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Your old road is rapidly agin’
Please get out of the new one if you can’t lend your hand
For the times they are a-changin’

Long-time readers of this blog know I’m a Bob Dylan fan. In fact, the first title I used way back when I started this thing in 2005 was a tribute to Dylan’s “My Back Pages.” Anyway, a story I read over the weekend in the New York Times had the lines above ringing in my head and they were directed squarely at Wall Street.

2012 saw a seismic shift in the way the average investor invests her money. Mutual funds are dying and exchange traded funds are taking over. More importantly, actively-managed funds have been losing assets to index ETFs. This is a huge step in the right direction for the average investor because over the long run it will save them an ungodly amount that would otherwise go to fees or be lost to underperformance.

Still, there is another layer of fees that investors would do well to avoid and those are the exorbitant fees charged by their financial adviser. In many cases, people are paying 1% of their assets year after year for something they can easily do on their own: buy a basket of index ETFs using an asset mix that suits their individual goals and temperament and then rebalancing them when they get out of whack.

You might think that 1% is really no big deal but what does it add up to over 40 years? 40%? Wrong – unless your adviser is truly an idiot it will add up to much, much more than that. That 1% can end up costing many multiples of its face value over time due to the power of compound interest (see “The True Cost of Financial Advice” for details). So if your adviser can’t justify this expense you have no reason not to fire him.

Let’s get back to that Times article (see “Finding Advice for More Modest Retirement Investments” below). When I read it I realized every financial adviser in the country should be crapping in his pants over this new trend. Basically, there are a few new companies out there that will help you discover your ideal asset mix, then  automatically invest your funds into low-cost index ETFs according to your individual mix and then they will rebalance them for you automatically when they get too far away from your ideal. And they do all this for a mere 0.25% of your assets per year.

Now why would anyone in their right mind pay 4 to 5 times this amount for essentially the same service? Maybe they really like a broker’s ad campaign or just want to help a guy out. I don’t know. Now for those that want to be involved in their individual investment process and save that 0.25% it’s relatively easy to do it yourself. And I lay it all out in my eBook “FIRE Wall Street.” Get your copy at

Chart of the Day

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The Dow Jones Industrial Average rose to a new closing high today following the S&P 500 and Russell 2000. Now all eyes shift to the Apple (earnings announcement tomorrow) and the Nasdaq Index to see if it can follow suit. The Dow has risen over 1,000 points since around Thanksgiving and some of the daily charts I review like this one are starting to look boderline parabolic. That always makes me nervous. See my full chart list at

Hit the Links

  • Finding Advice for More Modest Retirement Investments (NY Times)
  • The Untouchables: PBS show finds Wall Street can get away with murder (Globe and Mail)
  • How too-big-to-fail banks “exact an unfair tax upon Americans” and what to do about it (NY Times)
  • Apple’s market cap may still be larger than Exxon’s but its enterprise value isn’t even close. (WSJ)
  • Verizon sales suggest monster iPhone quarter (Business Insider)
  • Five of Steve Jobs’s Biggest Mistakes (Harvard Business Review)
  • My first computer, the Apple IIe, turns 30 (ars technica)
  • Home Prices In 2012 Climbed At Their Fastest Rate Since August 2006 (Business Insider)
  • Why Facebook Pages Are a Bad Investment for Small Businesses (Forbes)
  • 12 Business Lessons You Can Learn from Amazon Founder and CEO Jeff Bezos (KISSMetrics)
  • Golfer Phil Mickelson may call it quits due to climbing tax rates (Forbes)
  • Who the Hell Are Phil Mickelson’s Financial Advisers? (Ritholtz)
  • Stock Bulls Should Celebrate The Patriots Loss (WSJ)
  • Highlights from the 2013 Mavericks Invitational (Surfer)
  • How High Could the Tide Go? (NY Times)
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