The wealth management industry focuses on returns. This is how they sell their funds. But Baby Boomers in retirement should ignore this noise and focus on costs.

When in retirement and not adding to your nest egg any costs if not controlled can seriously deplete it. These costs primarily are Fees and Charges, Taxes, Inflations and Stock Market Losses.

I am included Stock Market losses here because if your nest egg suffers a large loss it will seriously cost your nest egg dearly.

If you look at any business out there they focus on costs. You are in the business of managing your nest egg in retirement. As such you too need to focus on costs.

Saving just one dollar this year means that dollar can be put to work earning income for your nest egg. If you pay it to your financial planner, the tax man or you lose it due to stock market losses it will cost you money in the long term. Read the rest of this entry »

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The Pension Research Council stated that Investment Advice is misleading and can be potentially harmful to investors. This is in their report “An Analysis of Investment Advice to Retirement Participants. They also talk about escalating annuities that protect us against large losses. Could this be the Holy Grail for Retirement Income?

At last I have found something that begins to make sense regarding a way to protect our nest eggs and avoid large losses in retirement. A report written by Zvi Bodie entitled “An Analysis of Investment Advice to Retirement Participants” gives a real insight into what we should be demanding of the financial planning industry.

Don’t let the title put you off - this is really valuable information and a “must read”. Here are the highlights, but I urge you to download the 27 page PDF report and read it thoroughly. Its only 13 pages of text as the rest is graphs and tables.

To all those Baby Boomers who responded to the Survey on Baby Boomers and their Retirement mentioned on a post on the blog The Survive and Thrive Boomers Guide and are not sure what steps to take next - read this Zvi Bodie’s Report. Take a copy with you to your next financial planners meeting and go through it with them.

Here are some of the highlights that should make you want to grab your free copy to discuss with your financial planner.

Zvi Bodie states: Read the rest of this entry »

Employing a Financial Planner to manage your Mutual Funds can result in poorer investment returns than if you had chosen the Mutual Funds yourself a recent study shows.

This came from a detailed study written in October 2007, “Assessing the Costs and Benefits of Brokers in the Mutual Fund Industry” and written by Daniel Bergstresser of Harvard Business School, John Chalmers of the University of Oregon, and Peter Tufano of Harvard Business School. You can click on the title above and download the 36 page report for free. It is actually quite readable Here is their closing paragraph which makes for sobering reading if you use a financial planner and do not direct them in managing your nest egg. They state:

“In summary, we find a reasonably clear pattern of results. We find that the brokered channel sells funds with inferior pre-distribution-fee returns. The channel does not show any evidence of superior aggregate market timing ability, and shows the same return-chasing behavior as observed among direct channel funds. Finally, more sales are directed to funds whose distribution fees are richer. This work leaves us with the puzzle of why investors continue to purchase funds that appear to be no better at substantially higher costs. The answer could be that we, as researchers, failed to measure important intangible benefits, or that consumers of brokers fail to consider the costs and benefits of this relationship.”

What is significant about this study is: Read the rest of this entry »