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.

All We Need is Some Education

By Brook Ptacek, IAC Student Intern

In my last blog post, I hit on how millennial investors prefer some face-to-face action when it comes to investing. In the study, Uncertain Futures: 7 Myths About Millennials and Investing, sponsored by FINRA and the CFA Institute, some of the top factors identified as holding back millennials from investing was debt or a lack of savings.  What was interesting was that money was not the only factor holding back millennial investors, but so was education.

The study showed that not all millennials feel confident in investing. Rather, they would want a financial adviser who could educate them on investing. According to FINRA and CFA Institute, this debunked the myth that “millennials, being overconfident in general, are also overconfident in their financial lives,” and the myth that “millennials are wary of the financial services industry and by extension skeptical of financial professionals.” Continue reading

Millennial Investors: This time it is Personal

By Brook Ptacek, IAC Student Intern

For a generation that grew up in the tech age, one myth that FINRA and CFA Institute’s study on millennial investors debunked is that millennials would likely be more attracted to robo-advisers. However, that could not be farther from the truth.

The results of the study show that in fact greater than one third of the millennials surveyed had never heard of robo-advisers. What is more interesting, though, is that the millennials surveyed did not show any interest in robo-advisers. Rather, millennials seem to gravitate towards something a little more personal.

The study showed that even after explaining to millennials what robo-advising was and giving examples, such as Betterment, Wealthfront, and Blooom, millennials still wanted no part in it. According to the study, only 16% of the millennials surveyed marked that they were very or extremely interested in robo-advisers. Instead, the “Me, Me, Me Generation” seems to want to talk to someone face to face, not electronically.

This is interesting for a generation that is often cited for being full of social media endorsing, selfie-loving, narcissists. And in a generation where you don’t even need to go into a store to buy milk, its odd that millennials would want a real person they can talk to face-to-face about their finances.  But as my next blog post explores, this is likely easily explainable: millennials don’t want you to bring them a fish, they want you to teach them to fish.