SOMETHING FOR THE WEEKEND
Fiduciary Rule
Was that it? Campaigners for positive change in the investment industry have been waiting for months for details of the new Fiduciary Rule in the United States. But when the announcement finally came this week it was, well, a little underwhelming to say the least.
OK, the proposed reforms are, on the whole, good news for investors. Crucially, in future, brokers and advisers will be subject to a fiduciary standard, meaning they must act in the client’s best interests. Until now, they’ve only been required to recommend investments suitable for the client’s situation.
But look at the proposals in any detail and it’s clear that Wall Street has escaped very lightly. To quote Josh Brown, “the industry has been expecting a punch in the face that would force a dramatic overhaul of how they dealt with their customers. Instead, it’s received a love tap”.
You can’t learn to invest just by reading articles
I know this is rather off-message for a journalist, but we really ought to read fewer articles and more books.
As my fellow blogger Morgan Housel once said of books, “Their edge over articles is simple: They are an automatic filter”. Think about it. Writing a book is a huge commitment. You need to think very carefully about what you’re saying. But you can write an article in half an hour.
Josh Brown thinks much the same way. Nuance is important, but there just isn’t room for it in 500 words. You only get to learn about a subject properly by reading books, at least to start with.
Don’t get me wrong. You don’t need to empty your local library to learn the basics of successful investing. To quote the investment author William Bernstein, “The body of knowledge that the individual investor, or even the professional, needs to master is pitifully small”.
But where do you start?
There’s nothing vested interests fear more than transparency
For those who haven’t yet heard of it, I’d like to give a brief introduction to the Transparency Task Force.
The TTF is one of the most exciting developments in UK investing today. It was set up in the spring of last year with the aim of increasing transparency in all areas of the pensions industry, from transaction costs to executive pay. It’s made up of people from right across the industry who give their time and expertise free of charge to try to improve outcomes for end investors.
I feel very very honoured to have been invited to join the TTF by its founder Andy Agathangelou. I took part in my first meeting yesterday and I very much look forward to playing a small part in this very important cause.
What happened to the year of the stockpicker?
At the turn of every year the financial media is inundated with press releases from the fund industry PR machine. The message, dutifully delivered by newspapers, magazines and online publications, is more or less the same each time — namely, this is the year of the stockpicker or the year that active management strikes back.
January 2016 was no different. If anything, the message this year was even more emphatic. The conditions, we were told, were perfect for active managers with the courage of their convictions to make their mark. Active funds, they said, were far better equipped than index funds for the topsy-turvy markets that we’ve been experiencing.
So, how’s it going so far? Er, pretty disastrously. CNBC is calling the first quarter of the year “not just bad, but history-making bad.. the worst quarter for stockpickers ever”.
Other TEBI posts you may have missed..
Video interview with Nucleus Financial CEO David Ferguson
Woodford is bowing to the inevitable on research fees
Active investors talk each other into losing money — study
Investors should be looking for quality stocks, right?
Cap weighting is not the one true way
Why should fund managers earn more than accountants?
Also worth reading..
10 crazy things people in finance believe (Ben Carlson)
This is how 99% of people should invest (Chris Perruna)
Why chasing performance is counter-productive (David Fabian)
The Paradox of Skill: Why active funds underperform (Chris Brycki)
The current model of active management is broken (Alex Dumortier)
Taxes can be a real drag on active fund performance (Larry Swedroe)
What does it mean to be a “low-fee” investment adviser? (Cullen Roche)
Given the choice, always choose simplicity over complexity (Josh Brown)
The single greatest asset any investor can have is self-control (Jason Zweig)
DFA’s Dave Butler on what investors can learn from professional athletes (Dave Butler)
Evidence-based adviser? We’d like to help
There are few things I feel more passionately about than evidence-based investing. One of them is the value of independent and unconflicted investment advice and financial planning.
That’s why we at Regis Media have started to provide high-quality content for advisers, to help them attract, retain and educate clients.
Advisers can subscribe to either one or two videos blogs per month, covering a range of topics, from the value of advice, to the factors that drive returns and the biases that stop us making rational investment decisions. Each video carries the adviser’s branding, plus contact details, call to action and disclaimer as required.
We also have a range of pre-produced video content available, which again can be tailored to each individual firm. An example is the four-part series Evidence-Based Investing Insights, originally produced for Independence Advisors in Pennsylvania, setting out the key principles underpinning the evidence-based approach:
Evidence-Based Investing Insights – Video 1/4: Market Pricing
Evidence-Based Investing Insights – Video 2/4: Diversity
Evidence-Based Investing Insights – Video 3/4: Return Factors
Evidence-Based Investing Insights – Video 4/4: Behaviour
If you’re interested in using any of our video content, please contact Sam Willet at s.willet@regismedia.com for more information. German-language content is dealt with by Christina Waider at christina@regismedia.com. Alternatively, you can call us on +44 (0)121 285 2585.
Robin is a journalist and campaigner for positive change in global investing. He runs Regis Media, a niche provider of content marketing for financial advice firms with an evidence-based investment philosophy. He also works as a consultant to other disruptive firms in the investing sector.
