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Saturday, April 29, 2017

Financial Journalists are Always a Good Source of Unbiased Advice

Yes, the title of this blog is a myth.  In fact, I find most evidence to the contrary.  Part of the reason is that like everyone else in business, journalists want "customers" and often resort to a bit of hyperbole or even outright falsehood to get more eyeballs.  The myth is that journalists have nothing to sell, they're just here to educate us with sober, neutral information, right?  Nonsense.
A good example is this Dan Caplinger article in Motley Fool:

Nothing like a little name dropping to get attention.  I'm not a fan of Robbins' late entry into the financial services world but Caplinger's critique is way off base, to wit:

  1. Caplinger wites, "Robbins has some financial experts raising their eyebrows" and then fails to mention any of them or why they're raising their eyebrows.  In admiration?  Astonishment at how great his advice is?  A shift in consciousness?  Constipation?  This is an evidence-free and meaningless statement.
  2. "The key to his process involves creating income for life".  Oh. My. God!  That is so disgusting and horrible!  What could he possibly be thinking??  And Caplinger left out the most important word "guaranteed".  By way of comparison, Social Security is an annuity and we can see how many lives that program has utterly ruined.
  3. "Unfortunately, the reality of how indexed annuities actually work often leaves them missing the mark in terms of being a perfect investment solution for many people."  Give me a break.  You could plug anything else into that dodgy sentence substituted for "indexed annuities" and it would be true.  All investment & savings options have pros and cons.  Not a single option is "perfect".  That goes without saying.  But apparently, until this article was written, nobody knew that before.  Thank you so much Dan for bringing us back down to Earth.
  4. "Wall Street's own self-regulatory agency has put out an investor alert about indexed annuities".  I have intense problems with that totally misleading sentence.  Go read the "alert".  Mr. Caplinger makes it sound like a dire warning when the "alert" is actually a better more informative and unbiased article than his.  Yes.  Please read the alert.  And understand, too, why Wall Street doesn't like annuities:  because annuities don't pay as well as "managing" assets; annuities don't require "management".  Frankly, most assets don't either.
  5. "surrender charges of as much as 20% can apply . . .granted, not all insurance providers have these draconian provisions".  Actually, none of them do.  I couldn't find any annuity product with such onerous terms.  None of the ones I use have more than 10 year periods.  Besides.  Annuities are designed to compete with other principal-protected, long term vehicles like Treasuries and CDs, which they soundly trounce.  Everyone has some money they won't need for 10 years or more and annuities are great places for it.  Short term money should be elsewhere.
Let me finish by saying, I could not write an article like Dan Caplinger's.  Because I'm a legal fiduciary

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