions.
I can literally close my eyes and write those four investments (don't make me laugh) down on a piece of paper and I would be able to check off at least three of these every time someone does business with one of The Three Villains. Usually, I can guess which of the four investments they own, by virture of which one of The Three Villains that they have their accounts with.
By the way, approximately 85% of every investor out there does business with one of The Three Villains. Yes, that means there is an 85% chance that you are a victim of The Three Villains.
It all boils down to one thing that guarantees that the deck is stacked against the average investor. Any registered representative that works for one of these Three Villains has to produce enough revenue to keep their jobs. In other words, they have a Quota to hit. If they do not hit their Quota, then they can be fired. These Quotas can be as much as $250,000 to $300,000 per year! This means that these registered representatives need to produce that much in commissions and fees for their Villain firm each and every year!
Now, ask yourself this question. How does my advisor, who works for one of The Three Villains, look out for my best interests? Do not tell me that your advisor is different. The truth is, like or not, that your advisor, who works for one of The Three Villians is most likely raking you over the coals.
Another critical point.
The liquidity factor is very important, in my opinion. Why do you want to invest in something that is not liquid? In this economic environment, that would be foolish. Let me repeat that. In this economic environment, that would be foolish. Three of the four investments mentioned above are illiquid, have penalties for early withdrawals, or have surrender charges.
Can it get even worse?
Sadly, it can. The typical variable annuity today is sold with roughly 2.6% in expenses and charges. Then, when you add on multiple guaranteed-withdrawal and guaranteed-stepped-up death benefit riders, you are adding probably another 1 or 2% on top of that. I routinely analyze variable annuities with these riders and in almost all cases, the expenses are north of 4% and closer to 5%. It is easy to make money when you are paying out 4 or 5% in expenses, isn't it? (I am being facetious.) Why in the world do you want to keep a variable annuity that is going to cost you 4 or 5% each year?
Think about this fact. If you give them your money and they charge you the laughing low figure of 4% in expenses and invest that for 20 years, the odds are they might be able to give you a guaranteed-withdrawal benefit of 5%. They are doing it WITH YOUR MONEY!!!
By the way, do not tell me that the reason you will stick with your variable annuity is because of the guaranteed-withdrawal benefits. Insurance companies are under pressure and some of them are writing their clients asking to be let go of those guranteed obligations in exchange for cash. I would not count on your guarantees, if I were you.
Non-Publicly Traded REIT's are built like Ponzi schemes. They take your money then generally, take a big chunk off the top for management and commissions. Then, they pay you back your capital as a "income stream". What a joke. You cannot sell these investments once you buy them for anything close to what you put in. Typically, you have to wait 10 years or more to even have a chance at getting some of your money back. Lots of times, the failing Non-Publicly Traded REIT's are rolled up into another REIT and you had no idea that this could even happen. I have seen people who thought they were going to get an 8% dividend, suddenly find after a roll up that their dividend is cut in half. Would that make you mad? Mad enough to want your money back? Sorry, you have to wait 10 years or more to hope and I do mean hope that you might get 80% of it back.
You are probably thinking that your advisor would not do that to you. Think again. They have that Quota, remember? If your advisor is like most, the only thing he or she really knows about a Non-Publicly Traded REIT is that it pays him 8.5% commissions. They do not know all the bad stuff I just described.
Mutual funds are okay, aren't they?
Sorry to disappoint you, but after your advisor makes his cut of your 5.75% commission, then you have ongoing 12(b)-1 expenses and management fees that can be north of 1% per year. I have seen instances where registered reps have made their 5.75% commission, then months later come back to you and put you in an assets-under-management account for 1.5% a year. So, now, you have paid the 5.75%, you are paying 1% plus in fund management fees, then on top of that, you are paying your advisor 1.5% a year. So, after two years, you may have paid 8.25% or more to be with your advisor.
Is this picture getting any clearer for you? I hope so.
Unfortunately, 85% of the people walking around out there are getting advice from The Three Villains.
You can stop the madness. Here is how. We can run an analysis on your investments to show you the truth. Feel free to contact me if you are in FL, IN, KY or TX. I can prove it to you.
RJ
Wednesday, December 14, 2011
Blinded by Wall Street
A so called "Vice President of Investments" recently responded to an article online trying to state his position as a Wall Street Broker and how he was just as "fiduciary like" as Independent Registered Investment Advisers. What a bunch of baloney! He claimed his advice was suitable and he looked out for his customers. What a joke! Do you realize that most all Wall Street Brokers are Vice Presidents of Investments? This title in and of itself is totally misleading.
Fiduciary like? There is no such thing as "fiduciary like." This shows how blind these Wall Street Brokers are when it comes to doing the right thing. They have actually convinced themselves that selling products from the inventory of their Wall Street brokerage firm is perfectly okay. They have also convinced themselves that selling a client a Variable Annuity in a IRA account that pays them 6 to 8% commission and locks the client in for 10 years or more is perfectly okay. That is instead of opening a regular brokerage IRA account without a 10 year or more penalty for early withdrawal. Further, they convince themselves that it is okay to sell mutual funds that charge a 5.75% sales load, when no load funds are available to them to offer to clients.
A read an article online recently that said over 90% of the Registered Investment Advisers out there today are also affiliated with a Wall Street firm, a Bank or an Insurance Company. This means that there is only 10% of us true fiduciaries out there. So, look out. Nine out of ten people out there today giving financial advice is doing so in their firm's best interest, not yours.
In my humble opinion, the battle the fiduciary standard is going to end with Wall Street brokerage firms, Bank and Insurance Company clients getting the shaft. There is already talk on the street of how the fiduciary standard is going to be watered down to allow the same Wall Street revenue generating brokerage machine to continue. Banks and Insurance Companies will continue business as usual. People will continue to be given financial advice that favors:
The good news is that there is a better option. Independent Registered Investment Advisers who have no affiliation with a Wall Street firm, a Bank or an Insurance Company. Sadly, we do not have millions of dollars that we take from clients and pay to Congress in order to get our way. We simply just keep plodding along hoping that one day, the people of America will wake up and realize that doing business with an Independent Registered Investment Adviser is the only place to obtain your financial advice.
