No Fiduciary Rule? No Big Deal

The Fiduciary Rule, imposed by the Labor Department and limited to retirement accounts (although the resulting switch from brokerage commissions to annual fees was more sweeping) is dead.

Two reasons why the period of mourning can be brief:

1. In the bad old days, high-cost investments sold by brokers were typically cats and dogs – stocks with a high potential for becoming worthless. Today's investors are less likely to lose everything in products sold by non-fiduciaries. Instead, higher expenses will reduce their returns.

2. Although 40 percent of investors are said not to know what they pay in expenses, the shift from commissions to fees has made investment costs more transparent. And today's investors are far more likely to ask  their advisers, "Are you a fiduciary?"

Fiduciaries are easy to find – bank trust units and independent advisory firms are everywhere.  All the prudent investor has to do is hire one.

How Joseph Heller Plotted “Catch 22”

To my knowledge, the founder of The Merrill Anderson Company never commented on the copywriting capabilities of Joseph Heller. But Heller's brief stint at our little advertising agency did help him fund his early work on Catch 22. That novel was designed more carefully than the casual reader might realize, as you can see here.

Beware the Crypto Jungle

Investment advisers win new clients by raising their hopes of becoming rich. Yet advisers perform their most valuable service when they save a client from becoming poor.

That service was never needed more than now, the age of cryptocurrencies.

Observers who couldn't believe their eyes when Bitcoin's value soared last year turned out to be right. Research suggests that only half the price rise was real – the rest was market manipulation.

Bitcoin mania spawned a swarm of entrepreneurs offering ideas, plausible or not, for cashing in on promise of blockchain. Steve Bannon, former White House adviser and Breitbart leader, reportedly has toyed with the idea of a new cryptocurrency called the "deplorable coin."

Four out of five initial coin offerings have been scams, according to one study. Why are people so eager to believe – and invest in – unlikely ventures? As The New York Times technology columnist observes concerning Bitcoin mania, it involves the willing suspension of disbelief:

[E]ven though the possibility of [Bitcoin] manipulation was mentioned often last year, it took months to put together detailed evidence that it had happened. 

And in that time, the whole world — the financial press, ordinary investors, anyone looking for the next windfall — put more money into Bitcoin. Even though lots of people should have known better — even though we all know the internet is lousy with scams — Bitcoin, we were told, was different. 

Nope, it wasn’t. Scams are everywhere online. Never let your guard down.

Women Are Changing the World of Wealth

On Wall Street and elsewhere, the management and deployment of Big Money has traditionally been men's work.  That's changing, as two names in the news remind us:

Catherine Keating has left Commonfund to become CEO of BNY Mellon Wealth Management. In an interview last year she explained why the investment management industry needs diversity.

Laurene Powell Jobs holds an MBA from Stanford and controls billions left by her late husband, Steve Jobs. As described in this feature in The Washington Post, her approach to impact investing and philanthropy is impressive.

P.S. You've got to chuckle  at Silicon Valley's reaction to the name of Powell Jobs' project, Emerson Collective. "Emerson? Emerson? Never heard of him. What was his startup?"

Are Ponzi Schemes Going Crypto?

In 2016 investors lost over $2 billion in 59 Ponzi schemes. That's just in the U.S. Opportunities to lose a fortune are global.

And now a new world of money-losing opportunities confronts incautious investors online. "Hundreds of technology firms raising money in the fevered market for cryptocurrencies are using deceptive or even fraudulent tactics to lure investors," The Wall Street Journal warns.

For helpful background, see "Cryptocurrencies and Online Marketing: Legitimate Business or Pyramid and Ponzi Schemes?"

As the authors point out, ICOs (Initial Coin Offerings) aren't necessarily frauds. Many are crowdfundings by wannabe entrepreneurs, with investors buying tokens as digital stock certificates. Unregulated penny stocks for the digital age!

Could ICOs become a significant threat to the wealth of HNWIs?

An unusual obituary

Here it is, as published in the Minneapolis Star-Tribune.  Evidently it was picked up by other papers around the world also.  I won't spoil it for you, but I do recommend the comments as well.