Thursday, March 12, 2015

Suitability vs Fiduciary

A hot debate these days is whether a fiduciary standard ought to be applied to the advice given by brokers. If I had a vote, I would vote for the fiduciary standard and abandon the suitability standard. A broker's license is too often used as a license to steal.

Given the fiduciary standard, my advice to those who "have enough" would be this:

Avoid all actively managed mutual funds and hedge funds. Use ETFs only, particularly if you do not want to do a lot of homework, but be sure to watch the macros. Otherwise, do the homework and limit your investments to only those that have been completely analyzed. Cash is not a bad alternative in a high risk, low interest rate, low inflation environment. If you don't "need" to be wealthier, make capital preservation your highest and perhaps your exclusive financial goal.

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