Total Eclipse of Your Investments?

Unless you are living under a rock, literally, you probably know that there is an eclipse across a wide swath of the United States today. It’s a biggie. We haven’t had one so clearly visible in the United States in a while and it looks like it will be 2024 until we’ll see another one. Solar eclipses, along with lunar and planetary eclipses are actually fairly common across the planet, with an eclipse of some celestial body or a partial eclipse generally happening a couple of times every year.

So, cosmically speaking, we have a fair amount of astronomical obstruction and you need special glasses to see it. Similarly, there may be a total eclipse obscuring the fees in your investment portfolio and you may need the investing equivalent of eclipse glasses with a solar filter to see those high and onerous fees!

It shouldn’t be difficult to understand how much you are paying for investment management and financial advising services, but with many providers, it can be. If you feel confident that all of your fees are on your statement, you may be surprised to learn that in many cases, they aren’t.

Many fees do make it onto statements, but with some, such as deferred sales loads, you may not realize that you are paying them until after you’ve made a decision to sell. Or, you may not remember an unusually high sales load that you paid up front. On top of that, most fees in mutual funds and ETFs aren’t usually explicitly called out on statements. To understand what you are really paying, you have to go research the fees on a site like Morningstar and then add in those management fees to determine your full fee picture. You’ll also have to dig pretty deep to determine if your broker is getting any sort of kick-back or commission on the products that they invested in on your behalf.

To help you got to the bottom of your fees, here are 5 questions to ask the person or firm helping you with your investments:

1) Are you a fiduciary and do you have to act in my best interest when making investments? If not, why not?

2) When you make an investment in my account, do you receive a commission, compensation or kick-back of any kind, if so, how much and how does it work.

3) What are the management fees of the products that I’m invested in and how do those fees compare to index funds and ETF or other similar products?

4) Did I pay any up front sales loads and are there any back end sales charges if I sell something? (Ouch if they get you both coming and going...)

5) When you add all the fees that I pay (or have paid) to you and to any other investment company or product that I am invested in, are my total fees under 1%? If not, why not.

Working with a fee only advisor and a company that generally uses low cost products and individual securities, such as J. Bradford Investment Management, can help you achieve a more transparent fee structure into your portfolio.

If you’d like a free evaluation of the fees you are currently paying, we provide free portfolio reviews so everyone can understand and evaluate the fees paid to their advisor or manager. With your solar filter glasses and your portfolio review, you’ll be glad neither your retina nor your portfolio get burned.

PLEASE REMEMBER:

- INVESTING AND INVESTMENT MANAGEMENT INVOLVES RISK, INCLUDING THE LOSS OF YOUR INITIAL INVESTMENT OR ANY INVESTMENT GAINS.

- PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

- THIS GENERIC INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION FOR ANY INDIVIDUAL TO TAKE A SPECIFIC ACTION.

- PLEASE INVEST PRUDENTLY AND SEEK PROFESSIONAL HELP FROM A FINANCIAL ADVISOR, INVESTMENT MANAGER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ON MATTERS THAT YOU ARE UNSURE OF OR THAT ARE UNIQUE TO YOUR PERSONAL CIRCUMSTANCES.

- FINANCIAL PLANNING AND INVESTMENT MANAGEMENT SERVICES PROVIDED BY J. BRADFORD INVESTMENT MANAGEMENT, NASHUA NH.

What do you mean they don't have to have to act in my best interests?!?!

Many people who I talk to about finances are surprised to learn that the person giving you financial advice does not necessarily have to act in your best interest when giving you that financial advice or performing investment management services. That is, they are only held to a “suitable” or “legal” standard and not the fiduciary standard. 

You might be thinking, "OK, I can read that Investopedia link you just provided, but what exactly does fiduciary mean?"

Well, two recent high profile stories help illustrate the point:

The first example relates to a sales contest run by Morgan Stanley where the advisors were allegedly pressuring their clients to buy a product and service that they didn't necessarily need. Sales contests and account opening pressure (like the recent Wells Fargo case) can be common in non fiduciary environments and customers can end up getting put in high commission products with better alternatives.

“Massachusetts charged the wirehouse with conducting an unethical, high-pressure sales contest among its financial advisers to encourage clients to borrow money against their brokerage accounts. The contest was run despite an internal Morgan Stanley prohibition on such initiatives.”

