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    As a former Dean and appointed Distinguished University Professor and Endowed Department Chair, Dr. David Edward Marcinko MBA was a NYSE broker and investment banker for a decade who was respected for his unique perspectives, balanced contrarian thinking and measured judgment to influence key decision makers in strategic education, health economics, finance, investing and public policy management.

    Dr. Marcinko is originally from Loyola University MD, Temple University in Philadelphia and the Milton S. Hershey Medical Center in PA; as well as Oglethorpe University and Emory University in Georgia, the Atlanta Hospital & Medical Center; Kellogg-Keller Graduate School of Business and Management in Chicago, and the Aachen City University Hospital, Koln-Germany. He became one of the most innovative global thought leaders in medical business entrepreneurship today by leveraging and adding value with strategies to grow revenues and EBITDA while reducing non-essential expenditures and improving dated operational in-efficiencies.

    Professor David Marcinko was a board certified surgical fellow, hospital medical staff President, public and population health advocate, and Chief Executive & Education Officer with more than 425 published papers; 5,150 op-ed pieces and over 135+ domestic / international presentations to his credit; including the top ten [10] biggest drug, DME and pharmaceutical companies and financial services firms in the nation. He is also a best-selling Amazon author with 30 published academic text books in four languages [National Institute of Health, Library of Congress and Library of Medicine].

    Dr. David E. Marcinko is past Editor-in-Chief of the prestigious “Journal of Health Care Finance”, and a former Certified Financial Planner® who was named “Health Economist of the Year” in 2010. He is a Federal and State court approved expert witness featured in hundreds of peer reviewed medical, business, economics trade journals and publications [AMA, ADA, APMA, AAOS, Physicians Practice, Investment Advisor, Physician’s Money Digest and MD News] etc.

    Later, Dr. Marcinko was a vital recruited BOD member of several innovative companies like Physicians Nexus, First Global Financial Advisors and the Physician Services Group Inc; as well as mentor and coach for Deloitte-Touche and other start-up firms in Silicon Valley, CA.

    As a state licensed life, P&C and health insurance agent; and dual SEC registered investment advisor and representative, Marcinko was Founding Dean of the fiduciary and niche focused CERTIFIED MEDICAL PLANNER® chartered professional designation education program; as well as Chief Editor of the three print format HEALTH DICTIONARY SERIES® and online Wiki Project.

    Dr. David E. Marcinko’s professional memberships included: ASHE, AHIMA, ACHE, ACME, ACPE, MGMA, FMMA, FPA and HIMSS. He was a MSFT Beta tester, Google Scholar, “H” Index favorite and one of LinkedIn’s “Top Cited Voices”.

    Marcinko is “ex-officio” and R&D Scholar-on-Sabbatical for iMBA, Inc. who was recently appointed to the MedBlob® [military encrypted medical data warehouse and health information exchange] Advisory Board.

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HOW THE “FIDUCIARY CONUNDRUM” DEFIES PHYSICS?

And … How We Can Fix It

By Dr. David Edward Marcinko MBA MEd CMP®

www.CertifiedMedicalPlanner.org

The Rules As I Understand Them

Securities industry Regulations and Regulators recognize that (registered) investment advisors give advice, while stock brokers sell brokerage products. Thus, the Series 65 license is required to become a financial advisor, while Series 7 licensed stock-brokers are not (and cannot) be fiduciary advisors.

So, advice is subject to a fiduciary duty, while product sales (brokerage) activity is not. The ratio of fiduciary advice to brokerage sales is about 1:99. So, what does that tell you?

A Contentious and Complicated Issue

This issue is so contentious and complicated today that lawyers are needed to define each and every term, engagement, transaction, brokerage or advisory contract, etc. It is far too amazingly contorted and complicated for most; including me; and we have even discussed the industry machinations and political double-talk on this ME-P previously; from some vary sharp industry experts, too.

The Fiduciary Conundrum

The “work-around” for these rules is industry “dual-registration”. Simply put, just get licensed to do both; as I did. Charge a commission when selling stuff and charge a fee for advice. And ideally, do both at the same time; while getting paid for both sides.

As a naïve luddite, I learned this little truism in financial planning school decades ago, and as a doctor and fiduciary for my patients at all times, almost vomited.

Of course, there were more sophisticated students in our classes who regurgitated the standard industry opinion: “We’ll give the client a financial plan for free IF we can sell commissioned products.”

Ideally this meant a fat and fully commissioned wrap account, whole-life insurance policy, LTCI policy; etc. Or, sell products and collect fat ongoing, and often unrecognizable AUM fees [fee-only], too!

From the stock broker-advisor’s POV, it was “Heads I win – tails you loose” for the client. Now, you know why I am a former or reformed certified financial planner.

