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Thursday, 3 March 2016

TIPS: Should You Trust an Advisor? The Shadow Knows...

Who Can You Trust?

The  question  would receive a resounding reply from Bernie Madoff's clients, no doubt. But don't rely on regulators or institutions to provide effective preventative controls. That's naive.

Three ways you can work to mitigate the evils of wayward advisors is to first employ two or more well-recognized practitioners to handle your affairs. A little competition goes a long way to keeping everyone on the up and up.

Secondly, consider employing only " fee-based hourly" advisors who are not so interested in generating commissions. The downside is that they are generally not as incented or aggressive and  that may be  a handicap  in both good or bad markets.

Lastly, do you homework!

It Just Got Even Harder to Trust Financial Advisors  

If you haven't yet checked your adviser's disciplinary record, you will after reading this.

There's a phrase no one wants to read in a sweeping report about the financial advisers who handle their savings: economy-wide misconduct. 

A new working paper by business school professors at the University of Chicago and University of Minnesota found that 7 percent of financial advisers have been disciplined for misconduct that ranges from putting clients in unsuitable investments to trading on client accounts without permission. That's a troubling mark for an industry that relies on the trust of clients. And some large, well-regarded firms have misconduct records that far exceed the average. Nearly 20 percent of financial advisers at Oppenheimer & Co., with more than 2,000 advisers counted in the study, have misconduct records, according to the new paper.
"It's everywhere, not just small firms. It is pervasive," said Amit Seru, a finance professor at the University of Chicago's Booth School of Business and a co-author of "The Market for Financial Adviser Misconduct."

The euro hit its lowest in almost three years against the yen while European shares extended their strongest run of the year on Tuesday as data from around the region bolstered the case for more ECB stimulus next week

Japanese Prime Minister Shinzo Abe will pull together a new advisory panel to debate the need for a supplementary budget for the coming fiscal year from April to stimulate the flagging economy, sources told Reuters on Tuesday.

Australia's net foreign debt has expanded beyond $1 trillion for the first time on record.

It's Official: Canada Has Sold All Of Its Gold Reserves

One month ago, when looking at the latest Canadian official international reserves, we noticed something strange: Canada had sold nearly half of its gold reserves in one month. According to the February data, total Canadian gold reserves stood at 1.7 tonnes. That was just 0.1 per cent of the country’s total reserves, which also include foreign currency deposits and bonds. 
As we noted, the decision to sell came from Finance Minister Bill Morneau’s office.
“Canada’s gold reserves belong to the Government of Canada, and are held under the name of the Minister of Finance,” explained a spokesperson for the Bank of Canada on Wednesday. “Decisions relative to gold holdings are taken by the Minister of Finance.”


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