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GET YOUR MONEY BACK! Misconduct and malpractice. Investment industry "best and worst practices". Information to improve public protection. Expert witness services for industry and investors. Forensic investment analysis. • View topic - Solutions, Self Defense and Best Practices

Solutions, Self Defense and Best Practices

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Re: Solutions, Self Defense and Best Practices

Postby admin » Mon Dec 04, 2017 12:17 pm

RIA = registered investment advisor. Subject to fiduciary standards, i.e full blown best interests.


Screen Shot 2017-12-04 at 12.15.37 PM.png


ADVOCACY, STANDARDS, AND RESEARCH NEWS & UPDATES

A WIN FOR INVESTORS NINE YEARS IN THE MAKING

“We are proposing that the SEC provide further administrative guidance that anyone calling themselves financial or investment advisors or otherwise providing personalized investment advice be required to register as an RIA. We will also call for rulemaking that will require all brokers to make prominent, up-front and ongoing disclosures that they are agents of the seller of financial products and services and that they are not representing the interests of the customer.
All of this is designed to bring clarity to retail investors on exactly who their financial service providers serve. We see this as an important interim step as the SEC and DOL consider a uniform fiduciary duty.”

https://www.cfainstitute.org/ethics/Doc ... 8ifQ%3D%3D
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Re: Solutions, Self Defense and Best Practices

Postby admin » Wed Oct 11, 2017 1:15 pm

from http://fiduciarynews.com/2017/10/fiduci ... gn=101217z

“Clean” shares refer to mutual funds with all the sales-related fees stripped out of them.


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It looks like regulators and the industry may finally have come around to recognize the difference between fees that matter and fees that shouldn’t matter (see, respectively: “401k Fees That Matter,” FiduciaryNews.com, April 27, 2010; and, “401k Fees That Should Matter,” FiduciaryNews.com, May 3, 2010). The word de jour is “clean,” as in “clean shares.” By now you’ve probably read one too many articles on the subject of this blossoming concept speculating on the future of retirement plan mutual fund investments. This article reveals the one thing those other articles have left out.

“Unlike other share classes sold through broker/dealers, clean shares are shares that don’t have conflicts-of-interests such as charge sales loads,


“Clean” shares refer to mutual funds with all the sales-related fees stripped out of them.
“Unlike other share classes sold through broker/dealers, clean shares are shares that don’t have conflicts-of-interests such as charge sales loads, 12b-1 fees, transfer agency fees, or other investor expenses that generate commissions for brokers and other intermediaries,” says Dan Sondhelm, CEO of Sondhelm Partners in Alexandria, Virginia. “Brokers instead can charge commissions or service fees for buying and selling shares. Since these costs are clearly stated on investors’ account statements, clean shares will give investors a far more transparent view of their actual investment expenses.”

The SEC currently requires some of these conflict-of-interest fees be disclosed on page two or the mutual fund prospectus as either wholly separate fees (i.e., front and back-end loads) or as a separate line item on the expense ratio (i.e., 12b-1 fees). The SEC does not currently require disclosure on other conflict-of-interest fees (i.e., revenue-sharing) and these fees are hidden within the fund’s expense ratio.

All fees removed to make funds eligible to be called “clean” shares deal with marketing and distribution payouts, not with normal operating expenses (which are reflected by the fund’s expense ratio). Andrew Van Fossen of Allevid Advising in Summerfield, North Carolina, says, “Clean shares are mutual funds that don’t have loads or other major fees in buying or selling. The only fee is the typical ‘management fee’ (a small percentage of the mutual funds total assets under management) that all funds use to keep the lights on.”

Studies have shown that embedded conflict-of-interest fees can have a detrimental impact on mutual fund performance (see “Yet Another Independent Study Highlights High Conflict-of-Interest Cost to Retirement Investors,” FiduciaryNews.com, February 26, 2017). Researchers have tried to explain this divergence in return data. They believe funds that payout conflict-of-interest fees have built business models based on success through selling, while those fund that do not rely on conflict-of-interest fees have built business models based on success through superior investment performance.

That most funds contain one sort of conflict-of-interest fee or another suggests the success through selling business model has been widely adopted by the mutual fund industry. “Most mutual funds were built to pay the brokers to send their clients to them,” says Van Fossen. “As such, they had those loads which primarily went to paying broker’s commissions.”

This long-term trend among mutual funds to incorporate conflict-of-interest fees into their business models may have finally hit a brick wall with the DOL’s Conflict-of-Interest (a.k.a. “Fiduciary”) Rule. “Mutual funds have been available for many decades,” says Sondhelm. “The industry was built on compensating financial advisors for advice. These fees were built in to mutual funds. Some firms have become more shareholder friendly over the years. Now, the DOL laws are the catalyst for more firms to participate. Of course, this process will take time. Developing share classes and/or changes to existing share classes, strategic thinking for boutique firms to determine if they want to remain in the fund industry, among other considerations, will take time.”

Indeed, some feel it is the very existence of the DOL’s Fiduciary Rule that has given rise to the push towards “clean” shares. “The concept of ‘clean’ shares came about so that brokers can comply with the new upcoming DOL Fiduciary Rule,” says Scott Salaske, CEO of Firstmetric in Troy, Michigan. “Many mutual funds are likely in no hurry to add the ‘clean’ share class unless their funds are heavily used in 401k products.”

By removing conflict-of-interest fees, fund investors receive an immediate benefit from “clean” shares. “Clean shares will give investors a far more transparent view of their actual investment expenses,” says Sondhelm.

In shifting away from broker-oriented transaction fees, the industry itself may shift towards new business models. “Clean funds are going to push brokers to become advisers,” says Van Fossen. “Instead of being paid on transactions, they will be paid either hourly (less likely) or on a percentage of their client’s assets (more likely).”

