Independent Fiduciary Consultant, Economics and Financial Ethics

One who intends to leave others better off for his having existed.


The Problem; "financial advisers who base their advice on what’s best for their own compensation rather than on what would maximize returns for their customers"

"Such “conflicted advice” is allegedly prevalent in the half-trillion-dollar-a-year business of rolling 401(k) money into individual retirement accounts when people change jobs or retire, the White House said. The proposed regulations, to be drafted by the Labor Department, would address the issue by imposing on all advisers a fiduciary duty to act in the “best interest” of a client. In contrast, the current system allows some brokers to act based on what’s “suitable”...

"...investment companies objected that consumers already are protected by compensation disclosure rules..."

...What we have here is a clear and valid principle — investors should receive advice that is in their best interest...

Mr. Obama said ...“You shouldn’t be in business” if that business is “bilking hardworking Americans.”...


Subprime Loan to Sales Ratio for financed new car sales = Bubble

OSHA investigator exposes mismanagement inside the Whistleblower Protection Program that left whistleblowers out to dry

"A federal whistleblower investigator who blew the whistle on his own employer says he is now communicating with the government agency that examines allegations of fraud, waste and abuse.
Darrell Whitman works as an investigator for OSHA's Whistleblower Protection Program, which evaluates claims of retaliation against workers who raise red flags about major problems in industries that affect public safety.

He spoke to the NBC Bay Area Investigative Unit in February regarding allegations of corruption inside OSHA Region 9, which is headquartered in San Francisco. Whitman said the United States Office of Special Counsel is now looking into his claims.

“When I found that this agency was abusing them, neglecting them and ignoring them,” Whitman said, “I had to standup and report [OSHA].”

Whitman described what he considers mismanagement of whistleblower complaints by Region 9 managers. He said his superiors have pressured investigators to dismiss cases without fully investigating them to alleviate a backlog of cases and meet quotas.

He said managers have altered his investigation reports, reversing the conclusion of his reports without his consent. Whitman said in one instance, his supervisor changed a case from a finding of “merit”—a victory for the whistleblower—to a determination of “non-merit.”

OSHA’s own numbers show that the agency issued merit findings in Region 9 just 16 times out of 562 investigations from 2009 to 2014. That amounts to 2.8 percent of cases. Nationally, the number of merit findings is equally dismal at 2.7 percent. Whitman believes the number of merit determinations should be closer to 30 percent.

...“When we don’t step up and do the right thing it’s not just the fellow worker," Whitman said, "it’s the public as a whole that then is at risk.”

...“They have to clean this agency up,” said UPWA head Steve Zeltzer. “They have to start enforcing their law and have to start protecting whistleblowers and putting executives in jail for threatening the health and safety of workers and the public at large.”

Janet Yellen on not enforcing the law

“It is unfortunate that I need to underscore this, but we expect the firms we oversee to follow the law and to operate in an ethical manner,” Ms. Yellen said in remarks prepared for delivery to the Citizens Budget Commission in New York on Tuesday night.

“Too often in recent years,
bankers at large institutions have not done so,
sometimes brazenly.”

Janet Yellen



"Most exceptionally successful long-term investors have proclaimed, at one time or another, their skepticism about investment consultants and the growing use of performance benchmarks aimed at splicing performances among investment styles, geographies, company sizes, sectors, etc.

The skeptics have included the likes of Warren Buffett, Charlie Munger, Peter Lynch, Martin Whitman, Jim Rogers, Seth Klarman, Georges Soros, Howard Marks, et al.  Recently a new Oxford University paper joined this critique.

The Financial Times of September 22, 2014, cites a study by a team of from Oxford University’s Saïd Business School, which analyzed consultants for more than 90 per cent of the retirement market.  It concludes, “On an equal-weighted basis, U.S. equity funds recommended by consultants underperformed other funds by 1.1 per cent a year between 1999 and 2011.”

their problem is rooted in the fact that what was once a practice has become a business.  This business requires consultants to foster a growing appetite for their services among clients, by creating a need for more frequent measurement and decision-making.  Thus, measuring and critiquing performance has become a quarterly practice – and at times, more often than that.

Unfortunately, in investing, a quarter or even a year is almost always a totally irrelevant period.
"We find that investment consultants’ recommendations of funds are driven largely by soft factors, rather than the funds’ past performance, and that their recommendations have a very significant effect on fund flows. However, we find no evidence that these recommendations add value, suggesting that the search for winners, encouraged and guided by investment consultants, is fruitless."
The third possible reason why plan sponsors follow investment consultants’ manager
recommendations is that they are simply unaware how accurate or inaccurate they are. While
consultants insist on full transparency in the performance of the fund managers they rate, they do
not disclose their past recommendations to allow analysis of their own performance.

Investment consultants do not disclose their past recommendations publicly in a way that
would allow their accuracy to be measured. Some consultants show their ‘value added’ by
comparing the performance of a portfolio of their recommended funds with that of an appropriate
benchmark. However, they do not generally compare this performance with the performance of
institutional funds which they do not recommend, nor do they make available the underlying data
for scrutiny by third parties.

In model I, where performance is assessed using industry-standard excess returns over
benchmark indices, recommended products underperform non-recommended products by 0.88%
per year; less than the 1.10% per year reported in Table IV but still highly statistically