MYTH: Ken Fisher's Lewd Remarks Don't Matter

 In case you're new to this tempest, Ken Fisher is the prolific author, WSJ writer & CEO of financial behemoth Fisher Investments.  At a recent Tiburon CEO Summit in October Fisher, a featured speaker, made several sexist, lewd remarks in portrayal of how the investment business operates in general*.  Contrary to most of the media, according to Fisher, he was describing this industry not his beliefs about how it should be run.  Still, as usual, the title of this post is a myth.  I believe Fisher's remarks do matter but not as momentously as the financial press would make it seem.

All the self-righteous hullabaloo is pollyannish and naive in the face of the larger obscenity that has not been addressed:  Fisher is a billionaire.  And then there's the subsidiary obscenity to that which is the ways he became a billionaire: merciless boiler rooms harrassing people on the phone all day,  the millions spent on questionable mass mail campaigns, & idiotic and disengenous advertising & public statements e.g. "I would rather die and go to hell than sell someone an annuity" & "I hate annuities and you should too".

I agree with Bernie Sanders that billionaires should not exist.  I think $999 mil. is plenty of "reward" for anybody.  The record wealth disparity we have today presumes there is a direct & uniform correlation between wisdom and wealth, virtue and wealth, value to society and wealth.  There are plenty of prominent models proving that this is false, including Ken Fisher.  No individual should be able to change the rules of commerce at will.  Billions can buy a lot of lawmakers and that is indeed what has occurred.

It is obscene that billionaires exist while families go bankrupt from medical bills.  It is obscene that billionaires exist while people die because they can't afford their prescriptions.  It is obscene that billionaires exist while we we mercilessly extract resources and other wealth from other nations.  It is obscene that billionaires exist while graduates stagger under record tuition debt design to create ever more billionaires.  Yet the financial press is all in a tizzy because Ken Fisher- accurately, I might add - likens the conventional sale of securities to trying to get into a girl's pants.  Both are driven by lust as well as disregard for the other person.

So Fisher's juvenile similes are merely symptoms of the problem, they are not THE problem.  The problem is wealth disparity resulting from the increasing ease with which unmerited wealth can be accumulated, an ease progressively enhanced by the super rich.  That is obscene in any society since it is the universal precursor to a failed civilization.

Your Constructive Comments are Welcome!

*all the juicy details here:  https://www.thinkadvisor.com/2019/11/25/cover-story-tipping-point

Why I Hate Annuities . . . and Ken Fisher Too!

To forestall the libel lawsuits I remind you that the titles of these posts are Myths.  In general, I don't practice "hate".  And, as you probably already know, I don't "hate" most annuities (and Ken Fisher really doesn't either, by the way).  There are excellent ones, and bad ones as well.
I certainly don't hate multi-billionaire Ken Fisher.  I've never met him.  I admire his research on, and support of, California redwood forests.  But really?  Are you going to sign over all your retirement funds to a high pressure firm that performs worse than unmanaged money?  Here are my issues with his firm's borderline practices. 

First and foremost are the ubiquitous (not to mention, factually remiss and ethically questionable) full-page "I Hate Annuities  . . . And So Should You" advertisements.  I have a copy of the "free" report offered in the ad and it is, overall, a fairly evenhanded summary of annuities . . . with a few serious errors.  But serious, glaring errors they are, and I wonder if they are accidental, for example conflating fixed annuities with their risky cousins, variable annuities.  I'm not going to get into those details in this post.  Later.

Second, is his gargantuan push to lure investors into a very bubbly market with claims of consistent 11+% annual returns.  Didn't work out so well back in 2008 either.  I think this is unconscionable, this appeal to the irrational fear and greed of investors who cannot afford to lose any money, especially in this overvalued market.

Third, is the neglect of his fiduciary obligations to his clients.  Fisher Investments has its own propriety products which it almost exclusively recommends.  They have a history of inadequate evaluation of client needs.  And for this they charge fees of 1% or more.  They have been sued and fined.

Fourth, as a result, Fisher Investments appears to be glossing over a major retirement risk for small investors:  sequence of returns risk.  The table below shows how average returns work.  It doesn't matter in what order the years are calculated, the end result is the same, as long as no contributions or withdrawals are made.

But suppose you're retired and making withdrawals to meet your fixed budget.  All of a sudden, losing years make a huge difference.  Nobody seems to be able to consistently predict sequence of returns.  So avoiding losses is essential in retirement.  Here are the facts in the table:

• Initial principal balance is $500,000.
• $25k annual withdrawals are taken, increased with inflation.
• The average return for both portfolios is identical:  6%

Finally, Fisher is already a billionaire.  I encourage you to do business- instead -with local independent, fiduciary advisers who sell no proprietary investments & employ a holistic approach in evaluating and planning for your retirement.  And who don't resort to inflammatory mass marketing to add to an already gigantic empire.  If you're going to spend 1.25+% of your assets every year for planning and management you might as well at least get some guarantees in return.  Or at least outperform unmanaged index funds.