A simple internet search of sales contests in financial services or unfair commissions in financial services will bring up a long list of violations and abuses by the financial services industry. And we're not talking about Bernie Madoff type of stuff, we're talking about the kinds of brokers and advisors many ordinary people are using.

The second example relates to Fidelity Investments and the potential conflicts that arise when both the Johnson family and Fidelity fund managers both see a private equity investment that they believe is a good investment. According to Reuters:

“The company’s tradition of putting clients’ interests 'before our own is a big part of what makes Fidelity special,' the fund firm says in its mission statement. In at least one lucrative field, however, the Johnson family’s interests come first. A private venture capital arm run on behalf of the Johnsons, F-Prime Capital Partners, competes directly with the stable of Fidelity mutual funds in which the public invests. It’s an arrangement that securities lawyers say poses an unusual conflict of interest.”

So while it is absolutely possible to get great financial services from advisors and companies that are not fiduciaries, the investment lines of “suitable” advice are often gray and potential conflicts can arise even in well-intentioned firms. You should ask your advisor or firm about any potential conflicts they have and be sure you are satisfied with their answer.

But why not work with someone who is bound to work exclusively for your best interests? Helping you holistically with your dreams and goals? You probably should. Whether it is with J. Bradford or another fiduciary, I absolutely recommend that everyone looking for financial advice ask if the person they are working with is a fiduciary and if not, why not. Maybe you'll be satisfied with the answer, maybe you won't.

Some clients and prospects do occasionally ask about the fiduciary standard and if we operate to the fiduciary standard when giving investment and financial advice. I love answering that question. The answer is unequivocally yes and it is part of the reason why I founded J. Bradford Investment Management as an independent RIA (Registered Investment Advisory) firm. We put our clients first and you get our unbiased, conflict free advice about all your financial matters.

If you'd like to have a contest, let's raise some money for charity.

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Planning and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.

Investing 101 Class -- now with emojis!!

I'm excited to be partnering with the Coalition for a Better Acre to deliver my revamped Investing 101 workshop on Tuesday, October 18th in Lowell, MA.

Now with emojis!!

I’ll be presenting in the 1st floor community room at 517 Moody Street from 6:30pm – 8:00pm.

The workshop is free, dinner will be served and you’ll have a chance to win a $25 Target gift card! Plus you’ll get 90 minutes of Jason unplugged.

I’ll answer questions and try to give practical, actionable advice in a pressure and judgment free zone. I hope you can join us.

You can check out the presentation slides, catch up on my blog posts or explore other educational videos that might help you formulate questions for the session.

Hope to see you there!

Sage Financial Advice From 80's Cartoon Characters

Back in the 80's, TVs had knobs and networks actually went "off the air" at the end of the night with the National Anthem and didn't come back on until the next morning. You knew you were up early if you turned on the TV and still saw the color bar test pattern.

Cartoon characters of that era also gave some pretty sage financial advice.

Elmer Fudd laid it out pretty clearly for Sylvester: "Sywvester......the handwing of money is a gweat wesponsibiwity."

For individuals and advisors, this is as true today as it ever was, perhaps more so. Individuals have a responsibility to take great care of their hard earned money and help it work for them as hard as they worked to earn it.

Advisors should not only help clients find investments that are suitable, but should also work to a fiduciary standard, ensuring that all actions and investments are exclusively in the client's best interests.

Today, the vast majority of advisors, planners and investments managers do work in the best interests of their clients and thankfully, the cases of outright fraud and deception are rare, but everyone from Bugs Bunny to the SEC is on the lookout -- 

"Dat evil character's after that nice old lady's money! Looks like this Boy Scouts' gonna do his deed for today." - Bugs Bunny

Individuals need to inform and educate themselves on the basics of investing and seek help when they are unsure or face complicated investment choices. And as practitioners in the investment management and financial planning space, we need to be there when our clients need us and uphold the integrity of the capital markets at both an individual and industry level.

The recently released Department of Labor best interests standard for retirement accounts is a great step in the right direction towards the timeless wisdom of Bugs and Elmer.

If you need help with a complicated financial matter or would like a 2nd opinion of your financial situation, we would be happy to help.

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Advisor and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.