Keep Your Assets. Take My Advice. Seriously.
Merry Christmas, Happy Hanukkah and Happy New Year. God Bless.
Fiduciary like? There is no such thing as "fiduciary like." This shows how blind these Wall Street Brokers are when it comes to doing the right thing. They have actually convinced themselves that selling products from the inventory of their Wall Street brokerage firm is perfectly okay. They have also convinced themselves that selling a client a Variable Annuity in a IRA account that pays them 6 to 8% commission and locks the client in for 10 years or more is perfectly okay. That is instead of opening a regular brokerage IRA account without a 10 year or more penalty for early withdrawal. Further, they convince themselves that it is okay to sell mutual funds that charge a 5.75% sales load, when no load funds are available to them to offer to clients.
A read an article online recently that said over 90% of the Registered Investment Advisers out there today are also affiliated with a Wall Street firm, a Bank or an Insurance Company. This means that there is only 10% of us true fiduciaries out there. So, look out. Nine out of ten people out there today giving financial advice is doing so in their firm's best interest, not yours.
In my humble opinion, the battle the fiduciary standard is going to end with Wall Street brokerage firms, Bank and Insurance Company clients getting the shaft. There is already talk on the street of how the fiduciary standard is going to be watered down to allow the same Wall Street revenue generating brokerage machine to continue. Banks and Insurance Companies will continue business as usual. People will continue to be given financial advice that favors:
- The Wall Street firm first, or the Bank or Insurance Company first.
- The Wall Street Broker, or excuse me...I meant Vice President of Investments.
- I interrupt this list for an important message. I just realized that if you get your advice from a Wall Street firm that is owned by a bank and you are sold a Variable Annuity, then the Wall Street firm, the Bank and the Insurance Company all benefit before you. Yikes!!
- Last on the list unfortunately is you.
The good news is that there is a better option. Independent Registered Investment Advisers who have no affiliation with a Wall Street firm, a Bank or an Insurance Company. Sadly, we do not have millions of dollars that we take from clients and pay to Congress in order to get our way. We simply just keep plodding along hoping that one day, the people of America will wake up and realize that doing business with an Independent Registered Investment Adviser is the only place to obtain your financial advice.
Keep Your Assets. Take My Advice. Seriously.
Merry Christmas, Happy Hanukkah and Happy New Year. God Bless.
Wednesday, September 14, 2011
Brainwashed Thinking
I was at a meeting recently and I had some conversations with some insurance agents, some bank representatives and registered representatives. This was just idle chit chat about what I do and what they do. I was very surprised how brainwashed these people are by their affiliations. They have no clue what it means to be a fiduciary and deliver advice in a client's best interest.
The SEC is currently evaluating how to apply a fiduciary standard to these type of professionals. I can tell you, the SEC is facing an uphill battle.
One of the people I spoke with in my idle chit chat was an insurance agent. I told this person that I recently had a seminar with planning ideas to help seniors qualify for Medicaid Planning and Veterans Benefits. This person's first question was ..."what products do you sell to them?" Those of you who have read my book, or seen my latest brochure will know that insurance agents are compensated by product sales. Unfortunately, this is all they know. They know that they get paid by product sales. When someone asks..."what product do you sell to them?", then that tells me what they focus on with their clients. They focus on themselves. This of course, is contrary to a fiduciary standard of care.
My answer to to this person was that I did not sell products to them, but rather I did what was in their best interest and only charged a fee for my services. This person persisted with...'but, you have to be selling some products. What products are you selling?" I was really taken aback about how the blinders over this person's eyes are affecting their objectivity. I may be reaching a little bit here, but the concept of charging a fee and doing something in the best interest of a client seemed to be so far removed from this person's thinking that it was not even a remote possibility.
Quite frankly, I was astonished. Sadly, most of the people in my business work at banks, insurance companies or Wall Street firms. They have all the marketing dollars and political power. They are so brainwashed into the product sales mentality that they cannot even imagine what it takes to do something in a client's best interest. Like I mentioned earlier, the SEC is facing an uphill battle.
Another person that I chatted with wanted to know if I was in the Financial Planning Association. The FPA is made up of CFP's and other professionals who are mostly people who work at banks, insurance companies and Wall Street firms. Take a guess how excited I would be to run around with a bunch of people like these folks.
This person saw my CFP lapel pin and said that I should join. I then said, "Why?" He said, "because you are a CFP and the FPA is for CFP's." I said to this person, "you are going to have to do better than that." The attorney standing next to me laughed when I said that. This person, who was a bank representative by the way, went on to try and convince me of the wonderful educational opportunities and continuing education available. As a courtesy, I gave this person my business card, but I have to admit that I am kind of like Groucho Marx in this area. I will not join any organization that wants me to join. The truth is the FPA is in decline and they are losing a lot of members each year. Every time I run into one of these people, they are trying to convince me to join the FPA. If it truly was a good organization, then no one would have to recruit for it. This tells me that it is a lobbyist organization with a bunch of fat cat salaried people trying to justify their existence. I will not be giving them any of my money.
The last thing I want to do is go to a meeting where insurance company home office people are telling me how great their products and commissions are for insurance agents.
I am very comfy in my own little world of the fiduciary standard and doing what is in the best interests of my clients, thank you very much.
Later my friends.
The SEC is currently evaluating how to apply a fiduciary standard to these type of professionals. I can tell you, the SEC is facing an uphill battle.
One of the people I spoke with in my idle chit chat was an insurance agent. I told this person that I recently had a seminar with planning ideas to help seniors qualify for Medicaid Planning and Veterans Benefits. This person's first question was ..."what products do you sell to them?" Those of you who have read my book, or seen my latest brochure will know that insurance agents are compensated by product sales. Unfortunately, this is all they know. They know that they get paid by product sales. When someone asks..."what product do you sell to them?", then that tells me what they focus on with their clients. They focus on themselves. This of course, is contrary to a fiduciary standard of care.
