We humans are as creative on the “Dark Side” of commercial activity, even as we are in developing beneficial new products and services. In the real face of huge financial benefits, however, some corporate executives can’t resist taking a supplementary dessert even before their shareholders have finished supper. Some scandals have more of a direct effect on investors than others, and most produce unwarranted layers of federal government control and legislation that stifle honest creativeness.
Variable Insurance and Annuities: Variable products are a comparatively new part of the insurance industry, circa 1980 roughly. Before that, the conventional wisdom tagged the Surprise Market much risky forever INSURANCE COVERAGE and Annuity Contract guaranteed benefits too. In fact, these benefits have been “guaranteed” for such a long time it became a generic expectation of anyone in the market for either. Why do the State Insurance departments cave into the Variable Product lobby? And what is not emphasized as the products are advertised to potential annuitants and insureds?
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Similarly, this product is so lucrative for the firms that they manipulate their rates to are more competitive. Since the introduction of variable benefits, there were more insurance company failures, and scandals, and not just a few disappointed recipients of reduced annuity payments. What’s in your retirement plan? Wrap Fee Investment Accounts: From the very beginnings of wealth, the very rich used Investment Managers to protect and to grow their portfolios. Most Investment Managers got just a few huge clients that they tended to as the rest of the pledging financial industry focused on property protection and estate creation through life-insurance coverage.
Most of today’s (salaried) Investment Managers are employed by FINANCE INSTITUTIONS to supervise a large number of Mutual Funds for an incredible number of investors of all financial shapes and sizes. There are more Equity Mutual Funds than there are individual Equities on the brand-new York Stock Exchange. Most investors today will employ many Investment Managers rather than actually talk with some of them.
Enter the personally managed investment profile product provided by most major Financial Institutions. For an individual fee, you obtain the non-public services of a professional Investment Manager, and a portfolio made for you. Except, of course, that you get neither. Mutual Fund with individual statements. But of course, you can talk with the manager if you like, change your asset allocation, established a reserve for the next costs aside, etc. Yeah, sure you can! Remember that “Flat Fee” managed accounts are quite different and may actually be separately and personally handled. Portfolio Window Dressing: Every quarter, every year, we hear about the adjustments that profile managers are making as they try to look best if you their largest clients.
Now, in a discipline (Investing) that they all officially identify as a long-term dedication to some specific strategy or plan, why do the Masters of the Universe spend so enough time manipulating their short-term performance quantities? And why is this considered business as usual of common fraud instead? Asset Allocation Mutual Funds: I take a look at Asset Allocation a bit differently than most professionals appear to and I regulate and monitor a portfolio’s structure using the price basis of securities rather than their Market Value.
But how, logically, can a one-size-fits-all Mutual Fund be the right blend for all investors? Here’s a description on the Internet: “A shared account that rotates among stocks and shares, bonds, and money market securities to maximize return on investment and reduce risk”. In reality, Asset Allocation is a structure-planning tool that establishes what percentage of an Investment Portfolio is to be invested for Growth in Equity securities and what percentage is to be invested for income production.
The proper allocation is a function of the investor’s age, marital status, financial position, employment status, pension plans, expenditure needs, risk tolerance, family responsibilities, etc. Diversification occurs within both (just two) asset classes. Corporate Executive Compensation: I highly think that everyone gets the to become filthy rich, legally of course.