SubscribeAn important benefit to each participant is that it would help to insure that they reach retirement with the maximum available nest egg. It would also establish performance guidelines for 401-k plans as well as all other outside savings and investments. By minimizing risk on an age weighted basis, and maximizing returns from all investments, results are predictable.
In addition the computer program would reflect a persons’ investment experience as a single Indexed Number. A grade. It would be either pass or fail. Anyone, in the privacy of their own home, could fill in their investment data and receive their Index Number. Each investment portfolio position would be entered into a category specific to that type of investment. The exact number of shares, the most recent price per share and its return for a trailing twelve month period.
It should adjust automatically as people age and gives instant feedback in real time.
Pure financial plans are large documents that cover many contingencies. They are invaluable. The Index Score differs in that it specializes in the investment management areas of suitability, risk management and return. This is a key component of a complete financial plan.
There are some issues that must be considered first.
1. The program should be extremely user friendly.
2. The benefits must be immediate and substantial.
3. Implementation and changes needed must be simple
4. There is a knowledge gap between the seller and consumer.
There are probably more but, the real serious issues lie with the consumer.
Let me explain…because investment products are mainly sold thru the investment community; the ideas and beliefs put forward in the sales process, are usually biased toward the sales process.
What this means is that you are given a set of investment circumstances that you agree with and then sold investments based on those criteria. You have to remember “It’s a sales game”. The brokers are looking for hot buttons and areas of interest. It’s hard to sell products, cold. They are looking for signs of what you will buy. These can be either concepts like retirement or individual products like certain stocks, bonds, mutual funds, etc. The investment media plays a pivotal role as well. Because of the “knowledge gap” between consumer and so called experts, the message is always the same.
?Don’t tie your money up.
?Invest for the long-haul.
?The market goes up and down…don’t worry.
?Diversify.
?Asset allocation
?You are special.
?We’re global.
?One client at a time.
?Managed accounts are the way to go.
I could go on forever. The point is it’s all about the money. Your money. You are not important, but your money is!
If none of this sounds familiar, you have never had a brokerage account.
All of the above is about selling product! It’s putting the cart before the horse.
Where is the planning? What about suitability and investment time frames? What about risk? Does long-haul investing, diversity and asset allocation make planning unnecessary? What about specific retirement income needs?
What has happened is that the educational system, the investment community and the media have led you down a path wit no map!
You need a plan in place and a navigation system to make this work. There are simply too many things to go wrong. Some times the only thing at the end of the rainbow is no where!
How did I get so smart? Thirty five years as an “investment advisor”. A very successful one at that. I’m not making this up! After all this time and reflection, I haven’t seen the benefit to the average consumer. At best, most people end up with a hodge-podge of various things in their portfolios. Some good, some bad and way too much, simply mediocre!
It’s like trial and error with your money. Remember the broker gets paid whether you win or lose. They just have to keep you in the game!
Let me say, I am not bashing the brokers or the consumers. The brokers are stuck with the rules the BIG FIRMS make. It’s my way or the highway and that worst of all circumstances, an ever increasing sales quota!
The consumer is caught in the middle of a system.
What to do…go back and read the first part of this report. If you had the computer program you would be much closer to a position of empowerment.
You would be in charge of your own destiny! Don’t be a victim. There are no second chances.
Kelson & Co. Inc.
1809 E. Bristol Street
Elkhart, Indiana 46514
Article Author :Chuck_Kelson
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