With fees no longer hidden, it will be easier to monitor fees and competitive pressure will likely eliminate excessive fees. “The biggest advantages of ‘clean’ shares are simplicity and lower costs for investors/retirement plan participants and transparency for retirement plan sponsors,” says Vitaly Novokreshchinov, Owner of Lestna Capital Group LLC in Chicago, Illinois. “Lower costs intensify the effect of compounding and have direct correlation with better investment outcomes for investors and plan participants. For plan sponsors, it improves transparency by enabling clearer disclosure, being aware of who pays what, and makes it easier to prove prudence of including such funds in the investment menu for plan participants.”

Still, there is no guarantee “clean” shares will result in lower net fees. Salaske says, “Many journalists have written about new ‘T’ shares and ‘clean’ shares over the course of 2017 with varying descriptions that all come back to the concept that clean shares are supposed to eliminate conflicts of interest, offer the lowest cost share class and be more transparent. All investors want 100% transparency when it comes to investing, but with a name like ‘clean’ shares they will likely think what the name implies, everything is clean, but not so fast. Just because something has a new label does not mean that it’s any better for investors. In the end, investors will likely pay the same amount in total investment costs when purchasing ‘clean’ shares, with the only difference being that now the fees are all split out from the fees charged by the mutual fund for investment management and distribution. This will likely help actively managed mutual funds with improved performance because the investment management fee will be lower because it will not include broker distribution fees, but don’t be fooled, those other fees that have been separated out of the total expense ratio of the mutual fund will still be charged, but just presented as new line items by the broker-dealer. It’s just reshuffling the fees and calling them by other names. I’m not sure why the industry is trying to fix something that does not need to be fixed. After all, there are already Class I (institutional) shares, that have low fees, no sales loads and no 12b-1 fees. What exactly is the industry trying to comply with when they already have a solution? Maybe they like the name ‘clean’ because it implies something that it’s not.”

Salaske has a point. For all the talk about “clean” shares and for all the articles written recently on the subject, very little attention has been paid to the fact we already have “clean” share funds available and we have had them available for a long time. It’s not just institutional class shares (which may still have revenue sharing fees). Quite a few funds have no 12b-1 fees, no commission loads, and no revenue sharing. You probably haven’t heard about them because, in rejecting the “success through selling” business model, it turns out they aren’t aggressive when it comes to marketing as their conflict-of-interest competitors.

The challenge is identifying a system for finding these funds. Sondhelm says, “Ask the fund firm specific questions about being ‘clean’ and read the prospectus although current versions may not have all the needed information. Prospectuses will probably have a clean section at some point.”

Because mutual funds are currently not required to disclosure revenue sharing, identifying current funds that qualify as “clean” share funds might prove difficult for the average person. “In order to identify funds that offer ‘clean’ shares, plan sponsors/participants can either do their own research or hire someone to do it for them,” says Novokreshchinov. Doing research on its own could be very time-consuming and requires investment knowledge and expertise. For plan sponsors, a much better way would to be delegate this responsibility. Hiring either a 3(21) Fiduciary Adviser or 3(38) Investment Manager is definitely a preferred for plan sponsors. When it’s plan participants, they can rely on other employees and plan guidance. However, working with a financial adviser is a best way to go.”

The bottom-line, according to Salaske, is that “there is no easy way to tell today that a mutual fund has a ‘clean’ share class. The industry and regulators are still trying to figure it all out.”

It has been this very hurdle that may have enabled the explosion of conflict-of-interest funds in the first place.“Lack of fiduciary and investment knowledge, no time, and even passivity among retirement plan sponsors and investors makes them rarely aware of better and cheaper investment alternatives available,” says Novokreshchinov. “As a result, mutual funds take advantage of this situation and are reluctant to promote ‘clean’ shares and give up more revenue they receive from other types of shares.”

Since we already have funds that can be classified as “clean” shares, why has there been this push of late to get regulators involved? “It helps to have the guidelines of regulators,” says Sondhelm. “Without them, funds will become 60% clean or 80% clean. While that is a step in the right direction, that doesn’t bring the industry far enough towards the goal.”

In addition, recent regulatory actions appear to have been the impetus of the growing interest in “clean” shares. “Since ‘clean’ shares came about for brokers to try and comply with the new upcoming DOL Fiduciary Rule,” says Salaske, “then regulators should step in and help the industry define this concept so at least investors have a fighting chance to be able to compare apples-to-apples and know what they are paying in total investment costs, not just the amount in mutual fund investment management fees.”

We have yet to reach an agreement on the exact definition of “clean” shares. Regulators may be in a better position to help do this. “‘Clean’ shares are in relatively early stage of its development and there is no consensus in the investment community on which other fees, such as sub-TA, they should include,” says Novokreshchinov. “This is where regulators could step in and provide its guidance. Specifically, regulators need to decide whether sub-TA and other revenue sharing fees should be included in ‘clean’ shares or not. Without regulators the industry may end up with another share class which is fair without and foul within.”

In the end, categorizing the cleanliness of funds may represent a business opportunity for someone. Sondhelm believes “research firms like Morningstar will start to cover how ‘clean’ a fund really is. This section will be added to their Morningstar.com or principia pages. Institutional consultants or outsourced CIO’s will be building databases of who qualifies as clean. Firms that put 401k plans together will likely add cleanliness to their criteria for fund selection. Government who is developing the rules may be supervising this over time. Maybe they can keep track to in a user-friendly database. Investment platforms, such as Schwab or UBS, may also be differentiating funds by clean vs not as clean. Financial advisors may be carving out a niche for themselves to promote their additional layer to avoid conflicts of interest. Clean fund firms will be touting their cleanliness in multiple ways, from brochures to videos for their financial advisors. Certainly, the financial news media will be writing about it and keeping track. Finally – select entrepreneurial companies may use this as a catalyst to develop a product focusing on clean mutual funds. As a result, peer pressure – and the publicity around it – will cause even more challenges in attracting investors for those firms who don’t follow along. Some will determine the expense is too much for them to bear and will decide to have their funds adopted or acquired. This will also be a buying opportunity for firms willing to be on the forefront of clean shares.”

