VOLATILITY INDICES: In Financial Markets

Posted on November 15, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Dr. David Edward Marcinko MBA MEd

SPONSOR. http://www.MarcinkoAssociates.com

***

***

The Role of Volatility Indices in Financial Markets

Volatility is often described as the pulse of financial markets, reflecting the collective emotions of investors as they respond to uncertainty, risk, and opportunity. Among the many tools designed to measure this phenomenon, the CBOE Volatility Index, or VIX, stands out as the most widely recognized. Dubbed the “fear gauge,” the VIX captures market expectations of near-term volatility in the S&P 500, derived from options pricing. Its movements often mirror investor sentiment: rising sharply during periods of crisis and falling when confidence returns. Yet, the VIX is not alone. A family of volatility indices exists across global markets, each offering unique insights into sector-specific or regional risk.

The importance of volatility indices lies in their ability to quantify uncertainty. Traditional measures such as historical volatility look backward, analyzing past price fluctuations. In contrast, indices like the VIX are forward-looking, reflecting implied volatility based on options markets. This distinction makes them invaluable for traders, portfolio managers, and policymakers. For example, a sudden spike in the VIX often signals heightened fear, prompting investors to hedge positions or reduce exposure to equities. Conversely, a low VIX suggests complacency, though it can also precede unexpected shocks.

Beyond the VIX, other indices provide complementary perspectives. The VXN tracks volatility in the Nasdaq-100, often dominated by technology stocks. Because the tech sector is highly sensitive to innovation cycles and regulatory changes, the VXN can diverge significantly from the VIX, highlighting sector-specific risks. Similarly, the RVX measures volatility in the Russell 2000, offering a window into small-cap stocks that are more vulnerable to domestic economic conditions. Internationally, indices such as the VSTOXX in Europe and India VIX extend this framework globally, allowing investors to compare risk sentiment across regions. Together, these indices form a mosaic of market psychology, enabling a more nuanced understanding of global financial stability.

Volatility indices also play a crucial role in risk management. Derivatives linked to these indices, such as futures and exchange-traded products, allow investors to hedge against sudden downturns. For instance, during the 2008 financial crisis, demand for VIX futures surged as investors sought protection from extreme market swings. More recently, volatility products have become popular among retail traders, though their complexity and tendency to lose value over time make them risky for long-term holding.

Critics argue that volatility indices can be misleading. A low VIX does not guarantee stability, and a high VIX does not always signal disaster. Moreover, the rise of volatility-linked products has occasionally amplified market stress, as seen during the “Volmageddon” event of February 2018, when inverse volatility ETFs collapsed. These episodes underscore the need for caution: volatility indices are powerful tools, but they must be used with a clear understanding of their limitations.

In conclusion, volatility indices such as the VIX serve as vital instruments for gauging investor sentiment and managing risk. They provide a forward-looking measure of uncertainty, complementing traditional metrics and offering insights across sectors and regions. While not infallible, their role in modern finance is undeniable.

For traders, analysts, and policymakers alike, these indices are more than numbers on a screen—they are reflections of the market’s collective psyche, guiding decisions in times of both calm and crisis.

COMMENTS APPRECIATED

EDUCATION: Books

SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit an RFP for speaking engagements: CONTACT: Ann Miller RN MHA at MarcinkoAdvisors@outlook.com -OR- http://www.MarcinkoAssociates.com

Like, Refer and Subscribe

***

***

Filed under: "Ask-an-Advisor", finance, Financial Planning, Funding Basics, Investing, Portfolio Management | Tagged: , , , , , , , , , , , , , , , , , , , | Leave a comment »

Dynamic Strategies in Broker-Dealer Recruitment

Posted on October 22, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporter and A.I.

SPONSOR: http://www.MarcinkoAssociates.com

***

***

The Evolving Landscape of Broker-Dealer Recruitment

Broker-dealer recruitment has become a dynamic and competitive arena within the financial services industry. As firms vie for top talent, the strategies and incentives used to attract and retain financial advisors have evolved significantly. In an environment shaped by regulatory changes, technological innovation, and shifting advisor expectations, broker-dealers must continuously refine their recruitment approaches to remain competitive and relevant.

Understanding Stockbrokers: Roles and Responsibilities

At the heart of broker-dealer recruitment is the pursuit of experienced financial advisors who bring with them established client relationships and significant assets under management. These advisors are highly sought after because they can generate immediate revenue and enhance a firm’s market presence. According to recent industry reports, firms like LPL Financial, Commonwealth, and Cetera have ramped up their recruitment efforts by investing in platform enhancements, rebranding initiatives, and technology upgrades to appeal to both seasoned professionals and the next generation of advisors.

