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Prognosticators or Product Sellers?


PIMco’s Bill Gross is arguably the best bond manager around and a really smart guy.  He and several of his PIMco colleagues are also master salesmen, just witness the number of appearances on CNBC and how often they are quoted in the financial press.  In the interest of full disclosure I have a fair amount of client assets invested with PIMco.

CNBC.com - 1996

In his August investment outlook letter, Gross proclaimed “… the cult of equity is dying.”  As we’ve come to expect, Gross lays out a very logical case to support his argument and he also says that the bond returns that we’ve seen over the past 30 years are unlikely to be replicated into the future as well.

At the end of the day this is a stroke of genius on many levels.  First it’s controversial and gets people writing and talking about Gross and PIMco.   Second, even with a new push into equities, PIMco is a bond shop.  I can’t help but think that anytime Gross talks down equities there is some motive, conscious or otherwise, to push PIMco’s fixed income products.

Josh Brown in his excellent blog The Reformed Broker recently wrote a post calling out Morgan Creek CEO and CIO Mark Yusko for predicting flat returns for equities over the next 9-10 years and conveniently suggesting alternative investments as the only way for financial advisors to achieve the types of returns their clients expect over this time horizon.

Morgan Creek is in the alternative investments business, and while I’m sure Mr. Yusko is a very bright guy, let’s face it this is just another thinly veiled sales pitch, aimed at financial advisors, for what his firm is selling.

The list goes on and on.  Except during the duration of the Olympics, I generally have CNBC on in the background during the business day.  Many of the guests function in the same fashion.  “Equities are the place to be” might be the mantra of a growth stock mutual fund manager.  The manager of a commodities fund might be predicting inflation into the future and touting commodities as a way to hedge against it.

Look I’m not saying any of these folks are bad people and don’t know what they are doing.  Whether you are a money manager or a financial advisor, you have to engage in sales and marketing in order to attract clients.  Financial advice is a business like any other in that respect.

As a financial advisor whose clients count on me to recommend financial strategies and the products to implement those strategies, I’ve learned to be an intent, but detached listener of pitches.  I attend several conferences throughout the year and listen in on any number of webinars and conference calls on a regular basis.  Many of these are sponsored and presented by financial services providers.   Generally there is much good information presented, but one always has to listen with a critical ear.

As always, please feel free to contact me with any financial planning questions or concerns you may have.

Photo credit:  Wikipedia

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