Category Archives: Asset Management

An industry leader’s perspective on developments and trends in the asset management and wealth management industries and those directly impacted by them, e.g. life insurance, annuities, broker/dealers, RIAs, wirehouses and financial advisors. Whether considering asset management industry performance, cost, or the currently raging active vs. passive arguments, Mark brings an unbiased perspective to the table. We hope you enjoy, and please take the time to add your own thoughts.

Improve Your Outcome

In a small twist on our normal approach we seek to help you improve your outcome. Retirement planning is a multi-faceted issue, and our regular focus on cost and strategy will get you to a better place. Sometimes, though, it is worth taking a bigger picture view to understand the landscape. We believe you can improve your outcome by having a better handle on the investing environment.

Improve your outcome by doing the right things during the accumulation phase.
We talk a lot about the active vs. passive investment debate raging in the industry. No doubt the bull markets since the bottom in 2009 have helped passive investments. It has also made it hard to outperform as an active investor. The tide continues to flow from active approaches to passive. Investors Have Pulled $109 Billion from Active Equity Funds in 2016: Here’s Why At the same time, the debate rages on in ever more unpredictable ways. Are Index Funds Communist? and Why the hottest investment trend in the world could have worse economic outcomes than Marxism
We should not miss the other rising star in the investment community, robo-advisors. Here is an interesting introduction and comparison of the robo advisor approach to the passive. Robo-Advisors vs. Passively Managed Funds: Which is Better? (WFC, SCHW)

Improve your outcome by understanding your retirement options.
We like to give you as much information as possible about your expenses during retirement. That is one key – along with longevity – to understanding how much you need to save in your working years. Here is a good overview to help you understand your retirement expenses from Forbes. How to Budget for Retirement
Hopefully by now this does not bring a lot of new information to you, but it does summarize a number of salient points with respect to your likely retirement cornerstone. 14 Things You Really Should Know About Your 401(k) Retirement Plans

Improve your outcome by understanding the data.
We talk about longevity often and healthcare costs in retirement about as much. Here is a damning piece on just what our expensive healthcare system buys the US compared with the rest of the world.  Life expectancy vs. health expenditure over time (1970 – 2014)
As if that were not bad enough, the implications worsen with lower incomes … and geography. The Rich Live Longer Everywhere. For the Poor, Geography Matters

Improve your outcome by improving your world view.
We rarely venture to the trivial any longer. Since it is August, why not indulge in some mind expanding beyond the retirement arena? 20 Gifs That Teach You Science Concepts in Seconds
If you want to talk really big picture, try on the Fermi Paradox for size. The Fermi Paradox
Since we are talking big picture things beyond your retirement, how about solving the potable water problem? The solar-powered sculpture that could desalinate 1.5 billion gallons of drinking water for California

Fiduciary Implications

The initial reaction to the DOL Fiduciary Rule was mixed, now we are beginning to see some Fiduciary Implications. Big players are already making moves to ease compliance, most notably Charles Schwab, and the speed with which this is happening means some benefits may quickly accrue.

So, what have been the fiduciary implications thus far, and what might follow?
The absolute most encouraging fiduciary implications I saw all week was this news about Schwab dropping loaded funds.  Post-DOL fiduciary rule, Schwab dumps load funds as advisors yawn That’s good news because it indicates the market moving to help you with your quest for lower cost investments, and Schwab moving means others will have to follow, despite what they may say.
Inasmuch as the fiduciary implications are technically limited to qualified investments, i.e. your tax favored investments like 401(k) and IRA assets, theoretically only a fraction of your investments are ‘protected’ by the new fiduciary rule. Still, I think once the smart players go to the effort of compliance with the DOL fiduciary rule, they will go ahead and apply it themselves to non-qualified money. Mind you, the SEC is talking about its own fiduciary rule for non-qualified money, and there will be plenty of resistance from the industry. SEC Joins Battle on Broker Bias That Could Remake Industry
Frankly, having a more uniform framework which applies across qualified and non-qualified money will be a better thing, certainly for investors, as the industry will be compelled to comply, limiting the chances of shutting out smaller investors. Keep in mind that the DOL rule makes it relatively easy to choose to walk away from small accounts – whether personal or business – as a rational business decision. Walking away entirely will be an entirely different equation.