Sooner or later, it will be important for 401k plan sponsors to get down and dirty when it comes to understanding the fiduciary liability implications of “clean” shares and their equivalent. Furthermore, since the most successful class action suits have involved different share classes of the same fund, you can be sure the introduction of “clean” shares will catch the eyes of your not-so-friendly neighborhood class action attorney.

Christopher Carosa is a keynote speaker, journalist, and the author of 401(k) Fiduciary Solutions, Hey! What’s My Number? How to Improve the Odds You Will Retire in Comfort and several other books on innovative retirement solutions, practical business tips, and the history of the wonderful Western New York region. Follow him on Twitter, Facebook, and LinkedIn.

Mr. Carosa is available for keynote speaking engagements, especially in venues located in the Northeast, MidAtantic and Midwestern regions of the United States and in the Toronto region of Canada.

SOLUTION: Tell your “advisor” that you demand and expect only “clean shares” (as described in this article) and/or go find them yourself.

(anything else is a sales-trick hidden behind an “advice disguise”)
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Re: Solutions, Self Defense and Best Practices

Postby admin » Fri Aug 04, 2017 9:05 pm

Hello Larry,
Below is a slightly edited version which you can make public ... some of the details about my dad are not really necessary to make the point and I'd rather keep that private. Therefore if you do post it publicly, please add a note that certain personal details have, out of privacy concerns, been deleted from the original sent to Mr Kreigler.

Regards,
Jean

Screen Shot 2017-08-04 at 9.59.38 PM.png


To: IIROC (Investment Industry Regulatory Organization of Canada)
Mr Kreigler,
Thank you for the substantive reply to my comment / question. Here is what I suggest you should consider at IIROC:

Substitute the word "representative" for "advisor" in all your material.
This more neutral term does not inadvertently suggest that advice may be allowed when in many cases it is not
the word actually is contained in the two main categories that deal with the public, Registered Representative and Investment Representative

Align the IIROC approval categories with those of the Canadian Securities Administrators (CSA)

It seems that it is possible for a person to be authorized by IIROC to trade and advise in securities but not by the CSA; in fact, I discovered by using your AdvisorReport that my dad's former Representative is approved by IIROC as Registered Representative and as such, allowed to offer advice, but is only a Dealing Representative aka SalesPerson per the CSA.

I interpret that to mean that CSA's classification takes precedence over IIROC's and the guy was just a salesman; does it need saying that such a situation is highly fraught with confusion for the public?

Back in 2015 when I last looked into this topic (blog post here http://canadianfinancialdiy.blogspot.ca/2015/03/investment-advice-trust-index.html) I found a minefield of confusing titles, approval categories and responsibilities - could the industry not see fit to adopt unified explanations at least, and better, common terminology?
Include information on the representative's bottom line authorized role

Though your online report helpfully includes the CSA classification, make clear what is the bottom line authorization (i.e. what the CSA says he/she is authorized to do)

Include information on the standard of care associated with the representative's bottom line CSA-authorized role

Is it suitability or fiduciary duty of care level that applies for the particular representative? In the case of my dad, the Salesman's suitability-only obligation resulted in several high-fee deferred service charge mutual funds being in the portfolio when I came along.

Now, my dad is no dumb "vulnerable" person but if he did not have such an ornery streak which led him to mostly ignore the "advice" of the particular salesman I am sure I would have discovered a portfolio stuffed with high-fee "suitable" mutual funds; not many people will have that successful instinct, as indeed I have discovered among other members of my family who are intelligent and well educated but too busy to make detailed enquiries about the nature of the relationship with their self-styled financial "advisors”.

Jean is the author of the financial blog found at http://canadianfinancialdiy.blogspot.ca

This blog has been a credible and respected source of investment analysis and objective information since 2007.
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Re: Solutions, Self Defense and Best Practices

Postby admin » Fri Aug 04, 2017 8:52 am

http://www.investmentnews.com/article/2 ... on-brokers

Screen Shot 2017-08-04 at 9.50.31 AM.png


Brokers in Nevada will have to meet a fiduciary standard when providing investment advice under a law that will take effect July 1.

The measure revises a current fiduciary law applying to "financial planners" that excluded brokers and investment advisers. The new law subjects brokers and advisers to the state's fiduciary rule.

Brokers normally operate under a suitability standard enforced by the Financial Industry Regulatory Authority Inc. that requires them to sell products that fit a client's risk tolerance, liquidity needs and investment objectives. Under the Investment Advisers Act of 1940, investment advisers must give advice that is in a client's best interests, or meet a fiduciary standard.


The Nevada law will go on the books just weeks after partial implementation of a Labor Department fiduciary rule that requires all financial advisers to act in the best interests of their clients in retirement accounts. The DOL rule is undergoing a review mandated by President Donald J. Trump that could result in modification or repeal.

"For a state to impose fiduciary duty on all accounts, not just retirement accounts, is a very big deal," said Andrew Hartnett, officer at Greensfelder, Hemker & Gale and former Missouri securities commissioner. "As uncertainty [about the DOL rule] lingers out there, it wouldn't surprise me to see other states step into that void."

The Nevada law was approved on party-line votes in the Nevada legislature, where Democrats hold the majority. It was signed on June 5 by Gov. Brian Sandoval, a Republican. A spokeswoman for Mr. Sandoval did not respond to a request for comment.

Under Nevada's fiduciary duty, financial advisers must disclose any "profit or commission" they receive based on their guidance to clients and must make a "diligent inquiry" about a client's financial condition and goals, according to an analysis by Mr. Hartnett.

The new Nevada law authorizes the state's securities administrator, Diana J. Foley, to "adopt regulations defining or excluding acts, practices or courses of business as violations of that fiduciary duty." A spokesperson for Ms. Foley was not immediately available for comment.