One of the most significant trends in broker-dealer recruitment is the emphasis on value-added services. Advisors today are not merely looking for the highest payout or signing bonus; they are increasingly drawn to firms that offer robust support systems, including compliance assistance, marketing resources, and advanced technology platforms. Broker-dealers that can demonstrate a commitment to advisor growth and client service excellence are more likely to attract top-tier talent.

Another key factor influencing recruitment is the cultural fit between the advisor and the firm. Advisors often seek environments that align with their personal values and business philosophies. As such, firms are placing greater emphasis on showcasing their culture, leadership, and long-term vision during the recruitment prhttps://medicalexecutivepost.com/2024/09/05/beware-the-brokerage-accounts/ocess. This cultural alignment can be a decisive factor in an advisor’s decision to join or remain with a firm.https://medicalexecutivepost.com/2024/09/05/beware-the-brokerage-accounts/

The competitive nature of the industry has also led to the rise of aggressive recruitment tactics, including lucrative transition packages and equity offers. While these financial incentives can be effective, they are increasingly being supplemented by strategic differentiators such as flexible affiliation models, access to alternative investment platforms, and opportunities for practice acquisition or succession planning.

Who Does a Stock Broker Work for – Really?

Moreover, the recruitment landscape is being reshaped by broader economic and regulatory forces. The implementation of Regulation Best Interest (Reg BI) and the ongoing impact of high interest rates have prompted advisors to reassess their affiliations and seek firms that provide clarity, stability, and strategic guidance. Broker-dealers that proactively address these concerns and offer transparent, advisor-centric solutions are better positioned to succeed in the recruitment race.

How Stock-Brokers Execute Trades

In conclusion, broker-dealer recruitment is no longer just about offering the biggest check. It is about creating a compelling value proposition that resonates with advisors’ professional goals and personal values. Firms that invest in technology, culture, and advisor support—while remaining agile in response to industry trends—will be best equipped to attract and retain the talent necessary for long-term success.

COMMENTS APPRECIATED

EDUCATION: Books

SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit an RFP for speaking engagements: CONTACT: Ann Miller RN MHA at MarcinkoAdvisors@outlook.com -OR- http://www.MarcinkoAssociates.com

Like, Refer and Subscribe

***

***

Filed under: "Advisors Only", Financial Planning, Funding Basics, Investing, Marketing & Advertising, Portfolio Management | Tagged: , , , , , , , , , , , , , , | Leave a comment »

PARADOXICAL CONTRADICTIONS: All Financial Advisors Must Know to Win Clients!

Posted on June 20, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

The Ultimate Psychological Challenge to Influence Clients and Close More Sales

***

***

By Dr. David Edward Marcinko MBA MEd CMP™

SPONSOR: http://www.CertifiedMedicalPlanner.org

***

A psychological paradox is a figure of speech that can seem silly or contradictory in form, yet it can still be true, or at least make sense in the context given.

This is sometimes used to illustrate thoughts or statements that differ from traditional ideas. So, instead of taking a given statement literally, an individual must comprehend it from a different perspective. Using paradoxes in speeches and writings can also add wit and humor to one’s work, which serves as the perfect device to grab a reader or a listener’s attention and/or persuade them to action, sales and closing statements. But paradoxes for the financial sector can be quite difficult to explain by definition alone, which is why it is best to refer to a few examples to further your understanding.

One good psychological paradox example is The Paradox of Thrift which suggests that while saving money is generally considered a prudent financial behavior, excessive saving during times of economic downturn can actually hinder economic recovery. When consumers collectively reduce their spending and increase their savings, it creates a decrease in aggregate demand. This reduction in demand can lead to lower production levels, job losses, and ultimately a decline in economic output. In other words, what may be individually rational behavior (financial saving) can have negative consequences for the overall economy.  

The following paradoxical contradictions will help financial advisors guide clients to close more sales to the benefit of both.

____

In the intricate world of finance sales, advisors are often at the crossroads of various paradoxes that challenge client decision-making. While the journey towards financial security involves calculated strategies, it’s the nuanced understanding of paradoxes that can help the advisor close more sales.