The Physics Split

Know that as a pre-medical college student years earlier, I leaned about the Werner Heisenberg Uncertainty Principle, in physics class.

Of course,  true Advice – is not Sales …  and Sales is not Advice. Both should never be; simultaneously. So, let’s ditch dual registration and decide which to pursue … and then proceed accordingly. Both sales and advice have risks and benefits to client and producer; both have advantages and disadvantages to both; as well.

WHY? Just like the Werner Heisenberg Uncertainty Principle; it shouldn’t [shan’t] be both; at once.

NOTE: In quantum mechanics, the Heisenberg uncertainty principle is any of a variety of mathematical inequalities asserting a fundamental limit to the precision with which certain pairs of physical properties of a particle, known as complementary variables, such as position x and momentum p, can be known simultaneously.

So, in physics, I can tell you where you are -OR- how fast you are going; but not both. Thus, if it is product sales; it is not advice.

Today, since “dual registration” is still allowed, my suggestion to clients is to seek a fiduciary in all matters 24/7/354; get it in writing, and try  to avoid arbitration and “best interest” or BICE clauses! Run from [fee-based and fee-only] AUM fees, too.

PS: I am not against Series #7 representatives and product sales. Salesmen/women often provide a valuable service and should be appropriately compensated. I only object when fees, costs, charges and commissions are duplicative, excessive and/or not fully disclosed to the client. Since excessive is an arbitrary term; full disclosure is the key ingredient.

Assessment

So – How am I wrong, mistaken and/or what did I miss? Do tell! Should We – Can We – Ditch Dual Registration [DDR]?

Oh! In the future, I also hope that State fiduciary standards will potentially cover both non-ERISA and ERISA situations, and employee plan participants will have access to full discovery rights, the one thing the industry fears most.

But, that’s a discussion for another day and time.

Conclusion

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BOOKS

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Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™8Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

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

***

Form ADV Part II [The Essential Document]

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Lifting the “Veil of Secrecy” on Selecting Financial Advisors

[By Dr. David Edward Marcinko MBA CMP™]

DEM white  shirtBy law, financial advisors must provide you with a form ADV Part II or a brochure that covers the same information. Even if a brochure is provided, ask for the ADV. Today, it may even be online.

While it is acceptable, even desirable, for the brochure to be easier to read than the ADV, the ADV is what is filed with the appropriate state or SEC. If the brochure reads more like a slick sales brochure or the information in the brochure glosses over the items on the ADV to a high degree, one should consider eliminating the advisor from consideration.

Types of Advisors

Registering with a state or SEC gives an advisor a fiduciary duty to the client. This is a high standard under the law. There are several types of advisors who are exempt from registering and filing an ADV.

First, there are registered representatives (brokers).  Brokers have a fiduciary responsibility to their firms regardless of whether they are statutory employees or independent contractors.

Second are attorneys and accountants whose advice is “incidental” to their legal or accounting practices. But, why would one hire someone whose advice is “incidental” to his primary profession?

A top-notch advisor is a full-time professional and should be registered.  One should insist that their advisor be registered.

***

Lifting veil of secrecy

[The Author in Chicago Seeking Fiduciary Transparency]

***

The ADV will describe the advisor’s background and employment history, including any prior disciplinary issues. It will describe the ownership of the firm and outline how the firm and advisor are compensated. Any referral arrangements will be described. If an advisor has an interest in any of the investments to be recommended, it must be listed as well as the fee schedule. There is also a description of the types of investments recommended and the types of research information that is used.

Assessment

A review of the ADV should result in an alignment of what the advisor said during the interview and what is filed with the regulators. If there is a clear discrepancy, choose another advisor. If it is unclear, discuss the issue with the advisor.

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How Stock-Brokers Execute Trades

What Every Physician-Investor Should Know

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And … Why Trade Execution Isn’t Instantaneous!

By Dr. Gary L. Bode MSA CPA CMP [Hon]; PC

Dr. Gary Bode; CPA, MSA, CMP

Many physician investors who trade through online brokerage accounts assume they have a direct connection to the securities markets.

But, they don’t. When you press “enter,” your order is sent over the Internet to your broker – who in turn decides which market to send it to for execution. A similar process occurs when you call your broker to place a trade.

While trade execution is usually seamless and quick, it does take time. And prices can change quickly, especially in fast-moving markets. Because price quotes are only for a specific number of shares, MD investors may not always receive the price they saw on their screen or the price their broker quoted over the phone. By the time your order reaches the market, the price of the stock could be slightly – or very – different.

Note: No SEC regulations require a trade to be executed within a set period of time. But if firms advertise their speed of execution, they must not exaggerate or fail to tell investors about the possibility of significant delays.

