NYT: How to Prevent a Financial Overdose

From Gretchen Morgenson writing at the NY TIMES online:

'THE Food and Drug Administration vets new drugs before they reach the market. But imagine if there were a Wall Street version of the F.D.A. — an agency that examined new financial instruments and ensured that they were safe and benefited society, not just bankers.

How different our economy might look today, given the damage done by complex instruments during the financial crisis....

two professors at the University of Chicago have raised an intriguing idea. In a paper published in February, Eric A. Posner, a law professor, and E. Glen Weyl, an assistant professor in economics, argue that regulators should approach financial products the way the F.D.A. approaches new drugs.

The potential dangers of financial instruments, they argue, “seem at least as extreme as the dangers of medicines.”

They contend that new instruments should be approved by a “financial products agency” that would test them for social utility. Ideally, products deemed too costly to society over all — those that serve only to increase speculation, for example — would be rejected, the two professors say.'
------------------
Link to NY Times article: http://www.nytimes.com/2012/04/01/business/how-a-financial-products-agency-could-protect-investors.html

----------------------
----------------------

"FDA" for financial instruments?  No.

Sounds like Obamacare for retirement planning.  Large bureaucratic overseers - a powerful group of people who assume they are smarter than you - decide what is best for you. 

A better, cheaper and simpler remedy already exists:

Buy a handful of the lowest cost ETFs.  Keep them for life.


The Life Keepers remedy stops the financial advice and financial product industries from skimming your wealth with high, hidden costs. 

When investors need advice, they can pay for it separately.  There is no need for a financial FDA.  There is also no need for all the marketing enticements or the vast media that exists to hype all the products and endless opinions.

Investors today already have a free choice to get rid of the worst risk no one  examines: costs from ongoing fees buried in products and services

The Life Keepers approach means more wealth for you.  How?  It is simple: keep more of your money for the rest of your life.  The cost savings can result in large, life changing amounts of money.  But no one wants to tell you because you keep the money you no longer have to pay them!

Patrick Broderick