It's not clear whether the Nevada law subjects brokers to a continuing duty of care or simply makes them fiduciaries at the point of sale, Mr. Hartnett said.

"There are a lot of questions surrounding what this legislation means for a commission relationship," he said.

The Nevada law could be challenged under federal pre-emption, according to George Michael Gerstein, counsel at Stradley Ronon Stevens & Young.

"There's a little bit of a question as to whether a state could force broker-dealers to register [as a fiduciary] when they don't have to do so at the federal level," Mr. Gerstein said.

In a 2012 study in the Journal of Financial Planning, Michael Finke, professor of personal financial planning at Texas Tech University, said courts in four states have recognized a fiduciary relationship between brokers and their clients — California, Missouri, South Carolina and South Dakota — while 14 have not. He put the remaining 32 states, including Nevada, in a "quasi-fiduciary" category.

"Quasi-fiduciary states impose standards that exceed the suitability standard set forth under Finra rules, but do not expressly classify broker-dealers as fiduciaries," Mr. Finke wrote.

Mr. Gerstein anticipates that more states will tackle investment advice regulation.

"The notion of these high standards of care across all the regulated entities is entering the public consciousness," he said. "It has become much more of a kitchen-table discussion than it used to be.”

http://www.investmentnews.com/article/2 ... on-brokers
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Re: Solutions, Self Defense and Best Practices

Postby admin » Tue Aug 01, 2017 6:29 pm

Financial Advisor Fees Comparison – All-In Costs For The Typical Financial Advisor?

EXECUTIVE SUMMARY

Screen Shot 2017-08-01 at 7.27.46 PM.png


While the standard rule-of-thumb is that financial advisors charge 1% AUM fees, the reality is that as with most of the investment management industry, financial advisor fee schedules have graduated rates and breakpoints that reduce AUM fees for larger account sizes, such that the median advisory fee for high-net-worth clients is actually closer to 0.50% than 1%.

Yet at the same time, the total all-in cost to manage a portfolio is typically more than “just” the advisor’s AUM fee, given the underlying product costs of ETFs and mutual funds that most financial advisors still use, not to mention transaction costs, and various platform fees. Accordingly, a recent financial advisor fee study from Bob Veres’ Inside Information reveals that the true all-in cost for financial advisors averages about 1.65%, not “just” 1%!

On the other hand, with growing competitive pressures, financial advisors are increasingly compelled to do more to justify their fees than just assemble and oversee a diversified asset allocated portfolio. Instead, the standard investment management fee is increasingly a financial planning fee as well, and the typical advisor allocates nearly half of their bundled AUM fee to financial planning services (or otherwise charges separately for financial planning).

The end result is that comparing the cost of financial advice requires looking at more than “just” a single advisory fee. Instead, costs vary by the size of the client’s accounts, the nature of the advisor’s services, and the way portfolios are implemented, such that advisory fees must really be broken into their component parts: investment management fees, financial planning fees, product fees, and platform fee.

From this perspective, the reality is that the portion of a financial advisor’s fees allocable to investment management is actually not that different from robo-advisors now, suggesting there may not be much investment management fee compression on the horizon. At the same time, though, financial advisors themselves appear to be trying to defend their own fees by driving down their all-in costs, putting pressure on product manufacturers and platforms to reduce their own costs. Yet throughout it all, the Veres research concerningly suggests that even as financial advisors increasingly shift more of their advisory fee value proposition to financial planning and wealth management services, advisors are still struggling to demonstrate why financial planning services should command a pricing premium in the marketplace.

https://www.kitces.com/blog/independent ... ement-fee/
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Re: Solutions, Self Defense and Best Practices

Postby admin » Fri Jul 28, 2017 12:52 pm

From Ben Carlson at Ritholtz Wealth Management:(link at bottom of page)

The Best Books on Financial Market History
Posted July 27, 2017 by Ben Carlson

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Earlier this week I wrote (again) about the importance of understanding financial market history. This prompted a few people to ask for some of my favorite books on the topic. Here goes:

Devil Take the Hindmost: A History of Financial Speculation
If I had to pick just one book to read on the topic, this would be the one. Chancellor weaves history, psychology, and economics beautifully in what is also one of the better-named finance books I’ve come across.


The Panic of 1907: Lessons Learned From the Market’s Perfect Storm
The story behind the banking crisis most people probably aren’t familiar with. This book shows how primitive the financial markets were before banking regulations and the Fed came around.


The Great Depression: A Diary

This first person account of what life was like during the Great Depression is not only a lesson in financial market history but also how difficult that period in history was for those living through it. I can’t recommend this one enough.
Stocks for the Long Run: The Definitive Guide to Financial Market Returns & Long-Term Investment Strategies
I’m always a little skeptical about how much faith we can put into market data from the late-1800s or early-1900s but this book does a masterful job of going way, way back to show how the various markets have performed over the really long haul.

More Money Than God: Hedge Funds and the Making of a New Elite

A book about the history of hedge funds but it plays out over the decades and gives some great background on what it was like to invest in various market environments over the years and how things have evolved for investors.
The Big Short: Inside the Doomsday Machine
The definitive book about the Great Financial Crisis and subprime mortgage meltdown and one of the best non-fiction books of the past decade. Liar’s Poker by Michael Lewis is also a great account of what Wall Street was like in the 1980s.
A Short History of Financial Euphoria
Howard Marks recommended this one. Galbraith is really good and it’s a quick read on the history of bubbles.

Against the Gods: The Remarkable Story of Risk
In the conversation for best investment books ever written.


Bull: A History of Boom and Bust, 1982-2004

One of the best investment books I’ve read in some time about one of the biggest stock market booms ever.
Dow 36,000…ok just kidding.


