Letters to the editor

Financial education is in short supply Poll on Obama deserves two thumbs down

After spending two days volunteering to give personal financial advice in connection with the Arlington Heights, Ill.-based National Association of Personal Financial Advisors’ “Your Money Bus” tour, I have spent some time thinking about the financial scandals, legislation and commentary from self-regulatory organizations, those in Congress and industry groups proposed as alleged solutions to our problems.

Should the Washington-based Certified Financial Planner Board of Standards Inc. be the next regulator?

Are target date mutual funds in 401(k) plans too risky? What about retirement plan fee disclosure? Or the need for index-based fund options in plans?

Just like in the past, the “answers” that the government and industry groups are pursuing tend to address their own concerns, rather than the un-derlying problem.

Registered-investment-adviser-backed groups are concerned about being regulated by the financial-product cartel, so they propose regulating themselves. Congress is concerned about the lack of re-sponse to problems it caused in the monopolistic and “computer-based” advice rules it passed, which left out the ability for independent advisers to give unbiased advice on money saved in retirement plans.

Sure, many of these groups have points we should consider.

The real problem, however, is that individuals don’t have the basic skills to judge for themselves the options available, and the knowledge to know when they are being given a sales pitch versus individual advice that pertains to their situation.

So what is the solution? Do we simply allow the same in-dustries that sell the plans to a group to educate the participants, when their interests conflict with full disclosure to their clients?

How about simply opening up dollars that belong to individuals within retirement ac-counts to pay for unbiased financial education without paying a withdrawal or tax penalty?

The mass of American’s savings for retirement rests in their 401(k), 403(b), and 457 accounts. It is clear that the problem with education comes from a lack of financial-literacy choices to the participants.

If 401(k) providers were mandated to allow for fee payments to independent financial advisers who provided this education, there would be a movement toward comprehensive financial literacy in a heartbeat, both from new entrants in the independent-advice business and the desire for the 401(k) provider to offer more comprehensive advice to retain assets.

Status quo and patchwork legislative and industry proposals are maintaining the problem, not proposing a solution. The message I received from individuals while on the bus tour came through loud and clear: They need more information from unbiased providers to make appropriate decisions, and when their savings are held hostage by fund and insurance companies, they lack the ability to pay for this important advice.

Robert Schmansky

Associate

Northern Financial Advisors Inc.

Franklin, Mich.

Poll on Obama deserves two thumbs down

That your publication remained largely mute while financial industry giants, goaded by the Bush administration and its amoral neo-con cronies, overleveraged themselves and fleeced the American public is excusable, I suppose, given where your paychecks originate.

But that you would now start teeing up on President Obama for doing what the vast majority of Americans think is a commendable job during historically challenging times is irresponsible.

Cancel my subscription immediately.

You should reflect on why so many perceive the financial giants you so dutifully pander to as greedy, self-absorbed clowns with an en-tourage of “yes men” … like InvestmentNews.

History will prove that your latest edition and hack poll (“Obama’s first 100 days in office earn advisers’ thumbs down,” May 4) deserves two thumbs down.

Andrew Simpson

President

First Insight LLC

Alexandria, Va.

(Editor’s note: The opinion poll results published in the May 4 issue reflected the views of InvestmentNews readers, not of the publication.)

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