What’s making Tim ‘Mad-As-Hell’ this week?
This segment seems to get easier every week thanks to the financial services industry.
I read an article yesterday on how retail investors have lost $113 billion in products that were marketed as safe and secure investments. I guess the industry’s definition of ‘safe and secure’ is different from that of an investor.
What really aggravated me was the fact these products used to be sold strictly to sophisticated institutional investors, but the industry in its infinite wisdom and greed, recently repackaged them as ‘principal protection’ products and started targeting senior citizens with them.
The SEC and FINRA recently issued an alert to retail investors regarding these investments that they come with confusing terms, low guarantees and tie up an investor’s money. These agencies also noted that investors either ignored or didn’t understand what was in the prospectuses. Being uninformed is the first cardinal sin of investing.
In April, UBS Financial Services, Inc. agreed to pay a $10.7 million fine to settle allegations that its advisers misled investors about principal protection products. What a surprise! In the complaint, FINRA said UBS sales reps (I mean advisers) didn’t understand the complexity of these products.
Here’s what made me ‘mad-as-hell’. As if $113 billion in investor losses was not bad enough, investors pay the $10.7 million fine through investment fees and investors also lose their power of compounding. Strike one, strike two and strike three. Does this sound like a winner’s game? I think not, but it’s the game the industry has investors conned into playing. ‘Their game’ is a loser’s game for investors, plain and simple.
Maybe it’s time investors play a new game, a winner’s game and take control of their financial futures. Let me know what you think about ‘their game’ or playing a new game in the comments section below.