Financial Advisor Fee Structure

Historically, most advisors earned their income based on commissions; however, to reduce churning and to better align interests with clients, most advisors have moved to a fee based platform, with many charging an annual fee of 1% of assets. Given the compounded impact of this cost over time, as well as the lack of value added, we may see another change, as some advisors are moving to a fee for service model. See article here, WSJ.

Triple Crown -- Does It Matter for the Market?

For the first time in 37 years, a horse (American Pharoah) has won the Triple Crown. The previous ten times this has happened, the stock market has lost an average of 9% over the remainder of the year. This adds to the expanding debate of Behavioral Finance vs. Market Efficiency.

Target Date Funds: Benefits and Disadvantages

Target date (i.e., lifecycle) funds are increasing in popularity, particularly among unsophisticated investors. These funds provide key benefits, as they automatically rebalance through time and also generally limit return chasing. Given the dollar cost averaging effect, the result may also be a higher (dollar-weighted) average return. On the downside, the target date funds may choose underlying funds in each category that benefit the fund family more than the investor. However, for most investors, the benefits would generally outweigh the potential disadvantages. See article here, WSJ.