Protecting Your Retirement Assets | Invest by Risk Category


It was reported back in early 2009 that 10,000 a people a day were losing their jobs.  Job losses meant that people stopped spending money, furthering the damage to the economy.  It almost seemed that there was no way out of the disaster.  As you can see from the second image that I presented that consumer spending was down, way down.  Consumer spending supports the economy at the rate of about 70%, so you can see how job losses and reduced spending were going to delay economic recovery.  In addition, average people not only stopped spending but were struggling with accumulated debt.

Job losses were the news of the day.  I remember being at my follow-up job only two months, when I had two cell phone calls in one week from friends that both lost their jobs.  Many employers handled it poorly, witnessed by the remaining employees.

Survivors were also burdened with the workload of disappearing coworkers, causing anxiety and depression.  If you were let go or not, you weren’t happy.  I think no one wanted to talk about it, but the job losses were expected to continue, which they did for several years following the crisis.

The job market has been watched carefully for the last ten years, with leftover sensitivity.  The definition of unemployment was forever altered as many people were forced into retirement or stopped pursuing employment.  Those individuals fall out of the equation, therefore, when unemployment was reported, it left a lot of skepticism.

I don’t know about you, but that’s enough gloom for me now.

Let’s move on to today’s topic.


Fiduciary responsibilities

On my last vlog, when I mentioned that I’d be speaking on fiduciary rules, I’m not sure everyone knew what I was talking about.  Or, it might have sounded like something so foreign or boring, that it was a turn-off.  I can promise that it’s not the most exciting topic in the world, but it is something that affects your lifetime wealth.  Got your attention now?

I hope so, because there are unscrupulous people waiting to steal from you.  They don’t do it with a gun, they do it using secretive methods and by keeping you in the dark.

With pensions drying up over the last three decades, they were replaced with qualified retirement plans that put the burden on the employee to save for their retirement.  These are employee 401(k) plans, that everyone is encouraged to contribute the maximum to.  So far, so good.

What happens next is that the employee is given a menu of investments to allocate their money into, then work the rest of their life until their full retirement age.

For those not paying attention, which most people aren’t, the investment accounts may not be appropriate for them or may be assigned to a financial advisor that is earning exorbitant fees.

So, here’s where it might have a stronger meaning.  Let’s say you work your whole life and your 401(k) investments accumulated a value of $400,000.  According to The White House Council of Economic Advisers, a study released indicated that excessive fees and hidden conflicts of interest lower annual returns by 1 percentage point, which over 35 years (a not uncommon time horizon for retirement savings) reduces a person’s wealth by a quarter.  Because of high fees and commissions applied throughout the years, your account has been siphoned off to $300,000.  That’s 25% of value that would be yours to enjoy in retirement.

Do you know where your money is, and what your asset management fee is?

While everyone automatically assumes that a financial adviser is supposed to work in the best interest of their client, that may only be partially true.  For all the investment funds that an adviser recommends, those funds may be to your benefit, but they may also help the adviser cash in on big commissions and hidden fees.  That’s what’s known as conflict of interest.  They’re using your account to bleed it for every penny of fees that they can get their hands on.

The fiduciary rule was created to ensure that financial advisers act in their customers’ best interest. Isn’t that what they’re supposed to be doing?, I hear you ask.  Yes, and… no.  They’re doing what’s in your best interest, but also what’s in their better interest.  What that means is that they’re investing your money but investing it in the financial instruments that earn them the highest commissions and fees.

The fiduciary rule was meant to require advisers to disclose conflicts of interest and provide a website to teach clients how they, the advisers, make money.

After delayed adoption in June, 2017, the regulations were subject to further review but triggered lawsuits along the way.  Ultimately, in true Trump fashion, the proposed regulations and fiduciary rule was scrapped.  Reasons against the rule went from burdensome compliance to a significant decrease in products to be offered for adequate diversification.  For whatever reason they asserted, the ramifications to the public should be emphasized.

Fee income from your account is basically an autopilot revenue stream for the asset managers.  Everyone’s getting paid – the mutual fund company and the financial adviser.  I don’t mean to bash my colleagues, but when there’s no transparency, and it’s a little bit of money at a time, barely noticeable, the cards are stacked in their favor.

We’re talking about $17 billion dollars, that’s right, with a ‘B’.  That’s how much asset management fees take in on an annual basis.

I fired my financial adviser almost four years ago.  Since then, my portfolio has been earning about 10-15% a year.  He bragged that it was earning 8%, and I was netting 6% after fees.  I was never entirely clear because the fees are not clearly displayed on the statements.