Tip: To avoid buying or selling a stock at a price higher or lower than you wanted, place a limit order rather than a market order. A limit order is an order to buy or sell a security at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. When you place a market order, you can’t control the price at which your order will be filled.

Example: You want to buy the stock of a “hot” IPO that was initially offered at $9, but don’t want to end up paying more than $20 for the stock. Place a limit order to buy the stock at any price up to $20. By entering a limit order rather than a market order, you will not be caught buying the stock at $90 and then suffering immediate losses as the stock drops later in the day or the weeks ahead.

***

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***

Caution: Your limit order may never be executed because the market price may quickly surpass your limit before your order can be filled. But by using a limit order you also protect yourself from buying the stock at too high a price. 

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ABOUT

Dr. Gary L. Bode was Chief Executive Officer of Comprehensive Practice Accounting, Inc., a firm specializing in providing tax solutions to medical professionals. Originally, he was a board certified podiatrist and managing partner of a multi-office medical practice for a decade before earning his Master of Science degree in Accounting from the University of North Carolina. He then served as Chief Financial Officer [CFO] for a private mental healthcare facility. Today, Dr. Bode is a nationally known Certified Public Accountant, financial author, educator, and speaker. Areas of expertise include producing customized managerial accounting reports, practice appraisals and valuations, restructurings, and innovative financial accounting as well as proactive tax positioning and tax return preparation for healthcare facilities. He has been quoted in Newsweek.

Conclusion

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Enter the Financial Advisory Gurus?

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Understanding the Nexus Between Fame and Quality

[By Rick Kahler CFP®]  http://www.KahlerFinancial.com

  • “I see that firm’s ads everywhere.”
  • “His books are best-sellers.”
  • “That advisor does all kinds of free seminars for retirees.”
  • “She’s on TV all the time.”

The Case … For?

When a financial advisor, someone with a radio or television show, or an author of financial books becomes well-known, it’s easy to assume you can trust that person’s advice. This isn’t necessarily the case.

Recently I was selected by an Internet community site called moneytips.com as one of their top 50 “social influencers.” This is a list of professionals in the areas of wealth and personal finance who use social media and other Internet tools effectively.

Among the top three on this list are Dave Ramsey and Suze Orman, whose books and advice include a great deal of solid information to help people get out of debt, manage money well, and provide for the future. Many others in the top 50 are respected financial journalists and advisors.

The Case … Against?

However, the list also includes a few advocates for high-risk investment methods, proponents of dubious get-rich-quick schemes, and purveyors of poorly researched advice. Those who put together the list focused on how well people established a presence on the Internet and used technology to communicate. That’s an assessment completely unrelated to the question of whether the advice or information being communicated was worthwhile.

Financial Planning

Financial planning, just like any other field, has a solid core of practitioners who quietly and ethically serve their clients. It also has its gurus, its outstanding marketers, and its fringe practitioners with extreme ideas. The challenge for consumers is not to assume fame and quality always go together.

Linking Fame and Quality?

Here are a few suggestions for keeping a balanced perspective about famous or familiar financial faces:

1. Knowing about a professional isn’t the same as knowing a professional. Everyone you know may have heard of Noted Local Advisor. That’s not the same as being able to recommend him or her. Get recommendations first-hand, from people who actually are clients of a firm or have used someone’s plan or advice. Ask specific questions about what they’ve done and how it worked for them.

2. Yes, there are shortcuts to building wealth, but they come with very high risks. For most of us, the best ways to build wealth are gradual and even boring: saving part of every paycheck, living on less than we earn, and investing for the long term in a well-diversified portfolio of different asset classes. It’s natural to wish for an easier, faster way, but that desire can make you more vulnerable to high-risk schemes and even scams.

3. Even if a method of building wealth is perfectly legitimate and works for others, it still may not be a good fit for you. If you’re a reclusive introvert, for example, sales is probably not your best path to success.

4. Apply the same common sense and skepticism to financial products or wealth-building methods that you would use anywhere else. For example, you probably don’t assume that a car’s advertised gas mileage is what you’ll actually get under real-world conditions. In the same way, it’s a good idea to assume that your real-world results from a proposed investment or business will be lower than the advertised numbers.

5. Don’t assume every financial guru is a crook. Many reputable professionals can teach you a great deal about money. Your job is to learn the financial basics so you can evaluate them with some educated skepticism.

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Assessment

And always keep in mind that a product or idea is not the same thing as the selling of that product or idea. The true genius of some financial “experts,” after all, is marketing.

Conclusion

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Fiduciary Financial Advisor versus Non-Fiduciary FAs

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Understanding the Difference

Dr. DEMBy Dr. David Edward Marcinko MBA CMP™

GOAL: To understand the difference between fiduciaries and non-fiduciaries, examine the SEC conduct rules.