Now that we have a glimpse at the fiduciary implications, let’s take a minute on world markets.
First, let’s consider some context for the prior remarks. This is a fascinating article about the future of the asset management industry. I pulled it first for the excellent bubble chart on invested funds. I put it here, though, because it gives you some insight into the industry dynamics. Asset Managers, Prepare to have Your Business Disrupted
You have read here before about the questionable US unemployment data. This article goes one step beyond to show you the US output gap as an alternative means of divining the true state of the economy. I found it fascinating. Why the US Output Gap Means the 10-year is Going Below 1%
I find it hard to internalize the rapid rise of China as an economic power. These few charts give a good primer on where things stand. These 4 maps show how China is dominating global trade
I admit I don’t agree with George Soros much, probably at my own peril. This time, though, he makes a good deal of sense. Soros says China looks ‘eerily’ like the US in the run up to the financial crisis
At the same time, Japan’s woes seem to worsen. In Shocking Finding, the Bank of Japan is Now a Top 10 Holder in 90% of Japanese Stocks

Now, you deserve to lighten up some.
As an adopted Minnesotan, I was surprisingly struck by the sudden loss of Prince. Here is a great link to his entire very last show. Listen to Prince’s Entire Final Concert
I know an inordinate number of people gather around for the Kentucky Derby. This may make it easier for you. The 13 Best Bourbons for Kentucky Derby Season 2016
When you hit the road this Summer, take along the best tools. The Best iPhone Apps for Travelers

Time for a volatility play?

If you’re going through hell keep going” – Winston Churchill

Markets and the Economy – time to leveraging volatility?:
With all the turmoil caused by Greece, Puerto Rico, the Fed, the sluggish economy, and so on, maybe one thing that is predictable is volatility. These three articles give differing perspectives; draw your own conclusion. History Says Shorting Volatility is the Right Move Here Volatility Surges 35% on Grexit Fears: It’s Time to (Start) Shorting the VIX Feeling Unfulfilled by the Volatility Tease?
These two articles present a more nuanced view of Volatility, and pre-date the Greece hysteria from earlier this week. Presenting a likely more reasoned view. Trading the VIX: I Want Volatility with My Volatility ETF Adoption of VXUP as a Hedging Instrument Could Transform Investment Management

Your retirement – a friendly reminder about costs:
No matter how you approach saving for your retirement, you should always remain hypervigilent about embedded costs. Here are some more tips on that: Here’s how much your 401(k) is really costing you
In my favorite corollary to costs, fees and the active vs. passive debate. Active vs. Passive: How fund managers stack up to index funds
Now this is a twist even I didn’t see coming on costs, low cost active funds outperform high cost active funds … I suppose that’s likely, but proven? Morningstar: Low-cost Active Funds Outlast, Outperform High-cost Peers

Travel – Summer travel season is squarely upon us, do it right:
Always looking to save on flights … can it be more complicated? Google Flights Guys on When to Purchase Flights ‘The Best Time to Buy is Now’
Since we’re listening to Google Flights guys, how about a tutorial? Using Google Flights to Find Cheap Airfares
Thrifty, but smart, ways to save on long hauls. Best Airlines to Fly International Economy

Become more well rounded

You have to be odd to be number one” — Dr. Seuss

Global Economy:
Alan Greenspan has lost some of his luster since largely leaving the public eye. Still, it is never a bad idea to hear what he has to say. Aside from the seemingly preposterous suggestions, (riots in the streets?) there are some good points. Gossip in the Workplace Could Signal Larger Problems
On the flip side, I offer the perspective that a strengthening Dollar is causing global liquidity tightening, imperiling emerging markets, including China. “Ignore This Measure of Global Liquidity at Your Own Peril”, Albert Edwards Warns

With all my focus on fees and income, you may wonder what the goal is for retirement savings. This may help. You won’t be able to calculate how much money you’ll need for retirement without knowing these six answers
Another way of looking at the same problem, how much to save? How Much of Your Income Should You Save?

I am sold on this, effectively sight unseen, because of the age old conundrum around garment bags being yet another, big checked item. Fellas, This Bag Will Make Traveling with a Suit So Much Easier
Travel internationally with good mapping capability, and don’t crush your data budget with this new app. Nokia HERE Maps for iPhone is out: Here’s why you want it
If you are not so concerned about your data, you may want to have a look at these apps, too. 8 Travel Apps That Work Better Than a Guidebook

Weekly Diversions:
Dig these gems up on Netflix, Amazon or PPV. Worthwhile 2014 Movies You May Have (Actually) Missed
I found this to be both mesmerizing and unnerving. A visualization of an asteroid’s path of orbit which nearly collided with the Earth and Moon in 2003
This one takes a commitment, but if you liked “The Imitation Game” it may be worth the effort. The Man Who Tried to Redeem the World with Logic

Inspiring Leadership

Management is doing things right; leadership is doing the right things.”
— Peter Drucker, Austrian-American writer and management consultant

Here is a great argument for staying visible, accessible and open. Gossip in the Workplace Could Signal Larger Problems
In some respects, this is a primer on transitioning from managing to leading. 4 things managers need to stop and start doing
A great way to get yourself thinking today, and often. 35 Inspiring Leadership Quotes

