My credibility with you is important.  I don't want to sound like a conspiracy theorist, but I'm going to take that risk with this edition of my newsletter.

I believe there is a vast conspiracy to separate you from your money.  Here are the participants and how it works.

The securities industry is the main player.  They tout an expertise in "managing" your money which most of them don't have.  They are slick salespeople, bolstered by a huge advertising budget.  Their goal is to sell you a wide array of actively managed investment products which you don't need and shouldn't buy.  The worst products they sell are complex and opaque (like hedge funds and private equity), which generate even larger revenues for them and poor returns for you.

The financial media serves as a distribution channel featuring members of the securities industry and giving them credibility they don't deserve.

Congress and the Courts have done their part.  They set up a system requiring you to submit disputes with your broker to arbitration administered by FINRA, which is basically an industry trade association.  As a practical matter, your broker can engage in all but the most egregious misconduct and you have no effective redress.  No jury trial for you!

Now for the shocker.  Your estate planning lawyer plays a role.  Either through ignorance, or because of a concern about reducing referrals from brokers, your documents omit a clause that could protect your heirs from having funds left in trust ravaged by the brokerage industry.

What's the clause?  It would simply require the trustee to only retain advisors who make no effort to "beat the market" through stock picking, market timing and fund manager selection and to follow the academic principles set forth in my books and those authored by John Bogle, William Bernstein and Burton Malkiel, among others.  It would direct the trustee to keep costs (both advisory fees and expense ratios) low and to use index funds, exchange-traded-funds or passively managed funds in the portfolio for trust assets.

By not including such a clause, your estate lawyer insures the transfer of wealth to your broker continues after your death.

It's quite a system!

Resource of the week

I recommend this blog by financial author, Larry Swedroe.  He explains why so many investors continue to invest in a way that makes no sense.