We can all agree the current times which have set about us are uncomfortable, and even downright scary. There is a fear in the air about us, be it at the water fountain in whispering groups or late at night alone with our thoughts. However, it is often times such as we are experiencing now, these trying times of hardship and adversity, when Homo sapiens are "forced" to shine. Change is in the air.
Many of us get set in our ways. We have our schedules and our preferences and are comfortable with the control these choices grant us. But change, although uncomfortable at times, is inevitable if we are to move forward successfully. In the words of George Bernard Shaw, "Progress is impossible without change, and those who cannot change their minds cannot change anything." Another simple quote that says it all by Benjamin Franklin is, "When you're finished changing, you're finished."
So enough of the rhetoric, what changes am I speaking of, how do we participate, and what do we need to watch for? Obviously, the financial industry and formerly accepted investment template is in the spotlight. Within the financial services industry, including those regulators who oversee the daily going-ons, a major change is being analyzed and placed on the operation table. This is the idea of suitability versus fiduciary standards. If you don't know the difference now is a good time to educate yourself, and don't worry, there are years and years of arguments on this subject for your research. However, it may soon affect your investment professional in the near future.
As to the formerly accepted investment template I spoke of, I see the changes as extremely exciting. From Madoff to toxic assets, a common theme today (which by the way Anderson Griggs has been preaching for some time), is know what you own, who is doing the managing, and question, question, question. Although we are able to devote our full time to investment management, this is not a viable option for most people. However, the problems of being a fully passive investor have been brought to light. Just as you do your own research before going into surgery, don't be afraid to ask as many questions as needed to be comfortable with your advisor and the products you or she are using.
And as to investment products, one which I feel will be quite a buzzword soon are market-linked Certificates of Deposit, or indexed CDs. Although these products are not new, I feel they will start to be offered more and more. At face value they appear to be a great remedy for market leery investors who feel they should still be participating in the markets. They are certificates of deposit, meaning their principle is insured by the FDIC up to $250,000. The yields you receive on these are many times linked to an index such as the S&P 500 or the Dow. In other words, when the market goes up, the yield of the CD increases, and when the market declines so too does the yield. This is a great story and sounds perfect, but these can be extremely complicated products, and like all other investments, they are not completely risk free.
Finally, keep your eyes out for possible mandatory IRA participation plans coming out. Retirement is currently a big issue now, and this type of plan is being discussed as a possible remedy. One way or another, the changes are coming. We need to fight our tendencies to dig our heels in. Be aware of the direction these changes are going, ask the questions that need to be asked, and try to focus on the exciting beneficial progress this time of change is offering us all.
Anderson Griggs & Company, Inc., doing business as Anderson Griggs Portfolio Management is a registered investment adviser with the US Securities & Exchange Commission. Pursuant to laws and regulations Anderson Griggs also maintains notice filing with several individuals state regulators including North and South Carolina. Anderson Griggs only conducts business in states and locations where it is properly registered or meets state requirements for advisors. This commentary is for information purposes only and is not an offer of investment advice. We will only render advice after we deliver our Form ADV Part II to a client in an authorized jurisdiction and receive a properly executed investment Management Agreement. Any reference to performance is historical in nature and no assumption about future performance should be made based on the past performance of any Anderson Griggs Investment Objective, individual account, or index. The authors of publication are expressing general opinions and commentary. They are not attempting to provide legal, accounting, or specific advice to any individual concerning their personal situation. Anderson Griggs Portfolio Management's office is located at 113 E. Main St., Suite 310, Rock Hill, SC 29730. The local phone number is 803-324-5044 and nationally can be reached via its toll-free number 800-254-0874.