As Seen On TV Asset Allocation

As Seen on TV Asset Allocation

I want to saw a boat in half, then tape it back together and take it out on the water.  I didn’t know I wanted to do this until I saw a commercial that runs during Cleveland Indians games.  The spokesperson could be the dad on any sitcom, straight out of central casting.  This enthusiastic Everyman uses a miracle tape to fix everything from underwater leaks to boats that have been sawed in half.  I have absolutely zero need for this stuff, but I feel compelled to buy some.  Why?  For the same reason we have to talk certain clients out of an As Seen On TV Asset Allocation. Universal Theory of Infomercials My wife has a universal theory of infomercials.  She says the key to a good infomercial is to take something simple and make it look like rocket science.  Sure, your current knife can cut a tomato, but…

Read More

Argentina and the Frog

Argentina and the Frog

Like many classic fables, the story of the frog and the scorpion can be traced back to many cultures, each with their own twist.  Aesop’s version is here. A scorpion and a frog meet on the bank of a stream and the scorpion asks the frog to carry him across on its back. The frog asks, “How do I know you won’t sting me?” The scorpion says, “Because if I do, I will die too.” Argentina was once the rising star of the global economy.  By 1913 it was the world’s 10th wealthiest country per capita owing to abundant natural resources and governance that emphasized economic growth.  After a military takeover in 1930, Argentina experienced constant political change.  From 1930 to 1983, the country averaged a new president every two years.  Argentina defaulted on its international debt in 1956, 1989, 2001, and 2014.  The 2001 default resulted in a highly…

Read More

Major Award

It’s a Major Award!

Walk into certain advisors’ offices and you’ll see plaques lining the walls with titles like ‘Chairman’s Roundtable’ .  Have they been honored for their investment prowess?  Perhaps their trustworthy nature?  It certainly sounds important – like a major award.  In reality, it’s a sales award.  That’s not something you’d generally find in a fiduciary’s office.  The same goes for many publicized rankings of advisors.  One of the most widely touted (from a prestigious publisher!) factors in revenue (ie what they were able to sell their clients over the last year) as a measure of advisor skill. Our Own Horn That’s part of what makes it feel so good to be listed on the Financial Times Top 300 Registered Investment Advisors.  The list isn’t an advertisement.  It’s based on assets under management, AUM growth rate, years in existence, compliance record, industry certifications, and online accessibility.  It’s not a ranking and they…

Read More

Markopolos

Outsourcing to an Absentee Investment Committee

They say there’s no such thing as a stupid question.  They are wrong.  Ask stupid questions, get stupid answers.  The Let Me Google That For You website is the perfect passive-aggressive answer to many stupid questions.  Rather than simply answering the question, LMGTFY provides a link that walks through the steps to google the answer.  For example, “How much does a polar bear weigh?”  Why do I bring this up?  As I have mentioned in other posts, sometimes all the due diligence you need can be found with a quick Google search.  Harry Markopolos says he’s uncovered some huge due diligence mistakes by the Boston Transit Authority (MBTA) and at least some of them would have been avoided with a quick internet search. Harry Markopolos If you’re unfamiliar with Harry Markopolos, he’s a modern day Cassandra.  Markopolos warned about the Bernie Madoff Ponzi scheme for years before it collapsed.  The authorities…

Read More

Product or client first

This Weekend’s Fiduciary Test

The first phase of the Department of Labor’s fiduciary rule went into effect on Friday.  This is the rule that mandates that your financial advisor must act in your best interest.  The whole thing doesn’t go live until 2018, but it will be interesting to see who makes what kinds of changes in the meantime.  Some have rushed to comply.  Others are banking on the Trump administration to overturn it. The Test I was particularly interested to hear whether the local AM station’s annuity salesman would change up his schtick this weekend.  He has an hour on Sundays to make his pitch in his non-threatening monotone.  The focus is on potential returns of the annuity (really the change in income the annuity would pay – very different from change in total value).  There’s always some sort of bonus and guarantee that you can’t lose money.  What’s not in focus is…

Read More