How to Make Money With Investments and Avoid Expensive Regulations
How to Make Money With Investments and Avoid Expensive Regulations
Is it Time to Unvest your Investments?
By Steve Kiefer
With the investment industry becoming more and more regulated, it creates an increasingly expensive proposition for investors. Firms are forced to spend large amounts of money on entire compliance departments which are staffed by people whose sole function is to keep the company above all the potential violations that are otherwise probable. This sometimes massive expense is passed on to the client/investor in the form of higher management fees and hourly rates. But there is a solution...Independent Investing.
There is a growing number of people who are saying "enough" to the costliness of using a broker or an investment adviser. These people are not day traders or great risk takers. On the contrary, they are retirees, single moms, teachers, businessmen and others from all walks of life. They are tired of being passed around from one broker to another without their say so. They are fed up with seeing dismal returns while their adviser continues to charge fees and expenses in spite of poor performance.
What does a person like this need to make the move to independence? They need direction and knowhow. They need a source of information that can be quickly assimilated and implemented without the need to spend hours doing research. An independent investor can quickly become more educated about practical investment techniques and strategies than their current broker is! It would surprise people to discover how untrained a broker can be. Oh they are well trained in the art of selling but few attain any investment management skills during their tenure as a broker or even as an investment adviser.
It's ironic, though sadly, thata person need only to pass a simple test to become an investment consultant. No prior experience is required! Just a few hours of study and the average person can pass the series 65 or series 66 test and then be registered as an investment adviser. They come from many walks of life but few step into the industry with anyprior investment experience. Yet they begin to charge the unwary client a management fee almost immediately and start recommending investments to them with scarcely an idea of what they are doing. Granted there are some who have sufficient experience and knowledge to carry out such a weighty responsibility, but, alas, they are few and very far between. Chances are very good thatif you enlist the services of a registered person or an IAR (investment adviser representative)you will be dealing with someone who doesn't understand the movements of the market and who may know less about them than you do, yet you will pay them for their advice and services. Does this make sense to you? If not, becoming an in-dependent investor who follows solid investment principals should make a lot of sense.
With the entire industry in an uproar over the previous chaos that ensued in 2008 and 2009, it is no surprise that, in the aftermath of last year's meltdown on Wall Street, Congress is on the brink of passing a sweeping overhaul of the financial regulatory system. This can only dramatically increase the costs ofremaining within these coming additional compliance guidelines. In a Bloomberg Businessweekarticle,Arthur Brooks, president of American Enterprise Institute said in regards to the coming regulatory changes, "The free enterprise system didn't fail us in the financial crisis. The root of the problem was government housing policy." According to Brooks the apparant perpitrators responsible for the evaporation of trillions of dollars now want to control the victim. Interesting. When the interviewee asked if Brooks was opposed to regulation per se he responded, "No. I'm in favor of smart regulation." (Italics mine).
It is interesting then howcongress can now suppose that the fox is capable of guarding the hen house when in fact it has laid waste to the entire farm. But the answer for them is always more regulation which means more cost to do business which in turn moves the expense to you, the individual investor.
It is time to think about an alternate way to acquire the investments you seek and thus the returns they afford without having to chart your way through the expensive maze of brokers and advisers who spend the majority of their time with sales and compliance and precious little time on existing client's portfolios. What you are paying for simply doesn't exist if you think your hard earned money goes to buy you quality service from a professional broker or manager.As much as the regulators try to force investment professionals to put their client's needs and desires above their own it will never happen. This is not to say that all advisers are crooks; on the contrary. Most are honest, hard-working individuals who are trying to make a livingselling investments or investment advice. But that is not to say they are all good brokers. In fact, the phrase "good broker" is an oxymoron. Again I'm not attacking someone's character here, I am merely pointing out that selling overpriced products to retirees and other non-suspecting investors, when far less expensiveinvestments are available which will do as well or better,does not make someone's practice good! Every time a broker sells an overpriced product (and I venture to say that all products sold for a commission are overpriced) it is not a good thing! The same holds true for an adviser who charges a fee to do basically nothing except pick a few security vehicles on behalf of someone and then collect an eternal fee for it.
So the $64 question is "Who's to blame?" and we can spend a lot of time spreading the guilt around because there are many who are responsible for the mess Wall Street is in today but let me ask you a different question: Who suffers the most when the system breaks down? The SEC would lament that they have lost a considerable amount of face from their failure to spot a hundred pound shark in the middle of a small swimming pool (my analogy) but egg on one's face can be washed off. Congress cries foul about leading corporations in America imploding right under the noses of the federal watchdogs that are supposed to be monitoring them but the domino that started the landslide started with some of their own members. State regulators...well, let's not go there right now.
So who suffers the most? Of course you already know the answer to that question; it is the one reading this article. And so all the players mentioned thus far are going to make things better bypiling more regulations onto a grossly over-regulated industry so they will feel better about their jobs butyou, the consumer,will suffer more from the added expense.
It might bewise to check out an alternative solution that provides you with all the necessary guidance and investment choices you needwhile completely avoiding the regulatory fight that makes you and your money the casualty. For more information on this subject go to Unvesting.com
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