My answer to to this person was that I did not sell products to them, but rather I did what was in their best interest and only charged a fee for my services. This person persisted with...'but, you have to be selling some products. What products are you selling?" I was really taken aback about how the blinders over this person's eyes are affecting their objectivity. I may be reaching a little bit here, but the concept of charging a fee and doing something in the best interest of a client seemed to be so far removed from this person's thinking that it was not even a remote possibility.
Quite frankly, I was astonished. Sadly, most of the people in my business work at banks, insurance companies or Wall Street firms. They have all the marketing dollars and political power. They are so brainwashed into the product sales mentality that they cannot even imagine what it takes to do something in a client's best interest. Like I mentioned earlier, the SEC is facing an uphill battle.
Another person that I chatted with wanted to know if I was in the Financial Planning Association. The FPA is made up of CFP's and other professionals who are mostly people who work at banks, insurance companies and Wall Street firms. Take a guess how excited I would be to run around with a bunch of people like these folks.
This person saw my CFP lapel pin and said that I should join. I then said, "Why?" He said, "because you are a CFP and the FPA is for CFP's." I said to this person, "you are going to have to do better than that." The attorney standing next to me laughed when I said that. This person, who was a bank representative by the way, went on to try and convince me of the wonderful educational opportunities and continuing education available. As a courtesy, I gave this person my business card, but I have to admit that I am kind of like Groucho Marx in this area. I will not join any organization that wants me to join. The truth is the FPA is in decline and they are losing a lot of members each year. Every time I run into one of these people, they are trying to convince me to join the FPA. If it truly was a good organization, then no one would have to recruit for it. This tells me that it is a lobbyist organization with a bunch of fat cat salaried people trying to justify their existence. I will not be giving them any of my money.
The last thing I want to do is go to a meeting where insurance company home office people are telling me how great their products and commissions are for insurance agents.
I am very comfy in my own little world of the fiduciary standard and doing what is in the best interests of my clients, thank you very much.
Later my friends.
Wednesday, June 29, 2011
The Banks Are In Bed With The Obama Administration
Normally, I try not to delve into political issues, but this latest injustice is too much to take. Just the other day, businesses across America won a reprieve from the high swipe fees charged by the Banks and Credit Card firms. The swipe fee was $0.44 per transaction. This may not seem like much, but it really hurts small business people who allow their customers to use their debit cards for small transactions.
For example, a retail customer buying only a cup of coffee would take a big bite out of the retail business owner's profit potential. Let us assume the cup of coffee costs $1.99. The retail business owner would have to pay $0.44 cents out of that $1.99 to the Banks and Credit Card firms. This is a 22% fee to the retail business owner for allowing his customer to use the debit card. This is why you have seen some businesses institute a minimum amount of purchase before they will let their customers use a debit card. On a cup of coffee transaction like above, the retail business is most likely losing money on the debit transaction. They cannot continue to do this and stay in business. Something had to change.
The retail business owners successfully pushed through Congress a limitation on the swipe fee reducing it to $0.12. This obviously made the retail business owners very happy, but not the Banks and Credit Card companies. They fired up their lobbying machine and went to work on the Obama Administration.
Today, the Federal Reserve is instituting some kind of special rule allowing the Banks and Credit Card companies the right to charge up to $0.24 for a swipe fee. Keep in mind, legislation was just passed making the maximum fee $0.12. Who cares about the law these days? Obviously, the Obama Administration does not care about it. The Banks and Credit Card companies obviously lobbied the Obama Administration for some relief to this legislation. Does it really surprise anyone to know that the Banks and Credit Card companies have pulled a fast one on the retail small business owners?
Why are we Americans allowing this to continue? These Banks are responsible for the recession that we are in. They are responsible for the federal funds rate being little or nothing so they can borrow free money to shore up their balance sheets for the mistakes that they made. Of course, all this is at the expense of the American public who are earning 0.01% on their money. Now, the retail small business person is getting the shaft on swipe fees, even after getting a law passed in their favor!
The Banks get what they want whenever they want and it is blatantly apparent that average Americans and retail small business owners are handed the bill.
This next election cycle is more important than ever. Do not assume that everyone will show up at the polls and vote the way you would have. You have to show up and vote. Otherwise, more injustice will continue at your expense.
For example, a retail customer buying only a cup of coffee would take a big bite out of the retail business owner's profit potential. Let us assume the cup of coffee costs $1.99. The retail business owner would have to pay $0.44 cents out of that $1.99 to the Banks and Credit Card firms. This is a 22% fee to the retail business owner for allowing his customer to use the debit card. This is why you have seen some businesses institute a minimum amount of purchase before they will let their customers use a debit card. On a cup of coffee transaction like above, the retail business is most likely losing money on the debit transaction. They cannot continue to do this and stay in business. Something had to change.
The retail business owners successfully pushed through Congress a limitation on the swipe fee reducing it to $0.12. This obviously made the retail business owners very happy, but not the Banks and Credit Card companies. They fired up their lobbying machine and went to work on the Obama Administration.
Today, the Federal Reserve is instituting some kind of special rule allowing the Banks and Credit Card companies the right to charge up to $0.24 for a swipe fee. Keep in mind, legislation was just passed making the maximum fee $0.12. Who cares about the law these days? Obviously, the Obama Administration does not care about it. The Banks and Credit Card companies obviously lobbied the Obama Administration for some relief to this legislation. Does it really surprise anyone to know that the Banks and Credit Card companies have pulled a fast one on the retail small business owners?
Why are we Americans allowing this to continue? These Banks are responsible for the recession that we are in. They are responsible for the federal funds rate being little or nothing so they can borrow free money to shore up their balance sheets for the mistakes that they made. Of course, all this is at the expense of the American public who are earning 0.01% on their money. Now, the retail small business person is getting the shaft on swipe fees, even after getting a law passed in their favor!
The Banks get what they want whenever they want and it is blatantly apparent that average Americans and retail small business owners are handed the bill.
This next election cycle is more important than ever. Do not assume that everyone will show up at the polls and vote the way you would have. You have to show up and vote. Otherwise, more injustice will continue at your expense.