____

But, what seems true about money often turns out to be false, according to colleague Finance Professor John Goodell, PhD from the University Akron:

  1. The more we try to trade our way to profits, the less likely we are to profit.
  1. The more boring an investment—think index funds—the more exciting the long-run performance will probably be.
  1. The more exciting an investment—name your latest Wall Street concoction, Special Purpose Acquisition Company [SPAC] or anything crypto—the less exciting the long-term results typically are.
  1. The only certainty is uncertainty and the only constant is change. Today’s market decline will eventually become a bull market, and today’s market leaders will eventually yield to other stocks.
  1. Big market trends play a huge role in investment results, and yet trying to time macroeconomic cycles or guess which market sectors will outperform is a fool’s errand. Many big market rotations are set in motion by something wholly unanticipated, like a virus pandemic or a war.
  1. To be happy when wealthy, we also need to be happy with far less money. The fact is, above a relatively modest income level, no amount of extra money will change our level of happiness. More money might even make us miserable, as many lottery winners have discovered.
  1. The more we hate an investing trait—or any trait for that matter—the more likely it is that we’re resisting seeing that trait in ourselves. It’s what Carl Jung MD called the Shadow of Undesirable Personality Aspects that we hide from ourselves. Do prospects get irritated listening to your unsolicited financial advice? There’s a good chance that you often give unsolicited financial advice but don’t like to admit it.
  1. The more we learn about investing, the more we realize we don’t know anything. We should just buy index funds and instead spend our time worrying about stuff we can actually control.
  1. The more an investor is convinced he’s right, the more likely he is to be wrong. Short sellers, in particular, are likely to succumb to this paradoxical trap.
  1. The more options we have, the less satisfied we’ll be with each one. This is the Paradox of Choice; revised. Anyone who has spent hours “optimizing” his or her portfolio knows this all too well. Its close cousin is information overload, another frustration paradox when investing.
  1. The more afraid we are of losing money, the more likely we are to take unwitting risks that lose us money. Sitting in cash seems wise during market selloffs. But the truth is, none of us can reliably time the market. Pull up any chart of the stock market over any period longer than a decade and you’ll see that the riskiest decision is sitting in cash, which gets destroyed by inflation.

The more we think about our investments and look at our financial accounts, the more likely we are to damage our results by buying high because of greed and selling low because of fear. It can pay to look away.

ASSESSMENT

How should you respond to these financial paradoxes? As you plan for your own financial future, as well as your own client prospecting endeavors, embrace the concept of “loosely held views.”

In other words, make financial and client acquisitions plans, but continuously update your views, question your assumptions and paradoxes and rethink your priorities. Years of experience with clients certainly support the futility of trying to help them change their financial behavior by telling them what they “should” know or do.

CONCLUSION

Remember, it is far more useful to listen to client beliefs, fears and goals, and to suggest options and offer encouragement to help them discover their own path toward financial well-being. Then, incentivize them with knowledge of the above psychological paradoxes to your mutual success!

EDUCATION: Books

SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit an RFP for speaking engagements: CONTACT: Ann Miller RN MHA at MarcinkoAdvisors@outlook.com 

REFERENCES:

1. Goodell, J: Full publication list on Google Scholar: https://scholar.google.com/citations?hl=en&user=lJyDADsAAAAJ

 2. Jung, Carl, Gustav: Full publication list on Google Scholar: https://scholar.google.com/scholar?hl=en&as_sdt=0%2C11&q=carl+jung+publications&btnG=

READINGS:

Marcinko, DE and Hetico, HR: Comprehensive Financial Planning Strategies for Doctors and Advisors [Best Practices from Leading Consultants and Certified Medical Planners™]. CRC Productivity Press, New York, 2016.

Marcinko, DE: Dictionary of Health Economics and Finance. Springer Publishing Company, New York. 2006

Marcinko, DE and Hetico, HR: Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors [Best Practices from Leading Consultants and Certified Medical Planners™]. CRC Productivity Press, New York, 2015.

***

Filed under: "Ask-an-Advisor", Career Development, CMP Program, economics, finance, Financial Planning, Glossary Terms, Investing | Tagged: , , , , , , , , , , , | Leave a comment »

FINANCIAL ADVISORY FEES: What All Doctors Must Know

Posted on June 8, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

SPONSOR: http://www.MarcinkoAssociates.com

***

By Dr. David Edward Marcinko MBA MEd CMP™

WHAT YOU “MUST KNOW“ ABOUT FINANCIAL ADVISORY FEES

Investment fees still matter despite dropping dramatically over the past several decades due to computer automation, algorithms and artificial intelligence, etc. And, they can make a big difference to your financial health. So, before buying any investment, it’s vital to uncover all real financial advisor and stock broker costs.

HEDGE FUND FEES: https://medicalexecutivepost.com/2025/04/18/stocks-basic-definitions/

SIX TYPES OF FEES AND EXPENSES

1. Up-front salesperson commissions. It is easy to ask; “If I buy this investment today and want to get out tomorrow, how much money do I get back?” If the answer is not “all your money,” the difference is probably upfront fees and commissions. These fees may run as high as 30% of the money invested. If you were to earn 5% a year on the investment, it would take 8 years just to break even.

