29 March 2016

How to pick a Financial Adviser

It could be the most important decision you make in your life (after selecting the right spouse and finding a career that is fulfilling)
How to pick a Financial Adviser (Washington Post)

27 March 2016

Fraud Watch

Credit Suisse, the Jailed Banker and the Oligarch's Millions (Bloomberg)

26 March 2016

Masters of the Universe or Men of Clay?

Do not get seduced by glamorous names or 'sexy' investment stories. The recent implosion of the much hyped Valeant should be a warning.

18 March 2016

Sector ETF's better than Market Index

While no advocate of market timing for the average investor I think it is preferable to keep an eye on overvalued or undervalued market sectors and allocate new money based on constant sector weightings. Index ETF's are a great - and cheap - instrument to get exposure to the Equity Market but this approach avoids money being allocated to expensive and possibly overpriced market sectors. It is perfectly possible to create a near-perfect replication of the overall market by carefully selecting sector ETF's.

How is your Financial Adviser, Planner, being paid?

Costs are a major drag on performance and the one variable that you can control with certainty. So always check how your Financial Adviser or Planner, is compensated. This documentary from Australia is a good example of what you should avoid. It examines a sales-driven culture inside a major bank that has been described as profit at all cost - a culture that has been built on commissions.

16 March 2016

Financial Planning - is it worth the Fees?

A glimpse at the fees charged by Standard Life's Financial Planning affiliate 1825 is an eye-opener. The example provided - I suppose it would illustrate a middle-class family, comfortable but by no means wealthy - is already a warning as the fee appears to be quite high. What hourly rate is the basis for the implied hourly charge? Would the client learn much more than he would be reading any of the available DIY investment books?
Many people are not really able to look after their finances. Most often this is due to spendthrift habits, but many are also not too keen to get into the nitty-gritty of investment.
But why would you use a Financial 'Planner'? In my opinion the selection of a Financial Adviser is a much more critical decision to make. Paying a Planner and then paying fees for an Adviser would lead to exorbitant expense.
Looking at the annual maintenance fees charged by 1825 and adding the fees charged by the typical Investment Adviser is just paying over the odds.
One should not forget that any investment vehicle (fund) the Adviser selects for you will also charge various fees.

14 March 2016

IPO offerings - Buyer beware!

Looking at the valuation of the Purplebrick online property agent one has to ask if investing in publicly offered shares is really a suitable investment option for the broader public. It does not take a mathematical genius to figure out that there is one certainty: the selling promoters and insiders make a hefty packet while the investors coming in at a later stage buy into a lot of hope.  I am all for 'free' markets but one has to wonder whether the regulatory and tax framework does not need a healthy dose of adjustment. Listings such as these may only be backed by 'skilled' (?) professional intermediaries, but they are ultimately investing the savings of Joe Sixpack, not their own money. The London Stock Exchange has been converted into a profit-seeking business which is a shame as it should really be in the forefront of guarding the end investor's interests above all other objectives. Talk of shareholder 'engagement' is really so much hot air if that is not the case. That one of the backers of this issue has reaped a double digit bonus in the recent past adds to the discomfort of the interested observer
 (20 December 2015)