Thursday, February 17, 2011
Help Me Understand Why This Keeps Happenning
After you have been doing what I have, for as long as I have, I hate to say it, but...the things that I wrote in my book, Keep Your Assets. Take My Advice™ are more relevant than ever. Let me take you through the thought process of all too many investors.
I speak to people who may come to our firm as a result of a bad experience some place else. Without fail, it is because they lost money at either a bank or a Wall Street firm. Typically, the story goes like this:
"I had some money with a big brand name bank guy who put me in a portfolio of mutual funds. When I started with him, I had over $800,000. When 2008 hit, all he kept telling me was to "Hold on. It will come back." (Where have I read that before? Oh yea. My book.) Of course, I lost all the way done to under $400,000. So, I moved my account away from my big brand name bank guy and went to a Wall Street firm guy. (Where have I heard that before? Oh yea. My book.) The Wall Street firm guy was no better. He knew I did not like mutual funds, so he put me in stocks. The problem was that he never watched them. He made some bad stock picks. There were no stop loss orders, puts or anything to protect my money. Over a year later, I am still around $400,000. So, this brings me to your firm to find out what you can do for me. Here are my demands if you will. I need to make a lot of money to make back what I lost. (Where have I heard that before? Oh yea. My book.) I want to be aggressive, but I want to also protect my money from losing anything. I need about $1,200,000 to retire and I want to do it in a few years. What can you do for me?"
Of course, I am thinking to myself...didn't this guy read my book? Apparently not. If he did he would know that you never do your investment business with a bank or Wall Street firm. The price for this fictional character was $400,000. If I were to walk up to you and say "give me $800,000 and let me turn it into $400,000 for you," then you would think that I was crazy. However, this is exactly what you are risking when you go to a bank or Wall Street firm. This is not atypical, but rather is very typical of what happens to people who get their investment advice from a bank or Wall Street firm.
When you, as a client, walk into a bank or Wall Street firm with $800,000, then they are going to do everything they can to maximize their commission revenue from that amount. They have no incentive to keep that $800,000 up or to grow it. Why? Because they already made the most that they could make when you walked in the door with the $800,000.
Then, after you take your account to the Wall Street firm, you give them to opportunity to maximize their commission revenue on the $400,000 or so you have left. The Wall Street guy is kicking himself wishing that he met you when you had $800,000, because he would have been able to double what he made on the $400,000.
Get this point if you get nothing else the rest of your life.
The banks and Wall Street firms do not care about the success or failure of your account. They have no incentive to care. All they care about is maximizing the most commission revenue that they can from you. Period. Point blank. End of story.
A registered investment adviser on the other hand has its compensation aligned with the success or failure of your accounts. If your $800,000 goes down, then their compensation also goes down. If it goes up, then their pay also goes up. Now, let me ask you a question. If your compensation had the opportunity to increase the more successful you were at making investment decisions for your clients, then wouldn't you put a lot of effort into what you do? This is my point exactly.
Conversely, if your compensation as a registered investment adviser went down if your client's accounts went down, then wouldn't you do everything you can to make sure that their investment portfolio was focused in the right areas given the current market environment? Further, wouldn't you treat that account as if it were your own? Is this sinking in yet?
Registered investment advisers who are paid on the success or failure of a client's investment account are more apt to be on top of things as opposed to a bank or Wall Street firm who has already gouged you for all they can get on the front end.
Here is an example of something that I did to prove my point that registered investment advisers will make a move to protect client assets. If I had a client with $800,000 and I let their account go down to $400,000 then, I would have let my compensation be cut in half. This is not smart. It is stupid.
I moved my clients to cash on October 6, 2008 and back into the market, May 8, 2009. Go look at a chart of the S&P 500 during that time period. Find October 6, 2008 on the chart and imagine you were 100% cash. Then, find May 8, 2009 on the chart and imagine you got back into the market at that point. Then, tell me if this was good or not.
Here is another problem with my fictional but based on real life example. This fictional guy went to a bank. He lost money, then went to a Wall Street firm where he didn't do anything but tread water. Between the two, it cost him $400,000 and a several years of getting towards his retirement goal. I say several years because his retirement goal is $1,200,000. In order to turn $400,000 into $1,200,000, you need a 300% return. Yikes! (Where have I read this before? Oh yea. My book.) As my luck would have it, my fictional client expects me to turn his $400,000 into $1,200,000. Would you agree that the fictional client's expectations are a little out of whack? Believe or not, people like this, do not think they are being unreasonable at all. Obviously, they now have a very low opinion of financial advisors in general, so now I am guilty until proven innocent. Now you know why I hate banks and Wall Street firms.
Here is your first clue about the people giving investment advice at banks and Wall Street firms. They are not "financial advisors." They just use the title to convince people to do business with them. Why do you think the SEC is looking at requiring all financial advisors (people at banks and Wall Street firms) to do what is in a client's best interest and to be held to a fiduciary standard of care?
Registered investment advisers are already held to a fiduciary standard of care and look out for the best interests of their clients.
The root of the problem is these "financial advisors" at the banks and Wall Street firms. They are raking people over the coals everyday. People fall for their glitzy ad campaigns thinking that banks and Wall Street firms care about them. But, the truth is they do not care at all about anything but maximizing their revenue.
Unfortunately, there is no way to be aggressive and not lose money. This strategy does not exist, even in a hedge fund environment. Investing equals risk. Investing aggressively equals more risk and the chance of more losses. So, what is a registered investment adviser to do with a client like this?
Teach them the finer points of life. Specifically, ten points to live by. An investor creed if you will.
Rick Johnson's 10 Point Investor Creed (Better know as the good, the bad and the ugly.)
I trust you can now see the light.
