Thursday, April 19, 2012

Shutting Out the Middle-Class?

AdvisorOne.com ran an interesting interview this week with Louis Harvey of the consulting firm Dalbar. Harvey was asked about the impact of the DOL or SEC imposing a universal "fiduciary" standard across the financial industry.  Harvey's conclusion?  The middle class will be shut off from advice.
“You can make three phone calls to three firms and ask their minimums,” Harvey said. “Every brokerage firm has a minimum for their RIA business which is substantially higher for the minimum of their commission business. The median for the RIA business is about $100,000; on the other, you can get a commission-based rep for about $5,000 [in assets].”
Also interesting is how Harvey labels himself in the great fiduciary debate.
Harvey considers himself a “separatist” on the fiduciary question, seeing a role for both fiduciary and commission-based advisors each in their own areas. He sees a danger in “trying to take the guys selling Fords and Chevys and bringing them into the fiduciary world. Only those who are qualified should be there,” he says.

Monday, April 16, 2012

A Solution in Search of Problem

That is what the Wall Street Journal editorial board labels the Department of Labor's attempt to redefine fiduciary.  Take a look.

The Latest Look at Financial Literacy

April is Financial Literacy month, and with it has come a host of articles looking at the financial literacy movement.  Of the more recent pieces, is a look by the Washington Post at efforts in Maryland and Virginia to teach finance in schools.  The central theme of the article is "does it work?"

Of course, that question cannot be answered yet but all experts agree it is worth trying.

In both states, a massive effort is underway:
Educators in Maryland and Virginia acknowledge that even implementing the new curriculum — let alone determining its effectiveness — is going to be a challenge. Teachers certified in math, social studies, economics and business are considered qualified to teach the new course, but they have to be trained. Dominion High School is aiming to offer the new course to juniors, beginning in 2013. At Marshall in Falls Church, the course is so new that Terence Mayo’s class is the only one currently offered, but it will require 17 different sections to accommodate one grade level, roughly 400 students. Marshall is exploring an online option, which students could take for free during the school day, and a class outside school for $800, which they would have to cover on their own. There’s also a summer option on the table.

Wednesday, April 4, 2012

Will Fixing 401ks "Fix" the Retirement Crisis?

That is the question posed by a great Washington Post article today.  The entire piece is packed with good information, examples and policy solutions.

This quote from Alicia Munnel of the Center for Retirement Research sums up the debate that will be worth watching in the next few years, as more and more burden for retirement is shifted to working families:
“Our whole retirement system’s too small. When you put together Social Security and these 401(k) plans, it’s just not going to provide enough for retirement income. . . . The question is, can you fix it by fixing the 401(k)s?”
Give the article a read and let's watch where this debate heads.