Recently, there was a push against “junk fees”, specifically an advisor charging a client a fee, when the advisor recommends an investment that is underperforming for the investor, but recommended because it pays a fat commission to the advisor.
Recently, an (L&S) rose in the House to propose an amendment to a funding bill to prohibit the agency using any of it’s funding to police advisor conflicts of interest that are harmful to the investor. The amendment passed on a voice vote.
We proles are frelled.
This piece from “the young turks” talks about this. *warning, it names names that cannot be named, so if you choose to listen to it, plug your ears, close your eyes, and hum, when the names are named.
At a lecture I attended in 1969 hosted and translated by my brilliant professor Samuel Beer [Samuel Beer - Wikipedia]
an 85 year old German Professor colleague of Max Weber said
(approxiamately from my deeply impressed memory)
(he had an air of bewildered amazement at still being alive and talking to these earnest young American boys about lost worlds that were somehow still relevant):
“Marxist Hegelian concepts of economics are almost useless because obsessed with weird ideas mystifying the power struggles between humans. It is crucial to understand an underlying simple fact, and that is that for aristocrats, whether antique hereditary or modern moneyed, commoners are not actual people with moral compass but creatures existing only to be shorn. Aristocrats evolve, most dying off, but successful families and alliances study and teach their heirs how to accomplish this clipping with the least noise and fuss. That has been and remains the underlying structure of civilization”
Or, as I have put it previously: “people like you and I are nothing but a ledger entry under “source of funds””.
The only remedy would seem to be to jump on board with the “JCs”, by buying stock, to get a share of what they steal from the other proles. But, today, seems shareholders, unless they have size, are nothing but another group to be cheated, as the “JC” hollows out the company to enrich himself.
We were invited to bid on a 'Computer Utility" project in Caracas. When I told my dad about it he had high praise for the group CEO. The CEO was not happy with parts of our proposal. After a brief discussion he said, “When I do business with my money I am the BULL and everyone else are the COWS.” My response, “Good day, Dr. Sosa.”
About 9 years ago the Senate Finance Committee had a hearing on Retirement Savings and Tax Reform. Chairman Sen. Ron Wyden pointed out in his opening statement that the US Gov’t spends $140 Billion year in tax subsidies for IRAs and 401k plans, yet the average American has very little in the way of retirement savings to show for it.
Of course the average American has very little in retirement savings. That $140 Billion and then some is siphoned off to fees and expenses in the financial services industry. Wall Street’s business model requires them to take 2% per year in fees, commissions and trading costs from the average client. Saving for retirement is a 50 or 60 year project where the average person saves for retirement for 25 or 30 years, and then, God willing, spends 25 or 30 years spending the money in retirement. If you’re losing 2% per year to fees, you need to save about twice as much money for retirement. Even Vanguard’s low-fee, Personal Advisor Service with the 0.30% of assets annual fee will capture 10% of your wealth over 50 to 60 years.
Contrast the above with the Federal employees’ Thrift Savings Plan (TSP) which has an annual expense ratio of about 0.06% and is run by a Federal employee making less than $200,000/yr. There’s a lot less skim going to Wall Street under this arrangement and Federal employees keep more of their retirement money – like almost all of it. It’s a big difference.
The vast majority of 401K tax benefits flow to people who don’t need help savings. Couple that will the backdoor Roth and HSA, neither of which help poor people, high earners get very favorable tax treatment.
Some of us recall when Congress tried to enact legislation holding retirement investment advisors to a fiduciary standard, requiring them to put the interests of the people whose money they were playing with, first. Of course, the legislation died in a flood of “protected free speech”.
For sure, a tax deduction is more valuable to upper income people paying higher taxes. But a lot of upper income people have financial advisors collecting fees and skim from them. Low-fee index funds remain a minority of retirement assets.
Of course. The fundamental tenet of “supply side economics” is shower those who already have the most, with piles of loot. Then, presumably, magical things happen.
If you also have a tax code that incentivizes financial speculation over productive work, you will get more financial speculation, and less productive work.
It takes some courage to tell the CFO of the company you work for, who wants to skim your pay “what part of NO don’t you understand?” I have told those stories before.
About a year before I left the Fortune 500 chemical company I worked at in the early 1990’s, they had a big all hands meeting to announce the “improvements” to the 401K plan. The presentation was put on by a couple of ladies from HR lacking much in the way of financial understanding.
Of course, the audience contained a lot of engineers and PhD chemists who had some understanding of arithmetic. When the floor opened for questions, it started out like this.
Question one: The S&P 500 index fund has an expense ratio above 1.00%. That seems high?
Question two: The Executive VP of Marketing for bank that’s the new 401k plan fiduciary is the cousin of the company Chairman and CEO. Did that have any influence on their selection?
It went down hill from there. The company President emerged from the 20th floor to close down the meeting about 20 minutes later.
They still had the same fiduciary and S&P 500 index fund with the 1.00%+ expense ratio when I quit and retired the following year.
Americans have been steadily ever more trained to be idiotic cowards regarding their pay and their taxes ever since “morning in America.” Hell, most of them pay every year to have their taxes calculated for them when the government already has it calculated…
Show an American an “invader” (definitions vary and in modern times Hollywood and social media experts always get hired to explain) and many of us fight with great courage. Show us a simple balance sheet and most of us quail, grow quesy, and run to the toilet discharging at both ends. And nowadays (brilliant!) it’s always a pay toilet. With a line.
The vast majority of USians don’t have a union that will back them up if they complain about their treatment. Their manager certainly won’t. Their manager will almost always, take the easy way out: agree with his boss, that the worker needs to shut up and do as he’s told…or they will find someone else, who will do as he’s told.
