By:
On:
In: Commentary
With: 0 Comments

It’s still your job, not the government’s, to protect your retirement savings.

Under new rules imposed by the Department of Labor, anyone being paid to provide specific investment advice on retirement accounts must do the right thing for his or her clients.

While the regulations are likely to reduce costs and improve returns for many savers and retirees, they raise a new risk: That investment salespeople will use the term “fiduciary” as marketing magic.

By law, a fiduciary must be impartial, seek diligently to avoid conflicts of interest, disclose any remaining conflicts and always serve the best interests of clients. Until now, only registered investment advisers — not most stockbrokers and insurance agents — have had to be fiduciaries. From now on, all of them will be when they get paid for specific investment advice on retirement accounts.

But the new rules don’t oblige stockbrokers and insurance agents to act in your best interest on your other investments. Nor do the regulations prevent these salespeople from calling themselves “financial advisers” when they aren’t registered as investment advisers.

Confused? You aren’t alone. In an online survey of nearly 500 investors last month, 51% said — incorrectly — that brokers must always act as fiduciaries. Only 44% correctly said that about investment advisers.

Now that just about everyone getting paid to handle a retirement account must act as a fiduciary, it’s up to investors to ensure that he or she behaves like one.

A fiduciary is, literally, someone in whom you place faith — and that kind of confidence ought to go down to the bone.

Personally, as the author of The Confident Investor, I suggest that you don’t use a financial adviser. Read my book and follow the simple logic there. You can purchase my book wherever books are sold such as Amazon, Barnes and Noble, and Books A Million. It is available in e-book formats for Nook, Kindle, and iPad.

Source: You Are Responsible For Your Retirement Savings – MoneyBeat – WSJ

By:
On:
In: Around the web
With: 0 Comments

Fund manager Geoffrey Abbott is extremely committed. Or maybe he needs to be committed.

Every day for the past seven weeks, Mr. Abbott has read an average of 39 letters that CEOs write to shareholders in their companies’ annual reports. His goal is to peruse the annual report from each of the 3,000 largest companies in the U.S. This past week, Mr. Abbott, who runs a small New York investment partnership called GCA Capital, plowed through the I’s and moved into the J’s. That puts him him on track to finish with Zumiez, Zynerba Pharmaceuticals and Zynga by the end of May, when Mr. Abbott will turn 30.

Thus, in a financial world driven largely by mathematical formulas and computers trading thousands of times a second, a young investor is searching for investments in the most old-fashioned way possible: by reading.

Warren Buffett doesn’t think Mr. Abbott is crazy. The chairman of Berkshire Hathaway himself spent much of the early 1950s reading every single entry in the thousands of pages of Moody’s manuals, the corporate encyclopedia of that era. He still spends most of his time reading — including the letters to shareholders in companies’ annual reports.

Not many investors seem willing to do that sort of digging anymore. Timothy Loughran, a finance professor at the University of Notre Dame who studies corporate disclosure, has analyzed computer records for the Securities and Exchange Commission’s filings website. He says only 29 people a day download the average annual report when it comes out. Even General Electric’s annual report was downloaded from GE’s website only 800 times in 2013, according to the company.

Source: It’s Time for Investors to Re-Learn the Lost Art of Reading – MoneyBeat – WSJ