Sunday, June 30, 2013

RESEARCH :The Financial Education Fallacy

RESEARCH :The Financial Education Fallacy by Lauren E. Willis
Suggests that investor education could be a cover for industry wrongdoing .  Read the full article 

Tuesday, June 11, 2013

Eliminate Embedded commissions ..Professionalize investment advice

Embedded commisions are the source of a lot of problems for retail mutual fund  investors. In this short paper we explain why  Read the full article 

FOOTNOTE:
"Assuming that both approaches cost the investor the same amount, most investors (59%) continue to prefer to pay fees that are part of their mutual funds, while 33% would prefer to pay for advice separately.” Source: Canadian Investors' Perceptions of Mutual Funds and the Mutual Fund Industry 2011 report . The Report notes “The general preference for including advisor compensation in the structure of the mutual fund is constant across all demographic groups and investor types. For example, higher value investors are no more or less likely to support this approach. There are also no significant differences related to investor age or the size of their investment account." [ Better fee disclosure and performance reporting may alter these numbers. ]

Wednesday, June 5, 2013

Research: The Arithmetic of Investment Expenses by William F. Sharpe


Research: The Arithmetic of Investment Expenses by William F. Sharpe

ABSTRACT Recent regulatory changes have brought a renewed focus on the impact of investment expenses on investors’ financial well-being. The author offers methods for calculating relative terminal wealth levels for those investing in funds with different expense ratios. Under plausible conditions, a person saving for retirement who chooses low-cost investments could have a standard of living throughout retirement more than 20% higher than that of a comparable investor in high-cost investments. In other words fees count.High fees plus conflicted advice= Freedom 75. With higher Canadian fund expenses , the impact on retirement savings is much higher.Read the full article