FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
A 17th-century mathematician’s famous wager about God teaches an important lesson about investing (Financial Planning)
Blaise Pascal, a brilliant 17th-century mathematician, famously argued that if God exists, belief would lead to infinite joy in heaven, while disbelief would lead to infinite damnation; but if God doesn’t exist, belief would have a finite cost, and disbelief would only have at best a finite benefit. Therefore, he concluded, given that we can never prove whether or not God exists, it’s probably wiser to assume he exists because infinite damnation is way worse than a finite cost.
“The implication: Even if the odds that something will happen are small, we should still pay attention to that slim possibility if the potential consequences are dire,” writes Jonathan Clements, who argues that Pascal’s thinking here could be used to apply to investing and understanding risk.
“Managing money isn’t about amassing as much wealth as possible. Rather, it’s about having enough to lead the life we want. Rolling the investment dice, while saving money by skimping on insurance, may give us a shot at amassing more wealth. But with that chance of greater success comes a risk of devastating failure,” he added.
As people start living longer, they’re going to have to figure out new ways to prepare for retirement. They may have to work longer, or in different arrangements or fields, in order to have enough money throughout their lives.
Russ Hill, chief executive at Halbert Hargrove Global Advisors, observed that a 65-year-old couple has a 25-year life expectancy between the two of them — and that number is growing, especially for wealthier people.
“We’ll have 75-year olds who have played golf, travelled, then look around and say, ‘I’m bored, I’m feeling pretty good, what else can I do? And by the way, I could use some extra money,'”said Ric Edelman, chief executive at Edelman Financial Services.
10 unintended consequences of the DOL rule (InvestmentNews)
Advisers think the new fiduciary rule could have consequences that the Labour Department did not anticipate, according to “The Economics of Change,” a new study from IN Research in partnership with Legg Mason.
As such, InvestmentNews’ Liz Skinner put together a list of 10 possible unintended consequences of the DOL rule, including a wave of early retirements among older financial advisors, a boost in merger and acquisition activity, and a drop in revenues.
The White House is cracking down on foreign tax evasion (Wealthmanagement.com)
The Obama administration announced a series of initiatives last week which will “attempt to close some of the more egregious loopholes used by foreigners to hide assets in the US,” reports David H. Lenok. Obama will also try to get Congress to pass more solid legislation with the same goals, Lenok adds.
The SEC announced fraud charges against Louis Martin Blazer III, a financial advisor who is being accused of taking money from five pro athletes without their authorization in order to invest in movie projects, reports Emily Zulz.
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