III. Brokerage Retirement Platforms are Pipelines
In Part I and Part II of our previous Blogs “Brokerage Retirement Platforms are Pipelines” we laid the groundwork for the new retirement savings platform, a virtual retirement platform. Through informed choice, training and today’s technology, consumers can determine when to use an intermediary broker or “RIA” for investment selection.
Pipelines and platforms are intermediaries. When an intermediary adds value producers and consumers will utilize an intermediary. However when an intermediary does not add value why should producers and consumers use an intermediary?
Grocery wholesaling and retailing are classic intermediaries. Grocery manufacturers – General Mills, Proctor & Gamble, etc. – sell railroad car quantities of their products to wholesalers, like SUPERVALU, who in turn sells cases of product to individual retail stores. The wholesaler adds value because the retailer can operate with lower inventory levels, a smaller backroom (if any) while being able to provide the widest selection of products to their customers. If the retailer is large enough – Kroger, Walmart or Publix – they will often choose to operate their own warehouses and eliminate the wholesaler.
The individual retail store is also an intermediary between the grocery manufacturer and the retail consumer. Most retail customers do not want to purchase a case of twelve or twenty-four 30 oz. packages of Cheerios; so the value provided by the retailer – either brick and mortar or online – is the convenience to order just one of an item.
When A Wholesaler or Retailer Does Not Add Value
Now when the wholesaler / retailer does not add value – charges too much or prevents the consumer from purchasing a manufacturer’s product – the consumer increasingly has the opportunity to “go direct” to the manufacturer to purchase the desired item(s). Manufacturers need to decide if selling small quantities is viable and consumers need to decide if the cost of delivery and potential storage of a larger quantity is also viable.
Implicit in this discussion is that forty-eight weeks out of the year the retailer may purchase Cheerios through a wholesaler; but for four weeks they may purchase large quantities directly from the manufacturer for a promotional sale; or as a consumer you may buy almost all of your groceries from one or two retailers – but there may some desired item(s) that you purchase directly.
Brokerage Pipelines Deliver Efficiencies to Broker Dealers, Not Consumer
In comparison, almost without exception, the retirement saver is burdened with unnecessary and redundant fees/ expenses – that are rarely clearly and fully disclosed – and their investment options are limited by the company/ employee benefit consultant / brokerage industry workplace troika. While the financial industry may make reference to their “platforms;” these are in reality pipelines, with the efficiencies being captured by the brokerage industry.
Now in fairness to the brokerage industry there are very real costs to operate a distribution system – pipeline or platform. Just as wholesalers need warehouses and transportation assets and retailers need to operate physical store locations or maintain an on-line presence – the brokerage industry incurs the “platform costs” identified by Van Alstyne, Parker and Choudary below.
Similar to a retailer using a wholesaler – “does the brokerage industry add value; and value in excess of their costs?” And, can a retirement saver – consumer – obtain access to a producer – a mutual fund company – without using and paying an intermediary? Yes, many Securities and Exchange Commission (S.E.C.) registered investment companies can be purchased “directly” by a retirement saver; however, how does the consumer know which one is the best for them?
A Virtual Retirement Platform
The requirements placed by the S.E.C. on registered mutual fund companies (producers) for audited performance, portfolio turnover, dividend yields, etc. are more stringent and more usable for retirement savers (consumers) than the marketing materials presented on brokerage industry web sites. There is more consumer protection with a “direct” consumer to producer investment than one that goes through the additional costs and uncertainties of an investment that goes through a brokerage industry intermediary.
Similar to the decision made by the retailer and the consumer in our grocery illustration – why would you use an intermediary that does not add value?
If the S.E.C. is already providing the regulation and protection that the consumer needs why should the consumer incur the costs of purchasing the same investment product through an intermediary, with greater risks, from Ponzi schemes, to cyber-security, to unaudited performance. Additionally, brokerage intermediaries – both online “robo advisors” as well as advisor based – have created managed accounts that serve no purpose for a retirement saver other than to allow the brokerage intermediary to circumvent S.E.C. reporting requirements and make data-driven comparisons impossible for the consumer.
Google, Yahoo and multiple other search engines provide virtually unlimited access for retirement savers to access information, made possible through today’s technology, and the ability to securely place their investments with S.E.C. registered mutual fund companies, passive or active.
Check the Ticker is a virtual retirement platform that for the first time provides retirement savers the transparent training and access to tools on a subscription basis. The tools permit the analysis, with the training, to determine if eliminating the intermediary is in their best interest. Remember that for consumers to participate in a platform exchange, consumers must have the requisite knowledge to participate in “value data and exchange feedback.”
Consumers need hands on training on how to use the available tools in the context of S.E.C. disclosures and a roadmap on how to use the data and tools to make an informed choice.
For too long the brokerage industry has told consumers that this is too complicated for individuals to understand, that individuals are too busy. In response, Check the Ticker recognizes that an individual’s retirement savings are the largest investment most people have. While estimates may vary; it is generally acknowledged that redundant and unnecessary fees together with conflicted investment advice have reduced the average American’s retirement savings by one third and too frequently, by one-half.
At the end-of-the-day what matters is “Performance” – performance after all expenses – fund expenses as well as distribution. Absent S.E.C. regulated performance measures and either investing directly with an S.E.C. regulated fund / or with full disclosure of all distribution expenses, including portfolio turnover, the individual has no way of knowing how well their investments are performing.
Check the Ticker SBC Provides the First Virtual Retirement Platform
Check the Ticker Tools and training create the virtual retirement platform through:
- An informed and educated consumer
- Interactive access to SEC regulatory data on audited performance, portfolio turnover, ESG holdings, dividend yields, etc.
- A valued feedback process, where the best core retirement money managers rise to the top of the virtual platform,
As a virtual retirement platform, Check the Ticker provides the transparent training and access to tools retirement savers need. With the training and tools, retirement investors now can determine who are the top US core retirement money managers for their Qualified Default Investment Alternatives (QDIA’s) or IRA. The information is made possible through the software, the tools, that create the retirement investor’s virtual platform.
Every time a retirement investor or small business selects a S.E.C. registered Investment Company or is advised to select one, they can access the platform, using regulated data and software, to make an informed choice.
A Retirement Investor Community: Share Who are Very Best Retirement Money Managers, all Based on SEC Regulatory Data and Scientific Selection Process
For the very first time, since the advent of 401(k) plans and IRAs, a virtual retirement platform provides a community for retirement investors to share their findings, through the use of SEC regulated data and today’s technology, as to which registered investment companies (passive or active), (Target Date Fund or Balanced Fund/Growth Fund) they determine to be in their best interest.