The Student Loan Crisis: How Bad Is It?

The student loan industry is a giant scam if you ask me. Parents and students alike don’t realize the slanted arrangement they are about to take on when applying for these loans. Society places such a strong emphasis on education (for good reason) that the education industry and especially the lenders behind it stand to benefit tremendously. It’s a shame that so many of these organizations view a young person’s desire to better educate themselves as an opportunity to rip them off, but I can’t say I’m surprised, not after listening to the news for the past six months. The only way to come out on top and not cost oneself a fortune in interest and penalties over the years is to never miss payments on student loans and, when possible, pay considerably more than the minimums. This can be hard to do at a time when jobs are scarce and higher education is wildly expensive.

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Financial ‘Life’ Planning

I often explain financial planning to my clients as a science whose applications aren’t terribly difficult. It boils down to creating a savings and investment program within the framework of your income and assets. Discipline is undoubtedly the most difficult component to implementing one’s long-term financial plan. Further, the more emotion we can remove from the investment process, the better off we will be. Buying low and selling high is rarely what happens when emotion meets the stock market. Lately, however, emotion has taken on a different and more important purpose as the economy dips into recession and investors are witnessing an unprecedented amount of volatility.

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A Discussion about Independent vs. Wire House Brokers

As you may have imagined, the past few months have been stressful not just for individual investors but for financial advisors as well. Many advisors get paid a percentage of the assets they manage so when asset prices cheapen, as they have recently, it indicates pay cuts for advisors, portfolio managers, insurance professionals, etc. One change which has been widely commented on in industry publications lately is the movement of assets away from large wire house firms such as Merrill Lynch and Smith Barney into smaller, independently owned advisory firms.* This move is not strictly the result of clients seeking a better relationship with their advisors. It’s also the result of advisors working at firms which have been plagued by the credit crisis looking for a change of scenery.

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