A Keynote from the Future

Veres, Bob
June 2002
Journal of Financial Planning;Jun2002, Vol. 15 Issue 6, p22
Academic Journal
The article revisits the financial planning profession in the U.S. from a futuristic point of view. The year 2002 was a unique transitional point where our society switched from one primary form of investing to another. People then were still investing in mutual funds, but the limitations of these vehicles were beginning to become apparent. Global price data was beginning to arrive in real-time, yet most investors still owned funds that disclosed the contents of their portfolios twice a year. Despite rapid customization in most service industries, the mutual fund investment still forced millions of very different individual shareholders to hold exactly the same portfolio and realize exactly the same tax consequences. U.S. Federal Chairman Abby Joseph Cohen warned of possible global deflation if the continuing recessions in Japan and Argentina should once again carry their gross domestic product levels into negative territory. It is interesting to remember that the U.S. experienced a comparable level of investment gloom in the first half of 2002, as a gradual tightening of accounting standards led most of the Standard & Poor's 500 companies to restate their earnings by half or more. There were some warnings. Several news articles told us that the hedge fund industry was taking in more money than its managers could handle. When several of the largest hedge funds were finally exposed, the financial planning profession went on a long, dark trip through lawsuits and self-recrimination. It has taken us 20 years to climb back out of that credibility pit and once again convince investors that we are their most trusted advisors. The planning profession is urged to pursue investment opportunities for their clients under the guiding mantra of an investment fiduciary: transparency, cost control and avoidance of conflicts.


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