I was unknowingly paying two sets of fees on the same money.  Here’s how that happened.  When I transferred money to my wealth adviser’s account, I wanted to keep a Vanguard fund that I’d had for many years.  They gladly accepted that fund.  What I didn’t realize is that Vanguard takes a fee for the investment account and so was my financial adviser, on that same money.  I called Vanguard to confirm the stupidity.

This is what is happening with all funds, unbeknownst to the account holders.  When your financial adviser offers a fund, the actively-managed fund first earns its fees, i.e., Gabelli or Eaton Vance, then your friendly financial adviser takes his cut.  That’s paying two fees on the same money.

Good luck trying to find out how much the actively-managed fund is taking.  It’s difficult-to-impossible to find.  These fees cut into your annual return, reducing your compounding strength, and reducing your overall ending balance.

Compounding is not just for interest-bearing accounts, where you invest $100 at 5%, then have $105 to invest the following year.  Compounding can be in the form of reinvested dividends and increased shares of a stock or mutual fund.

I learned this hard truth after I fired my adviser.  I had 500 shares of a REIT in my IRA.  I didn’t start reinvesting the dividends in the company until after I started managing the account myself.  I now have 585 shares from reinvested dividends for the past three years.  I wasted six years of compounded dividends because I wasn’t paying attention.  The dividends that the stock earned in the six years paid the adviser’s fees.

Here’s some insider information.  When the fiduciary rule was pending in 2017, I attended an all-day conference of the Financial Planning Association.  The keynote speaker at lunchtime addressed the fiduciary rules.  I have never heard such inflammatory comments made at a professional conference.  The reaction is understandable, but seemed overtly unethical.  By avoiding disclosure and being adverse to acting in their client’s best interest, it seemed the were adamant about maintaining free reign to siphon money out of their client’s investment accounts. The rule would limit their revenue streams, basically taking money out of their hands.  The amounts are staggering – US retirement assets are around $28 trillion dollars as of the first quarter of 2018.  That’s are sizeable sums that they wouldn’t be able to get their greedy hands on.

In light of the rule and its reversal, Certified Financial Planners are bound to the fiduciary rule.  Other investment firms have jumped on board to gain credibility.  Regardless, here’s what you should be doing.  Take a look at your retirement accounts.  What are you invested in?  Do you know?  Do you know how much in fees you’re paying?  Is it higher than 1%?

There’s a way to find out how to see the underlying investments of a mutual fund or index fund.  Look for the page or tab that says Top Ten Holdings.  Look for the page that shows you the annual fee percentage.  It’s not that hard to find.

Ask the right questions.  If you can’t find what you’re looking for, ask until you get a clear answer.

Are you paying double fees anywhere?

Look, I know you’d rather be doing something else.  On the next rainy day, when you can’t do anything else anyway, take some time to track down your 401(k) and IRA statements.  If you can’t find everything all at once, do a little at a time.

Over the course of your lifetime working years, you could come out with an additional 25% of wealth in your accounts.  But it’s up to you to safeguard it.  Don’t expect your employer’s fund manager to call you and point out that you’re paying him/her and their fund buddies extra fees.  Don’t expect them to tell you that, by buying that annuity product, they just won a trip to Amelia Island in Florida.


Moving onto today’s second topic:


Investment Ideas By Risk Category

I hear over and over “I want to invest, but I don’t know how or where to start.”  Here are some ideas where to start.

Sometimes categorizing by risk may help provide a direction.  Then, as you get more comfortable, you can move into other diversifications. Low-risk investments are great, but you don’t want to miss out on higher returns.

Low risk – assets that preserve wealth: CDs, cash-equivalents, TIPS (treasury inflation-protected securities), municipal bonds.


Medium risk – Stocks, ETFs, mutual funds that blend stocks with bonds where high-risk investments are blended with low-risk investments.


High risk – experimental businesses, start-ups, junk bonds, high-risk individual securities

Cryptocurrencies are risky because they’re unregulated currencies.  Warning: Don’t invest more than you can afford to lose.


I endorse Vanguard for their non-profit, low fee funds, but a really cool online brokerage firm is M1 Finance.  For those into fully customizable accounts, this could be a really fun site while working with your investments.


The features of this service are so far ahead from when I started investing.  It takes under three minutes to link your bank account to the site and you can start investing.

It’s almost like being at the custom salad bar.  If you don’t want the bland pre-packaged version, you can choose which salad ingredients you want.  I like their drop-down menus and the visuals using pie charts.

M1 Finance allows you to buy fractional shares.  For example, Amazon being at around $1,700 a share may be too steep for one share.  You can customize your account to buy one-quarter or one-half of a share.  Categories range from ultra-conservative to aggressive, with sector categories, and General Investing to Responsible Investing.  Best of all, there are no fees.

Use this link to get started:

M1 Finance

Don’t overthink it, just do something.

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