On The Wisdom of the Cynic

By: Esmat Hanano, Spring 2019 Intern

The prevalence of social media in our everyday lives has led to a new type of financial services representative. For ease of reference, I’ve dubbed this new breed of financial services representative the “seize-your-moment representative,” or SYMR. Interesting name, right? Well that’s one of the main characteristics of these representatives: they pique your interest and arouse your natural sense of curiosity with an opportunity that begs you to “seize the moment!” Once they have your attention, it’s a full-court press to get you to sign up with them. Some other identifying features of SYMRs are a heavy reliance on social media to sell financial services and products, excessive use of inspirational quotes and memes, and dubious testimonials that claim to demonstrate the success awaiting anyone who joins their “downline.” Continue reading

Investor Ed Crosswords: Staying Informed and Evaluating Investment Performance

According to FINRA Rule 2340, general securities members must disburse account statements at least once every calendar quarter.   The account statements informs you as an investor because you can evaluate the quarterly performance of your investments.  Evaluating your investment performance requires you to consider your rate of return and your yield.  Continue reading

Investor Alert: Self-Directed IRAs Risky Diversity

By: Caitlyn Scofield, Spring 2019 IAC Student Intern

Everyone loves having options, whether it is choosing where to go to dinner or what shirt to wear for that big interview more options are better. This holds true in the realm of investments as well. IRAs, Individual Retirement Accounts, allow individuals to prepare for their future while affording several tax benefits. These types of accounts are usually limited by the custodians to conventional investments. For those sophisticated investors that want more options, a self-directed IRA allows investors to diversify their investments by allowing them to invest in a broader set of options including non-conventional or alternative asset investments such as cryptocurrencies and real estate. While these options allow for more options it also opens investors up to a lot of risk, so investors should be very aware of potential harm before they sign up.  Continue reading

The More the Merrier: Crowdfunding

By: Kevin Mathis, Spring 2019 IAC Student Intern

Sally the inventor has a novel idea that she wants to market.  The problem is that she can’t secure the small amount of capital he needs to jumpstart a business startup.  Banks will not loan Harry the amount of capital he needs because his invention seems too risky.  Harry, Harrie, Harrey, Harré, Harí, Hari, Hairy, and Harrold are investors with capital.  They want to invest in a small business startup.  These guys can’t find any startups accepting individuals only willing to invest a small amount of capital in the business.  What do they do? Continue reading

New Year, New Me?: Checking in on your Financial Resolutions for 2019

By: Brook Ptacek, Investor Advocacy Clinic Spring 2019 Student Intern

In mid-January, FINRA staff posted an Investor Alert about a 2019 Resolutions Reset. In the article, FINRA goes through six tips to make sure 2019 is “your strongest financial year yet.”  Those are some bold words, but the advice FINRA provides is valuable.

The six tips FINRA provides include: (1) evaluate your spending plan or budget; (2) set new goals; (3) check your credit report; (4) rebalance your portfolio; (5) zero in on fees; and (6) free yourself of financial clutter. 

To have the strongest financial year yet, FINRA suggests that you should first evaluate your spending plan or budget. According to FINRA’s Investor Education Foundation’s National Financial Capability Study, if you budget, you’re more likely to spend within your income. FINRA even gives you tips on how to create a budget. Continue reading

To Do List: Save for Retirement

By Caleb L. Swiney, Spring 2019 IAC Student Intern

Most people know that they need to save for retirement, but that’s the easy part. Actually beginning to save, knowing how much to save, and, most importantly, knowing who to trust your savings to are where the difficulties begin. Luckily, FINRA has outlined a checklist to help investors navigate those questions. Each of the following four tips are important to not only those investors who are starting to save for retirement, but also those who want to strengthen their savings plan. Continue reading

Money, Money, Money, Money…MonAYYY

Money, Money, Money, Money…MonAYYY

By Brook Ptacek, IAC Student Intern

That is what it always comes down to: the nickels and dimes. So how does money impact millennial investors? Well the last myth to pull apart from FINRA and the CFA Institute’s sponsored study, entitled Uncertain Futures: 7 Myths About Millennials and Investing, is that “millennials overestimate the investable assets needed to work with a typical financial professional.” What the study showed us is that, in fact, millennials underestimate how much money they need to invest.

This is not surprising though because as the study clearly shows, and as my blog series started addressing in the beginning, money is tight for millennials. Millennials are not buying houses and not having children for that very reason, something FINRA and the CFA Institute point out as impacting millennial investment decisions. The top financial goal of 40% of non-investing millennials surveyed is to not live paycheck to paycheck. So of course a group that already is having difficulty just meeting their daily expenses is going to underestimate what kind of money they need in their savings to work with financial professional.

In sum, the FINRA and CFA Institute’s research seems to show that to get millennials to invest, they need to feel like they are in a position where they feel comfortable to hand over their rainy day money. And to do that, you need to educate them about where that money is going or companies need to offer more employer-sponsored retirement plans so a millennial’s natural curiosity takes over. Millennials are not adverse to the financial system, they’re just averse to losing their precious money.