inquiring minds want to know…

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Are you worried that your broker might decide that his own interests are more important than whether you die penniless under a freeway overpass, even though you’re, you know, paying him?

Would you like to earn a little bit of extra cash just in case?

You could always make a bit of pocket change by helping to beg the Senate to confirm Betsy DeVos for Education Secretary, since it looks like they’re worried the nomination might come up short.

 

 

4 Responses to inquiring minds want to know…

  1. Tommydog says:

    I do most of my own retirement investing, and most of that is in mutual funds, but I have a couple of accounts I play with myself. I also have one with a financial adviser whom I’ve found to be pretty knowledgeable and straightforward. I don’t think she’s generated any more in returns that just the mutual funds, but she’s opened my eyes to a few things I wasn’t aware of and introduced me to some people I otherwise wouldn’t have met, and since we don’t really do a lot of buying the and selling the commissions have seemed worth it in their own way even if they’re a lot more than a basic Schwab account.

    We’ve had a few discussions about this new law. One of her concerns is that she thinks I take too much risk for my age, and that I’d normally have to sign a slew of docs saying that in many ways I act contrary to the advice I get, but as she’s aware she has only a portion of the portfolio she hasn’t worred about it too much. However, had this rule gone into effect there would have been quite a few restrictions placed on how they would permit me to structure my account with them. I was not happy with the proposed changes.

    While the law touts that it will make advisers into fiduciaries and who could object to that, many advisers were interpreting that as meaning that they were obligated to take control, and, of course, if they could change to a fee based arrangement rather than commissions their inclinations may well have been to go as safe as possible. Since when is an adviser supposed to be an overseer? You should be free to listen to and accept, reject or modify the advice as you see fit.

    I’ve oft stated that I think Trump’s behaviour is crass and boorish, but I’m pleased as punch about this executive order. Most people who are upset about Trump’s action don’t really understand how Obama’s actions would really have been implemented, but now I assume I’ll get to keep the relationship I want rather than the one Obama thinks I should have.

  2. bluthner says:

    Hey Tommy,

    I am on an excursion in Trump’s America but been following you guys- not much time to respond but very quickly: I’m sure you know you could easily get yourself certified as a ‘sophisticated investor’ and then none of those rules and restrictions would apply to you, and you could have all the risk you care to eat and your broker would not lose any sleep at all. Those rules aren’t there for savvy guys like you, they are there to protect people who really do rely entirely on their brokers and advisors, who are legion, and get taken to the cleaners regularly without there is oversight. My old mother is one of them: her broker traded and traded for her until there was nothing much left to trade. If he hadn’t died before I found out about it he would have soon after.

    So clearly Obama does not think you should be hemmed in by those regs. He thinks you being a smart and sophisticated investor should get yourself designated as such and then the whole world is your oyster.

  3. Tommydog says:

    heh, heh. I’m not sure how sophisticated I really am, as a quick perusal of the account I manage myself would probably be ahead if I’d just put it in a good mutual fund, but it’s not much behind either so I guess I could claim some entertainment value.

    While I’m quite familiar with “accredited investor” status, “certified sophisticated investor” is a new one that sent me to the internet which knows everything. It does seem that I’d give up some rights and I’m not certain that every advisory service or brokerage allows it.

    This was one of Obama’s clueless “who can be against cute puppies” orders. When your advisor sits down and tells you how this will change your relationship with them and what they will permit you to do if you continue as a client, I’m not convinced that many people would really be that well served by it. For many it would certainly increase their costs while limiting their options.

    It is no praise of Bush or Trump to observe that while Obama had a pretty voice he was utterly unsophisticated in trying to assess how changing A might affect B. He obviously avoided taking any algebra while in school. A cipher of a man. Has any former president ever been erased as quickly as Obama is being erased?

    There is an interesting irony at play. The inequality that so many bemoan is largely a function of equity ownership (or the options on such ownership). It’s indeed risky, however, a big win can make you pretty well off or even a member of the “1%”. The regulations are in place such that most people must already be well off to even be permitted to make such speculative investments (with exceptions for founders, employees, and relatives and friends). The reason, of course, is that many, or even most, fail. I’ve invested in a couple of private placements that tanked and am not personally inclined to do it again. I won’t touch hedge funds though I am allowed to. Because of these risks we’ve set in place regulations whereby the already wealthy are permitted to undertake investments that might make them even wealthier, but the average Joe is not, with the result that the homers are hit only by those allowed to take a swing.

  4. KevinNevada says:

    The problem with deregulating the conduct of people who control OPM is that they always always find some way to create a new investment bubble – and then exploit the upwards curve on that bubble to make scads of money for themselves, for the insiders.

    Then they cash out before the collapse – and the taxpayers get to clean up the mess.

    They did it to some of the banks in the Oil Patch in the early 80’s.
    Then they did it, big time, to the S&L’s. Remember them?
    Then they did it to the bond markets, with junk bonds.
    Then they did it with the dot-com boom.
    Then, biggest and baddest, they did it with home mortgages. We are still paying for that one.

    And now Trump is going to allow them to do it again, I’m not sure where, but they will do it.

    Drain the swamp??

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