MyPrivateBanking Blog
Daily Comments on the World of Wealth Management

Posts Tagged ‘felix salmon’

Bank Rip-Off of the Day

Thursday, May 12th, 2011

Felix Salmon reports about a Merrill Lynch client who is also active on Wikinvest:

“This guy probably knows that he’s paying his Merrill broker an annual management fee of 1.75%, which alone is more than $40,000 a year. But he doesn’t know that other Merrill clients in his position are paying far less - that Merrill brokers basically charge as much as they can, and the average Merrill client on Wikinvest pays less than half that, just 85 basis points.

“And there are other things this guy doesn’t know, as well, because they’re buried in his statements - things like the fact that Merrill charged him $5,763 to make 24 trades last year, over and above that $40,000 management fee. That’s about $240 per trade.”

From a European perspective this case would not even be among the most expensive fee arrangements. Looking at European private banks, overall fees of 200 basis points (2% of invested assets plus hidden fees, that come with the products) are not so uncommon. Check our research on open and hidden fees in wealth management accounts and what to do about it.


Charity: Should You Donate Aid to Japan?

Wednesday, March 16th, 2011

We have all seen the horrifying pictures from the quake and tsunami in Japan. Many affluent individuals are wondering whether it is a good idea to donate money to Japan helping out the victims.

Felix Salmon, a blogger at Reuters, says no: His main argument is that Japan is a wealthy nation and there are other, better causes on which the money would be much more effectively spent even though these causes get less public attention.

Tyler Cowen, an economics professor and blogger, says yes. He argues that with Japan the chance that the funds are usefully deployed are much higher than normally with aid. He also adds that it is not realistic to expect that people will donate to another cause instead of donating to Japan.

Both sides make valid points. On balance, I think Tyler Cowen’s point that people won’t give to a substitute makes the strongest argument.