============

I asked a few friends — Michael Batnick, Dan Egan, Meb Faber and Tadas Viskanta — for their list and while we overlapped on many choices here are some I missed:

The Go-Go Years
When Genius Failed
The Money Game
Where Are the Customers’ Yachts?
The Great Crash
The Snowball
An Engine, Not a Camera
Debt, the First 5,000 Years
The Myth of the Rational Market
Birth of Plenty
Financial Market History
The History of the United States in Five Crashes
Triumph of the Optimists
Extraordinary Popular Delusions and the Madness of Crowds

Now, after you read all of those books here’s what else I’ve been reading lately:
Delivering on the 300-hour rule (kc-roi)
The topic is gold (Irrelevant Investor)
How to create work that lasts forever (Ryan Holiday)
A dozen investing lessons from Ed Thorp (25iq)
Biggest investment regret? (Humble Dollar)
Barry had some questions to Vanguard’s new incoming CEO (Bloomberg)
Tennis with Howard Marks (Reformed Broker)
Our NYC conference in November already has Cliff Asness, Scott Galloway, Liz Ann Sonders & Jason Zweig as keynotes (EBI)

http://awealthofcommonsense.com/2017/07 ... t-history/
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Re: Solutions, Self Defense and Best Practices

Postby admin » Fri Jul 28, 2017 10:25 am

The Stupidest Thing You Can Do With Your Money

Screen Shot 2017-07-28 at 11.16.54 AM.png


Go to Freakonomics, part of New York Public radio and listen to a dozen of the podcasts herein. Find them on iTunes as well, there are hundreds.

They are so well done, so entertaining, and they will tell you 99% of everything you need to know about money matters.

I suggest the best investment education you could give yourself is the gift of getting into the habit of listening to this podcast. Thanks to my friend Derrick who today sent me the podcast he listened to with this comment:

One of the best podcasts I've heard about investing fees.
These freakenomics guys do a good job of exploring things in an unbiased way without preconceived notions.


Episode 295 The Stupidest Thing You Can Do With Your Money
It’s hard enough to save for a house, tuition, or retirement. So why are we willing to pay big fees for subpar investment returns? Enter the low-cost index fund. The revolution will not be monetized.


Check out this episode: https://itunes.apple.com/ca/podcast/fre ... =390360677



http://freakonomics.com/archive/






http://www.wnyc.org/story/stupidest-money/
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Re: Solutions, Self Defense and Best Practices

Postby admin » Fri Jun 23, 2017 9:55 am

From 2015 comes this simple, simple list from a wise man, (not myself:) to protect the average person:
I agree with it:


Screen Shot 2017-06-08 at 3.18.21 PM.png



3/1/15
Maybe we need an Investor Self Protection Organization with simple rules or guidelines
Don't trust the industry.
Don't trust the regulators.
Don't use Advisors of any sort.
Learn the basics of investing.
Do It Yourself with a discount broker using a CASH Account..
Don't buy mutual funds, seg funds or other structured products.
Buy only Shares, Bonds, GICs, and certain true ETFs.
Don't use leverage.
If you do need an Adviser select one who is registered and qualified to give financial advice and open a Discretionary or Managed Account where the firm has a fiduciary obligation. Make sure proper formwork is completed.

(Larry adds only the comment, that if you get a financial-fiduciary-professional, you will be looking at fees, all-in, of around 1%. These folks may not take smaller accounts, and that is to be expected, and if you cannot obtain this level of “do no harm” agency duty, then go back to the list from Stan above. Do NOT settle for the hidden predatory sales tactics of banks and investment dealers who misrepresent their sales agents as if they were advisers. That will be like walking into a trap in 70% of examples in my experience.)
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Re: Solutions, Self Defense and Best Practices

Postby admin » Tue Mar 21, 2017 3:14 pm

March 16th, 2016

To: Financial Consumer Agency of Canada
427 Laurier Avenue West, 6th Floor
Ottawa ON K1R 1B9

Fax: 1-866-814-2224 / 613-941-1436

I write to request investigation into breaches of ‘legislation, regulations, voluntary codes of conduct, and/or public safety commitments’, within the mandate described in FCAC’s annual report.

Specific to: Ontario Securities Act Section 44,
Alberta Securities Act Section 100,
BC Securities Act Section 34,
Manitoba Securities Act Sections 74 and 74.1

As well as any other rules, laws, or public safety commitments that pertain to misrepresentation, deception, or falsification by our regulatory bodies, as well as the banking and investment industry.

It is found that Provincial Securities Commissions, or key persons within commissions, are selectively ignoring violations of public protective commitments and laws found in Securities Legislation.

In one example, ignoring the most basic laws against “misrepresentation”, has seemed to cause a ‘cascade effect’ of negating the “Fair, Honest and Good Faith” requirements, for banks and investment firms. This ‘slippery slope’ has allowed Canadian’s financial security to thus be violated in a myriad of ways by our most trusted institutions. Captured regulation appears to describe this issue, which allows ‘two wrongs to add up to making billions’…predominantly for banks and investment dealers.

I call your attention to a recent report by the Small Investor Protection Association, titled ‘ADVISOR TITLE TRICKERY’. This describes the deception practiced by thousands of bank and investment system players. http://sipa.ca/library

It appears that Securities Commissions utilize ‘personal discretion’, to decide if and when to enforce laws or to ignore laws and principles entirely. This occurs even when commissions are notified in writing of the harms of ignoring the law. I am compelled to ask the Financial Consumer Agency to investigate Securities regulatory and self-regulatory bodies and to intervene to protect Canadians.

I look forward to co-operating with FCAC, with others, and hopefully with a public inquiry, to ensure that Canadian laws are applied to the protection of Canadians, and no longer ignored for the sole benefit of the financial sector.



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Larry Elford, Investment Forensics
Former CFP, CIM, FCSI, APM
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Re: Solutions, Self Defense and Best Practices

Postby admin » Tue Mar 21, 2017 3:10 pm

March 20th, 2017

To: Hon Bill Morneau, Minister of Finance

From: Larry Elford

Re: Banking, financial investigations, and call for Royal Commission

Dear Mr. Morneau,

I write to you regarding aspects of financial victimization of Canadians, which I believe to cause the greatest overall economic harm to our citizens, and our country.

