Letters to the editor: Sept. 2

In “It’s the Asset Manager, Stupid” (Aug. 27), Mark Goldberg laments that advisers don’t more carefully screen for skilled managers because perhaps they “don’t have the time or inclination to reflect on the past.”

If Mr. Goldberg had any real knowledge or experience of the past, he’d know that trying to separate skill from luck when it comes to investment managers is a fool’s errand. 

There are always managers who look as though they have skill because they outperformed an appropriate benchmark, but there are fewer than you would expect from a simple coin-flipping contest. 

And just as in coin-flipping, the “skilled” managers always change from time period to time period.  Simply buying the benchmark itself will deliver better results than trying to discover an unknowable skilled manager ahead of time.

Thomas C. Post

Partner

Yolles Toal & Post

Diversified Portfolios Inc.

Bloomfield, Mich.

I am writing in regard to your editorial “Financial literacy must be a priority” (Aug. 13).

You call on government officials “to give Americans the tools they need to understand basic financial concepts.” Can you think of any area where politicians are more inept? 

We need to stop looking to government to solve every social problem.

If government owns education, they own everything.

Brian A. Schreiner

Vice president of business development

Schreiner Capital

Management Inc.

Exton, Pa.

Editor’s note:
The editorial was calling on government officials to provide the necessary funding to state and local organizations to allow them to create education programs for investors, young and old. It was not advocating that government control the education system.

A recent story, “College CEO blasts FPA’s incoming boss (Aug. 27), stated this: “The FPA wants to be the primary organization for planners, but members are split into two sometimes-opposing camps. Some are fee-only fiduciary advisers. Others are commission-based brokers.” That is misleading.

Dually registered commission-based advisers can, and often are, fiduciaries, as well.

The fact that a financial planner has his or her broker’s and/or insurance license does not diminish their benefit to the client. Fee-only financial planners are no more or less superior to fee-and-commission planners (who are also fiduciaries), so long as full disclosure is made to the client before the engagement by both.

In our current regulatory environment, creating a holistic financial plan for a client requires planners to have access to products that charge a commission. So in effect, fee-only planners may find themselves in the position of referring clients to insurance or securities brokers. Otherwise, they would have to limit their product selection to a very small subset of fee-only products.

There is no one compensation model, just as there is no one standard financial plan for everybody. We each have a planning process we follow, and as long as it is done ethically and with full disclosure, the final decision maker is the client we serve.

Richard L. Cox Sr., CFP

Chief investment manager

Cox Wealth Management LLC

Chattanooga, Tenn.

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