Blog
Wait a minute… the new “Fiduciary Rule” is supposed to make all financial advisors put their clients’ best interests first, but has exceptions?
A few weeks ago, the Department of Labor finalized the new “Fiduciary Rule.” In concept it helps protect investors from abuse, but it has big gaps, through exceptions. Unfortunately the gaps are not easy to find, but could negate much of the intent of the new rule. As context, most people aren’t aware that investment advice companies fall into two groups: 1) A big group of companies, enormous and tiny,…
Learn to like volatility
How many songs have you heard that include lyrics like “Here we go again” or “It happened again” or “I did it again”? There are many, because trials and tribulations in life are many. The best outcomes happen, however, when you push on through.
When markets drop: take deep breaths, and don’t do anything
Given the recent increase in market volatility, the article below may be a helpful read. As a WealthStep client or follower, you may have heard these timeless ideas before in our letters, webinars, and blog / Facebook / Twitter posts (follow us to get helpful thoughts and reminders!).
The Reality of Red Numbers
How often are monthly stock market returns negative? Is there a pattern within years or across years? How about the bond market? You may notice that short-term volatility is a fair price to pay… the longer the time period, the fewer the negative returns. In other words participation and patience pays. And, remember that inflation (i.e. purchasing power risk) is a bigger long-term risk than market volatility. Gain perspective from…
Simple or Simplistic? Which gets you to financial independence?
Most people want to help keep their investment planning and lives simple, but they don’t want to risk their futures with overly simple guidance. This is a critical distinction, and those that understand it tend to have better outcomes. In this context “simple” should mean “easy and helpful.” Simplicity happens when you do the hard work of working and saving/investing enough, while objective experts do the hard and right work…
Buyer beware – Proposed investor protections don’t actually protect much
True or false?: All financial firms and professionals are required to act in your best interest, right? Answer: FALSE. Many have conflicts of interest, and biased “advice” damages results… A recent White House Council of Economic Advisers analysis estimate showed that conflicts of interest hurt affected investor accounts by ~1% each year. This amounts to around $17 billion annually. And since it is mostly related to fees and costs, it…
Doctrine of the Mean
When one asset class is outperforming another within a diversified portfolio, investors sometimes wonder why both are held. The recent US stock market vs. the weaker International market such an example. The non-US stock market’s (MSCI EAFE) 3-year annualized return was not far off long-term stock averages, but the US market’s (S&P 500) unusually high 3-year return of 17.9% made well-balanced investors envious of less diversified portfolios. During the financial…
You choose: Fiduciary vs. suitability standards of care
There are two very different standards of care, when it comes to financial professionals: “Fiduciary” (registered investment advisors, regulated by the SEC/Securities & Exchange Commission) and “suitability” (brokers, “self-regulated”). Below is a condensed version of a Washington Post article that summarize it well: Fiduciaries have a much stricter duty and legal obligation than do those who operate under suitability rules. Investors rarely come out on top when a self-regulating entity…