I speak to people who may come to our firm as a result of a bad experience some place else. Without fail, it is because they lost money at either a bank or a Wall Street firm. Typically, the story goes like this:
"I had some money with a big brand name bank guy who put me in a portfolio of mutual funds. When I started with him, I had over $800,000. When 2008 hit, all he kept telling me was to "Hold on. It will come back." (Where have I read that before? Oh yea. My book.) Of course, I lost all the way done to under $400,000. So, I moved my account away from my big brand name bank guy and went to a Wall Street firm guy. (Where have I heard that before? Oh yea. My book.) The Wall Street firm guy was no better. He knew I did not like mutual funds, so he put me in stocks. The problem was that he never watched them. He made some bad stock picks. There were no stop loss orders, puts or anything to protect my money. Over a year later, I am still around $400,000. So, this brings me to your firm to find out what you can do for me. Here are my demands if you will. I need to make a lot of money to make back what I lost. (Where have I heard that before? Oh yea. My book.) I want to be aggressive, but I want to also protect my money from losing anything. I need about $1,200,000 to retire and I want to do it in a few years. What can you do for me?"
Of course, I am thinking to myself...didn't this guy read my book? Apparently not. If he did he would know that you never do your investment business with a bank or Wall Street firm. The price for this fictional character was $400,000. If I were to walk up to you and say "give me $800,000 and let me turn it into $400,000 for you," then you would think that I was crazy. However, this is exactly what you are risking when you go to a bank or Wall Street firm. This is not atypical, but rather is very typical of what happens to people who get their investment advice from a bank or Wall Street firm.
When you, as a client, walk into a bank or Wall Street firm with $800,000, then they are going to do everything they can to maximize their commission revenue from that amount. They have no incentive to keep that $800,000 up or to grow it. Why? Because they already made the most that they could make when you walked in the door with the $800,000.
Then, after you take your account to the Wall Street firm, you give them to opportunity to maximize their commission revenue on the $400,000 or so you have left. The Wall Street guy is kicking himself wishing that he met you when you had $800,000, because he would have been able to double what he made on the $400,000.
Get this point if you get nothing else the rest of your life.
The banks and Wall Street firms do not care about the success or failure of your account. They have no incentive to care. All they care about is maximizing the most commission revenue that they can from you. Period. Point blank. End of story.
A registered investment adviser on the other hand has its compensation aligned with the success or failure of your accounts. If your $800,000 goes down, then their compensation also goes down. If it goes up, then their pay also goes up. Now, let me ask you a question. If your compensation had the opportunity to increase the more successful you were at making investment decisions for your clients, then wouldn't you put a lot of effort into what you do? This is my point exactly.
Conversely, if your compensation as a registered investment adviser went down if your client's accounts went down, then wouldn't you do everything you can to make sure that their investment portfolio was focused in the right areas given the current market environment? Further, wouldn't you treat that account as if it were your own? Is this sinking in yet?
Registered investment advisers who are paid on the success or failure of a client's investment account are more apt to be on top of things as opposed to a bank or Wall Street firm who has already gouged you for all they can get on the front end.
Here is an example of something that I did to prove my point that registered investment advisers will make a move to protect client assets. If I had a client with $800,000 and I let their account go down to $400,000 then, I would have let my compensation be cut in half. This is not smart. It is stupid.
I moved my clients to cash on October 6, 2008 and back into the market, May 8, 2009. Go look at a chart of the S&P 500 during that time period. Find October 6, 2008 on the chart and imagine you were 100% cash. Then, find May 8, 2009 on the chart and imagine you got back into the market at that point. Then, tell me if this was good or not.
Here is another problem with my fictional but based on real life example. This fictional guy went to a bank. He lost money, then went to a Wall Street firm where he didn't do anything but tread water. Between the two, it cost him $400,000 and a several years of getting towards his retirement goal. I say several years because his retirement goal is $1,200,000. In order to turn $400,000 into $1,200,000, you need a 300% return. Yikes! (Where have I read this before? Oh yea. My book.) As my luck would have it, my fictional client expects me to turn his $400,000 into $1,200,000. Would you agree that the fictional client's expectations are a little out of whack? Believe or not, people like this, do not think they are being unreasonable at all. Obviously, they now have a very low opinion of financial advisors in general, so now I am guilty until proven innocent. Now you know why I hate banks and Wall Street firms.
Here is your first clue about the people giving investment advice at banks and Wall Street firms. They are not "financial advisors." They just use the title to convince people to do business with them. Why do you think the SEC is looking at requiring all financial advisors (people at banks and Wall Street firms) to do what is in a client's best interest and to be held to a fiduciary standard of care?
Registered investment advisers are already held to a fiduciary standard of care and look out for the best interests of their clients.
The root of the problem is these "financial advisors" at the banks and Wall Street firms. They are raking people over the coals everyday. People fall for their glitzy ad campaigns thinking that banks and Wall Street firms care about them. But, the truth is they do not care at all about anything but maximizing their revenue.
Unfortunately, there is no way to be aggressive and not lose money. This strategy does not exist, even in a hedge fund environment. Investing equals risk. Investing aggressively equals more risk and the chance of more losses. So, what is a registered investment adviser to do with a client like this?
Teach them the finer points of life. Specifically, ten points to live by. An investor creed if you will.
Rick Johnson's 10 Point Investor Creed (Better know as the good, the bad and the ugly.)
- Doing business with a bank is bad.
- Doing business with a Wall Street firm is bad.
- Doing business with someone whose first priority is to maximize their commission revenue is bad.
- Expecting a 300% return in a few short years is bad.
- Investing aggressively and protecting your money from losses is ugly.
- Doing business with a registered investment adviser is good.
- Doing business with someone who has your best interests at heart is good.
- Doing business with a Certified Financial Planner® who also works at a registered investment adviser firm and is not affiliated with a bank or Wall Street firm is good.
- Having a well thought out plan for your future designed by a professional whose compensation is tied to your success or failure is good.
- Never allowing yourself to fall victim to a "financial advisor" at a bank or Wall Street firm again is good.
I trust you can now see the light.
Friday, June 25, 2010
FinReg or The American Financial Stability Act of 2010
We are almost there. Everyone has been waiting for the final version of The American Financial Stability Act of 2010 to become law. Shortly, we will be able to see it for ourselves and look for how it will impact the financial industry.
The early word is that the authority to require the fiduciary standard for broker/dealers and investment advisers will be granted to the U.S. Securities and Exchange Commission (SEC). The current status of the fiduciary standard is that investment advisers (like my firm) are already subject to the fiduciary standard. It is the broker/dealers (Wall Street firms, Banks & Insurance Companies) who are not subject to the fiduciary standard.