You realize how set I am on reducing fees and their impact on your retirement. Still, this feels too much like it is asking for increased regulation, somehow skirting the rules. U.S. mutual funds cut expenses by shifting billions to trusts
Forbes has a CFP give you some tips on retirement withdrawal rates. How Much Investment Money Can You Take Out in Retirement
Here is a decent, albeit brief, look at spend rates in retirement. It loops in the rule of thumb 4% guideline. How Much of Their Nest Egg Should Retirees Spend a Year?
This is an interesting article because I’m amazed that Money magazine would publish it without reference to longevity annuities, especially qualified ones. The New Rules for Making Your Money Last in Retirement

Funny and insightful, this post helps you while away the hours you spend in airports between flights. The Definitive Guide to Drinking in Airports
Leverage technology to save yourself some money on your next vacation. 6 Google Flights Tricks That Are Better Than Any Travel Agent
Mind you, this is a bit backwards as it is the UK perspective, still, I think there are some worthwhile points in here. Booking a flight? This table shows how timing affects ticket pricing.
Fascinating Aside:
File this in the unintended consequences category. Can a solar eclipse shut down Europe?


“I checked the actuarial tables, and the lowest death rate is among 6-year-olds. So I decided to eat like [one],” – Warren Buffett on his diet

Self-improvement: in line with some of the best quality thinking, today we redesign our weekly post to give you better information, more clearly. Hopefully, we will find an interesting quote, too.

Another Steve Jobs reference, seems we shared a birthday. Steve Jobs would have turned 60 today. Here are 15 of his most inspiring quotes.
Some quick food for thought: Four Leadership Traits to Win in Business Today
I really like this one; short and to the point. 10 Ways to be easy to follow
Another article in line with my own philosophy. 6 Ways Vision Will Inspire Your Employees and Culture

As you know, this is the key to it all, making your retirement savings last. How to Turn Your Retirement Savings Into Retirement Income
More interesting insight on active vs. passive management in the fund world: Why Active Management Fell Off a Cliff – Perhaps Permanently
I mention deferred income annuities, or QLACs, often here. Now some guidance on what it means for your retirement planning. How QLACs are changing the Social Security timing game

This tool has been around for a while, as ITA Matrix, and it’s great. Google officially launches Flights, their Search-friendly travel tool
With all the complexity of airline pricing, you need help, and while Google Flights is a great start, this is a good companion. New Hopper App Predicts Airfare Prices, Alerts When to Book
There’s no question, being pleasant helps a lot in these cases. Still, be prepared: How to get on an earlier flight without paying a fee

Understanding Longevity Risk

Understanding Longevity Risk
Then a quick note on US economic recovery and some fun things, too

Being right about your longevity is the real key to retirement planning:
Yes, I focus a lot on costs and compounding when talking retirement, but it really comes down to how long you will be living, doesn’t it? That’s your longevity risk. My focus is right because you want to get the most bang for your savings, but still, how much should you have? Plan for a Long Life When Saving for Retirement
I have mentioned these several times before, but I am not the only one thinking “longevity annuities” will be the big push in 2015 after Treasury approved them inside your 401(k) or IRA. ‘Longevity’ in annuities could be the big 2015 focus
The good news is you should expect … and push for … your retirement plan to show you just how much income you can expect from your savings. Lifetime Income Estimates Would Boost Retirement Savings Rate, Study Finds
Lest we forget, fees matter, but here is a completely different perspective, shareholder fees matter most according to this article, makes sense. The great mutual fund expense ratio lie

One interesting article about the US economy:
This helps explain the discrepancy between rosy figures on the economy and the persistent malaise at the local level. Only 2% of counties have fully recovered! Much of America Still Hasn’t Recovered from the Recession

Interesting reading from around the web:
Two articles this week on Google’s changes to Google Translate. If you head overseas this is a real win Google Translate Update May Save You a Lot of Money and even a demo Watch Google Translate decipher foreign signs in real time (could have used that once or twice!)
This one gives you an infographic on what Apple products drive revenue. Where Apple’s Money Comes From
Beware the consequences of exceeding your free bag limit on airlines. What Airlines Don’t Tell You About That Free Bag

Oil Prices and You

Oil prices and you
Some tools you may like to have, and some facts that will amaze

Oil prices continue to slide … is there more to it than shale?
With the shale oil boom in the US, Saudi’s keeping the taps running, and global economy still sluggish, prices continue to plummet. Oil sinks below $59 after IEA cuts demand outlook
This one is intense, but interesting now to see what happens, since prices hit $59 overnight. Deutsche Bank predicting a broad high yield default cycle from plunging oil prices. The astounding thing to me, the assertion that there is a “widely documented “secret” deal by Obama/Kerry with the Saudis to crush Russia with low, low oil prices.” If WTI Drops To $60, It Will “Trigger A Broader HY Market Default Cycle”, Says Deutsche
Oil prices have meaningful impacts on petro-fueled economies. Impact of Oil Price Drop on Producer Nation Deficits
Jennifer Ponce de Leon at Columbia thinks it produces investment opportunities Oil and the High Yield Market