2. Ongoing advisory fees. These are monthly, quarterly, or annual fees paid to advisors for their investment advice and oversight. This includes working with you to pick the asset classes, set diversification, select a portfolio manager, optimize taxes, re-balance holdings and other periodic tasks.

These fees have many names including wrap fee or investment advisory fees. The normal “rule of thumb” is 1% of assets managed, although fees can range from 0 to 7%. Today, it can even be as low as .5%. It can be charged even if the advisor receives an upfront commission. It can be easy to see, or hidden in the fine print.

3. Additional service fees. Find out specifically what services are included financial advisory fees. Additional fees for financial planning or other services are rarely disclosed. They can range from minimal hand-holding focused on your investments to comprehensive financial planning.

4. Ongoing managerial expense ratio fees. These are incredibly well hidden that you may not see them in your statements or invoices. The only way to know is to read the prospectus or other third party analysis, like Morningstar.com. And, they can vary greatly for the same investment, depending on the class of share you buy.

For example, American Fund’s New Perspective Fund’s expense ratio ranges from 0.45% to 1.54%.  The average expense ratio of a mutual fund that invests in stocks is 1.35%. Conversely, the average expense ratio of a Vanguard S&P 500 Fund is 0.10%. The difference of 1.25% is staggering over time.

5. Miscellaneous fees. Some advisors charge $50 – $100 a year per account to open or close an account, and even fees to dollar cost average your funds into the market.

6. Transaction fees. Every time you buy or sell a fund, a fee is typically paid to a custodian. These can range from $5 to hundreds of dollars per transaction.

7. Fee Only: Paid directly by clients for their services and can’t receive other sources of compensation, such as payments from fund providers. Act as a fiduciary, meaning they are obligated to put their clients’ interests first

8. Fee Based: Paid by clients but also via other sources, such as commissions from financial products that clients purchase. Brokers and dealers (or registered representatives) are simply required to sell products that are “suitable” for their clients.

A “suitable” investment is defined by FINRA as one that fits the level of risk that an investor is willing and able, as measured by personal financial circumstances, to take on. The Financial Industry Regulatory Authority is a private American corporation that acts as a Self Regulatory Organization (SRO) that regulates member stock brokerage firms and exchange markets. These criteria must be met. It is not enough to state that an investor has a risk-friendly investment profile. In addition, they must be in a financial position to take certain chances with their money. It is also necessary for them to

A hedge fund is a limited partnership of private investors whose money is managed by professional fund managers who use a wide range of strategies; including leveraging [debt] or trading of non-traditional assets [real-estate, collectible, commodities, cyrpto-currency, etc] to earn above-average returns. Hedge funds are considered a risky alternative investment and usually require a high minimum investment or net worth. This person is known as an “accredited investor” or “Regulation D” investor by the US Securities Exchange Commission and must have the following attributes:

  • A net worth, combined with spouse, of over $1 million, not including primary residence
  • An income of over $200,000 individually, or $300,000 with a spouse, in each of the past two years

Not a fiduciary.

A Review of Investing Expenses

Ways to minimize fees

Choose the fee structure. The fee structure should align with your needs. Consider the type of advice you seek, the number of times needed and the complexity of your financial situation. You can always negotiating tactics are free to ask for a better deal.

Compare fees. It is essential to research and compare different fees. Be sure to read the fine print for details or costs that are not a base fee.

Robo-advisors: For simple investment goals, with little specificity, robo-advisors may be a cost-effective option. They charge lower fees than conventional financial advisors and provide an automated, algorithmic approach to managing your investments. 

Assessment

The average cost of working with a human financial advisor in 2024 was 0.5% to 2.0% of assets managed, $200 to $400 per hourly consultation, a flat fee of $1,000 to $3,000 for a one-time service, and/or a 3% to 6% commission fee on the product types sold.

ADVISORY FEES: https://medicalexecutivepost.com/2025/02/26/be-aware-financial-advisory-fees-fee-based-versus-fee-only/

Conclusion

When ruminating over financial advisory fees; read and understand the contract with disclosures, do not sign a confidentiality or non-disclosure agreement, and do not waive your right to a lawsuit. According to colleague Dr. Charles F. Fenton IIII JD, forced legal settlements almost always favor the advisor over the client.

References and Readings:

1. https://www.capitalgroup.com [American Funds]

2. Marcinko, DE and Hetico, HR; Comprehensive Financial Planning Strategies for Doctors and Advisors [Best Practices from Leading Consultants and Certified Medical Planners™] Productivity Press, New York, 2017. 