The SEC will have to wait six months until a study is done. This is really an opportunity for Wall Street firms, Banks and Insurance Companies to fight it and or, time to get prepared for it. The law is supposed to give the SEC the power to implement a rule related to the fiduciary standard. The SEC has commissioners who vote on such any rules, if presented. So, there is no guarantee that after the results of the study, the SEC will make such a rule. FinReg only gives them the power to make such a rule, I believe. It doesn't necessarily make it etched in stone. Also, they normally put proposed rules out for a period of time before implementation and allow people to comment on them. Then, after the comment period, the SEC reviews the comments and determines the impact that making the final rule may have on the industry.
I wonder, if it is easier for Wall Street firms, Banks and Insurance Companies to fight the implementation of an SEC rule such as the fiduciary standard, as opposed to a law passed by Congress. There is a major difference if you catch my drift. It would be much tougher to overturn legislation, in my opinion. Do not think for a minute that Wall Street firms, Banks and Insurance Companies will not be flooding the SEC with comments on any proposed rule on the fiduciary standard. It is obvious they do not want it.
The main thing you need to understand is that registered investment advisers are already subject to the fiduciary standard and they (we) only wear one hat. So, if you see a lot of resistance to the fiduciary standard in the next six months, keep in mind that is not coming from registered investment advisers.
As I have blogged about many times before, the best financial advisor to hire is an Independent Registered Investment Adviser with no Wall Street firm, Bank or Insurance Company broker/dealer affiliations. Like me.
The early word is that the authority to require the fiduciary standard for broker/dealers and investment advisers will be granted to the U.S. Securities and Exchange Commission (SEC). The current status of the fiduciary standard is that investment advisers (like my firm) are already subject to the fiduciary standard. It is the broker/dealers (Wall Street firms, Banks & Insurance Companies) who are not subject to the fiduciary standard.
The SEC will have to wait six months until a study is done. This is really an opportunity for Wall Street firms, Banks and Insurance Companies to fight it and or, time to get prepared for it. The law is supposed to give the SEC the power to implement a rule related to the fiduciary standard. The SEC has commissioners who vote on such any rules, if presented. So, there is no guarantee that after the results of the study, the SEC will make such a rule. FinReg only gives them the power to make such a rule, I believe. It doesn't necessarily make it etched in stone. Also, they normally put proposed rules out for a period of time before implementation and allow people to comment on them. Then, after the comment period, the SEC reviews the comments and determines the impact that making the final rule may have on the industry.
I wonder, if it is easier for Wall Street firms, Banks and Insurance Companies to fight the implementation of an SEC rule such as the fiduciary standard, as opposed to a law passed by Congress. There is a major difference if you catch my drift. It would be much tougher to overturn legislation, in my opinion. Do not think for a minute that Wall Street firms, Banks and Insurance Companies will not be flooding the SEC with comments on any proposed rule on the fiduciary standard. It is obvious they do not want it.
The main thing you need to understand is that registered investment advisers are already subject to the fiduciary standard and they (we) only wear one hat. So, if you see a lot of resistance to the fiduciary standard in the next six months, keep in mind that is not coming from registered investment advisers.
As I have blogged about many times before, the best financial advisor to hire is an Independent Registered Investment Adviser with no Wall Street firm, Bank or Insurance Company broker/dealer affiliations. Like me.
Friday, May 28, 2010
The Critical Difference - What It Means For Someone to Work in Your Best Interests
The Critical Difference of Working With Registered Representatives, Bank Reps, Insurance Agents and Independent Registered Investment Advisers - What It Means For Someone to Work in Your Best Interests
Most of America has money in retirement plans, investment accounts and insurance products. Think about it. If you go see a registered representative at a brokerage firm, or at a bank, or an insurance agent, no matter what level of experience or designations that they hold, odds are that they will want to sell you something. The reason for this is that they have a revenue quota to keep their office perks and their job. If they fail to reach their revenue quota, then they can lose their job. If you are sold products that benefit these registered representatives and their firms, then how does that help you? The truth is that your needs are always way down on the totem pole with this business model of Banks, Insurance Companies and Wall Street firms.
Independent Registered Investment Advisers do what is in your best interest. Not all of them will do it, however. How many Independent Registered Investment Advisers will work with you knowing that you do not have $500,000 to invest? If you simply tell them that you need help getting out of debt, then watch as they tell you about their account minimum of $500,000 and let you walk out the door.
A lot of these Independent Registered Investment Advisers only want to work with customers who have money and lots of it. The thinking goes it is better to have 1 person with $1,000,000 than 10 people with $100,000 each. It is easier to manage one person as opposed to ten people. Most all Independent Registered Investment Advisers work from this business model, with the exception of one that I know of and that is me.
The Taking Control Plan is how you should run your financial life. If you start at the right side of this Money Flow, then you are benefiting the firm selling you products. If on the other hand, you take my advice and start at the left side of this Money Flow, then you are benefiting you and your family.
This should be an "ah ha" moment for you. The light bulb should be shining bright now.
If you build the solid foundation first, by paying your everyday expenses, controlling your discretionary spending with the Under Control Accounts, then setting up Individual Savings Accounts for specific short term goals like vacations or home improvements, then you can begin to build a bigger emergency fund. In today's environment, forget 3 to 6 months of expenses. Today, I recommend 9 to 12 months of expenses in case of job loss, accidents or medical issues that would cause a longer strain on your financial situation. Once you have tackled all of these, then and only then should you move on to fully funding your retirement plans and taking excess cash flow and adding it to investment accounts.
Wall Street firms, banks and insurance companies want you to buy their stuff which means starting on the right side of this Money Flow. How does this help you if you have debt, your discretionary spending is not under control and you have no money saved for vacations? You have to be smart today. Really smart.
With The Taking Control Plan, you benefit first. Isn't this truly advice in your best interests? This is what I do for you.
Not me first, but you first.
