Economics

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#281 Does your Financial Advisor Put You First?

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The fiduciary duty entails asking an important question: Does your financial advisor put you first? That's what our guest Mary A. Malgoire, CFP helped explain. Mary is the founder of The Family Firm Inc, a fee-only financial advisory firm in Bethesda, Maryland and believes in the client-first, fee-only model, because there are “too many conflicts that exist.” As the past President and Chairman of the Board of the National Association of Personal Financial Advisors (NAPFA), she is fee-only true and blue!

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Mary joined the board of the Institute for the Fiduciary Standard in January 2015 and has been instrumental in developing the Campaign for Investors website. The Institute is a not-for-profit organization that formed to advance objective and competent financial advice, by educating investors about their rights and promoting best practices among financial advisors. In short, the Institute seeks to change the financial services industry and improve investor outcomes. The web site has lots of resources for investors including: How to find out if your current advisor is a fiduciary, how to calculate your investing costs and to know your rights as an investor.  The six duties of a Fiduciary are: Serve the client’s best interest; Act in utmost good faith; Act prudently -- with the care, skill and judgment of a professional; Avoid conflicts of interest; Disclose all material facts and Control investment expenses

 Callers/Listener E-Mails/References:

Here's the article I referenced: Financial Threats you CAN Control

We fielded retirement account questions from Henry, Dev, Shirley; debt issues from Matt and Jean (check out the NYT and ProPubica NJ Loan Program article that outlines some of the ridiculous rules around education debt); and investment strategy questions from Pete and Beatrice.

Thanks to everyone who participated this week, especially Mark, the Best Producer/Music Curator in the World. Here's how to contact us:

  • Call 855-411-JILL and we'll schedule time to get you on the show LIVE 
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#280 Stocks Market Highs, American Business Lows

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Despite stock market indexes reaching all-time highs, American businesses are falling to new lows. The reason is that the golden age of US innovation and capitalism has given way to what our guest Rana Foroohar calls "financialization.” Rana is the Time business and economics columnist and author of "Makers and Takers: The Rise of Finance and the Fall of American Business." The book divides the American business world into "Makers," those companies that serve the real economy by providing capital and investing in long-term growth and "Takers," those who use financial engineering to juice short-term profits and as a result, enrich their shareholders and themselves.

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How did we go from the simple explanation of banking that Jimmy Stewart provided in "It's A Wonderful Life" ("The money's not here [in the bank]. Your money is in Joe's house that's right next to yours. And in the Kennedy house and Mrs. Macklin's house and a hundred others") to a world where only about 15 percent of all the money in our system actually ends up in the real economy?  Rana notes that the 40-year process has culminated in the financial sector holding "a disproportionate amount of power in sheer economic terms. It represents about 7 percent of our economy but takes around 25 percent of our economy of all corporate profits, while creating only 4 percent of all jobs."

And if you have an MBA or are thinking of getting one, you might be interested in knowing that "an increasing number of business educators at top schools are concerned that MBA programs are churning out number crunchers without a conscience." Before you get too depressed, listen to the whole interview, because Rana notes "Despite all our problems, America is still the prettiest house on the ugly block that is the global economy." There are also some interesting policy shifts that could occur that would remedy the trend.

Callers/Listener E-Mails:

If you are interested in starting your own business, check out my conversation with Barbara, who is trying to decide whether or not to start a private practice. We discuss the Social Security Windfall Elimination for Scott, the use of fixed annuity for Deanna and robo advisors for Andrew.

Thanks to everyone who participated this week, especially Mark, the Best Producer/Music Curator in the World. Here's how to contact us:

  • Call 855-411-JILL and we'll schedule time to get you on the show LIVE 
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#279 Making Money in a Low Return World

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Making money in a low return world is tough. Last week, the yield on 10-year US government bonds touched an all-time low and stocks have been stuck in neutral for two years. Given the current environment, return caller Ryan asked whether one asset allocation fits all portfolios? In other words, should you put those investments which are likely to appreciate the most in a Roth IRA, where you will never have to pay taxes on the gains? It may take some some work, but the idea has merit.

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Heather Long, CNNMoney's senior markets and economy writer, joins the show to weigh in how you can make money in the current low return era. Heather notes that most forecasters now expect below average returns for the major asset classes over the next five years. She helps us decide what to do about it. Heather also discussed politics, diving into the question: Who’s better for your money: Trump or Clinton?

Thanks to everyone who participated this week, especially Mark, the Best Producer/Music Curator in the World. Here's how to contact us:

  • Call 855-411-JILL and we'll schedule time to get you on the show LIVE