3. Marcinko, DE: Dictionary of Health Economics and Finance. Springer Publishing Company, NY 2006

EDUCATION: Books

SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: MarcinkoAdvisors@outlook.com 

COMMENTS APPRECIATED

Refer, Like and Subscribe

***

***

Filed under: "Ask-an-Advisor", Alternative Investments, CMP Program, Experts Invited, Financial Planning, Glossary Terms, Investing, Marcinko Associates, Portfolio Management | Tagged: , , , , , , , , , , , , , , , , , , , , | Leave a comment »

INVESTMENT: Advisor V. Adviser

Posted on May 23, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

ChatGPT and AI

SPONSOR: http://www.MarcinkoAssociates.com

***

***

An investment advisor (sometimes spelled “investment adviser”) is defined as a company or person who has a government registration allowing them to choose, manage and recommend investments for clients. Investment advisors are also sometimes referred to as stock brokers. They are not fiduciaries.

RELATED: https://medicalexecutivepost.com/2025/04/01/financial-advisors-vital-critical-thinking-skills-to-master/

Unlike other financial advisors who may not be regulated, investment advisors are regulated by their state or the Securities Exchange Commission depending on how much money they manage. Investment advisors may also offer services like retirement planning.

COMMENTS APPRECIATED

The Medical Executive-Post is a  news and information aggregator and social media professional network for medical and financial service professionals. Feel free to submit education content to the site as well as links, text posts, images, opinions and videos which are then voted up or down by other members. Comments and dialog are especially welcomed. Daily posts are organized by subject. ME-P administrators moderate the activity. Moderation may also conducted by community-specific moderators who are unpaid volunteers.

Subscribe, Like and Refer

***

***

Filed under: "Ask-an-Advisor", Financial Planning, Glossary Terms, Investing, Retirement and Benefits | Tagged: , , , , , , , , | Leave a comment »

REQUEST “PROFESSIONAL PORTFOLIO CONSTRUCTION” For Physicians [The Doctor Effect]

Posted on March 26, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

A FREE WHITE PAPER UPON E-MAIL REQUEST

SPONSOR: http://www.MarcinkoAssociates.com

***

***
Several years ago we noted that far too many mid-career, mature and physician clients using traditional stock brokers, management consultants and “financial advisors”, seemed to be less successful than those who went it alone. These Do-it-Yourselfers [DIYs] had setbacks and made mistakes, for sure. But, the ME Inc,. doctors seemed to learn from their mistakes and did not incur the high management and service fees demanded from general or retail one-size-fits-all “advisors.”

In fact, an informal inverse related relationship was noted, and dubbed the “Doctor Effect.” In other words, the more consultants an individual doctor retained; the less well they did in all disciplines of the financial planning, professional portfolio and investing continuum.

Of course, the reason for this discrepancy eluded many of them as Wall Street brokerages and wire-houses flooded the media with messages, infomercials, print, radio, TV, texts, tweets, and internet ads to the contrary. Rather than self-learn the basics, the prevailing sentiment seemed to purse the holy grail of finding the “perfect financial advisor.” This realization was a confirmation of the industry culture which seemed to be: Bread for the advisor – Crumbs for the client!

And so, we at the the Institute of Medical Business Advisors Inc. (iMBA), and this Medical Executive-Post, formed a cadre’ of technology focused and highly educated doctors, financial advisors, attorneys, accountants, psychologists and educational visionaries who decided there must be a better way for their healthcare colleagues to receive financial planning advice, products and related management services within a culture of fiduciary responsibility.

We trust you agree with this ME Inc philosophy as illustrated in this free white paper available upon request.

PROFESSIONAL PORTFOLIO CONSTRUCTION [Investing Assets and their Management]
Subscribe, Read, Like and Refer

Email whiote paper request here: MarcinkoAdvisors@outlook.com

***

***

Filed under: "Advisors Only", "Doctors Only", Experts Invited, Financial Advisor Listings, Financial Planning, iMBA, Inc., Investing | Tagged: , , , , , , , , , , | Leave a comment »

EDUCATION: Niche Specific, Timely, Online, Asynchronous and Affordable

Posted on February 1, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

For Financial Advisors & Financial Planners, CPAs, CFPs, CFAs, Stock-Brokers, Insurance Agents, Attorneys, Wealth Managers and Related Advisors!

By Staff Reporters

***

***

FINANCIAL EDUCATION PODCAST: CMPs™ are In … Are CPAs Out?

CERTIFIED MEDICAL PLANNER™: Education for Financial Planners to Thrive with Doctor Clients!