Most of America has money in retirement plans, investment accounts and insurance products. Think about it. If you go see a registered representative at a brokerage firm, or at a bank, or an insurance agent, no matter what level of experience or designations that they hold, odds are that they will want to sell you something. The reason for this is that they have a revenue quota to keep their office perks and their job. If they fail to reach their revenue quota, then they can lose their job. If you are sold products that benefit these registered representatives and their firms, then how does that help you? The truth is that your needs are always way down on the totem pole with this business model of Banks, Insurance Companies and Wall Street firms.
Independent Registered Investment Advisers do what is in your best interest. Not all of them will do it, however. How many Independent Registered Investment Advisers will work with you knowing that you do not have $500,000 to invest? If you simply tell them that you need help getting out of debt, then watch as they tell you about their account minimum of $500,000 and let you walk out the door.
A lot of these Independent Registered Investment Advisers only want to work with customers who have money and lots of it. The thinking goes it is better to have 1 person with $1,000,000 than 10 people with $100,000 each. It is easier to manage one person as opposed to ten people. Most all Independent Registered Investment Advisers work from this business model, with the exception of one that I know of and that is me.
The Taking Control Plan is how you should run your financial life. If you start at the right side of this Money Flow, then you are benefiting the firm selling you products. If on the other hand, you take my advice and start at the left side of this Money Flow, then you are benefiting you and your family.
This should be an "ah ha" moment for you. The light bulb should be shining bright now.
If you build the solid foundation first, by paying your everyday expenses, controlling your discretionary spending with the Under Control Accounts, then setting up Individual Savings Accounts for specific short term goals like vacations or home improvements, then you can begin to build a bigger emergency fund. In today's environment, forget 3 to 6 months of expenses. Today, I recommend 9 to 12 months of expenses in case of job loss, accidents or medical issues that would cause a longer strain on your financial situation. Once you have tackled all of these, then and only then should you move on to fully funding your retirement plans and taking excess cash flow and adding it to investment accounts.
Wall Street firms, banks and insurance companies want you to buy their stuff which means starting on the right side of this Money Flow. How does this help you if you have debt, your discretionary spending is not under control and you have no money saved for vacations? You have to be smart today. Really smart.
With The Taking Control Plan, you benefit first. Isn't this truly advice in your best interests? This is what I do for you.
Not me first, but you first.
Wednesday, May 19, 2010
Where Art Thou Fiduciary Duty to Clients?
I had an industry email flash come across my screen saying that the Senate Bill on Financial Reform is expected to pass tomorrow. Then, later I heard that the Democrats are in last minute meetings trying to secure the 60 votes needed for cloture. This prompted me to go view the latest version of the bill, Senate Bill 3127 with amendments.
We have heard within the last week that the fiduciary standard of care would be applied to broker/dealers with an exception for Variable Annuities. Looks like the insurance companies were able to get fiduciary duty exempted from their activities, because Variable Annuities are only sold by insurance agents who also have securities licenses. So, it is with great anticipation that I went to the Senate Banking Committee's web site to find the latest version of the bill.
I pulled up the latest version of S. 3127, then I did a search for the word fiduciary. Guess what? There is no mention of the word fiduciary in regards to consumer protection. I am not kidding. I am dead serious.
I guess since the insurance lobby won out on the Variable Annuity issue, then it must have ticked off the lobbyists for the Banks and Broker/Dealers. I'm sure they complained that the Insurance Company lobbyists should not be exempted from the fiduciary duty to consumers while they were subject to it. The Bankers and Wall Street lobbyists, it appears to me, have managed to get rid of the fiduciary duty to consumers altogether. Banks, Insurance Companies,Wall Street firms and their lobbyists have once again destroyed any chance of getting fiduciary duty protections for consumers, in my humble opinion.
Of course, this is no surprise to me. As I have blogged about over and over again, it is impossible to have a fiduciary duty to clients if you have a revenue quota at your Bank, Insurance Company or Wall Street firm. If these firms had to live by a fiduciary duty to consumers, then they would not be able to require their representatives and agents to meet their revenue quotas. As always folks, it is all about the money.
As long as consumers keep trusting, or excuse me, allowing Banks, Insurance Companies and Wall Street firms to take their money, then they can all count on plenty of lobbying funds for Congress. Let's face the facts. Once this bill passes, it is extremely doubtful that we will see any other massive piece of legislation that will include protections for consumers. As always, Banks, Insurance Companies and Wall Street firms win and the consumer loses. If you do not believe me, look at the credit card reform legislation. Did it help consumers? No. It only helped the credit card companies.
Consumers can win if they make one minor change. Quit doing business with anyone affiliated with a Bank, Insurance Company or Broker/Dealer. Instead only do business with Independent Registered Investment Advisers like me. Independent means no affiliation with any Bank, Insurance Company or Broker/Dealer. None. Nobody. No one. Not a single soul. Not any. Not a single person. Not one iota.
Never again fall victim to the shenanigans of Wall Street. Hey, that sentence is on the cover of my book, Keep Your Assets. Take My Advice. Have you read my book yet? You can find a link to Amazon or Barnes and Noble at the top of this blog page, right under the picture of my book. Thank you very much.
We have heard within the last week that the fiduciary standard of care would be applied to broker/dealers with an exception for Variable Annuities. Looks like the insurance companies were able to get fiduciary duty exempted from their activities, because Variable Annuities are only sold by insurance agents who also have securities licenses. So, it is with great anticipation that I went to the Senate Banking Committee's web site to find the latest version of the bill.
I pulled up the latest version of S. 3127, then I did a search for the word fiduciary. Guess what? There is no mention of the word fiduciary in regards to consumer protection. I am not kidding. I am dead serious.
I guess since the insurance lobby won out on the Variable Annuity issue, then it must have ticked off the lobbyists for the Banks and Broker/Dealers. I'm sure they complained that the Insurance Company lobbyists should not be exempted from the fiduciary duty to consumers while they were subject to it. The Bankers and Wall Street lobbyists, it appears to me, have managed to get rid of the fiduciary duty to consumers altogether. Banks, Insurance Companies,Wall Street firms and their lobbyists have once again destroyed any chance of getting fiduciary duty protections for consumers, in my humble opinion.
