Friday, May 28, 2010

Short Takes: Financial Advisor Background Checks, Fiduciary Duty, and more

1. Preet describes detailed procedures for doing a background check on your financial advisor.

2. Jason Zwieg thinks the idea of making investment advisors bear a fiduciary duty to their clients is worth considering.

3. Thicken My Wallet makes a convincing case that investors of average means have little choice but to become DIY investors because, on average, they can’t get access to competent financial advisors.

4. Rob Carrick argues that predictions of rising interest rates haven’t been bad predictions, but rather that their timing was off. As someone who makes no financial bets on interest rate predictions, I can see this logic from my detached point of view, but for someone who made financial moves designed to exploit rising interest rates, there is little difference between bad predictions and bad timing: both mean lost money.

5. Canadian Mortgage Trends gives some insight into the incentives lenders offer to mortgage brokers to stick customers with above-market interest rates.

6. Larry Swedroe aims his sound reasoning at the “sell in May” strategy explaining that it has no historical supporting evidence. He then goes on to show the techniques that can be used to manufacture false evidence to support the strategy.

7. Canadian Financial DIY makes the case that the standard discount broker comparison charts should take into account currency-conversion spreads and whether the brokerage allows US dollars in RRSPs.

8. Potato has some fun with the assertion that immigration will prevent housing prices from dropping with his argument that immigrants are not stupid.

9. Larry MacDonald has 8 tips for reducing rebalancing costs. This is an excellent list, but I’m not a fan of point number 5. As I’ve argued before, I think that rebalancing should be driven by prices rather than the calendar.

10. Big Cajun Man reviews the video Madoff and the Scamming of America.

11. Balance Junkie explains the rules surrounding TFSA withdrawals.

12. Million Dollar Journey explains the use of put options to protect your portfolio.

13. Ellen Roseman has some customer complaints about another of Bell’s attempts to increase the size of the bills they charge their customers.

10 comments:

  1. Thanks for the mention Michael. I have to agree with you on the prediction front. There's an old investor rationalization that goes something like "I wasn't wrong. I was early." A few people (David Rosenberg and Gary Shilling come to mind) did get it right by recommending buying treasuries based on deflationary predictions. The conventionally wise called them crazy.

    Enjoy the weekend!

    ReplyDelete
  2. #2. Zweig.

    The fact that these people are allowed to NOT act as a fiduciary is (to me) a scandal.

    If all they do is sell to earn commissions, or spend time to earn fees, then what's the point? Why would anyone in his right mind take financial advice from a non-fiduciary?

    Oh yes. They have no choice. Fiduciaries are not readily available.

    ReplyDelete
  3. Thanks for the link, also a good set of articles all around this week for getting people to think about their advisors...

    ReplyDelete
  4. Thanks for the mention enjoy your weekend on the links.

    ReplyDelete
  5. Thanks for the link. Enjoy the weekend.

    ReplyDelete
  6. Thanks for the link Michael! More on the advisor checking to come...

    ReplyDelete
  7. Hi Michael, thanks for the mention. I only wish the brokers would all fall into line with Qestrade and RBC to allow USD within registered accounts to remove one more source of complication and cost.

    ReplyDelete
  8. A lot of posts on financial advisers this past week! Why does anyone, rich or poor, need an adviser when the passive indexing approach lets one get better returns on average (according to studies) for about the same amount of time and energy (or less) as dealing with an adviser?

    ReplyDelete
  9. @Larry: Good question. My guess is a combination of ignorance and fear.

    ReplyDelete