I wish to place my name at your disposal if you should need it, regarding recent bank scandals and in particular the FCAC announcement to investigate.

I have spoken in three Canadian legislatures over the past decade or so, on this area, twice in Parliament in Ottawa and once in the Ontario Legislature.

39th PARLIAMENT, 2nd SESSION, Standing Committee on Banking, "How Canadians Are Financially Abused"
40th PARLIAMENT, 2nd SESSION, Standing Committee on Justice, "The Perfect Financial Crime”

I enclose a copy of a recent investigation request sent to the FCAC to ensure that they do not limit their investigation to the banks, which I believe to be only the “symptom” of Canada’s economic drain problems, and not the “disease”.

I believe the disease, or the cause, is well over 1000 financial regulators, who are being paid as highly as $700,000 per year to look the other way, at clear rule and law violations by the banks. In my view it is the regulators who are being so highly paid (paid 100% by the industry they are supposed to protect) that they appear willfully blind to systemic violations of rules and laws.

How may I be of help to Canada in this matter? I seek nothing in compensation.



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Larry Elford, former CFP, CIM, FCSI, APM
Investment Forensics
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Re: Solutions, Self Defense and Best Practices

Postby admin » Tue Mar 21, 2017 3:08 pm

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“Dear ABC Bank,

I would like to ask ABC Bank if it is true that most ’advisors’ of ABC Bank, and in specific, the ‘advisors’ that ABC Bank allowed to give me financial advice on my investment accounts, are or were legally registered in the category of “advisor”, as they represented to me and in your advertising? I have enclosed some samples of bank “job openings” to show that most banks advertise “advisors”. Is it a true form of advertising or have Canadians been duped?

Or were they legally registered as “dealing representatives”, which is further clarified as ‘salesperson’ under that registration category, with the Canadian Securities Administrators?

I feel that if this question can be answered by you, I will be saved the trouble of having to retain legal counsel and ABC Bank may be saved the trouble of having to do similar.

Failing a prompt response to this question I feel that ABC Bank may leave me/us am with no other alternative than to continue my search for “fair, honest and good faith” services and answers to my question through legal counsel.

I once again, thank you for simply making my account “whole” as if I had never stepped foot into a ABC Bank ‘advisor’ relationship, to prevent much ado over not very much money. This is becoming more a matter of principle to us than a matter of the dollar value of my account. I would like my initial investment value returned to me/us, with a nominal and reasonable amount of interest for the years that I feel I have wasted with the deception of your employee titles.

Thank you for your prompt attention to this concern, which will allow me to put this matter to immediate rest.  

Signed

A Client who wishes “Fair, Honest and Good Faith” disclosure as you promised to me.

Strangely, when I search my ‘advisor” at your institution, I find he holds no such registration/.....

This 1.5 minute video (link below) shows investors how to search and find the difference between a “dealing representative”, which 96% of investment sellers in Canada are found to be concealing......”Hey, isn’t license concealment illegal.....?”

https://youtu.be/zIjt0qRsJKg
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Re: Solutions, Self Defense and Best Practices

Postby admin » Mon Jan 16, 2017 7:23 pm

Larry Elford says:

Ron Rhodes shares this wish list for investment regulations and protection considerations. Please refer back to this list after the next Black Swan that has our global heads spinning.

Best of 2016

Wish List for the Trump Administration

What any person or legislator would benefit from reading. Any investor will see in this set of simple rules some answers to their investment risk questions, which they have not even thought of yet. Any politician will see this as the way to be a public protective hero. There will come a day (too soon I fear) when the public must turn their full attention to finding those hero’s who truly protect the public interest and not just their self interest. Thanks for this Ron.


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Ron A. Rhoades, J.D., CFP® is an Asst. Professor of Finance at Western Kentucky University's Gordon Ford College of Business, where he serves as Director of its Financial Planning program. This article represents his views, alone, and are not those of any institution, organization or firm with whom he may be associated. Follow Ron on Twitter: @140ltd. To contact him, please email: Ron.Rhoades@wku.edu.

Sunday, January 1, 2017
My Financial Services Regulation Wish List for the Trump Administration
Dec. 22, 2016


1. Keep the U.S. Department of Labor "Conflicts of Interest" Rule. Why?

The core of the rule is principles-based. Only 237 words ... that's the Impartial Conduct Standards it applies.
It has already led to decreased asset management fees.

It has been shown that small investors can, and will be served, under a fiduciary standard.
Businesses large and small want the fiduciary standard - so they can rely upon the advisers to their retirement plans, and hold them accountable. No more plan sponsors left "holding the bag" as "retirement plan consultants" escape liability for their really poor recommendations under the inherently weak and ineffective suitability standard.

Many, many investment advisers are able and willing to provide such services, often aided by technology.
It will accelerate the trend away from arms-length product sales, and toward fiduciary-client relationships. Fiduciary status is justified given the high degree of information asymmetry, the necessary reliance by individual Americans on financial and investment advisers.

As trust in financial advisers grows, under a fiduciary standard, so does the rate of utilization of financial advisers. This is a good thing - as Americans need help to save more and invest more wisely.
It provides a foundation for financial and investment advisers to, eventually, become a true profession.
Greater accumulations of capital will result, as investment fees/costs come way down. In turn, this results in:
Greater financial security for Americans, as they enter and are in retirement.
Greater capital accumulation by Americans. And a lower cost of capital for corporations.
In essence, this "supercharges" U.S. economic growth. Greater capital accumulation provides the fuel necessary to transform innovations into new products and services.

2. Sunset B.I.C.E. after three years.

The DOL's Best Interests Contract Exemption is complex. Trying to accommodate commissions and other inherently conflicted sales practices, and fit them into a fiduciary-client relationship, is what causes the complexity.