Of course, this is no surprise to me. As I have blogged about over and over again, it is impossible to have a fiduciary duty to clients if you have a revenue quota at your Bank, Insurance Company or Wall Street firm. If these firms had to live by a fiduciary duty to consumers, then they would not be able to require their representatives and agents to meet their revenue quotas. As always folks, it is all about the money.
As long as consumers keep trusting, or excuse me, allowing Banks, Insurance Companies and Wall Street firms to take their money, then they can all count on plenty of lobbying funds for Congress. Let's face the facts. Once this bill passes, it is extremely doubtful that we will see any other massive piece of legislation that will include protections for consumers. As always, Banks, Insurance Companies and Wall Street firms win and the consumer loses. If you do not believe me, look at the credit card reform legislation. Did it help consumers? No. It only helped the credit card companies.
Consumers can win if they make one minor change. Quit doing business with anyone affiliated with a Bank, Insurance Company or Broker/Dealer. Instead only do business with Independent Registered Investment Advisers like me. Independent means no affiliation with any Bank, Insurance Company or Broker/Dealer. None. Nobody. No one. Not a single soul. Not any. Not a single person. Not one iota.
Never again fall victim to the shenanigans of Wall Street. Hey, that sentence is on the cover of my book, Keep Your Assets. Take My Advice. Have you read my book yet? You can find a link to Amazon or Barnes and Noble at the top of this blog page, right under the picture of my book. Thank you very much.
Friday, January 22, 2010
Same Old Song
The Democratic party received a stunning wake up call this week when Scott Brown won election to the U.S. Senate. However, I am dismayed that we are hearing the same old song. When Democrats do not like something, they vilify it. They disparage it. They throw insults. Those who do not follow their liberal agenda are attacked over and over again.
Today's speech by the President fit the Democratic playbook to a "T." He attacked the big banks as those who caused the problem. He is going after them to make sure that we will not have the "too big to fail" problem again. On the surface this sounds fair, but if you peel back the onion a little, then you will find that it is superficial.
What I mean is...if the government doesn't step in and prop up the banks the next time they do something "stupid," as the President put it, then market forces will solve the problem.
Do not get me wrong. I am not a big fan of Wall Street firms. However, there is plenty of blame to go around here. This is exactly what the Democrats like to do, play the blame game, instead of accept responsibility for their own actions. The Democrats are the ones who passed the legislation forcing banks to accept mortgages from people who could not afford them. Somehow, they have skirted responsibility for that major snafu.
I truly believe that the Democrats are now attacking the big banks, because it deflects criticism away from themselves. They know that most Americans do not have a very high opinion of Wall Street banks. Therefore, in their effort to try and shore up support for the Democratic Party, they trot out the same old song. Make someone or some group your enemy, then attack, vilify and disparage them.
If I could give some political advice to the people advising the Democrats, then I would simply say...
"It is jobs and the economy stupid."
Today's speech by the President fit the Democratic playbook to a "T." He attacked the big banks as those who caused the problem. He is going after them to make sure that we will not have the "too big to fail" problem again. On the surface this sounds fair, but if you peel back the onion a little, then you will find that it is superficial.
What I mean is...if the government doesn't step in and prop up the banks the next time they do something "stupid," as the President put it, then market forces will solve the problem.
Do not get me wrong. I am not a big fan of Wall Street firms. However, there is plenty of blame to go around here. This is exactly what the Democrats like to do, play the blame game, instead of accept responsibility for their own actions. The Democrats are the ones who passed the legislation forcing banks to accept mortgages from people who could not afford them. Somehow, they have skirted responsibility for that major snafu.
I truly believe that the Democrats are now attacking the big banks, because it deflects criticism away from themselves. They know that most Americans do not have a very high opinion of Wall Street banks. Therefore, in their effort to try and shore up support for the Democratic Party, they trot out the same old song. Make someone or some group your enemy, then attack, vilify and disparage them.
If I could give some political advice to the people advising the Democrats, then I would simply say...
"It is jobs and the economy stupid."
Friday, August 28, 2009
The Number of Banks in Trouble Grows
Is there any safe place to put your money these days? Well yes, but you must be smart about it.
Did you know that the FDIC has increased the FDIC coverage for depositors to $250,000 per person, per bank? They have these limits in place until 2013. The thing to do is to not put all your eggs in one bank.
The Wall Street Journal has an article on the status of the FDIC and the banks in today's edition. You can read all about it here: http://online.wsj.com/article/SB125137695691263385.html .
If you want delve in a little deeper to see what might be going on with your bank, then you may want to take a look at http://www.financialstability.gov/latest/reportsanddocs.html . Look at the latest TARP report by date. This will give you a list of all TARP recipients and show whether they have paid back their TARP funds. Is your favorite bank in here?
When buying CD's, make sure that your brokerage account is not also buying CD's from the same bank. This would jeopardize your FDIC insurance by potential exceeding the $250,000 limit.
You want to be smart about investing? Then, buy and read my book, Keep Your Assets Take My Advice. http://www.amazon.com/Keep-Your-Assets-Take-Advice/dp/1440126933 You will wonder where I have been all your life.
Thanks.
Did you know that the FDIC has increased the FDIC coverage for depositors to $250,000 per person, per bank? They have these limits in place until 2013. The thing to do is to not put all your eggs in one bank.
The Wall Street Journal has an article on the status of the FDIC and the banks in today's edition. You can read all about it here: http://online.wsj.com/article/SB125137695691263385.html .
If you want delve in a little deeper to see what might be going on with your bank, then you may want to take a look at http://www.financialstability.gov/latest/reportsanddocs.html . Look at the latest TARP report by date. This will give you a list of all TARP recipients and show whether they have paid back their TARP funds. Is your favorite bank in here?
When buying CD's, make sure that your brokerage account is not also buying CD's from the same bank. This would jeopardize your FDIC insurance by potential exceeding the $250,000 limit.
You want to be smart about investing? Then, buy and read my book, Keep Your Assets Take My Advice. http://www.amazon.com/Keep-Your-Assets-Take-Advice/dp/1440126933 You will wonder where I have been all your life.
Thanks.
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