MICRO-CERTIFICATIONS: Education for Financial Advisors Seeking Physician-Client Prospecting Success?

e-BOOKS: For Doctors, Financial Advisors, CPAs, Insurance Agents, Medical Consultants and Health Law Attorneys

***

CONTACT: Ann Miller RN MHA CMP

Email: MarcinkoAdvisors@outlook.com

***

Filed under: "Ask-an-Advisor", Accounting, Career Development, CMP Program, Events-Planner, Experts Invited, Financial Planning, Health Economics, Health Insurance, Health Law & Policy, Healthcare Finance, iMBA, Inc., Investing, Taxation | Tagged: , , , , , , , , , , | Leave a comment »

Investment Advisor [IA] VERSUS Financial Advisor [FA]

Posted on January 21, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

DEFINITIONS

By Staff Reporters

SPONSOR: http://www.MarcinkoAssociates.com

***

***

While IAs and FAs may seem the same, they are not the same. The Financial Industry Regulatory Authority (FINRA) and the Securities Exchange Commission (SEC) have clearly defined investment advisors as distinct from financial advisors.

The term financial advisor is a generic one that can encompass many different financial professionals, although it most commonly refers to stock brokers (individuals or companies that buy and sell securities).

Investment advisor, on the other hand, is a legal term and thus has a more clear-cut definition – or at least as clear as legalese is apt to be.

KEY DIFFERENCES:

  • Financial advisors help with all aspects of your finances, including saving, budgeting, insurance, retirement planning, and taxes.
  • Investment advisors focus specifically on choosing and managing investment portfolios.
  • Financial advisors offer broader financial guidance, while investment advisors concentrate solely on investments.
  • Investment advisors are held to the fiduciary standard, while financial advisors who work as brokers may operate under different rules.

MORE: https://www.financestrategists.com/financial-advisor/advisor-types/investment-advisor/

COMMENTS APPRECIATED

Refer and Subscribe

***

***

Filed under: "Ask-an-Advisor", Accounting, Ethics, Experts Invited, Financial Planning, Glossary Terms, Health Insurance, Insurance Matters, Investing, Marcinko Associates, Risk Management, Taxation, Touring with Marcinko | Tagged: , , , , , , , , , , , , , , , , | Leave a comment »

OUTCOME: Bias

Posted on January 3, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

***

***

Outcome bias is judging a decision based on its result rather than the quality of the decision at the time it was made.

It’s like saying a bad poker play was smart because you won the hand. Or, a bad stock picker or financial advisor was good because the price went up!

According to psychologist and colleague Dan Ariely PhD, this bias ignores the process and focuses solely on the outcome. It’s why we celebrate lucky breaks and criticize thoughtful risks that didn’t pan out.

So, the next time you’re evaluating a decision, focus on the reasoning behind it, not just the end result.

COMMENTS APPRECIATED

Subscribe Today!

***

***

Filed under: "Ask-an-Advisor", Ethics, Financial Planning, Funding Basics, Glossary Terms, iMBA, Inc., Investing, LifeStyle, mental health | Tagged: , , , , , , , , , , , , , , , , | Leave a comment »

STOCK MARKET: A Zero Sum Bias?

Posted on October 13, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

FINANCIAL / INVESTMENT ADVISORS & STOCK BROKERS

SPONSOR: http://www.MarcinkoAssociates.com

***

***

According to colleague Dan Ariely PhD, a Zero Sum Bias [ZSB] is the mistaken belief that one person’s gain is another’s loss. It’s like thinking the world is a giant pie with only so many slices. This mindset fuels competition and jealousy, making us forget that collaboration can create more pie. It’s why we sometimes root against others instead of working together.

Question: Is the stock market a zero-sum game? You frequently hear media refer to games and markets as zero-sum games.

Answer: Well, yes, we define the stock market as a zero-sum game, both in the short and in the long term, although it technically is incorrect. A zero-sum game is where one person’s gain is another person’s loss – thus there is no wealth created and the overall benefit is zero. This doesn’t apply to stocks, but it’s a zero-sum game in relation to a stock market benchmark.

For example, short-term trading in stocks is theoretically not a zero-sum game, and neither is long-term investing. But short-term trading is close to a zero-sum game, and long-term investing is a zero-sum game if we use a broad index as a benchmark.

Essentially, in other words, the stock market functions as an expansive network of zero-sum transactions; each trade engages a buyer and a seller–their perspectives on a security’s future value contrasting. These opposing views propel market prices: they mirror not only risk transfer but also potential reward—a dynamic process indeed! Traders and investors must grasp the crucial zero-sum aspect; it underscores trading’s inherent competitiveness. Effectively anticipating market trends and actions from other participants: therein lies success in this environment. 

CITE: https://www.r2library.com/Resource/Title/0826102549

So, next time you feel like someone else’s success diminishes your own, remember: there’s more than enough pie to go around.