As the years go by, B.I.C.E. may be interpreted so that its very tough requirements become weakened.
The industry is moving toward fee-based accounts. Good firms that understand how the fiduciary standard truly operates (e.g., Merrill Lynch, etc.) already have rejected the use of B.I.C.E.

It's best to permit B.I.C.E. for a limited period as a means of transition, then to sunset it.

3. Have the SEC alter how it enforces the Advisers Act.

If a person or firm holds out as a "financial adviser" or "wealth manager" or "retirement consultant" or "financial planner" or otherwise uses a title that evokes an adviser-client relationship, they should be held to the fiduciary requirements of the Advisers Act - at all times and without exception.

If the primary role of the person is to provide investment advice, rather than to execute transactions, the "solely incidental" exclusion to the definition of investment adviser should be applied properly and that person should be required to register as an investment adviser and to comply with the fiduciary duties arising from the Advisers Act.

Large amounts of broker-dealer advertisements suggest that advice is the primary component of the broker-customer relationship, and it is certainly understood that way from the standpoint of the customer.
The process of executing trades no longer requires the skill it took in the 1930's, due to the involvement of automated systems, and the improvements in market liquidity.

Registered representatives have been provided education on "trust-based sales techniques," without understanding that the formation of a relationship of trust and confidence with a client leads to fiduciary status under state common law.

The recommendation of another investment adviser should be subject to the fiduciary standard of the Advisers Act. This includes recommendations of separate account managers, as well as recommendations of mutual funds. (The doctrine of suitability was originally intended to shield brokers from liability when their primary role was in executing a trade for a customer; the doctrine should have never been extended to the recommendation of pooled investments.)

No more wearing of two hats. No ability to switch hats. Once you are a fiduciary to a client, your status as a fiduciary continues, and it extends to all aspects of the adviser-client relationship.

Estoppel and waiver have limited applicability to fiduciary relationships. Sect. 215 of the Advisers Act needs to be properly applied to prevent both "disclaimers" of core fiduciary duties and seeking client "waivers" of them.

The SEC must realize that, although the securities laws generally are based upon disclosures, the Advisers Act went much further. We have fiduciary standards because disclosures are largely ineffective. A huge body of academic research supports this conclusion.
Say what you do. Do what you say. A fiduciary steps into the shoes of the client, and acts - with all of the expertise required of a professional adviser - with total loyalty to the client's interests.

Let's not keep permitting "particular exceptions" (as the late Justice Benjamin Cardozo opined) to erode the fiduciary standard of conduct. Let's conform the industry to the standard, and not the standard to the industry.

4. Clean up mutual fund regulation.

Europe and Canada have stronger disclosures of mutual fund / ETF fees and costs than the U.S. possesses. We lag behind, again, instead of leading the way.

"Portfolio turnover" is measured incorrectly. It should not be the lower of sales or purchases divided by the fund's net assets, but the average of them. This important statistic - as the SEC now permits it to be calculated - can often mislead investors.

Require in all mutual fund / ETF advertising truthful comparisons to broad-based indexes. No more comparing active funds only against indexes that exclude index funds in their computations.
Do away with state-based and municipality-based retirement accounts. This is not the essential role of government.

5. Work to reduce regulatory overkill.

Every regulation on the books should be reviewed. Does it work? What is the burden of the regulation, versus its benefit?
Increase the number of RIA exams for verification of assets (i.e., custody); but decrease substantially the number of RIA exams for everything else. Investment advisers are professionals - treat us like such. And use the SEC's limited resources to combat the most egregious frauds.

Take a good hard look at FINRA. With hundreds of pages of rules, it still has utterly failed the vision of its creators - Senator Maloney and others - who sought to create an organization that would raise the securities industry's conduct to the highest levels. In fact, FINRA has opposed raising standards at every turn. FINRA embraces conflicts of interest at every turn, rather than seek to minimize them - even broker-dealer fines levied by FINRA become part of FINRA's budget (thereby lessening the fees assessed against broker-dealer firms!). Consider whether FINRA's oversight of market conduct regulation should be transferred back to the SEC, or snapped altogether.

Lastly, permit me to include an economic imperative in my "wish list." Invest in people - through education. The most effective intervention to promote long-term economic growth is that of expanding educational opportunities for all. Yet, financial support for higher education has diminished over time. This, along with increased federal regulatory mandates (requiring more administrative staff to comply with all the regulations), has led to high tuition costs and, as a result, huge student loan debt burdens.

Additionally, interference in primary and secondary education (mandatory testing, etc.) has created the perverse incentives ("teach to the test," etc.) that have diminished the quality of the education provided by dedicated teachers in our schools. Multiple-choice test questions encourage a focus on recognition via cramming for tests and exams. Students now focus more on the acquisition of test-taking skills for multiple-choice exam questions, rather than the acquisition of true understanding of concepts and long-term memory formation. From the standpoint of a college professor, students entering college lack critical thinking, writing, and verbal communication skills one would expect from a college freshman. While I willingly tackle the challenge of increasing these skills in my students, a better foundation in these skills before students enter college would lead to a better overall college learning experience.

As technological progress destroys many jobs, our society is in need of a more educated workforce - especially graduates of high-quality vocational educational programs. Let's invest in education, and reduce regulatory burdens imposed from above upon colleges, high schools, and primary schools. In so doing, empower America to meet the demand for the skilled jobs of tomorrow.

