Are You Giving the Directions or Taking Them?

Reproduced with the permission of Joel Block below: 

Living through the stock market roller coaster has been difficult – in fact, it is paralyzing. I am so focused on it that I am having trouble concentrating on work that I can actually control. Ironically, the chaos of the week has made one issue crystal clear for me. 

The more I understand the stock market, the more I realize that I don’t get it at all. 

Most individuals have their money in the stock market because their retirement accounts force them into the market. Those funds are forced into the market because the companies that manage those funds are stock market companies. A coincidence? The stock market companies supply pension plan participants with a small slate of stocks and mutual funds to choose from. They don't like to call it a slate because that increases their liability in case something goes wrong. But in effect, when you are provided with two, five or seven choices, it is basically a menu that somebody, who pretends to care about your money as much as you do, has provided to you so you can make a simple choice. 

Most people think that they live in a self-directed world because they are able to pick the investment vehicle for their capital. But could this be anything further from the truth? In reality, you are not self-directing when you pick from a slate with investments that yield 2% or 3%, and maybe stretching it into really crazy territory, up to 5% annually. It doesn't sound like self-direction to me if you have to be in the stock market at this crazy time and you don't feel good about it. If you would rather be in commodities, real estate or some other asset class, you have to take charge. Do you want real self-direction? So do we. 

The entrepreneurial management team of my company has come up with a mechanism for delivering true self-direction to pension plans and IRA funds. We work with CPAs and pension plan administrators that convert the restricted, “cookie cutter” plans into opportunities for true self-direction. 

It is the entrepreneurs in our society who always solve the big problems and allowing people the freedom to manage their money in a way that is suitable to their personal style and risk temperament will be no exception. Entrepreneurs will help consumers to solve this problem too, helping investors to break free from the shackles of the big wire houses on Wall Street. 

We will be sharing strategies in this area, but for a “heads up” on how we are working with retirement assets, please be in touch with me.