COMMENTS APPRECIATED

Thank You

***

***

Filed under: "Ask-an-Advisor", Experts Invited, Glossary Terms, Investing, Marcinko Associates, Risk Management | Tagged: , , , , , , , , , , , | Leave a comment »

Who Does a Stock Broker Work for – Really?

Posted on September 5, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

And … What’s Up at the Bank of America?

http://www.CertifiedMedicalPlanner.org

A Vintage ME-P

According to E. Dilts, BoA is making it harder for brokers to take some of their clients with them when they leave Merrill Lynch-specifically, clients that were referred to the broker by a Bank of America branch.

Brokers in recent months have been asked to sign contracts saying that if they leave Merrill Lynch, they can’t take the names or phone numbers of those customers with them, because those clients belong to the bank.

Lawyers said this policy chips away at the decade-old truce among brokerages known as the Protocol for Broker Recruiting.

The agreement was meant to end the continual and costly legal battles between brokerages and their brokers over who had the right to keep clients, and allows departing brokers to take client information including names and phone numbers with them.

***

Stocker

Stock Broker versus Brokerage House

***

Assessment

So, who does the broker [er-ah! financial advisor] really work for – the [physician] client or the brokerage house? And doesn’t this make your account just a portion of their “book of business?”

Talk about advice versus product sales?

Link: http://wealthmanagement.com/wirehouse/bank-america-chips-away-brokerage-industry-truce?NL=WM-27&Issue=WM-27_20150224_WM-27_400&sfvc4enews=42&cl=article_2&YM_RID=CPG09000002702210&YM_MID=2033

More:

Channel Surfing the ME-P

Have you visited our other topic channels? Established to facilitate idea exchange and link our community together, the value of these topics is dependent upon your input. Please take a minute to visit. And, to prevent that annoying spam, we ask that you register. It is fast, free and secure.

Even More:

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners(TM)* 8

Filed under: "Ask-an-Advisor", Ethics, Experts Invited, Investing, Risk Management | Tagged: , , , , | 1 Comment »

PHYSICIANS BEWARE: Financial “Advice”

Posted on June 26, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

BEWARE THE “DOCTOR EFFECT”

Bread for the advisor – Crumbs for the client

By Dr. David Edward Marcinko MBA CMP™

SPONSOR: http://www.MarcinkoAssociates.com

Several years ago a group of highly trusted and deeply experienced financial services professionals and estate planners noted that far too many of their physician clients, using traditional stock brokers, management consultants and financial advisors, seemed to be less successful than those who went it alone. These Do-it-Yourselfers [DIYs] had setbacks and made mistakes, for sure. But, the ME Inc. doctors seemed to learn from their mistakes and did not incur the high management and service fees demanded from general or retail one-size-fits-all “advisors.“

”In fact, an informal inverse relationship was noted, and dubbed the “Doctor Effect.” In others words, the more consultants an individual doctor retained; the less well they did in all disciplines of the financial planning and medical practice management, continuum.

Of course, the reason for this discrepancy eluded many of them as Wall Street brokerages and wire-houses flooded the media with messages, infomercials, print, radio, TV, texts, tweets, and internet ads to the contrary. Rather than self-learn the basics, the prevailing sentiment seemed to purse the holy grail of finding the “perfect financial advisor.” This realization was a confirmation of the industry culture which seemed to be: Bread for the advisor – Crumbs for the client!

And so, at D.E. Marcinko & Associates, our informed cadre’ of technology focused and highly educated doctors, nurses, financial advisors, attorneys, accountants, psychologists and educational visionaries decided there must be a better way for their healthcare colleagues to receive financial planning advice and related management services within a culture of fiduciary responsibility.

CMP: http://www.CertifiedMedicalPlanner.org

COMMENTS APPRECIATED

Thank You

***

***

RISK MANAGEMENT: https://www.routledge.com/Comprehensive-Financial-Planning-Strategies-for-Doctors-and-Advisors-Best/Marcinko-Hetico/p/book/9781482240283

***

Filed under: "Doctors Only", CMP Program, Ethics, Experts Invited, Financial Planning, Industry Indignation Index, Insurance Matters, Investing, Marcinko Associates, Portfolio Management, Risk Management, Sponsors, Touring with Marcinko | Tagged: , , , , , , , | Leave a comment »

Select and Check Your Stock Broker and Financial Advisor?