Let’s get back to your retirement planning:
A pretty well reasoned contrarian view on the active vs. passive argument. Active vs. Passive Management: It’s a Good Time to Go Active
First, some follow-up on the Tony Robbins controversy, Tony takes to ThinkAdvisor to defend himself. Tony Robbins slams critics, says he’s not a financial advisor
An age old lesson for my retirement focused readers: beware fees … and in this case taxes. With Market Timing, Even if You Win, You Lose
If you insist on playing the market, though, there’s an even cheaper way to do it now. The Robinhood app for your phone allows you to trade for free, that beats even E-Trade or any of the other low cost options. Robinhood Launches Zero-fee Stock Trading App
Way more intense than usual this week, so let’s lighten things up now:
Save even more money on your holiday shopping. Secret Codes Will Save You Money at Costco
Make it difficult to track your digital footprint. Opt out of global data surveillance programs like PRISM, XKeyscore and Tempora
I am amazed by this one, how about you? By the numbers: Half the senators who voted for PPACA will be gone in 2015
Finally, one very silly thing to lead you into the weekend: 16 Ridiculous but True Facts That Will Make People Think You’re a Liar

Some great economic analysis

Plus, some leadership and travel tips, and a bevy of just cool facts

Agree, or disagree, it is great to get hard data on the table for discussion:
A great, short economic analysis on the greatest problems facing the global economy, summed up in a single, mind-boggling chart The Defining Problem of Our Times (in 1 simple chart)
An economic analysis to help you understand what is really driving the Wall Street run since the 2008 bottom, again in one simple chart Why Institutions are so Desperate for the Retail Investor to Come Back
The leader of Germany’s Central Bank lays out some hard truths, his economic analysis and candor is refreshing, and this one has a bunch of charts. Kudos to Herr Weidmann for Uttering Three Truths in One Speech

Because we all need to keep refreshing our leadership skills, and no single article or idea is the Holy Grail:
Keep your team, and your business, focused by dealing with the biggest issues first Great CEOs Deal with ‘Elephants’ First

I saw this in two different articles, and it seems brilliant … plus, you can still get in on the indiegogo campaign:
A cool idea to blend current technology with luggage … know where it is, know what it weighs, keep your stuff secure … all linked to your smartphone! Connecting Flight: Bluesmart Smart Carry-on Luggage

Now, for the cool stuff, from a German U-Boat to the Cosmos:
Over 70 years after the battle, they have uncovered a U-Boat and its prey off the coast of North Carolina. How cool is that? Uncovering a Hidden Battleground
Some are dumb, some are fascinating, I like the ant and the flights, you? 12 mesmerizingly informative GIFs
Talk about culture shock, the retired Attica prison warden visits a contemporary facility in Norway An American Warden Visited a Norwegian Prison, and He Couldn’t Believe What He Saw
These few slides put it all in perspective You Won’t Think of Life on Earth the Same After You See These 15 Photos

Improve your retirement and leadership

Improve your retirement and leadership
Then, learn some cool stuff, too

Some overdue looks at great reads on leadership:
It’s easy to forget, but you never should: successful strategy is all about execution. Strategy Execution: A Short Checklist That Helps
You never can be a good enough negotiator. Here are some more tips from Wharton:
13 negotiating techniques taught at the Wharton School of Business
Speed up your decision-making process, and improve it. Too much to expect, well, at least read the ideas, they may ring true. 5 ways to make better, faster leadership decisions

A weekly dose of retirement guidance:
A noted economics professor and prize winning author on why people don’t buy more annuities … even though they should Jeff Brown: Retirement Researcher, Model & Mentor
A really interesting article on how to market time, without the risk of market timing. It’s worth the free sign-up to a great site. Simple and Effective Market Timing with Tactical Asset Allocation
Another reason to sign up for Seeking Alpha, a great tool for picking ETFs. Plus, they’ve got a great iPad app, too! ETF Hub
An interesting review of actual 401(k) balances vs. theoretical ones Why aren’t 401(k) and IRA balances bigger?

Better than average weekly diversions:
Despite having read the book Krakatoa, and visited Indonesia on several occasions, this slipped from my radar. It’s astonishing. The Sound So Loud That It Circled the Earth Four Times
This was not the first, and won’t be the last, article I have read about how the developing world holds the key to arresting climate change – in fact dig around on The Week site, they have a couple more. Why India is the key to the world’s climate future
You won’ learn anything from this, but you’ll be amazed. Photo of Earth from the Curiosity Rover on Mars