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Social Security Spousal Benefit Calculation Before FRA
10 months ago
Investing - Why Overpriced May Be Better Than Inexpensive
Are you the type of individual who recognizes you shouldn't trade stocks, mutual funds and ETFs frequently, but simply can't seem to stop? Or are you a financial advisor who trades more often than you would like to? Let me propose an unorthodox solution to provide some negative reinforcement each time you trade.
This is a solution I don't believe many financial advisors would endorse and certainly one I would not use from a pure dollars-and-cents perspective. This is a solution that should only be considered if you have trouble minimizing your trading addiction.
If you are a frequent trader, you are likely using a discount broker who offers trades at very low fees or even no fee in some cases. There is no instant disincentive to trading frequently. When you want to trade, you can do so without giving much pause to the cost of your action.
My solution is the following. Move your investment accounts to an old-fashioned brokerage that charges an arm and a leg for each trade. Instead of looking for the least expensive trading solution, select the most expensive institution that makes the hit you take on each trade as painful as possible. Use this painful, expensive trading expense to make you take pause and think through your trading decision more fully. Allow this pause to give you the time to allow emotion to ebb from your decision-making. Take the time to consider why you think something has changed from your original purchase.
Making good financial decisions is almost entirely about recognizing when our decision-making process runs astray, then putting in place mechanisms and processes to short-circuit those processes. Making trading excessively expensive is one example of doing this and may be a large enough barrier to minimize your trading habit effectively.
Financial Advice - Why Not Put Your Clients' Interests First?
Yesterday a reader sent a copy of the most recent NAIFA newsletter to me pointing out that the last page proudly proclaims that they helped defeat a fiduciary standard in the recently passed financial reform legislation. I've ranted against NAIFA once before and don't intend on attacking that organization again today. But this newsletter did reignite my "clients' interests first" wick!
My position is that anyone offering financial advice (or implying they offer financial advice) should be willing and wanting to put their clients' interests first. An advice-based business where an individual entrusts a professional with skills and training the individual lacks to help them and the professional willingly accepts that trust automatically creates a fiduciary relationship. That is basically the definition of a fiduciary relationship. So, I want to ask the following question and genuinely hope to hear feedback opposing my position.
Can anybody articulate an argument against people offering financial advice putting their clients' interests first?
I have heard the arguments made to date and, in my not so humble opinion, they carry no weight. The primary argument made is that a fiduciary standard will make advice too expensive for most people. That argument is garbage, for a number of reasons. Most important among those reasons is that bad advice, whether affordable or not, is worse than no advice. And that more "affordable" advice is not generally more affordable...it's simply more difficult to understand what one is actually paying.
So, let me hear it. Why should financial advisors not have to uphold a fiduciary duty? I just don't understand how individuals continue to argue against putting clients' interests first. I want to understand and see the other side. All I see is companies and organizations using the guise of wanting to help and being trustworthy and forthright while fighting against having to do what's right for you in the name of profits.
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