As a financial planner, I’ve seen many a 401k plan in my day, and I’m here to tell you that the vast majority of them are not pretty, while some are even downright ugly. Admittedly, that’s a mighty broad brush full of awfully harsh words, and I’d surely prefer to be la-la-la’ing about instead, all chipper, sprightly espousing what-a-wonderful-world bromides, but I feel irresistibly impelled to instead write of the truth I’ve seen. And that truth is that the typical 401k plan — in which a decent part of the wealth of most Normal Folks resides — falls quite a bit short of being beautifully designed.
Please allow me to explain.
Hey kids! The FP50IBD for 2014 is out, and it’s a real humdinger!
What’s that you say? You’re wondering what that nasty looking little squirt and a half of letters and numbers all strung together in that first paragraph means, are ya?
Please allow me to introduce . . . er . . . translate it for you, as we take another trip into our continuing series, Language Fail in the Land of Financial Planners, and, in doing so, hopefully help you understand how the concepts of financial planning and investment advising became so thoroughly bollixed-up and so inelegantly hotchpotted.Thursday, July 3, 2014 at 8am
Say you’re driving down the road in your much-loved older car that you know — you just know — is gonna last you for many, many more years. And say you’re smiling to yourself about how the car has only gotten better with age because it’s been your good buddy through many an adventure and your faithful companion through many tens of thousands of miles, just the two of you twogether, so to
speak spell, when all of a sudden WHAM! some idiot staring down at a mobile phone while driving too fast perfectly T-bones you, rendering your dear friend . . . er . . . car . . . forevermore incapable of doing that thing which all cars must do to be deserving of their title, which is to say: drive.
So you get out of your car and, one quick glimpse later, head hanging low, you know — you just know — that your good buddy is dead, gone, done, finished, expired, no longer with us and not merely resting, or, as they say in this context and no other, totaled, because fixing it will cost more than the car, once fixed, would be worth. It’s a total loss.
So you’re just fine, but your car is totaled. What’ch’ya gonna do?
* * *Tuesday, June 3, 2014 at 2pm
Wall Street — by which I mean the overall business behemoth that makes its money by holding investments of other people’s money and by trafficking in investments and money generally — is vigging all of us to death.
I mean this pretty much literally, i.e., I mean that, from the moment we are born until the day we die, the price each of us pays for storing our saved-up money, for our own use later on, consists of Wall Street taking its little slice — its vig – off the top, every moment of every day of every week of every month of every year, forever and ever, the scale of which is totally disassociated from any value Wall Street delivers unto us. Wall Street owns the market, and, in many ways, it also owns our investments in that market.
Wall Street thus owns the Asset of All Assets — the King and the Queen and all the Princes and Princesses of Assets, and t’is a very nice thing to own, indeed.
* * *
First year property class in law school is all about what it is to own something. For instance, it talks about what sorts of rights an owner of land has relative to the rights of those who live next to the land. And it talks about who owns a fox that is fair game but happens to be on another person’s land. More broadly, it also talks about how ownership is, in essence, a bundle of rights that can be enforced in a courthouse. Seen in this light, ownership is the very bedrock of the law we know and kinda-mostly love.Tuesday, May 6, 2014 at 5pm
Quick: what’s the difference between a “fee-only” financial planner and a “fee-based” financial planner?
You haven’t a clue, right?
Well, that means that the financial planning community hasn’t done a great job educating the public at large about what these labels mean, which is too bad because helping the public be smart about choosing a financial planner is what this fee-only vs fee-based distinction is supposed to be all about.
So the public doesn’t get any content out of these labels. Zilch. Nada. But, my oh my and gosh a’mighty, do financial planners ever get a lot out of ‘em! Why, within the industry these “-only” vs. “-based” labels are fightin’ words, and are often the talk of the inside-baseball town, resulting in lawsuits and abrupt, something’s-not-right-here departures of head honchos and the like.
So it’s all Montagues and Capulets, with the “-only” camp viewing the “-based” camp as impure and overly commercial and the “-based” camp viewing the “-only” camp as smug and overly self-righteous.
* * *
So what are these labels and the distinction between the two all about? In a word: money. This fee-only vs fee-based distinction is all about the avenues through which a given financial planner has money coming into his or her coffers. …more ►