Stock-Brokers (non-fiduciaries) are subject to FINRA Conduct Rule 2310(a) which reads:

In recommending to a customer the purchase, sale or exchange of any security, a member shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by such customer as to his security holdings and as to his financial situation and needs.

A fiduciary follows a higher standard of conduct: 

A fiduciary duty is an obligation to act in the best interest of another party. A fiduciary obligation exists whenever the relationship with the client involves a special trust, confidence and reliance on the fiduciary to exercise his discretion or expertise in acting for a client. A person acting in a fiduciary capacity is held to a high standard of honesty and full disclosure in regard to the client and must not obtain a personal benefit at the expense of the client.

Five primary responsibilities as a fiduciary to clients are:

  • To always put clients’ interest first
  • To act with utmost good faith
  • To provide full and fair disclosure of all material facts
  • Not to mislead clients, and
  • To expose all conflicts of interest and all compensation to clients.

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Assessment

Conclusion

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INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors

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Why Doctors Must Consider Fees When Building A Retirement Nest Egg

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Understanding Mutual Fund Share Classes and Costs

[By Rick Kahler MS CFP® ChFC CCIM]

www.KahlerFinancial.com

Doctors – Do you want to add $500,000 or more to your retirement nest egg? Pay attention to the fees that mutual funds charge you for investing your money. Few physicians or small investors understand that the same mutual fund can charge a wide range of fees, depending on the share class you select.

For many medical professionals and most Americans, the best way to build wealth is to live on less than you make and invest 15% to 35% of your paycheck into mutual funds. It’s essential to find funds that are diversified among five or more asset classes.

The Choice After Mutual Fund Selection

Once you’ve found a mutual fund with a mix of appropriate asset classes, there’s one more choice to make. What class of shares should you buy? The most popular classes are A, B, and I shares; however, many funds offer even more classes like C, F, and R shares.

The difference between the classes has nothing to do with the underlying management or structure of the mutual fund. All share classes own the same stocks or bonds. The difference lies in the fees you pay the mutual fund for their services and for commissions to brokers who sell the funds.

Types of Share Classes

Many A shares and almost all B, C, F, and R shares impose sales commissions, often called “loads,” which are based on the amount you invest. For example, A shares usually charge you a one-time commission ranging from 4.0% to 5.75% of your initial investment. With B shares there is no up-front commission, but they will charge you a stiff penalty to sell the funds in the early years and will impose an additional annual commission often ranging from .25% to 1.00% a year. Some discount brokers will waive the upfront commission on A shares for their customers.

Typically the best shares to purchase are the I class, which don’t have any commissions associated with them and offer the lowest management fees of any other share class. The downside is that I shares often require a minimum investment ranging from $10,000 to $1,000,000. Financial advisors often have relationships with discount brokers that allow them to purchase the shares for clients in smaller amounts.

Fee Comparisons

It pays to compare fees.

For example, a comparison of fees available at the website of the Financial Industry Regulatory Authority (finra.org/fundanalyzer) shows that a $10,000 investment in the Invesco S&P 500 Index fund’s A shares will cost you $129 a year, while the same investment in the C shares will run $163. If instead you invest in the Fidelity Spartan 500 Index fund you will pay just $11.50 annually, which is over 1% less than the Invesco A shares.

The Savings

It’s surprising what a 1% savings means to your retirement nest egg. According to a study by the Vanguard Group reported by Jack Hough in SmartMoney.com, if a 25-year old saves 9% of his pay in a mutual fund, paying .25% a year in expenses versus 1.25% amounts to having an additional $500,000 by age 65.

Assessment

With all that said, most investors don’t have either the knowledge or the time to construct a diversified portfolio of mutual funds that will carry them through to retirement. Paying a fee or commission for advice can ultimately save you a lot of money. There are advisors who will help smaller investors select investments for an hourly or flat fee. Others charge fees based on the size of your portfolio, which normally range from .3% to 1.5%.

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

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It’s all About Personal Financial Management [PFM]

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Building Deeper Relationships with Medical Professionals and other Clients

To build deeper relationships with their clients and customers, financial advisors, wealth managers, brokerages and banks need to move away from just being an account to store money – and more towards helping their customers take control of their finances. Adding personal financial management (PFM) tools are a great way to start.

Right now, medical professional clients and many customers, are turning to third party sites to help them with their finances. But, a recent Javelin reports shows that customers are 3-x as likely to trust a bank with these services.

Below are some reasons why FAs, WMs and SBs should consider providing PFM capabilities (such as StatementRewards’ Purchase Insights) to physicians and lay customers.

Source: truaxis.com

Conclusion

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