Ron A. Rhoades, J.D., CFP® is an Asst. Professor of Finance at Western Kentucky University's Gordon Ford College of Business, where he serves as Director of its Financial Planning program. This article represents his views, alone, and are not those of any institution, organization or firm with whom he may be associated. Follow Ron on Twitter: @140ltd. To contact him, please email: Ron.Rhoades@wku.edu.
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Re: Solutions, Self Defense and Best Practices

Postby admin » Tue Apr 05, 2016 5:53 pm

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Some great solutions and descriptions of the problems to be solve, can be found in the first portion, executive summary and Introductory Comments of this Ontario Minister of Finance study: See quotes of interest/summary below:

There is an absence of an explicit obligation for providers of Financial Planning or Financial Product Sales and Advice to act in their clients’ best interest. This is detrimental both to consumers who rely on these services to achieve their financial goals and to confidence in the financial services industry.


The plethora of titles and designations utilized in the financial services industry may cause consumer confusion, making it difficult for consumers to be certain of the qualifications and expertise of their financial advisory or financial planning service providers.



There is a stark asymmetry in financial knowledge between providers of Financial Planning or Financial Product Sales and Advice on the one hand and consumers on the other.


We recommend that a Statutory Best Interest Duty2 (SBID) be adopted and applied to all individuals who and firms that provide Financial Product Sales and Advice and/or Financial Planning in Ontario. This SBID should be based on a uniform and codified standard of care.


We recommend that the use of titles by individuals and firms engaged in the provision of Financial Product Sales and Advice and/or Financial Planning be prescribed in order to reduce consumer confusion.


Those engaged in providing Financial Product Sales and Advice and/or Financial Planning are not permitted to use corporate positions or titles given the consumer confusion that results and can result from the use of such titles.




http://www.fin.gov.on.ca/en/consultatio ... tions.html
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Re: Solutions, Self Defense and Best Practices

Postby admin » Sun Apr 03, 2016 7:20 pm

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DRAFT Resolution on Regulation of the Financial Securities Industry    Presented to Policy Convention 2016

WHEREAS

Most Securities regulators in Canada are “self”-regulatory and can use this to often bypass investigation and prosecution of industry wrongs.

WHEREAS

The financial industry pays the salaries of the regulatory force, rather than the taxpayer. This means that clever financiers get to choose who to hire to regulate financiers. i.e. hiring your own police

WHEREAS

The financial industry pays regulators three to four times more than what they would earn in similar employ elsewhere; over-paying makes regulators “compliant” and more willing to say “YES” to the financial industry; In consequence, failing to protect the public.

WHEREAS

All thirteen (13) securities commissions, acting in concert will allow any financial institution in the country to be exempt from our Securities laws, simply by completing an application with no public debate and no public notice.

WHEREAS

Securities Regulators and Self-regulators in Canada have representation on the RCMP Investigation Units which further allows the investment industry to avoid criminal prosecutions.

BE IT RESOLVED

That the (name deleted) Party of Canada adopt policy supporting and implementing major changes to the Securities regulatory system in Canada.

Establish a national Investor Protection agency with the following attributes:

1. Separating all investment police functions and investigations from the securities commission and the securities industry. A separate, specialized, Securities Crime Police Unit would be formed.


2. The government appointing Regulators representative of the public interest and that will be paid by the taxpayer, not industry.


3. Allowing no exemptions to the law, except in extreme cases where full public discourse and disclosure can show no damage to the investing public by such exemption.


4. Separating the Securities commissions and industry paid regulators from the RCMP Investigation Units and any police agency.


5. Enforcing rather than ignoring the Criminal Code for the Financial Industry.
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Re: Solutions, Self Defense and Best Practices

Postby admin » Thu Oct 01, 2015 3:46 pm

Five, "Billion Dollar" questions for any investment "advisor".

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In Canada the financial regulators are proposing new CRM (client relationship disclosure models) to better "protect" consumers.

The trouble is that the new CRM info does every bit as good a job of hiding the most important factors in an investment advisory relationship. In the US, these most important items are also well, well hidden from investors.

Here, then, for the record, is a Recovering Broker's list of the FIVE MOST IMPORTANT QUESTIONS to put towards anyone offering you investment "advice".

What EXACTLY does your license or registration say that you are registered as? (Please do NOT tell me your "title", or your latest correspondence course)

What legal duty of care, (TO PROTECT THE CLIENT), comes WITH that license or registration?

Is it a FIDUCIARY or a SUITABILITY duty or standard of care?

Can you provide that duty of care to me in writing, on your firm letterhead, or direct me to where this is written/sourced?

Can you direct me to a source where I can better understand the risks and benefits between a fiduciary or a suitability advice standard?


These questions will cause commission salespeople to choke, or talk very very fast……while true financial professionals will smile and gladly answer each one. You will understand whom you are dealing with simply by being witness to their reaction...

Here is a short one minute view of retired TD CEO Ed Clark, revealing the "counterpart" game that bankers prefer not to reveal, then a couple minutes by Tony Robbins on the concept of a fiduciary.

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https://youtu.be/23xWWsGp6vU

These questions are worth billions to the industry, to HIDE from you, and to you they are worth possibly a DOUBLING your long term future retirement capital, if you learn the differences.

View this video which looks at SEC Advisor rules, and shows how 99% of "advisor" persons in the US are "exempt" from following SEC rules or being governed by the SEC…..oops! https://youtu.be/aX52f3Jjbm8

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Please send me any thoughts suggestions, improvements or comments to improve this list, and PLEASE SHARE it, as it is very difficult for ordinary investors to gain access to information truly intended to protect their interests.

Follow me at:



Larry Elford, former CFP, CIM, FCSI, Associate Portfolio Manager

Current http://www.investment-bodyguard.com

Twitter: @RecoveredBroker

lelford@shaw.ca

Facebook group for Fraud victims

https://www.facebook.com/groups/albertafraud/

Facebook group for Fraud victims across Canada (Small Investors Protection Association of Canada, 1998)

https://www.facebook.com/groups/240100382792373/

Video site for victims of investment malpractice

http://www.youtube.com/user/investoradv ... ature=mhee

http://www.albertainvestorsprotection.com

http://www.investoradvocates.ca


"The main thing I have to remember is to always try and keep the main thing, the main thing."
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