News & Views Spring 2007 Knowledgeletter

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It's springtime in the Rockies, which means that snowfall is down from 100 inches a month to 60! It also means that changes are afoot in the world, and the financial planning industry is no exception.

In this issue of the Knowledgeletter, we're looking at one big developement: the FPA's March 2007 win over the SEC's so-called Merrill Lynch rule, which underscores the difference between a sales person and a fiduciary adviser.

In keeping with that theme, additional articles help you focus on two important issues in managing your portfolio: current opinion on dividends and how to avoid a typical investing mistake.

We are delighted if you wish to forward this newsletter to colleagues or friends whom you believe would find it useful. Of course, if this newsletter was forwarded to you and you would like to receive future issues, you are welcome to subscribe.

Enjoy!
Steven R. Smith

FPA Rises Up for Consumers…and Wins
Delivering a victory to consumers of investment advice, the Financial Planning Association prevailed against the Securities and Exchange Commission, overturning the 2005 “Merrill Lynch rule.” The rule exempted broker-dealers’ fee-based accounts from the fiduciary requirements of the Investment Advisers Act.

This decision may seem like just another technicality amidst the endless regulatory structure governing financial professionals. But, every investor should put their lawyer’s cap on and dive into the details of this ruling, because it impacts the most critical and basic fiduciary question: Who’s side is the advisor required to be on?
Read my special commentary...

Sound Investment Planning Pays Big Dividends…or Does It?
Lowell Miller and Curtis Jensen —veterans of the money management world—have recently sounded off on what role dividends play in portfolios. Their opinions represent opposite ends of the spectrum.

With such divergent advice being handed down from luminaries, our advice is simple: portfolios, like life, require balance.
Read on...

Peccadilloes: Recency Bias
RightPath introduces an occasional guide to help you reduce those seemingly small mistakes in managing your portfolio that add up over time. Our “Peccadilloes” columns are based upon behavioral finance, for which Princeton Professor Daniel Kahneman won the Nobel Prize in Economics in 2002.

Behavioral finance identifies a laundry list of cognitive and emotional biases—or behavioral mistakes—we all tend to make in our financial decision-making. Think of them as mental traps that, once recognized, we work to avoid in managing our portfolios.

We hope you enjoy this inaugural topic and look forward to bringing you a fresh look at practical ideas to improve your financial well-being.

This time: Recency Bias.
Read on...