Investment Scandals Scams What s Next
Below is a MRR and PLR article in category Finance -> subcategory Investing.
Investment Scandals & Scams: What's Next?
Summary
With each new scandal, sensational media coverage and political posturing deepen investor fears and demand more regulation for entities that should be fostered for their success and competitiveness. Politicians, ironically, often lead the criticism?"perhaps due to their own familiarity with cover-ups and improprieties.Keywords
Variable annuity, life insurance, asset allocation, mutual funds, no-load funds, investment plan, stock market, stocks, bonds, income investing, window dressing, wrap accounts, investment managers, scandal, scam, financial institution, executive compensation.Article Body
Humans are remarkably inventive, even on the "dark side" of commerce. Faced with vast financial rewards, some executives can't resist indulging in gains before their shareholders have even tasted their fair share. Certain scandals hit investors harder than others, often leading to unnecessary regulatory burdens that stifle genuine creativity.1) Variable Insurance and Annuities: Emerging around 1980, variable products in the insurance industry were a departure from traditional views that considered the stock market too risky. State insurance departments yielded to the lobbying of these products despite their inherent instability. The lure of high commissions has made these annuities particularly appealing to financial professionals, resulting in numerous insurance failures and disappointed policyholders. What does your retirement plan depend on?
2) Wrap Fee Investment Accounts: Historically, the wealthy employed investment managers for personalized portfolio growth. Nowadays, most investment managers handle thousands of mutual funds for diverse investors, often without direct communication. Many financial institutions offer personalized investment portfolios for a single fee, but often provide generic portfolio solutions. Note that "flat fee" managed accounts can offer tailored management.
3) Portfolio Window Dressing: Despite investing being a long-term discipline, managers frequently adjust portfolios to impress major clients, raising questions about whether these actions are more performance manipulation than genuine strategy.
4) Asset Allocation Mutual Funds: The notion that a single mutual fund can suit all investors is misleading. Proper asset allocation is tailored to individual factors, such as age and financial goals. True diversification requires strategic planning across equity and income securities?"not a one-size-fits-all approach.
5) Corporate Executive Compensation: Wealth acquired through honest means benefits everyone through job creation and economic opportunities. However, once companies go public, they should share profits with shareholders. Excessive executive compensation is nothing short of theft from investors.
In the wake of each scandal, sensationalist media and politically expedient cries for regulation stoke investor fears. Politicians often lead this charge, though their own experiences may contribute to their enthusiasm. Meanwhile, the integrity of the financial institutions that create potentially harmful products remains largely unquestioned.
Four of the primary contenders for this year’s "Blockbuster Scandal" arise from Wall Street’s halls. Which one concerns you the most?
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