Posted on May 28, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Shopping Suggestions

Rick Kahler MS CFP

By Rick Kahler MS CFP®

Shopping for a financial adviser you can trust has never been easy. The Department of Labor [DOL] rule requiring brokers to act in a fiduciary capacity when dealing with retirement plan assets has not made it any easier. The government’s intent was to help consumers clearly distinguish when financial professionals can be relied upon to give unbiased financial advice or when they are acting in their own interests to sell a financial product. Unfortunately, the rule has only exacerbated the confusion.

When shopping for financial advisers, you need to investigate their education, niche, process, compensation structure, and experience to see whether they are a good fit for your needs. Equally important, it’s up to you to do a background check and determine whose interest the adviser is looking out for. No one else will do it for you.

Two-Steps

Here are two important steps you can take to greatly increase your chances of getting someone who will truly be looking out for you.

First, ask any adviser you deal with to sign a statement affirming they will act in the capacity of a fiduciary to you, meaning you will be a client, not a customer. A copy of this form can be found at www.advisorperspectives.com. Advisers unwilling to sign the Form Adv are not likely to be fiduciaries who will put your interests first.

Second, check the adviser’s background. If advisers receive any type of fee, they are held to a fiduciary standard automatically by the SEC. Still, it’s wise to check their background for any misconduct, which you can do at www.adviserinfo.sec.gov. If advisers sell securities, mutual funds, private REITs, or limited partnerships and receive any type of commission, they will be regulated by FINRA. You can go to BrokerCheck.finra.org to view their records for misconduct.

It’s important to check an adviser’s background because being found guilty of misconduct doesn’t mean they can’t actively be selling financial products.

For example, in a March 7 article at kitces.com, financial planner and writer Michael Kitces points out that over 73% of FINRA-registered brokers who FINRA lists as having a misconduct “are still employed a year later, despite the fact that such brokers are a whopping 5x more likely to engage in misconduct again in the future.”

Kitces explains that while just 7.3% of all FINRA brokers have some type of misconduct on their records, only about half of them actually lose their jobs and about half of those find employment with another firm. Additionally, it seems some firms have more of a culture of employing brokers with misconduct.

***

Wall Street

***

The top five brokerage firms with the highest (15% or more) concentration of brokers with misconduct are Oppenhiemer & Co, First Allied Securities, Wells Fargo Advisers Financial Network, UBS Financial Services, and Cetera Advisers. This is according to a working paper, “The Market for Financial Adviser Misconduct,” by Mark Egan, Gregor Matvos, and Amit Seru, business school professors at the University of Chicago and University of Minnesota. Geographic location also makes a big difference with the states of California, Florida, and New York having counties with much higher concentrations of brokers guilty of misconduct (15 – 30%) than states like Pennsylvania, Kansas, Iowa, Kentucky, and Vermont with the counties having the lowest concentration (2 – 3%).

Kitces reminds us that the “single greatest predictor of whether a broker will engage in misconduct is whether he/she has engaged in any prior misconduct.”

Assessment

For this reason, it’s crucial to make FINRA’s Broker Check part of your research before hiring a financial adviser. Before trusting any adviser to put your interests first, look out for your own interests by investigating the adviser’s history.

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

***

Filed under: "Advisors Only", "Doctors Only", Accounting, Ethics, Experts Invited, Financial Planning, Investing | Tagged: , , , , , , , , , | 1 Comment »

What is the SELLING AWAY of Securities?

Posted on October 15, 2022 by Dr. David Edward Marcinko MBA MEd CMP™

Information All Physician Investors Should Know

By Dr. David Edward Marcinko MBA CMP®

CMP logo

SPONSOR: http://www.CertifiedMedicalPlanner.org

According to Wikipedia, selling away in the U.S. securities brokerage industry is the inappropriate practice of an investment professional who sells, or solicits the sale of, securities not held or offered by the brokerage firm with which he is associated.

CITE: https://www.r2library.com/Resource/Title/0826102549

An example of the term expressed in a sentence is, “The broker was selling investments away from the firm.” Brokers marketing securities must have obtained the appropriate securities licenses for various types of investments. Brokers in the U.S. may be “associated” with one or more Brokerage firms and must obtain licenses by passing standardized Financial Industry Regulatory Authority exams such as the Series 6 or Series 7 exam.

***

In the past I’ve held these as well as a Series 63 and 65 license [SEC].

CFI: https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/selling-away/

YOUR COMMENTS ARE APPRECIATED.

Thank You

FINANCE: https://www.amazon.com/Comprehensive-Financial-Planning-Strategies-Advisors/dp/1482240289/ref=sr_1_1?ie=UTF8&qid=1418580820&sr=8-1&keywords=david+marcinko

***

Filed under: "Ask-an-Advisor", CMP Program, Ethics, Glossary Terms, Investing, Touring with Marcinko | Tagged: , , , , , , , | Leave a comment »