MyPrivateBanking Blog
Daily Comments on the World of Wealth Management

Archive for the ‘fee-only advice’ Category

Will the US be Next to Ban Kick-backs?

Wednesday, June 15th, 2011

The initiative of the UK’s FSA (Financial Services Authority) to ban kick-backs from next year on is drawing attention all over the world. Financial Planning Magazine asks: Will the US be next to ban commission-based advisors? We hope so.


Is Financial Education Bad for Private Investors?

Wednesday, June 8th, 2011

A recent article on MarketWatch claims that

“financial education, for some consumers, appears to increase confidence without improving ability, leading to worse decisions.”

The report goes on that it appears that investors need professional help because,

“… there are the expert skills, skills that are good to have but best left in the hands of a professional. With driver education, it’s changing brake pads; with money it’s asset allocation, risk management and security selection”

Great advice - give your wealth to a professional and join the 80% or so of actively managed portfolios that are underperforming their market benchmarks. There may be a lot wrong with personal finance education. One major reason probably being that its mostly in the hands of self-styled “experts” who are not aiming for education but who are trying to sell one or the other investment product using personal finance books and education as marketing tools.But true financial education for private investors should not be complex, difficult or confusing, and it should be definitely not done by those who have a clear conflict of interest.  It should be simple, straight-forward and independent from banks or other financial players who are following their own special interests.

Running your own portfolio is not difficult. In fact, it is quite simple - at least compared to the skills you need to drive a car: Have clear objectives, understand your risk profile and invest in simple, index-based products. But there are only very few professionals who want to teach this gospel. Probably, because the professionals won’t make a lot of money based on these simple but effective strategies.


Financial Times Quotes MyPrivateBanking on Anti-Kick-Back-Initiatives

Monday, December 6th, 2010

The Financial Times is quoting MyPrivateBanking’s research director on how kick-backs are on the (slow) retreat in Europa. Frequently, fund sponsors and other financial product providers are paying kick-backs or commissions to private banks and wealth managers when they sell their products to clients. This happens often without disclosing the commission to the private banks’ or wealth managers’ client:

But as in the UK and US, the European Commission and some national governments on the continent are laying track for more consumer and investor protection measures. “That’s a big force - not directly for fee-based consulting, but for more transparency, more disclosures, more fairness, whatever that might be,” Mr Binder says. “There are a number of regulatory initiatives right now - where banks have to disclose the ‘kickbacks’ from fund firms and fund sponsors, for example - that will have the effect at the end of day for more consulting to look like fee-based consulting.”

MyPrivateBanking has just released a report on fee-only financial advice in Germany.